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Posted by on Jun 6, 2012 in Business, Inspirational, Leadership, Return On Morale | 15 comments

Does Culture Matter? Ask Talbots

Does culture really matter?

Let’s forget the touchy-feely crap for a minute and look at this from a skeptic’s point of view. Seriously, so what if people hate their company and its poisonous culture? We’re here to make money for our shareholders, not make good times for our workers.

Well, maybe. But… maybe not. I think it best to illustrate with an example.

Several years ago, when Jane and I still lived in Boston, I met a psychologist whose office wasn’t too far from the headquarters of two fairly large companies, Meditech and Talbot’s.

We got to talking about my interest in corporate culture, and he told me something that really made an impression on me:

If every company were like Meditech, we therapists would be out of business. If every company were like Talbot’s? Graduate schools could not produce enough psychologists to keep up with the demand!”

As this Ph.D. explained, Meditech employees really love their company. I’m not endorsing Meditech – I know too little about them to tell you that you would love them, too, or that you should run your company as they do theirs. But I do know a few of their employees, and I can tell you that these individuals are quite happy there. Whatever Meditech does, it works for the employees – and for the owner. He’s a very wealthy man.

Talbot’s? Well, according to my psychologist friend anyway, the employees really dislike their company. He related to me that the culture is dysfunctional; toxic, even.*

Who cares what the employees think, a skeptic might ask. Did they do the work they were paid to do? Then so what?

Let’s fast forward a few years, to this past Friday. The morning news reported that a private equity firm has bought Talbot’s for pennies on the dollar compared to their stock price of five years back.

Hey, times are still tough in a lot of sectors, definitely including retail. And this one-company data point doesn’t “prove” anything, all by itself. But here’s my question for the skeptic: if some retail clothing firms are holding on, and others are thriving, then… well, what sets those apart from the companies that are languishing, such as Talbot’s?

Many things, without question. Talbot’s clothes are expensive and dowdy; neither of those things are very popular these days, and so yes, the new owner would be wise to remedy at least one of those traits, if not both.

But why didn’t current staff take care of that long ago? Could it be culture? Could it be that a toxic culture repelled top talent for years, leaving this company with the leftovers, and setting them up for disaster when hard times struck?

You decide.

Art by  Aagaard

Ted Coine (93 Posts)

Author | Speaker | Consultant Ted Coiné is one of the most influential business leaders on Twitter, with a following of over two hundred thousand and growing rapidly. He has been ranked by both Huffington Post and Forbes for his business leadership and social media influence. An inspirational speaker, Ted is author of Five-Star Customer Service and Spoil ’Em Rotten! Prior to writing his first book, Ted was founder and CEO of Coiné Language School, a B2B company he brought from his living room to a $10 million valuation in four years by focusing relentlessly on customer service. He is currently writing his third book, about how social media is transforming leadership and business in this exciting new century. Ted and his family live in Naples, Florida, where he is active in the tech startup scene.


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  • http://www.frymonkeys.com/blog Alan Kay

    Totally agree. Just been working with a European bank where there is a great customer-focused culture based on staff going out of their way to make things happen for the client. The business is going through a carefully planned strategic change. Interestingly they have some problems with the internal culture. That said, the customer culture is so strong that the internal issues don’t damage the front-line relationships. They will figure it out.

    • http://www.shiftandswitch.com Ted Coine

      Alan, that’s a very interesting point that most culture/employee/customer authors, speakers, and bloggers avoid because it flies against the narrative. Tough. It is indeed possible for an old-school culture to spoil its customers rotten – my wife, Jane, worked for just such a company for almost 20 years! I need to write on that at some point: though please, beat me to the punch and we’ll post it. Your writing is always welcome here at Switch and Shift!)

  • http://Website D. Eider

    Speaking from first hand experience at Talbots, I couldn’t agree more. The environment is as toxic as can be and nobody, aside from a select few in upper management, feels they have a vested interest in the success of the company. The worst element is the quality of the Director, VP, SVP level. Most are more interested in winning the favour of their superiors than taking care of the people who toil beneath them. It’s incredibly demotivating and certainly effects the work produced in a very negative fashion. Hopefully, Sycamore will take a long and a hard look at the people in charge, clean out the bad apples and install some more competent leadership. That would most certainly go a long way in their efforts to turn this once great company around.

    • http://www.shiftandswitch.com Ted Coine

      Wow, awesome! I’m not saying it’s awesome as in I’m happy it’s like this at Talbot’s; I’m saying I’m really grateful for your insider’s view.

      Your assessment doesn’t surprise me at all; it’s fairly common, unfortunately. Nothing acceptable about it at all, of course.

      I agree, Sycamore (the private equity firm that bought Talbot’s last week) would be wise to clean house. It’s just plain foolish to keep the leadership that allowed you to buy the company on the cheap. Hopefully for the employees of Talbot’s, Sycamore isn’t foolish.

  • Burke Allen

    Dell are you intending? Your products are becoming wore than “me toos” and your customer service is, well not something you would wnt to bring home to meet the parents….. Culture does not just matter is THE matter that will determine the sustainability of your company. Everyone in the company is responsible for the culture. Do your part to make it a good one….

    • http://www.shiftandswitch.com Ted Coine

      Thanks for weighing in, Burke! Dell… I have a funny story about them I should share sometime.

