Paul Stannard was sick of hiring employees and then having to fire them within a year.
“I felt like I was just rolling dice,” he says. “I would hire someone who would seem to have all the right qualifications, and then it was evident pretty quickly that the person wasn’t a good fit. I could have thrown darts at a dart board and probably had the same success rate.”
After consulting with executive organizations, the founder and CEO of SmartDraw.com learned that his software company had a firmly entrenched competence culture and that not everyone is wired to succeed in that environment.
Since refocusing his efforts, Stannard has reduced his turnover and grown SmartDraw to 2007 revenue of $11 million.
Smart Business spoke with Stannard about how to keep employees who fit your culture and why sometimes the only option is to clean house.
Q. How do you create a culture in which employees are empowered?
The corporate culture is a total reflection of the CEO, which is me. It’s just the way I am — maybe to a fault. Once I have confidence in someone’s abilities, I’ll basically just give them the reins of what they’re doing and assume they’re going to go off and take care of it. Now, I’m pretty unhappy if they don’t.
There is a name for this: What we have at SmartDraw is called a competence culture. A competence culture is one where the power is with the person who has the most competence in the area we’re talking about. It’s not a hierarchical culture.
If we’re talking about trying to improve shipping, the shipping guy who does this every day [so] everyone in the room is listening to what he has to say. That guy has the expertise, so he’s the one everyone is listening to.
It doesn’t matter what the hierarchy of who reports to who is. So if we’re talking about software development, we’re listening to the software developers.
That’s a competence culture, and the cardinal sin in a competence culture is to not have that competence. If that competence is lost, if the person knows what they’re doing, they’re gone.
If you’re a person who feels confident about what you do, and you have expertise and you want to be able to run with it, SmartDraw is a great place for you. If you are a person who is not all that good at what you do and it comes to light, it isn’t a great place to work and you won’t be here very long.
In that sense, it’s a sink or swim sort of thing.
Q. How could a CEO change a company from one with a hierarchical culture to one with a competence culture?
Fire everyone and start over. There has actually been some psychological research on this. It is virtually impossible to change a company’s culture because it becomes ingrained in everybody that works there.
The only way a culture is ultimately changed is if it is forced from the top and eventually all of the people who were comfortable under the old culture either are fired or leave. It may take two years, but you essentially do 100 percent turnover or close to it.
A competence culture is not suited to all businesses. It’s suited to innovative high-technology businesses, and that’s where you typically find them.
In a high customer service, high-touch company like Nordstrom’s, it’s not a suitable culture. Culture there is more of a family culture. It depends on what their mission is. Wal-Mart is a top-down, hierarchical culture because it’s all about low costs. You don’t have to have enormous discipline.
Q. Once you have a group of employees who fit your culture, how do you keep them?
Our style is not to micromanage them. They are given an area of responsibility and the freedom to go off and make that happen. They are assumed to be an expert in what we have hired them to do, when given a pretty minimal amount of someone staring over their shoulder.
For those kinds of people, they really love that environment. There are many other types of people who do not like that environment. Some people feel at a loss; they don’t know what they should be doing every day. They really want the constant attention. Those are the type of people who don’t do well at SmartDraw.
Equally, people who want that freedom don’t do well in an environment where someone is breathing down their neck.
The first thing that helps us retain people is that we made a good fit to begin with. It meets the employees’ needs as well as ours. Their working environment is something that they value.
The second thing we do is try to stay competitive from a compensation point of view. We use salary surveys; we try to stay in the market or compensate fairly and well.
How to reach: SmartDraw.com, (858) 225-3370 or www.smartdraw.com