Under The Hood

This is a summary of a great 🌿 branch book. Under The Hood is the first book I’ve found that gives us a coherent model for shaping employee culture. This is not a complete summary — I’ve left out a section near the end of the book with more situation-specific recommendations. This summary gives you the core idea. Read more about book classifications here.

Over the years, I’ve noticed that there are a certain set of odd … practices that various highly effective business executives seem to do in their companies. Some of my friends call these practices ‘myth-creation’ or ‘culture-setting’ — the practices tend to be highly social in nature, targeted specifically for employee ‘wetware’: that is, the emotions and beliefs of the humans that make up the core of an organisation. I didn’t have a name for these practices. But I think you’ll start to notice these things, if you spend enough time studying businesses.

I’ll give you an example.

One of the first things I read about Amazon was The Everything Store by Brad Stone. Scattered throughout that book, almost as an afterthought, are multiple anecdotes about Amazon leadership attempting to create a certain employee culture, at scale. This was almost always Jeff Bezos at work; the Amazon door desk story, for instance, is the quintessential demonstration:

It was the summer of 1995, back when Jeff Bezos could count his Amazon employees on one hand and those few employees needed desks. Bezos’ friend and employee number five, Nico Lovejoy, says Bezos himself found a scrappy, cost-effective solution right outside their doors.

“We happened to be across the street from a Home Depot,” said Lovejoy. “He looked at desks for sale and looked at doors for sale, and the doors were a lot cheaper, so he decided to buy a door and put some legs on it.”

With that, the Amazon “door desk” was born. What neither of them knew at the time was that the scrappy, do-it-yourself desk would turn into one of Amazon’s most distinctive bits of culture. More than 20 years later, thousands of Amazon employees worldwide still work each day on modern versions of those original door desks.

“We built door desks because it was the cheapest way we could support a desk,” said Lovejoy. “A lot of the things that we do are scrappy by nature. So long as the scrappy solution works.”

You can hopefully see the impact of this story. Decades later, folks are still talking about it. But what do you call this type of thing? How do you even begin to think like this?

I’ve been a little obsessed with Amazon ever since. Part of it was the six months I spent helping former Amazon executive (and Bezos’s second shadow) Colin Bryar, explicate the Amazon Weekly Business Review. Another part of it was my obsession with org design. But I’ve spent a lot of time now hunting down examples of Bezos and other early Amazon leaders engaging in such deliberate acts of cultural creation.

My point, though, is that it seems Bezos was preternaturally gifted in shaping Amazon employee culture. I’m not 100% sure of this — perhaps Bezos was not so good; perhaps he had help from someone else. But whatever the case, his early actions indicate that shaping company behaviour at scale was an important consideration, and unlike many founders, he knew it from fairly early on in the company’s life. To be fair, Bezos’s desire to shape culture wasn’t always in the employee’s favour. In The Everything Store, there’s a bit that goes:

(…) Evidence of this friction usually emerged during the question-and-answer sessions at the company’s regular all-hands meetings, held for many years at Seattle’s oldest playhouse, the Moore Theater. Employees would stand up and pose direct questions to the executive team, and often they inquired about the enormous workload and frenetic pace. During one memorable meeting, a female employee pointedly asked Bezos when Amazon was going to establish a better work-life balance. He didn’t take that well. “The reason we are here is to get stuff done, that is the top priority,” he answered bluntly. “That is the DNA of Amazon. If you can’t excel and put everything into it, this might not be the place for you.”

But my point still stands: unlike many other companies, Amazon’s leadership actually attempted to find ever more effective mechanisms to mould culture — early, and then at scale. And if you’ve read enough business biography, you’ll begin to notice other businesspeople who have the same ability, albeit perhaps not as explicitly displayed (or at least as extensively documented) as with Amazon.

But what is this skill? What is it called? How do you get better at it? Is there a cohesive model you can use?

This is the question that Under The Hood answers.

What is Culture, Really?

The basic idea behind Under The Hood is simple. This amorphous thing that Bezos was shaping is known as ‘employee culture’. This is a popular term, though not a useful one. You probably know what a culture is — or at least you ‘know’ it, even if you can’t define it precisely. The problem is that most of us don’t have a good model for culture. In order to talk about the skill that Bezos displays, we need to talk about what a culture is, and then we can talk about the model that Stan Slap introduces in Under The Hood.

What, exactly, do we mean when we say ‘employee culture’?

The textbook definition for culture is that it describes the ‘social behaviour, institutions and norms found in some group of humans — including the beliefs, customs, capabilities, attitudes and habits of the individuals in these groups.’ Which — ok, cool. But let’s make this more visceral.

Anyone who has managed groups of people would know that it’s not enough to understand the individuals who are working for you. Of course building a model of the people who report to you is a skill — and it’s a skill that most managers learn on the job. (You aren’t effective as a manager if you don’t know how to motivate your folks; there’s a common saying in management circles that “the job of the manager is to train … and to motivate” — which originally comes from legendary Intel CEO Andy Grove). But in some ways learning to motivate folks is easy. When you get to even a handful of people under you, or — god forbid — when you find yourself running a whole organisation with hundreds of individuals, you quickly learn that there’s something more at play.

The way I like to think about this is that ‘something more’ rears its head whenever you want to implement a large scale change. Let’s say that you want to change the incentive structure of your org. Or you want to change your product direction. Or perhaps you’re introducing some process — test driven development, say — for the first time. Invariably, you will find that your changes don’t take the way you expect them to. In your one-on-ones you talk to individuals who appear convinced, but when gathered together those same individuals will be influenced by their peers and act differently from when they were present with you; the net result is that the organisation seems to actively resist your plans.

The ‘something more’ also shows up when you threaten the collective identity of your org. Let’s say that your company makes widgets and calls itself ‘The Widget Company’. “We make widgets” is what you tell employees when they join, it’s what your managers think when running their teams, and it’s what the rank-and-file say when their families ask them where they work and what they do. If corporate leadership descends from the board room to inform the company that it’s now no longer in the business of making widgets but instead in the business of supporting other widget-makers (and therefore to “think of ourselves as the ‘Widget Support Firm’”), and that — yes, we will shutter all company factories over the next five years … well, you can imagine that the entire employee base will revolt. Your sudden announcement violates the organisation’s sense of self, and you risk having the org reject you like a squirrel spitting out a bad nut.

This ‘something more’ — this … invisible thing that emerges when groups of people clump together — this thing is called culture.

Culture is more than this, of course. Culture is also how an organisation acts, absent explicit mechanisms to govern employee behaviour. Culture is the set of beliefs that an employee base has about itself and about management. Culture governs organisational behaviour under periods of high stress. All of these things you likely already know.

And that is the problem, isn’t it? A lot that has been written about culture over the years. One prominent tech industry bromide is ‘culture is who you hire, fire and promote.’ This sounds, on the face of it, actionable and useful — but stop to think about this for a bit. What was Bezos doing with the door-desk story? Was he hiring, firing or promoting someone? He wasn’t doing any of those things. He was doing something … different: he was creating a ‘legend’ — a story that Amazon’s culture could tell itself about who it is and how it should act.

