"Corporate culture will soon be the number one reason why an employee stays or leaves a company."
It’s early, not even 7 a.m., in fact, and the above statement is prefaced with an apology for interrupting the free-flowing dialogue taking place between a gathering of five biopharmaceutical executives on day two of the 2020 J.P. Morgan Healthcare Conference (JPM). Among the incessant ringing of nearby cell phones, conversations, and the echo of flatware clinking on dishes, we’ve come together at the Marriott’s Level III restaurant in San Francisco for a roundtable discussion on corporate culture, only our table happens to be rectangular. And though all arrived early and have already met, we take a moment for each to formally introduce themselves (listed in order of introduction).
Morgan Conn, Ph.D., chief business officer at Pharvaris B.V., a private biopharmaceutical company headquartered in the Netherlands.
Bruce Cozadd, cofounder, chairman, and CEO of Jazz Pharmaceuticals, a public biopharmaceutical company based in Ireland.
Catherine Stehman-Breen, M.D., chief research and development officer at Obsidian Therapeutics, a privately held cell and gene therapy company headquartered in Cambridge, MA.
Randy Schatzman, Ph.D., CEO and board member of Bolt Biotherapeutics, a privately held biopharmaceutical company based in the San Francisco Bay Area.
Allison Lewis, head of human resources at Cidara Therapeutics, a public biopharmaceutical company headquartered in San Diego.
Introductions complete, the discussion begins with a question directed to Conn.
Editor’s Note – What follows is an edited transcript of the breakfast discussion hosted by Russo Partners.
What Is Your Opinion Regarding Corporate Culture And Its Link To Company Success Or Failure?
“There’s clearly a strong link, but it’s not everything,” responds Conn. The executive notes witnessing companies with “toxic” cultures, yet good assets, still having success. That being said, he believes the best way to maximize chances for success is to have a culture with a shared set of beliefs, values, and behaviors that, “help your ability to execute, make things happen and stretch what you can do.”
Cozadd adds, “Anyone in the industry that’s experienced a great culture will never tolerate being in another organization without that. If you’ve seen something good, if you understand it, you’re going to seek that out again.” According to Cozadd, employees who value the culture of the company where they work give their best. Such a disposition proves particularly helpful when having to weather tough times, which in the world of biopharmaceutical drug discovery and development, tends to come with the territory. “If you look at turnover rates when things aren’t going well, or if people will rejoin a company later after they’ve left — for any reason — most of it comes down to culture.”
Dr. Stehman-Breen shares how when she joined Obsidian Therapeutics, she met with all of the scientists, many of whom were fairly young (i.e., fresh out of Ph.D. or undergraduate programs). “A lot of them switched jobs relatively quickly after their first job,” she elaborates. It wasn’t money, but culture. “There was a uniform theme that they did not feel their former employer had a positive company culture, that they and their careers were being supported, and/or had a good manager that took them under their wing.” Stehman-Breen asserts that if companies want to retain talent, even in the early days, having a strong culture is critical.
Schatzman chimes in, “Simply put, it’s the difference between being a moderately performing company and a high performing company because a positive corporate culture drives that highest level of delivery for people.” The executive goes on to point out the industry’s dichotomy (i.e., working in a regulated/regimented environment that also demands high levels of creativity). “These concepts tend to fight against each other, but having the right culture provides the balance that allows these groups to perform.”
Lewis contends that though a strong asset can struggle through a bad culture, a bad culture can ruin a good asset. “The time and money that it takes to get something through trials and to market is an arduous struggle,” she reminds. And the cost and disruption of turnover that comes from a bad culture can easily prevent a good asset from ever making it to the finish line.
A story is shared of an executive having to announce bad news to employees. During the all-hands briefing, the executive is overcome with emotion, something they had been hoping to avoid. But what they thought would be perceived negatively turned out to be the exact opposite, as employees expressed appreciation for the leader’s authenticity, sparking the following dialogue.
“We’ve talked about culture as a thing, but it’s heterogeneous within a company,” says Conn. Though a company has an overall corporate cultural tone, there are subpockets. There’s strong evidence that employee satisfaction (i.e., whether they stay or go) is most tightly linked to their manager, and that behavior in those individual settings becomes really important in terms of setting the tone that can be spread throughout an organization. “One of the hardest things I’ve ever had to do professionally was to lay off a colleague with whom I’d worked for a decade, along with another I had hired only two months prior,” Conn shares. He admits to becoming emotional but believes that authenticity is part of the reason why he remains close friends with both to this day.
“I was at a company in Seattle called Alder Bio-Pharmaceuticals,” Schatzman begins. Wanting to do something different, the company decided to try an experiment. From July 4 to Labor Day, the company implemented “summer hours.” “On Fridays at noon, the company closed, and we brought in a food truck with the intent of feeding employees and sending them on their way,” he continues. But instead of going home to do whatever they wanted, they instead organized various employee functions to get to know one another a little better outside of work. “It was a lot of fun, and when next summer rolled around, employees were asking if we could do it again.”
