When the Flagship Sails: Managing Company Culture in Multiple Locations

Whether they’re adding new locations by merger, acquisition, or replication, most business leaders anticipate the challenges associated with growth. Yet while they sort out specifics like evolving logistics, budgeting, and staffing, they often downplay or overlook how their company culture will absorb the change. This is a dangerous oversight.

Culture should be paramount in every CEO’s strategy as they grow their organizations. The existing culture propelled the company’s performance and positioned it to expand. But if leaders don’t prioritize scaling their workplace culture when their staff grows and spreads to multiple locations, it will splinter and fade. And a fractured culture is a leading reason why growing companies falter.

How Organizational Culture Forms

Most companies start small as their founders make their dreams a reality. These leaders have a vision of what they want the organization to do and how it should operate. In the beginning, they are usually very hands-on in every area of operation, setting the tone for employees’ behaviors. Whether they realize it or not, they are forging their fledgling company’s culture.

The founding leader usually hand-picks employees they believe will help fulfill their company’s goals. They choose people with similar values who want to be a part of a tightly-knit team on the rise. This original crew is tuned into how their boss operates and follows their example. The culture that emerges as they lean into their leader’s work ethic and demeanor becomes the bedrock of the company’s success.

How Growth Can Affect Culture

After their companies take off, many leaders eye growth options. They may launch satellite locations, merge with a compatible enterprise, or purchase another business that can enhance their profitability. Most believe that they can multiply their business’s achievement through expansion.

But even if their company’s growth only involves a few additional sites, the culture the founder fostered won’t automatically carry over. Without that cultural DNA, the secondary locations will operate differently and probably less effectively.

One reason growth can erode culture is that a multi-site staff will no longer regularly observe and follow their leader’s example, so that influence will wane. Without their founder’s sustained reinforcement of “how things are done around here,” employees moving to open and run new sites are susceptible to doing things their own way.

Another consequence of expansion is that recruits hired in new locations will never have a chance to shadow and learn from the founder. Companies often try to quickly fill positions as they grow, using skills and experience as criteria. Even if these new employees excel at the “what” of their jobs, they often don’t sync with the “why” and “how.” They resemble a talented group of players in a pick-up game without a playbook or coach. Even if they rack up a few wins, they don’t have the tools to sustain that momentum.

And if an organization’s growth involves a merger or acquisition, employees of the added company come with their own culture in play. The groups may be equally qualified to perform their jobs but operate from a different blueprint. Inevitably, each bloc believes its methods are better, which activates division and distrust. Instead of a unified culture, an “us vs. them” mentality can easily take hold.

The new factions or locations may follow the same processes and produce the same products and services. However, matching the original company’s success will be difficult without sharing the same culture.

Steps to Maximize Culture as A Company Grows

The company culture instilled by the founder is often an unspoken code of conduct rather than a structured part of the business. But that informal approach won’t work when the company expands. At that point, leaders must make culture part of their growth strategy and develop a plan to sustain it. CultureWise CEO David J. Friedman explains this further in his book, Culture by Design.

“Not having a culture plan would be like trying to run our companies with no budget or forecast and hoping we hit our numbers.”

For growing companies to sustain success, Friedman tells leaders that they should be intentional about creating and driving the culture they want to see throughout their organization. To achieve the best results, leaders should follow a process to institutionalize their culture.

DEFINING THE CULTURE

Leaders must first clearly define their culture to replicate it across locations successfully. They should consider the elements that make their culture an asset and document them. Sebastian Gilbert, Managing Partner at Dadneo Capital, offers them this advice in a LinkedIn blog post:

“Your culture is the set of beliefs, behaviors, and norms that shape how you work and interact as a team. It reflects your mission, vision, values, and goals as a startup. To define your culture, you need to articulate and communicate these elements clearly and consistently to your employees.”

To develop a list of cultural norms they want to permeate their company, David Friedman suggests leaders consider four behavioral categories for their staff:

1. How they work with customers
2. How they work with each other
3. How they approach their own work
4. Their attitude

Leaders formulate a “common language” by formally defining and describing these preferred behaviors. Creating this lexicon lays out specific expectations for employees as they perform their jobs, whether they interact with the company leader or not. However, identifying the behaviors isn’t enough to ensure that the culture is manifested throughout the organization.

CEO, author, and professor Rebecca Newton notes in Harvard Business Review that while defining culture is imperative, leaders must systematically reinforce it. “Even when these [behaviors] are codified in policy documents or value statements, they can begin to erode or shift in reality.” She counsels leaders to take meaningful steps to bring those behaviors to life.

SUSTAINING THE CULTURE

Once leaders define their culture, they must develop a process to expand it exponentially. If opening new sites, they need to implement a systematic and consistent method to coach and reinforce their culture in every location.

This process could include devising culture reinforcement exercises to be practiced across the organization in daily huddles or weekly meetings. Other techniques are regular reminders about culture sent to all staff, engaging employees by having them lead group discussions about culture touchpoints, and including culture metrics in performance reviews.

And in all circumstances, leaders should lock in solid buy-in from the entire staff to achieve a universal workplace culture. It is particularly important to ensure that middle managers are on board with the initiative so they can assume the role of modeling and coaching the culture.

If their growth involves a merger or acquisition, leaders should develop a plan to cement cultural alignment before that change takes place. It is well worth their time to be proactive as they anticipate this move instead of reacting when problems arise after blending workforces. McKinsey reports that 25 percent of leaders cite a lack of cultural cohesion and alignment as the primary reasons mergers flounder.

Leaders should make culture a primary focus of recruiting and hiring new talent as the company grows. The organization’s culture should be one of the primary things that attracts people to work for the organization. And it should be the yardstick that hiring teams use to ensure that candidates will be culture promotors, not detractors.

As companies branch out, Tony Delmercado recommends that they hire for culture and avoid the mistake of hiring for the city. The COO of Hawke Media acknowledges that this seems counterintuitive in an article for Entrepreneur but cautions: “Don’t assume you need a certain personality type to fit in with the new branch. Instead, stick to your cultural guns regarding who you are and what kind of person fits with your culture.”

It is equally essential to solidify new employees’ awareness and understanding of the culture during the onboarding process. During this crucial period, companies can help recruits perceive how embodying the culture will allow them to flourish in the organization.

Ultimately, the culture that made the original company stand out will be the hallmark of each new location. Just as with the flagship operation, the culture will make every new site successful. Culture will be the differentiator that captures the attention of new markets and unites the brand wherever it’s operating.