In truth, ‘hire, fire and promote’ is one of those bromides that seems useful and right, but that actively prevents you from learning a better model for employee culture. It simply is not powerful enough. ‘Hire, fire and promote’ gives you three actionable levers, but it does not give you a rich enough set of tools to achieve your goals. And what powerful things you can accomplish if you have richer tools! Under The Hood argues that with a proper approach, you will be able to:

• Get organisational buy-in for changes in company strategy.
• Increase retention and employee satisfaction without increasing spending commensurately.
• Integrate two different employee cultures after M&A.
• Keep an employee culture in-sync across a global organisation (with different offices in different countries).
• Scale an employee culture as your company grows rapidly.
• Prevent cultural complacency from settling in, especially if you are currently winning in a competitive marketplace.

But the most compelling things that Slap argues you can do with a firm grasp of employee culture are:

• Get the employee culture to protect the company when it goes through a crisis.
• Get the employee culture to buy-in and trust leadership, even when the company has to pivot into total uncertainty.

That all sounds a little wild. So who is Stan Slap, and how does he propose that you do this?

A Useful Model of Employee Culture

Stan Slap runs a consulting firm called SLAP. His client list reads like the who’s-who of international business: Costco, Oracle, HP, Caterpillar, Microsoft, Amazon, General Electric, Intel Security, Viacom, Tesla, Glassdoor, Warner Music Group and on and on — companies doing business in 44 countries. Slap himself sat on the board of directors of Patagonia for a number of years — one of the more mission driven companies on the planet. The vast majority of these companies hire Stan’s firm to diagnose and then improve employee commitment — usually in the face of some strategy headwind. Others just want middle management or employee commitment, period.

In Under The Hood, Slap starts out with a model of employee culture that I find remarkably useful. And here he does something very smart: it is difficult to reason about abstract concepts like ‘culture’. So Slap doesn’t make it abstract. His formulation goes something like this:

1. Your employee culture is an information-gathering organism.
2. The single dominant obsession of this organism is survival. Slap’s one liner for this instinct is “a culture is your employees’ shared belief about the rules of survival and emotional prosperity.” From the perspective of the organism: “How do I survive — in this company, on this team, working for you — and once I know I’m going to be okay, how do I get rewarded emotionally and avoid punishment?”
3. With this frame in mind, there are two big properties of the organism that you need to keep top of mind. Property number one: an employee culture exists to protect itself. It is interested in survival … but not the company’s survival, and not your survival. This seems odd, but employee cultures understand that what is good for the company is not always what is good for the culture. Layoffs, for instance, hurt the employee culture but can help the company. Property number two: if you are a leader or manager, you are not part of your employee culture. Sure, technically you are also an employee of the company, but if you’re a member of management, you’re part of a different culture. The considerable power and influence you have over the employee culture ensures that you are never accepted as part of it.

And … that’s it. It really is that simple.

I should note that many (though not all) of the practices that Slap recommends are not novel. Similar things have been discussed or practiced by experienced executives and other savvy management writers, perhaps through independent discovery, or perhaps through the normal process of diffusion (SLAP has consulted for a lot of companies at this point). The major difference is that Under The Hood gives you a coherent model for the practices. A coherent model is useful because it is easier to think about; it also allows you to come up with new mechanisms of your own.

It’s also important to emphasise just how much Slap pushes the organism metaphor. Organisms are easy to wrap our heads around! Here’s an important sample (all emphasis mine):

The implication of this for you as a manager is that your employee culture’s antennae are constantly working, tracking you and seeking information. The culture’s credibility detector is infallible. Its perceptions are alarmingly accurate. Its memory is everlasting. Quick recap: the prodigious recall of a wizened elephant combined with the impact potential of a rabid wolverine.

There isn’t much that goes on that the culture doesn’t know about; it’s always watching, always gathering and sifting information, always updating its perceptions. It knows when you’ve been naughty. It knows when you’ve been nice. It knows that you’re reading this page of this book. You can’t sweep anything under the rug to hide it from an employee culture. A culture lives under the rug.

Your employee culture will notice what you emphasise, what you reward, what you give priority attention to, what you ignore. It will observe why you protect and promote, why you punish. It will watch to see whether you defend what’s important to you under stress or temptation to compromise. The culture will use all of these impressions to form beliefs about how to behave in order to best serve itself.

(…) Does your employee culture ever get it wrong? Sure. Not intentionally and not very often, but since it can’t always confirm the accuracy of the information it’s collecting it has to take a best guess at interpreting the meaning and implications. Like any human organism, once it reaches a conclusion it tends to seek further information as confirmation of its existing belief system, which can compound the error.

And here you’re starting to see the shape of the game. Since employee cultures are information processing organisms interested in self-preservation, the way you manage a culture is to feed it information about exactly that which it is interested in. You do this through words, but more importantly you do this through costly actions that are consistent over time. The rest of the book goes into how you can do this — and what to do when you can’t.

Slap organises Under The Hood into two sections: ‘the Seven Deadly Sins’ and ‘The Four Vulnerabilities’. The Seven Deadly Sins are common mistakes when dealing with an employee culture. The Four Vulnerabilities are situations where employee culture becomes very tricky to manage:

1. Scaling a great employee culture as your company grows.
2. Keeping your employee culture united during M&A.
3. Eliminating cultural complacency in a competitive marketplace.
4. Maintaining cultural commitment under pressure.

For the sake of brevity, I will not include the Four Vulnerabilities in this summary. Those four chapters cover very context-specific strategies, and are less generally useful. If you want more information, go buy the book!

Now with all that setup out of the way, let’s talk about the Seven Deadly Sins.

Sin 1: Failure to Respect the Power of an Employee Culture

Slap opens the book with the biggest mistake companies make about culture. Most managers think that the difficult part about business strategy is coming up with the strategy. Slap points out that the difficult part is getting employee commitment to buy the strategy, and then to execute it well.

(To be fair, coming up with the business strategy is plenty hard, but lots of business books are written about coming up with a winning business strategy. In Slap’s experience, most businesses don’t have good models for getting employee commitment and therefore get punched in the face by the execution).

But getting the employee culture to commit is actually more powerful than mere ‘good execution’. Getting complete employee buy-in results in smarter strategy. Slap writes (emphasis mine):

Management generally considers three types of resources on hand for strategic execution: time, talent, and dollars. But there’s a fourth that trumps the three: commitment of the employee culture. There are many bad decisions a company can make, but few that can’t be made good by an employee culture’s decision to course-correct it. There are many good decisions that a company can make, but few that can’t be made great by an employee culture’s decision to protect it and promote it to customers with its own good name.

This is true. When legendary Intel CEO Andy Grove undertook the painful decision to switch Intel from memories to microprocessors — in response to an existential threat — he wrote:

… while Intel’s business changed and management was looking for clever memory strategies and arguing among themselves, trying to figure out how to fight an unwinnable war, men and women lower in the organization, unbeknownst to us, got us ready to execute the strategic turn that saved our necks and gave us a great future.