“What leaders do in private moments can have a tremendous impact across the organization,” adds Cozadd. How does an organization treat an employee who’s had a traumatic injury? Does it keep their job open for a year and a half so they can rejoin the company? “It’s meeting somebody in the garage, say a new employee heading into the building, and taking the time to chat with him or her for 15 minutes,” he continues. “Those employees are going to tell that story to other people.” In other words, what you’re doing all the time as a leader matters for culture. “It’s not just those seminal moments we all know matter. It’s how you treat people all the time.”
There’s a balance between being genuine versus trying to always be upbeat as a leader. “In fact, it’s okay for a leader not to be happy every day,” Lewis reminds. False optimism comes through quickly while being genuine tends to pay off even when someone isn’t always positive.
Schatzman asserts, “If I’m having a bad day, I go find employees because they’re most often having a good day, and that helps bring me up and changes my day around.”
How Do You Reinforce The Corporate Culture You Want At Your Organization?
“A lot of company culture comes from the top,” answers Stehman-Breen. As such, Obsidian trains its leaders around aspects that contribute to a positive corporate culture. “We recently updated our mission and our values,” she elaborates. Knowing, understanding, and consistently advocating the company’s mission and values bring a leadership team together. “You want it to be as if the leadership team is all holding hands when socializing the mission and values throughout the organization, as that helps to create a sense of ownership,” she analogizes. Typical team-building activities (e.g., lunch get-togethers, monthly spotlights of people having done an outstanding job) provide opportunities to showcase desired behaviors to model. “It isn’t money that drives people to stay at a company, work a little harder, or be just a little more creative.”
Cozadd shares that his company will soon be giving out its annual “Jazz Master” awards, which exemplify an employee living the company’s values. “Giving recognition should benefit the whole organization, not just the person,” he explains. This requires telling the story in a way that reinforces the desired behavior to the entire organization. “We try to do that by having other people tell their stories.” For example, the company might put together a video tribute where coworkers, managers, or direct reports tell the story. “We’ve even covertly involved family members in such initiatives,” he admits. Hearing a variety of other people say good things about the recipient has multiple benefits. First, it involves more than just the recipient in supporting the company’s cultural aims. Secondly, it’s more powerful than the CEO delivering a “teacher’s pet” type of message while the recipient stands at the front of the room, all the while anticipating possibly having to give an impromptu speech. “We bring them up to accept the award after all the good things have been said; that way, the embarrassing part has already happened.”
But recognition doesn’t always have to be big things that only happen annually for an employee to feel good about their contribution. “Individual managers consistently delivering one-on-one feedback and recognition is a big component of building a company’s culture, and that needs to be threaded throughout if you want to get the whole company behaving in a certain way,” Conn asserts.
“You want to give employees developmental feedback and make sure they understand that they are important to the organization and that they have a manager and a process in place to help manage their career,” Stehman-Breen notes. When the employee no longer feels recognized as an individual but more like a commodity, that’s when a company’s culture can begin to fall apart.
“I’ve been at companies where recognition programs are the downfall of culture,” shares Lewis. How? Say your company has core principles. And then say that an employee known to run counter to such principles (i.e., win at all costs) gets the promotions, recognition, etc. That sends a signal of the behaviors to be emulated, as that’s what’s being rewarded. “When you start rewarding the wrong things, that’s the beginning of the downfall of a strong culture.”
Stehman-Breen shares that one of her favorite benefits in biopharma is the annual holiday shutdown between Christmas and New Year’s. Though a common practice today, such wasn’t always the case. So how does an annual shutdown apply to corporate culture? It depends on how it’s implemented. If no one is really working that week (i.e., sending and receiving emails), it allows employees to spend quality time with loved ones, recharge, and then come back feeling good about what they do. But if the annual shutdown isn’t honored by people at the top, it can have the opposite effect.
Jazz Pharmaceuticals uses an annual all-employee anonymous survey (including free-text comments) to help keep tabs on how things are going. “We’re trying to measure whether what we’re saying people should be experiencing daily is what they’re actually experiencing because if we’re saying it, and it’s not true, it’s inauthentic,” Cozadd explains. However, you have to be willing to be transparent about the results. This doesn’t mean revealing all the free-text comments, but sharing data and letting employees know what was heard. “If some things aren’t what we want them to be, then we talk about what we’re going to do.”