      Clay Christiansen tells a compelling story about how Dell outsourced its entire business bit by bit until its outsource provider entered the market as a competitor. I need to look that up and share it, I think. Among other things, it’s a compelling indictment of EBITA, the accounting chicanery most American companies use to assess their financial performance as opposed to, as he so eloquently puts it: money. You can’t deposit EBITA in the bank.

  • http://www.thecaremovement.com Al Smith

    Absolutely, Ted. Thanks.

    • http://www.shiftandswitch.com Ted Coine

      Glad you liked it, Al. No surprise, though. You’re a leader who gets it, without a doubt.

  • http://leadagers.com/ C LeBlanc

    Ted, as you know – If there is behavior normalizing “this is how we do things here,” it is describing a culture.

    Cultural values can be cancerous: ““We all lie, cheat, and steal.”
    Cultural values can also be inspirational: “We never lie, cheat, or steal.”

    A workplace’s culture is delicate. It can hinge on one word or one person. As always, but often shoved aside – it’s LEADERSHIP (at all levels) and management – together – that offers the best chance for success.

    • http://www.shiftandswitch.com Ted Coine

      Well put. This is how I like to frame it:

      Leadership is the originator of culture at a company’s founding, and its steward forevermore.

      As you say, culture is a neutral term. Strong companies should have positive cultures, though the details will differ dramatically even among the most vibrant and positive cultures out there. One thing all healthy companies have in common, though, is a strong focus on customer engagement – not just satisfaction, but avid loyalty.

      Thus the equation:

      Leadership + Culture + Service = Profits

      For me, culture is the sweet spot – it’s where everything happens. But you’re right: without five-star leadership, even the best culture is doomed for decline and failure.

  • http://Website David Locke

    In a string of tweets, I was laying out the case that culture is a problem, rather than a solution. Ted asked me to put the discussion here.

    I’ve worked in software startups, rather than web startups, throughout my career. We migrated across the technology adoption lifecycle. As we did so, the culture changed. Then, we crossed into the Moore’s late mainstreet (consumer) phase of the lifecycle. We moved from growth to decline as demarked by a missed quarter about a year after our successful IPO. We needed a new discontinous innovation. It didn’t happen. We M&A’d without a premium a year and a half later. This sequence is typical.

    When a company needs a new discontinuous innovation, they try to sell it to their existing customer base, so they fail. Or, they try to keep their current level of institutionalization with its costs and policies, so they fail. Or, they try to keep their culture and that likewise drives failure. The customer base, costs, policies, and culture must begin a new and evolve as the products, markets, customers, and staff evolve. This anew thing is hard.

    • http://www.shiftandswitch.com Ted Coine

      David, I don’t want to put words in your mouth, but I think we agree in principle.

      My formula describing this firm’s struggles goes thus:

      Leadership + Culture + Service = Profits

      Let’s forget the service and profits – it sounds like this startup got stuck in the leadership and culture, and the latter two never had a chance to develop.

      Leadership sets the direction for culture, good or bad, weak or strong. It seems to me that your employer had poor leadership. There’s no shortage of this in business, and it takes myriad forms. In a startup, optimism is absolutely essential, but it can also cause leaders to underestimate challenges, future funding needs being one example, growth challenges and scaling of culture being another.

      When it was time for your firm to break its innovation cycle and reinvent itself, it failed. That was a leadership failure: leadership needed to maintain a culture of discontinuous innovation from day one, and somewhere that got lost along the way (if it ever existed in your company to begin with).

      Does culture matter? I think you proved, through this terrific example, that indeed it does.

      BTW – terrific hat tip to Clay Christiansen’s groundbreaking work, The Innovator’s Dilemma. It made my Business Heretic’s Library, volume 1. It’s a must-read!

      http://switchandshift.com/the-business-heretics-library-vol-1

  • http://Website David Locke

    More on culture in startups. I worked in a successful company that wanted to exit without ever having taken VC money. We were all stock option compensated, so we took reduced salaries and expected to be fairly compensated at the IPO. But, it turned out that to IPO, you have to have VCs, so we took on some VCs. VCs invest to expand your market, so we doubled the size of sales.

    We had been planning on moving into new offices. It turned out that the new offices were planned before the expansion of sales, so we didn’t have room for sales. Dev was left in the old digs. Sales got the new ones. The AC went out in Dev’s building. That was Houston in the middle of summer. Dev’s culture got tight. When Dev finally moved into the new offices, we had a party to reunite the company. Guess what? Nobody came. We were fractured as a culture by the move, and we remained fractured after the move. Beware of moves.

    • http://www.shiftandswitch.com Ted Coine

      David, I couldn’t agree more: our physical environs send signals about the importance of individuals and, as in your example, whole departments. Keeping people together allows them to mix and reinforces a culture of connection and mutual adventure; keeping people apart reinforces a culture of silos.

      Leaders, do you really want to build silos into your work spaces?

      Oiy. Painful as it is to work for poor leaders, their competitors are grateful for them!

  • http://twitter.com/jamesstrock James Strock

    Terrific post, Ted! Organizational culture ultimately might be seen as a systematic expression of values. It’s hard to measure the effects with precision on a spreadsheet–but, as you express so well, one can see the results. Thanks for sharing.