Over time, more and more of our production resources were directed to the emerging microprocessor business, not as a result of any specific strategic direction by senior management but as a result of daily decisions by middle managers: the production planners and the finance people who sat around the table at endless production allocation meetings. Bit by bit, they allocated more and more of our silicon wafer production capacities to those lines which were more profitable, like microprocessors, by taking production capacity away from the money-losing memory business. Simply by doing their daily work, these middle managers were adjusting Intel’s strategic posture. By the time we made the decision to exit the memory business, only one out of eight silicon fabrication plants was producing memories. The exit decision had less drastic consequences as a result of the actions of our middle managers.

Energy

A core concept that Slap introduces in the chapter is the idea of ‘energy’. If you think of your employee culture as an information-gathering organism, it makes sense that it, too, has energy levels that it uses for its various activities. A good company leader has a finger on the energy levels of the overall organism.

Slap argues that as a manager, you can give your culture energy by reducing uncertainty. You have three levers available to you:

1. Give your culture context. If your employee culture can understand why something is happening, it needs less energy to probe management actions and announcements for implications.
2. Give your culture predictability. The more your employee culture can forecast how the company will act, the less energy it requires to classify the future as reliable.
3. Give your culture a sense of self. If what your company does — and more importantly, how and why it does it — is a positive force in the world, being part of it boosts the culture’s sense of self, which converts into energy.

There are a few strategies that Slap suggests for each of these levers. Let’s go through them quickly.

Give your culture context

You can help your culture understand why something is happening by:

1. Revisiting past decisions — both made and unmade. Most employees in most companies hear about decisions from management, but rarely hear about what happened when those decisions were discarded. An employee culture believes that things rarely work out the way they were promised, and that what executives say in speeches don’t always come true (And how can it? The world is complex; executives are mortal). Execs should explain at least some of the plans that didn’t proceed as announced, which goes a long way towards building trust.
2. Don’t focus exclusively on revenue goals. By definition, revenue goals cannot provide context because they change so often. Slap writes that you don’t want your culture to wonder “Now that we’ve made our number, who are we?” Instead, executives should talk about fundamental company beliefs that remain stable regardless of financial fluctuations. Such beliefs can provide stable context.

Give your culture predictability

You can help your culture predict what happens next by:

1. Provide simple rules for living. Slap writes: “take what is most uncompromising about your company’s standards, personality, and performance ethic and translate it into simple guidelines — one page, total — that your employee culture can use to prioritise and make decisions: this is what the company believes is absolutely most important, so always do this, and never do that. You can then point out that anyone violating these essential guidelines will be held immediately and fully accountable. This will allow your culture to predict the consequences of its own behaviour.”
2. Hold predictability drills. During Q&A or other all-hands type meetings, one thing you can do is to walk through various scenarios about performance, values, mistakes, good times or bad times and explore how the culture believes the company would react. Slap recommends that you should make these predictability exercises part of introducing any major new strategy or performance goal (more on this soon).

Give your culture a sense of self

There is a smart way of doing this, and a dumb way of doing this. Slap opens this section by rightly calling out some ham-fisted ways companies attempt to give their employees sense of self (or, you know, ‘purpose’):

Any company an spin its business model into some sort of sniffle-inducing noble purpose: ACME manufactures a flange that supports on of the gears in machines that fold boxes that hold the food that some company ships to all those starving kids in Africa = ACME Feeds the World!

Hilarious.

No, Slap points out that regardless of whether you have a noble purpose or not (and, to be certain, not every kind of company can have one), your employee culture’s sense of self is pegged to your company’s true character: that is, how it treats people inside and outside. He writes:

Make sure every member of the culture learns about company decisions that show empathy and decency to people within the company; delightful features of the customer experience; how the company treats its vendors and partners; how it supports its local communities and conducts itself as a national and global citizen; and, most important, how it treats its employee culture.

And you can also help with how external parties see your employees with regard to the company. Some ideas for how to do this, from the book:

• Buy dinner for the employee, their partner, and a couple of close friends as the company’s celebration of their joining the company.
• Send a package to their home that includes FAQs with which they can easily explain the importance of the company and its role in their personal community.
• Produce a company comic book that explains to kids what the enterprise does and how their dad’s or mom’s job makes them a superhero.
• Give a donation in their name to a company sponsored charity.

Sin 2: Presumption of Rapid Behavioural Change

The second sin is that managers assume an org change will be quickly taken on by the employee base.

Actually, let’s make that more precise: novice managers will assume that large-scale changes will be easily accepted by the employee culture (“after all, can’t they see it’s in the business’s interest — and therefore to their benefit?”). More experienced managers will say something like “oh, the rank and file don’t like change.”

Slap points out that both these frames are inaccurate. A more accurate frame is that an employee culture hates the loss that change represents, which is really the loss of the known.

Your culture used to know its job; now you’re changing that job, and it has to relearn then re-earn its competence. Your culture used to have relationships it understood and could depend on; now it’s being reorganised and it doesn’t have those relationships. Your culture used to understand its compensation; now there’s some fabulous new bonus program, but the culture doesn’t know what it means when it earns it and, more important, when it doesn’t.

Slap points out that there are two common reactions when he talks about this. First, company executives will say things like “We don’t have a problem with change. Must be why we’re senior management.” To which he points out that it’s a lot easier to deal with change when you’re the folks who invented the change in the first place, and it’s a lot easier to accept change when you decide to change only when you’re ready for it. (To which I’ll add: we’ve seen how well leadership deals with change when it’s forced by the market — 2020 global pandemic, anyone? Nobody likes it when they’re thrust into the unknown.)

The second reaction Slap gets is “well, we don’t have that problem here — when we do changes, sure our folks don’t like it, but then they get used to it and we don’t hear about it.” To which Slap writes: “That’s right. You don’t hear it anymore. It’s all gone underground to the employee culture, where management can’t hear it anymore. Meanwhile, the culture has activated its guerrilla networks and is blowing up bridges …” More concretely (emphasis mine): “should your company not have a lot of tolerance for a candid cultural response, you may not hear about it directly. You may not feel the resistance directly either: it could be revealed by a subtle lack of speed, uniform action, and discretionary effort.”

So what do you do? Again, keeping to the analogy of “think of your employee culture as an information gathering organism who wants to guarantee its survival”:

1. First, explain what isn’t changing. To reduce the negative impact of change, you must explain to your culture what isn’t changing. If you introduce five PowerPoint slides that say “this is changing”, follow it up with ten that say “And here’s who we have always been, here’s who we still are, and here’s who we will always be.” You may talk about uncompromising consistency of product focus, quality standards, customer relationships and anything else that qualifies as stable. This anchors the culture in what it already knows about how to survive and thrive in your org.
2. Second, sell the change like a consumer product. Marketer and consultant Geoffrey Moore has this thing where he categorises consumers as innovators, early adopters, early majority, late majority, and laggards. Loosely speaking, adoption of change in an employee culture follows a similar pattern. Slap recommends that you ask managers to identify and target the early-adopters in your culture, and get them to be the disciples of the change. (If speed is of the essence, you may even ask for support from these folks). It’s a lot easier for the culture to listen to members of the culture; in this way you can introduce a change and then reinforce it with positive examples within the employee base.

Sin 3: Plenty of Management where Leadership is Needed

This is a difficult chapter to summarise, first because it touches on ideas that seem over-discussed and trite, and second because it is — in itself — a summary of Slap’s first book: Bury My Heart in Conference Room B.