At Cidara Therapeutics, once a new hire has been with the company for around 60 days, they have a “sit down” to gain a deeper understanding of the company’s core principles. For example, one of the core principles developed in the company’s first year of existence is courage. “But what does that look like? How do you define it? What works well for reinforcing?” asks Lewis. Helping new hires understand the core principles enables everyone to hold each other accountable to deliver on, and that has a direct impact on a company’s corporate culture.
Cozadd adds, “You need to also ask what employees notice as being different from where they were before.” New employees can explain what they are experiencing culturally within a company right now, while a more tenured employee might describe a company’s culture as it was when they were hired. “Measuring the difference is a great barometer to understand how your company’s culture is evolving.”
Mechanisms around onboarding, training, communication, feedback, get-togethers, rewards, and recognition should be on everyone’s list, as each plays a part in spreading a culture through shared organizational experiences. But what happens when your company reaches a certain size? One panelist comments about how when a company reaches a certain size (e.g., 50,000 employees), corporate culture initiatives can start to feel inauthentic because it’s impossible to make everyone the same. “That’s an interesting perspective because as you get larger, it’s even more important to make it purposeful and directional, otherwise the culture is going to evolve in a direction you don’t want, and that’s when things tend to go off the rails,” asserts Lewis.
Conn suggests that when propagating values to a bigger group, it requires some sort of core, perhaps a small group, where they collaboratively determine a corporate value, which is then shared with the organization. Another recommendation includes having a corporate value statement drafted by ground-level employees versus senior leadership.
Should Corporate Culture Be Something Discussed At The Board Level?
“I’m curious,” Cozadd begins as he addresses the table. “If leaders of organizations are saying culture is tied to success, does the board believe that? Does the board know what the culture is? Does the board care what the culture is? Does the board ascribe importance to it?”
Conn feels that board involvement around corporate culture depends on the stage of the company, while Cozadd suggests it is more of a senior leadership responsibility. From Stehman-Breen’s perspective, companies that start with the strongest cultures are those where management and the board buy into its importance, and those boards can even include a VC. Lewis adds, “A lot of the questions a board asks can be tied back to culture.” For example, boards often want reports on progress, turnover, and financial accountability, all of which (she asserts) tie into core values (e.g., accountability, urgency), and thus a company’s overall culture. But when pointing this out to a board, it might need to be subtle to prevent an initial briskness that can be encountered when talking about corporate culture at the board level. “It can feel a little hokey, but if you show where the results reside and how those are tied directly to culture, it will make the board more interested,” Lewis contends.
What About The Hiring Process As It Relates To Corporate Culture?
“At Obsidian, during the hiring process we try to identify people who are consistent with our company culture because, in a small company, it doesn’t take many bad actors to create a toxic environment,” responds Stehman-Breen.
Cozadd elaborates, “We think of hiring as a two-way process. It’s not just us selecting the right people who match our culture; we have to be transparent enough about what our culture is that candidates can match in or match out.” To that end, when meeting with relatively new hires (i.e., 60 days in), he likes to inquire as to how accurately the job was described versus what they’ve experienced. This helps the company see if its recruiting efforts are providing prospects the best chance to match, too.
Helping people understand how different personalities think, process, communicate, and function is another important consideration around hiring for culture. Several panelists reference the DISC as a useful tool. DISC is a behavior assessment centered on the four personality traits of dominance (D), influence (I), steadiness (S), and conscientiousness (C). “Knowing why a person isn’t the first to speak up at a meeting, for example, can be helpful to a shared understanding, which builds trust and respect,” says Stehman-Breen. Conn likes the fact that DISC emphasizes variability. But when it comes to hiring for “cultural fit,” Lewis has the following advice to avoid hiring like-minded people. “We try to talk about cultural complements [i.e., behaviors, skills, strengths] that will round out the rest of the team.”
A comment on behavioral diversity being an area often neglected sparks a comment from Cozadd. “In the last two years, we’ve made training courses mandatory for people managers.” Here’s why: Most managers who opt into training are the ones who need it the least, and those needing it the most don’t opt in. “Mandatory sounds like a bad word, but that way, we are all going through it.”
What Hasn’t Worked Well In Building Corporate Culture?
Cozadd can’t point to a complete flop but does note one reason for when things didn’t go as hoped. Collaboration is a Jazz Pharmaceutical core value. “I believe passionately that collaboration is just how you work with people, inside or outside your company.” But some seem to believe being collaborative means everyone in the room has to agree on everything, and that tends to muck things up and slow things down. “If they think collaborative is code for nice [i.e., ‘I’m never going to tell anyone they didn’t do something well’], that’s a problem.” The moral of this story is to make sure you’re clear on what you are and are not trying to communicate around values and principles.