I’ll try my best to describe the ideas here, but if you’re curious about how to actually accomplish this, I recommend that you buy Bury My Heart (with the warning that it is a challenging read) or you hire SLAP Company to run the program for you.

Also, please refrain from rolling your eyes.

The short version is this: under pressure, an employee culture is most susceptible to true leadership. True leadership can compel employees to go above and beyond rational commitment. It consists of two ideas:

1. The primary purpose of leadership is to change the world around you in the name of your values so you can live those values more fully.
2. The primary process of leadership is to turn your values into a compelling cause for others so you can gain resources to help you do that.

Bury My Heart is a way to get true leadership from your managers. It is very difficult to do, and demands a massive amount of vulnerability from managers in front of their direct reports — and before you roll your eyes, I should note that Bury My Heart got Slap in trouble with no less than Bill Gates and Steve Ballmer at Microsoft in the early 2000s. (I’m not kidding — this is the sanitised, public version of that incident; Slap told me that living the events was more inspiring … but also more terrifying.)

The core idea goes back to the conception of ‘an employee culture is an organism interested in information related to its own survival’. A culture is very interested in how you — as manager, as its direct boss — behaves under pressure. If your team can understand what drives you, where you come from, what your values are and where your foibles are likely to lie, you are predictable, and it is more willing to follow you into battle. Bury My Heart is a structured process designed to have managers discover, accept, and then explain their values and their personal histories to their peers and subordinates in an extremely costly way — after which they publicly commit to upholding those values even when it goes against company mandate.

This accomplishes two things: first, it achieves employee commitment (how can you not follow a leader who commits to living their values in front of you? — assuming, of course, that they actually do it and they’re not sociopaths). But it also achieves managerial commitment to the company. A manager that does not compromise on their personal values in favour of company mandates is a manager that will not need to detach themselves to protect their own psyche.

In the Microsoft example above, the full context (as I understand it) was that head of worldwide sales Orlando Ayala felt that he — and the sales organisation he led — was not able to live their full values as fundamentally good people, in a company that had been under siege for years — and portrayed as evil — given the landmark United States v. Microsoft Corp anti-trust case in the early 2000s.

Ayala brought the issue up with company leadership at a Microsoft strategic planning offsite, in front of Bill Gates and Steve Ballmer, when nobody expected him to do so. And he was convinced to do this after a two-day Bury My Heart workshop.

I’ll stop my summary here — again, it’s probably better to just read the book if you’re curious as to what it takes. A word of warning: unlike Under The Hood, Bury My Heart is challenging because the ideas seem so trite even if the program is not; Slap spends half the book piling on argument and social proof in order to convince you of the approach, before he starts on the meat of it.

I can vouch for the book though: it’s not trite. And Slap tells you how to live your values even if occasionally you have to live with conflicting company diktats.

Sin 4: Say What? Communicating to a Culture

How do you communicate to your employee culture? In a previous section I asserted that you can communicate to it by talking to it, but in truth this is not that effective. (Which isn’t to say that you shouldn’t do it; only that you should have the right expectations when talking to the culture). A culture is best communicated with through consistent, costly actions. Slap calls this ‘deliberately creating cultural legends’.

To set the stage, let’s first discuss what a ‘normal’ reaction to management communication might look like:

1. The default cultural reaction to most communication is cynicism. Slap writes that this is normal: Cynicism doesn’t mean your employee culture doesn’t care. It means that it hurts to care. Using management weasel words (‘strategic reduction in force’, ‘right sizing’, ‘realignment’) is so common in business life that it’s no surprise that such language reinforces employee cynicism. So, first: use simple words whenever possible, and second: expect some amount of quietness when communicating with your culture.
2. Why the quietness? The answer is simple: the organism is fundamentally conservative. It is waiting to see if you back up your words with actions. It is watching for consistency. It pays attention to the order in which you talk about things. Slap writes that you should respect the reluctance and accept the cynicism, even if you don’t necessarily like it.
3. Apathy, on the other hand, is the dangerous thing. A sign of that is total, sustained silence: “Cultural silence is a protective organisational response that could indicate big mistrust of you or the company. If the relationship with the company or its management is perceived as incurably erratic or autocratic, what’s the point in the culture contributing to the dialogue?” It’s normal for an employee culture to be restrained or quiet. But it’s not normal to go completely silent.

But all of this is just setup for the big thing. Slap writes (all emphasis mine):

There are a lot of ways to communicate with an employee culture. Oddly enough, directly isn’t the best. The best way to talk to your culture is to get it to talk to itself.

An employee culture communicates through legends—true stories that can be transmitted immediately within the culture, stored for quick retrieval, and even bequeathed to the next generation. A story attains legend status when it serves as a clear proof point about the culture’s survival or emotional prosperity. Legends are a carefully vetted and curated database and the culture’s most protected asset.

A culture legend will reliably happen whenever you do something significant to protect or violate what you say is most important. Once the culture perceives that as credible and telling, it will communicate it among its own population. A legend is spread rapidly and completely. It’s listened to carefully, taken seriously, and considered true by everyone, although the irony of cultural legends is that something has to be exaggerated to be believable.

That’s what becomes a legend—something prominent enough to be worth adding to the survival database. Yet one of the remarkable things about cultural legends is that the legends themselves aren’t exaggerated at all when passed from one employee to another.

It is at this point that we have language to talk about what Bezos was doing with the door desks, or with fulfilment centre TVs. He was creating cultural legends.

How do you do this? One common answer is that your actions have to be costly. But as the cases above demonstrate, that’s not all there is to it. Business leaders who are good at legend creation understand that there is a far richer palette to work from. Slap writes (again, all emphasis mine):

This is a matter of deliberately causing cultural legends that reinforce what you want from the culture: in essence, writing the script the culture reads to itself when considering what behavior will best impact its survival and emotional prosperity. A legend is information inserted by the culture into the pipe that flows dependably into its own belief system. A culture’s obsession with its own well-being ensures that it will adjust its behavior to take advantage of any information it perceives is beneficial.

Your employee culture will give you all sorts of indications of its true perceptions. You just have to know how to read them, which is a whole lot easier if you’re the one who wrote them.

Grand acts alone won’t convince your employee culture of anything. A culture is focused on its survival and so it places a premium on consistency—it’s looking for a pattern of management behavior, so the small things in between the big things are most important to the culture in gauging dependability. However, legends are critical to getting the culture’s attention and creating awareness of linkage to important management behaviors that might otherwise go unnoticed.

That last sentence reveals the core structure of the practice: you have to explicitly call out the link between the legend and the message you wish to communicate.

There are two ways you may do this:

1. Declare what is most important to you, then prove it with something memorable.
2. Prove it first, then retroactively point out the linkage between what you do and what you value.

Both methods can work, but the former is more expedient. The key is to actually mean it: you want to create a legend around something you’ll support intuitively, rapidly, and consistently. On top of this, you may have to repeat the linkage a few times — and then talk about the core value again, and again, and again. This repetition is counter-intuitive to most folks — we’re not used to saying the same things so many times. Slap writes, reassuringly: “Your culture won’t think, ‘We’re hearing this again, and it’s patronising,’ It will think, ‘We’re hearing this again, and it could be valuable.’”

The actual legend creation has to be memorable. Slap recommends having one or two ideas in your back pocket. Memorable here might mean costly, but it can also mean provocative, profound, unexpected, never-thought-we’d-see-it, or sometimes flat-out loony. Here’s a sampler from Under The Hood, as told to Slap by Tom Mendoza, former president of NetApp:

“Another time I was in Singapore and I got a call from the person who ran the North Carolina division, where we run three shifts, and we’re having some motivational issues on the late shift. Could I come out there sometime in the next few months? I looked at my calendar and I realized that unless I go now, I can’t. I’m in the club that says Singapore Air, and so I said to my admin, ‘How would I get to North Carolina?’

Unfortunately, there’s not a Singapore—North Carolina shuttle service. I flew home seventeen hours to L.A., changed, repacked, and took the red-eye right out again. As people were getting off their shift, I was standing there the next day. And I spent, I’d say, eight hours speaking to groups of fifty every forty minutes—so almost every person. Just talked and listened and let them see me. And the next day, I was in New York City for meetings.

And here’s a case about Jeff Bezos’s reacting to some flatscreen TVs he found in Amazon’s fulfilment centres:

Whenever Jeff Bezos roamed a fulfillment center or his own Seattle headquarters, he looked for defects—flaws in the company’s systems or even its corporate culture. On an otherwise regular weekday morning in 2003, for example, Bezos walked into an Amazon conference room and was taken aback. Mounted on the wall, in a corner of the room, was a newly installed television meant for video presentations to employees. A TV in a conference room did not by itself seem controversial, yet Bezos was not pleased.

The installations, which he had not known about or authorized, represented to him both a clumsy attempt at interoffice communication and an extravagant expenditure. “How can anything good be communicated in this way,” he complained.

Bezos had all the new televisions in Amazon’s conference rooms immediately removed. But according to Matt Williams, a longtime Amazon manager, Bezos deliberately kept the metal mounts hanging in the conference rooms for many years, even some that were so low on the wall that employees were likely to stand up and hit them. Like a warlord leaving the decapitated heads of his enemies on stakes outside his village walls, he was using the mounts as a symbol, and as an admonition to employees about how not to behave.

The television episode was the foundation of another official award at Amazon, this one presented to an employee who identified an activity that was bureaucratic and wasteful. The suddenly superfluous televisions were given as the prize. When the supply ran out, that commendation morphed into the Door-Desk award, given to an employee who came up with “a well-built idea that helps us to deliver lower prices to customers”—the prize was a door-desk ornament. Bezos was once again looking for ways to reinforce his values within the company.

To link these two examples back to Slap’s core model of employee culture, Mendoza’s legend worked because it demonstrated — through some costly actions! — that the company president cared for its employees. Bezos’s case worked because ripping the TVs out like that contained information necessary for the continued prosperity of the employee culture.

(You can almost imagine an employee looking at the bare mounts and thinking: “I better not spend the company’s money frivolously — or the hammer will come down hard on me!”)

Sin 5: Pay What? Compensation and Culture

One thing that I like about Slap’s model is that it also has useful things to say about compensation.

Many companies believe that how much you pay employees is key to getting employee commitment. The thinking goes: the better the pay, the more loyal the employee base. And boy have we seen this experiment play out. Over the past 15 years, from 2008 through to 2022, tech companies have been extremely willing to spend boatloads of cash on employees. The premise was that if you paid folks well, removed every worry in their world, pamper them with on-site massages and free transportation and chef-cooked meals, employees would be free to do their best work and would remain loyal to the company.

And yet this has clearly not worked out.

Slap is well aware of this, and in fact has had a front row seat to this experiment: his firm is based out of San Francisco, and Slap has spent the past two decades working with the who’s who of tech companies. He writes:

The war for talent rages on today, as companies seek to secure top performers in a hypercompetitive market, but it’s not the first time it’s been fought. It happened first about fifteen years ago and was waged mostly by the information technology industry, where the impact of individual contributors is considerable and runaway growth required runaway head count to keep pace. To recruit and retain, IT companies slathered money and stock options on people.

(…) Many employees became multimillionaires; some of my company’s IT clients had problems with a chronically absent employee culture. People weren’t calling in sick; they were calling in rich, when managing their multiple new rental properties couldn’t be done within a one-hour lunch break.

And yet all that money didn’t ground these employee cultures to their companies, didn’t halt turnover, and didn’t sustainably increase productivity. Instead, people became day traders with their own careers, moving in a constant, restless search for the next-highest bidder to whom they could pledge temporary allegiance. A new class of migrant workers was born: The Beaujolais Nouveau of Wrath.

This was because the critical signals linking money to meaning were missing for the employee culture. Fat as it was, compensation was treated by these companies as a commodity, so their cultures treated it like a commodity, too. During this same time, we also had clients who operated good companies in more traditional industries. They initially despaired at being unable to fete their employee cultures in a competitive fashion but found that giving the most they could and attaching dependable linkage between performance reinforcement and safety meant the cultures didn’t feel diminished and didn’t give diminished loyalty to their companies (emphasis added).

So how should you think about compensation?

The answer Slap gives is fairly straightforward, even if execution requires a lot of thoughtfulness: an employee culture wants to know how to survive and thrive. Compensation is a huge signal to that end. So compensation is most effective when it’s designed to give meaning. And the meaning in this context isn’t in the amount spent, but in the sense that the company cares when it’s rewarding employee behaviour.

Or, as Slap argues: “Most compensation systems focus on money. The better ones focus on what money buys. The best ones — that deliver maximum cultural impact — focus on what money can’t buy: security and a sense of self.”

How do you do this?

We’ll look at some examples in a bit, but the rule of thumb is to approach cultural compensation like marketing: a constant effort to engage and differentiate, with an understanding of the values and beliefs of your employee base. Assuming that you can pay above a certain minimum bar to be competitive, what matters is not how much you spend, but what that spend means in the context of the culture —which is good news: if you cannot afford to spend big on benefits, you can make it count by showing that you care, and demonstrating to them that they are valued.

Slap has three big categories of ideas here:

1. Focus on what money can’t buy.
2. Show obvious effort and creativity.
3. If you’re betting big, go big.

And he demonstrates some of these ideas through example. Let’s go through these in order.

Focus on what money can’t buy

Compensation should match the principles and personality of the company. This can get very wacky:

Use compensation to reinforce results, but don’t just reinforce the actual achievement; reinforce also the spirit in which it was achieved—celebrate how, not just how much. If results were consistent with the character of your company and your culture made an obvious effort to protect or advocate that character on the way to reaching the goal, pointedly overreact by increasing reinforcement from what it would have been for just meeting the objectives any old way. This will be an energy-producing signal to your culture that the character of the company matters and your return on the spend will be greater.