This inspires Schatzman to share a story from one of his first biopharmaceutical jobs. “The head of research was very authoritarian in his approach,” he begins. As a young scientist at a midsize company, Schatzman had the benefit of being able to attend senior management meetings and present programs periodically. In this instance, it was one of his colleagues presenting. “He was making a point, and his boss, who was part of the executive team, tried to emphasize that point in a certain way, and the head of research cut him off in front of his peers, essentially berating him and shutting him down. The conversation went on about where this program was going, but you could see that the contributions of ideas and thoughts had been completely shut down in the room. They ended up deciding to take the program in a particular direction.” Meanwhile, Schatzman is sitting in the back of the room thinking, “They’re deciding without all the information because these guys now aren’t willing to speak up.” This is why at Bolt Biotherapeutics, everything’s free game. In other words, he wants people to bring the good, the bad, and the ugly to meetings, and nobody gets publicly chastised.
Conn asserts that implementing the above can be difficult in a science-based organization because most employees started as academics. “There’s a saying in academia, that the politics are so rough because the stakes are so low,” he jokes. But this is about scientific training, which can be relatively brutal, partly because there isn’t a whole lot of professional development taking place. “Professors aren’t taught how to manage organizations well,” he asserts. And while some scientists have talent for organizational management, many don’t. So when a scientist experiences more of the brutal side and then decides to start a company, unless they are self-aware and do a good job in changing the approach, it will continue to propagate.
One of the previously mentioned core principles of courage (i.e., the ability to challenge the status quo) re-emerges.
According to Lewis, to prevent groupthink, you need to identify “how far down the rabbit hole” you are willing to go before deciding it isn’t the right path. Further, it’s a behavior that can be encouraged, measured, recognized, and rewarded. Conn adds, “In the U.S. Navy, the lowest airman on an aircraft carrier can shut the entire flight deck operation down.” Toyota does something similar with any assembly line employee being able to shut down the entire assembly line if they see a problem. “It’s one thing to say it, but another for an organization to allow, enable, and reward such empowerment for good decision-making.”
To get more junior people in the habit of speaking up, Stehman-Breen advocates modeling the desired behavior. “If they’re in a meeting you’re in, and they’re being quiet, you call on them. You ask for and respect their opinion. If it invalidates yours, don’t argue your opinion into the ground.” Instead, say, “That’s a great thought. You’re absolutely right. I hadn’t thought of that.” In this way, you not only shift how you think about things but if people see and understand that, it benefits a company’s culture, as people then bring the best of their experiences together to come to ultimately the optimal outcome. “This doesn’t mean everyone gets a vote, but if someone has a valid opinion, it should be considered,” she reminds.
Schatzman then directs a question to Cozadd on how he goes about understanding how his organization operates. He prefaces this by saying that he’s tried to just slide into meetings to observe and listen, but he can tell that him being there has changed the whole context of the meeting.
“Early in my career, I found that if I interacted with employees across the organization in informal ways, I could build really strong and durable relationships,” Cozadd shares. And having built personal relationships with people at every site, and at every level, Cozadd feels that if he asks them for the real scoop, they’re going to tell him because he’s consistently demonstrated that he’ll not only listen but act. “I’m going to our EU/rest of the world 2020 kickoff meeting in Spain this Sunday, and at some point, I’m going to ask individual employees how things are going.” According to Cozadd, it’s a very risky moment when the CEO doesn’t have an accurate view of what’s actually going on at the company. This leads to a conversation around useful tools.
What Are Some Tools You Find Useful In Building A Company’s Corporate Culture?
Conn admits to being a fan of the “Manager Tools Podcast.” In addition to a weekly podcast, Manager Tools has books, forms, scripts, and seminars, just to name a few of the resources he has used. “Personally, I think every organization should be using the model that they put forward around feedback, delegation, and coaching, as culture starts with one’s manager,” he contends.
Stehman-Breen advocates for bringing on, as early as you can, a full-time HR person. From her perspective, the best way to have a portal into employee best practices is to have someone who knows that’s their job. “But it needs to be a person who understands they are an advocate for the employees, not someone placed in a position to advocate on behalf of management,” Schatzman advises. Lewis adds, “Often HR reports to the CFO or COO, but that creates a conflict.” For example, say the head of HR is advocating for bonuses during a tough year, but they report to the CFO, how do you think that’s going to go? Rather, she believes the head of HR should directly report to the CEO. “One, it shows employees the importance the CEO places on a position that advocates on their behalf. Two, it is in alignment with the CEO [i.e., what’s in the best interest of the company].”
As time is nearing the end, and we all have to get back to the chaos that JPM is, the group is asked for any parting pearls of corporate culture wisdom.
Start early and be purposeful because a culture is difficult to change once established.
Be introspective on interactions, as culture is the thousand things you do every day.
Authentically live what you’re declaring because if it isn’t real, the mission statement will be ignored.
Ask employees what they’re experiencing, what can be better, and be clear when feedback is acted on.