Slap’s next idea is to extend the impact of compensation:

• Ensure a connection between those who get top performance reinforcement and the security of their jobs (which … should exist anyway, and usually does — but can be destroyed when a corporate reorganisation washes out good folks with less visible profiles.) This requires better comp-setting systems.
• Include life goals with performance goals — especially if you expect your employee culture to protect the business as if it were life itself. These include things like imbedding learning goals, or personal values satisfaction goals into an employee’s OKRs.
• Erect a huge Heroes of the Company monument where any employee whose over-the-top act that protects what the company stands for gets their name etched into forever. Put that monument either in the executive offices where the leaders will see it, or in the lobby where customers, vendors and job applicants will see it. Give these folks different business cards that invites conversation about their special status; upgrade their workspace that makes it clear to their peers their value; give them special, beautiful awards that they can display prominently on their desks or at home. (See, for instance, the special Anniversary Awards that tech giant Apple gives to long-term employees, which the company spent two years working on. Also note how Apple took the time to make a statement to a public website: “Staying true to Apple’s commitment to the environment, the awards start as remnants from the production process, using the same metals and the same iconic colours as our products …”)
• Use job recruitment collateral to talk to prospective new members about the existing culture. This is a good excuse to admire and honour employee culture — Slap writes that the standard to aim for: “printouts of your recruitment advertising should be good enough to be posted on office walls by people who aren’t applying for a job with your company but who fantasise about being treated that way by their own company.”
• Include an employee’s family in performance rewards. At the very least, send them a letter thanking them for their support (said employee likely sacrificed in order to give the company extra effort, and their families helped with that sacrifice). But better still, if a special accomplishment is being formally celebrated, extend an invitation for their family and friends to attend. If you’re giving them an award: ship it to their homes so that they can open it in front of their families and display it on the wall.

In the book, Slap interviews Costco’s Jim Sinegal and Craig Jelinek, which is captured as a case here:

CRAIG: I watch this all of the time, in every country we do business in. My attitude is, we don’t want to just be better than every other retailer in Mexico, as an example. We want to be Costco in Mexico. That means we pay thirty percent to forty percent more than any other retailer in the country. And I know some say, Hey, you don’t have to do it. But we want our entire employee culture to understand that we’re not going to try to lower wages every time we get the chance.

CRAIG: I’m big on respecting people. What it gets down to is that you have to build trust with your employee culture by trusting it. If you build the trust, then you build the people, and good things are going to happen.

It’s been very successful for us.

JIM: To answer your question, Stan, we feel that we have a responsibility to make sure that our employee culture feels secure. That it can sleep at night.

Fulfilling this responsibility is how I sleep at night.

As mentioned earlier, all of this is akin to marketing to the culture, and it is worth taking seriously.

Show Obvious Effort and Creativity

Here Slap begins to seriously knock it out of the park. I guess it says a lot about me: some of these ideas I’d never even considered.

For starters, in “leverage their discretionary income” Slap writes (bold emphasis mine), “start by actually asking your employee culture what it wants — not money, but what money buys and what it can’t.(..) You can focus your employee culture’s input by asking it to respond in price, lifestyle and personal values categories, like family, health, adventure, home and learning. These can be translated into perks like family activities, adventure travel, self-development lessons, home improvement, and yoga classes.”

When I was running my last company, I did not think of rewarding based on personal values categories. This seems so obvious in retrospect.

Slap continues: you can also start thinking of your employee base as a consumer population to others. Choose retailers who sell items that your culture covets, or restaurants that are a regular haunt. Tell them that you will encourage members of your culture to head their way if they agree to provide exclusive discounts.

One step up: provide a proprietary company ‘credit card’ — a debit card identical to the look of a credit card, and periodically load the card with funds to pay for special pre-negotiated perks, linked to whatever the material goods or activities the culture says it covets.

The point is the effort. Slap writes (all emphasis mine):

If you devote obvious creativity and concern to compensation, that effort is a major perk for your culture. So make sure that you aim to surprise and delight with the rewards you load onto the cards; keep them fresh, unusual, and hysterically exciting. Don’t just offer tennis lessons through the card; offer circus trapeze lessons. Don’t just offer a meal at a coveted restaurant; include one of everything on the dessert menu. If your company has the resources, show the power of the mighty enterprise to make the fantastic happen. Everything and everyone is available for a price: Your Fortune 500 company can get Duane Allman exhumed for your 50th birthday.*

* We have orchestrated all sorts of insane perks for our clients’ employee cultures, including two weeks’ stay at Mick Jagger’s beach house; hiking through the Costa Rican rain forest with five ex-Playboy playmates; invites to the hottest Oscars, Tonys, and Grammys after-parties; into the pit and onto the track at Le Mans; golf lessons from Tiger Woods’ coach; home dinners by Michelin-decorated celebrity chefs—at your home or theirs; and band party with front-row seats at Bruce Springsteen’s annual private concert at his old high school. Everything and everyone: available.

Which … what?

And then: localise performance reinforcement, which comes with this lovely story:

My company recently conducted a cultural audit of one of our global clients to determine its employee culture’s willingness to support new performance goals. The positive response from their employee population in Bangalore was so much higher than the rest of the company that we had to back it out from the mean score to get an accurate company picture. What was happening in India? The company was offering zero-interest loans for weddings, days set aside twice a year for employees to bring their entire extended family into headquarters for a visit and special presentation, free use of loaner cars, and community outreach that included food distribution and sponsoring of local high schools with technology days and support. These things may have resonated in New Jersey, too, but they evidenced an especially precise understanding of what is important to an employee culture in Bangalore.

Wow!

If You’re Betting Big, Go Big

And here Slap just goes off:

If your company is depending big-time on the success of a new strategy, goal, or focus, the reward should be big, too — legendary for its creativity and empathy (…) As an example, offer a bonus in four parts — the winner or winners get all of them — and make it big: depending on your budget, from $2,500 to $5,000 to spend in each category.

And then he breaks these four categories down:

• Big for them: winner’s choice from a list of categories, the point is to make it personally indulgent. Categories include things like clothes (gift certificate to their favourite store), music (any instrument or recording device), lessons (yoga, circus trapeze?), auto (any car accessory or improvement)
• Big for family and friends: winner’s choice, again from a list of available categories. The point is to share the reward with close friends or their home. Categories: include home improvement, houseboat vacation for their family and friends, spectacular activities with their kids, best seats at the best restaurants, tickets to sports events.
• Big for the world: the goal is to allow them to impact the less fortunate. Categories include: donation to charity in their name, scholarship to underprivileged in their name, billboard with personal (company approved) social message.
• Big for the company: winner’s choice, from a list of available categories to address the highest level of management of their choice within the company. The point is to allow them unusual direct access to provide their POV. Buy-in of the content is required, and includes: the opportunity to address the board of directors for fifteen minutes at the next meeting, opportunity for a thirty minute meeting with the president of the company, opportunity for a thirty-minute presentation or Q&A to entire C-suite at its next meeting, opportunity for a one-hour meeting with their choice of executives, or opportunity to write an article for the company’s external website.

He tells the following story (on presenting to the board) in the footnotes to the chapter, which I’m including here because I loved it:

A good board wouldn’t hesitate to make some time for a presentation from a member of the employee culture—direct access to the ideas and concerns of the culture would be important to those directors. I was on the board of a sports clothing company called Patagonia for many years, and one of my fondest memories as a director was deciding the special bonus granted the company’s receptionist. His name was Chip, and as a first point of entry to the company, he was an ideal representation: an award-winning athlete with a contagious personality. He had famously answered a customer who had called corporate headquarters to bemoan the destruction of an expensive new Patagonia outfit by her cat. “What should I do?” she asked. “Get a new cat,” Chip advised without hesitation. We gave him $10,000.

In each of these stories, and with each of these ideas, Slap is demonstrating that it’s not how much you spend that matters. In the grand scheme of things, tickets to a sporting event or a Taylor Swift concert or a great seat at a hot restaurant won’t cost that much — either to the company, or over the lifetime of well-compensated high performer. It’s the effort and the thought that the company puts into the reward that will stick.

And what about companies that can’t afford that much? Here, Slap writes (emphasis mine):

Before there was ever a profusion of VC-funded and IPO-imminent start-ups to work for, employee cultures stood by their small companies that had mighty missions and family-like intimacy. Even if the companies didn’t have a lot of money to lavish on them. Whatever the culture got meant more because it cost the organisation more to give.

Same as it ever was today. Trust, the sources of cultural energy (context, predictability, sense of self), and above all — safety — are the messages compensation has to send to your employee culture. Some companies can make grand investments to create this, but there are plenty of work-arounds if you can’t.

(…) Here’s where creativity and effort are most needed but also most telling. If you can’t afford the best total insurance package, you can afford to help your people be healthy. If you can’t afford the employee development, you can afford to have everyone in the company teach what they know to others. If you can’t afford the company cafeteria, you can afford to ensure that treats are constant and are painstakingly selected to be the best. If you can’t afford to stuff everyone at a company Christmas party, you can afford to sponsor a competition to let people and teams bring their own best recipes. If you can’t fund your own charitable foundation, you can afford to pick smaller charitable concerns or start your own, and allow a day or two paid leave to help your culture make a difference in person. If you can’t afford the sabbaticals, you can afford to give birthdays off, create an unusual annual holiday, or allow your employee culture to nominate its own.”

At the risk of invoking a cliche: the thought really counts.

Sin 6: Asking for Too Much Trust

Of all the chapters in Under The Hood, Sin 6 delivers the most surprising recommendation: try not to explicitly declare your company values.

Yes, I can already see your eyebrows going up. Yes, this is coming from someone who sat on Patagonia’s board — one of the most mission-driven, values-forward companies in the world. A little explanation is in order.

Fundamentally, why do companies declare values? They do so because they want to mould employee behaviour — earnestly in the best case scenario, and aspirationally in the worst.

Do some companies live their stated values? Yes — a select few. Do many companies violate their own stated values? Of course — witness the widespread cynicism about corporate values. So if some companies can do it well, even taking into account the difficulty, why does Slap advise against corporations listing their values?

The answer: because doing so is the easiest way to lose the culture’s trust.

Slap opens his critique by questioning the very premise of the practice (all emphasis mine):

Companies don’t have values; people do. Every classic definition of values is that they are deeply held personal beliefs. In an organisation with legitimate values, the person at the top brings their own values to work and insists that others be allowed to do the same. Common values rise to the surface; they define how people inside of the company are treated and spill over to how people outside of the company are treated. It’s a seamless, organic process.

And so Apple under Tim Cook is different from Apple under Steve Jobs; Amazon under Andy Jassy is almost certainly going to be different from Amazon under Jeff Bezos. The values of the leaders at the top are different; the values of the humans that make up the company below them are almost certainly going to reflect that.

To make things worse, living up to explicitly declared values is hard stuff. To do values well, you have to do so many things right over such a long period of time. Slap includes a litany of ways a values exercise may fail:

1. The values are posted as fact on websites and wallet cards, but are in fact aspirational statements, unregulated and unattached to performance realities.
2. The values were decided by a committee that hammered the passion out of them to reach consensus.
3. Company values bear little resemblance to what the culture perceives are the personal values of the CEO or the C-suite.
4. Senior management doesn’t constantly talk about values, because coming up with them was the act of completion.
5. Those who ignore the values, including major revenue generators, are allowed to stay in their jobs without consequence or are buried elsewhere in the organisation.
6. The company constantly celebrates what was done as most important, not how or why it was done.
7. There is no institutional support for what is considered most important — it is not systematically imbedded and reinforced, and there are perceived risks and restrictions to acting in the name of the values.
8. There is no authorisation, even unstated, assuring the culture that it is safe if it acts in the name of the company values.
9. How the company represents its better self is inconsistent with how it talks privately about its products and customers.
10. Supposedly sacred internal values are used as external advertising messages, and are then replaced by other advertising messages.

Slap doesn’t say this in the book, but in conversation with me he is unequivocal: Unless they’ve already done so, we tell clients NOT to do corporate values. Just don’t do it. Take whatever they want to do with values and call it ‘obsessions’ instead.

‘Obsessions’ can change; values can’t. Obsessions take the weight off company leadership. Obsessions get treated differently: both by the culture, but also by the managers who have to sign off on it. Slap writes (and I find this remarkable — all bold emphasis mine): “My company is often asked to determine the true state of a client’s employee culture. When the culture is negative, one of the first things we look at is where its current critical perceptions were formed. This is most often traceable to a belief that the company declared values and failed to protect them. When the employee culture is in great shape — most willing to support a company plan — we find that it admits to being unaware of what the stated values actually are but is confident that the company will defend them.”

There are three additional actionable ideas in this chapter, assuming you buy Slap’s arguments:

1. Probe values, don’t declare them. This is a natural extension from “common values will rise to the surface”: if you believe this, then your job is to probe for those values periodically, not declare them. Regularly ask your employee culture what they think the company’s values are likely to be. If you find something you don’t like, recalibrate policies or decisions to bring them into alignment.
2. As a a manager: ask for trust a little bit at a time. If you’re in middle management, your job isn’t to establish corporate values. Your job is to hit performance goals despite any cultural climate of skepticism. There are two principles Slap has to offer here: first, use a staged call to action (promise a little bit first that you can deliver), and second, sanction the inevitable (tell your folks to expect certain things that will happen — even if it’s bad for them). To make this more concrete: start by promising your reports several things that — over a short period of time — will definitely happen in the name of the latest plan. And then promise a couple of things that — over a short period of time — will definitely never happen in the name of the latest plan. Then come back after both have become true to negotiate for more trust. The culture, eager for more information to help it survive and thrive, is highly likely to give it to you.
3. As a culture: trust it to be trusted. If there’s a trust breakdown between leaders and employees, it’s probably a good idea to demonstrate to the employee culture that it can be trusted. Slap writes: “One of the simplest ways [to reconstruct trust] is to give your culture a greater feeling of being trusted. Your employee culture may disagree with you about how to stop a problem or create success. Maybe you’re right (…) maybe your culture is right (…) find out by agreeing to a short pilot period within a small organisation. No matter what happens, you will have risked little and gained a lot.”

And — whatever you do — to preserve trust, stay away from explicit corporate values.

Sin 7: Big Kickoff, Little Payoff

Most companies handle the introduction of a new strategy pretty well, promoting it big and hard at the start. If the company is a large one, the expense spent on the kickoff meeting for a new strategy can be immense: superb production values, all-expenses paid flights for employees from all around the world, staging and effects comparable to a top-tier concert.

The problem of course, is whether the employee base actually executes the strategy. Slap sets up the problem like this (emphasis added):

Your employee culture may indeed respond to your goal introduction with enthusiasm, but never assume that has given you dependable cultural endorsement. The danger is that you have gotten typical buy-in, which means your culture agrees that it’s a smart idea and could sell it to others. This is different from cultural buy-in, which means your culture has bought it and is committed to protecting it, course-correcting it, and representing it enthusiastically with its own good name.

It’s a false positive: agreeing with something and buying something are not the same things to an employee culture. Cultural buy-in requires your employee culture to believe that the strategy will last awhile, that the risk-reward ratio is palatable, that it has the tools it needs to get this new job done, and that what executives say in big speeches usually comes true.

You are presenting serious goals, yet your employee culture will take them seriously only if you can provide that which is almost impossible: clarity about each step forward. How can you do that? You have to announce the thing at some point to gain the culture’s focus that will begin to move it forward, without yet knowing the benchmarks, table stakes, metrics, resources, competencies required, or the circumstances you’ll encounter along the way. This may be reasonable to management, but without this definition the employee culture will perceive the strategy as rushed and airbrushed.

Management is busy and can’t be expected to know every tactical step that follows the announcement of a new strategy, but your employee culture doesn’t always know this. The problem with selling a big initiative to an employee culture is that the culture has never created one itself. If it thinks a strategy is wobbly at the outset, it assumes the goal will follow a predictable pattern of uncertain in six days, forgotten in six weeks, and replaced in six months.

So what to do with this problem? By this point in the essay you might be able to guess the solution: find a way to provide safety to your culture, and you’ll be able to win the support you need.

Slap gives you three ideas here:

1. Forecast the choice points. Over the next 90 days, your employee base will arrive at decision points where they have to support new goals and behaviours over old goals and behaviours. Explain where these choice points will lie, and which are the right, safe paths to take. Review and update every 90 days or so, until it’s clear that the strategy has taken.
2. Forecast the choke points. Over the next 90 days, your employee culture will be placed in situations where there’s no clear choice between deciding on behalf of the new strategy or the old. These are impossible situations, where someone will be unhappy with the decision. Explain where you think such ‘choke points’ will occur if you know them; if you do not, just say that they are likely to occur. Either way, the goal is to assure your culture that it’s safe to raise a hand for help in those circumstances — management will understand that the culture is seeking clarification in order to execute the change.
3. Forecast the safety checks. Make it crystal clear what the culture will definitely be doing if it were acting correctly in the name of the new strategy, by the end of the next 90 days. Make these ‘safety checks’ behaviours or actions that the culture can use to obsessively self-monitor to assure itself of safety, without asking management.

The best part about this approach is that you don’t have to do this up front for the entire scope of the new strategy. The point is just to “light the road a few months ahead of time and keep updating to stay a few months ahead.” Rinse and repeat all three practices every 90 days, until it’s clear the strategy has taken.

(This, uhh, assumes that the strategy is the right one. But if leadership decides to go back on the strategy in a year or so — execute the idea in Sin 1 where you have to explain to your employee base why you unmade the decision.)

The impression I get is that you’re leading an extremely paranoid, somewhat conservative, very cynical organism down an uncertain path, but that’s ok: the way you do it is by reassuring them that each step along the way is solid and real, you’ve thought things through and explored a few steps ahead, and you’ll all get to the promised land together. You are — in the words of Chinese leader Deng Xiaoping, on the event of modernising China — “crossing the river by feeling the stones.”

Wrapping Up

I should remind you that there are four more chapters in Under The Hood that I’m not including here, that you may want to read if you find yourself in need of specific advice. These are the ‘Four Vulnerabilities’, which is Slap’s name for the four scenarios in which managing employee culture becomes super important:

1. Scaling a great employee culture as your company grows rapidly.
2. Keeping your employee culture united during M&A.
3. Eliminating cultural complacency in a competitive marketplace.
4. And finally, maintaining cultural commitment under pressure.

For now, let’s take a step back and talk about what we’ve just examined together.

At this point you’ve probably noticed that you’ve come across many of Slap’s ideas before — and you’d be right: most of the practices that he recommends are not new, and were not invented by him. For instance, as we’ve seen throughout this essay:

• Jeff Bezos knew how to create legends from relatively early in Amazon’s life.
• Andy Grove experienced the difficulties of employee cultural resistance when attempting to change Intel’s direction.
• It’s likely that you’ve recognised other practices from other managers who have done similar things as you’ve gone through this summary.
• Plus you’ve probably read, like I have, good critiques of compensation practices in big tech in the late 2010s, arguing that things have not worked out the way folks thought it would. Some of these critiques have excellent recommendations attached as alternatives — ideas that echo Slap’s.

All of this is correct, and yet I think Under The Hood gives us something valuable.

Slap’s book is notable to me because it’s the first time I’ve encountered a coherent model for this skill, and one that’s been tested amongst the who’s-who of modern companies. A coherent model is useful: it allows you to predict which practices are more likely to succeed, it gives you the ability to diagnose problems, and it gives you a shot at coming up with new practices of your own, the way that Bezos and others did in the respective cases we’ve listed in the Managing Employee Culture concept sequence in Commoncog’s Case Library.

Years before I found Slap’s work, I once argued to my managers that getting an org to take on a new practice is a bit like training a dog: you tell it what to do, praise it when it does it, and call it out when it doesn’t. After a couple of cycles where you do this consistently, it takes on the new behaviour: viola! You’ve trained your org! (When I told this to Slap, he told me this was a little insulting to an employee culture, which is a lot more intelligent than a dog!)

Years later, I realised that a more useful model was that an organisation was really a ‘complex adaptive system’ — that is, a network of components with no central control exhibiting complex emergent behaviour, sophisticated information processing, and adaptive learning. (Think: a swarm of bees, or a flock of geese, or a … traffic jam). This was good — and accurate — but still not useful. In truth, it is difficult to reason about something so abstract as a complex adaptive system when you’re busy running a company.

Plus, what about all that sophisticated culture-modifying behaviour that you’ll observe in business history if you know what to look out for? Bezos’s legend creation bugged the hell out of me — as I wrote in the introduction: what was this skill, and how do you get good at it?

Reading Under The Hood was finding the answers to all my questions in one place. I find Slap’s model tractable. It’s difficult to reason about a complex adaptive system. It’s easier to reason about a single organism. And it’s easier still if you boil the organisms’s purpose down to “self-protective behaviour” — you’ll notice that everything Slap recommends ultimately reduces to providing safety, predictability, and a sense of self to the culture.

Under The Hood is a good book. It’s not a terribly long read. And it tells you the shape of what you need to know. Or, to put this slightly differently, it gives you the foundation to get good at a skill that seems so mysterious and so hard to define at the outset.

Recommended.

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Note: find out more about Slap Company here. Read the sequence of cases on Managing Employee Culture over at the Commoncog Case Library.

Originally published 13 November 2024, last updated 13 November 2024.