Zenefits and the Compounding Effect of Cultural Assessment

Culture is one of the easiest things to blow off when it comes to organizational investment. You build it, and you just sort of place policies and procedures to make sure it works, right? When HR managers shout from the rooftops that corporate culture can be the downfall of an organization (or at the very least a huge stumbling block) if not properly cultivated and managed, we’re quite often met with an exasperated response. Not THAT again. And yet, when the company stumbles and falls over said block to the tune of millions of dollars, it’s most irritatingly a malady that could have been avoided. There is nothing that guides a company to it goals and beyond quite like a dynamic, properly-cultivated corporate culture, and a perfect example of this has recently hit the news: Zenefits.


This darling of Silicon Valley shot through the uprights not unlike a good number of its start-up constituents: former CEO Parker Conrad Valley’s billion dollar startups, peaking last year when he was able to raise $500 million for a corporate valuation of $4.5 billion. Announcing itself as the fastest-growing software service ever, based on a free cloud-based HR platform for small businesses around the U.S., it makes the majority of its income from commissions when clients use their platform to purchase insurance. The model was genius, and the corporate culture was constructed to obtain those sales by any means necessary.


There was only one big problem: they’ve been accused of partnering with quite a few salespeople without the proper license to sell insurance, and reportedly skirted quite a few laws that would make for the legal sale of insurance products. That’s not just a small pebble they stumbled over; that’s a gigantic legal boulder that’s put them under the watchful eye of the Federal government and downgraded them as an investment. Conrad has stepped down, and the former COO, David Saks, has taken the helm. One of the first things he did was address the errors in culture that led to their current state. He’s quoted in a Forbes article as having sent an email with the following text:


“We must admit that the problem goes much deeper than just process…Our culture and tone have been inappropriate for a highly regulated company. Zenefits’ company values were forged at a time when the emphasis was on discovering a new market, and the company did that brilliantly. Now we have moved into a new phase of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders.”


As someone who has made a career out of designing adaptable, successful corporate cultures, I feel that they could have benefitted from strong HR. As Saks stated in the email, the culture that founded the company is very different from the one that will right the ship and keep it afloat. Where it appears the first epoch of the company’s history could be best summed as “by whatever means necessary,” it safe to assume that through careful corporate assessment and an in-depth look at their culture and the talent that supports it, it will most likely evolve to “with our shareholders and customers at the center of whatever we do.”


When speaking of corporate culture, a static approach is never best. You don’t just build it and let it go, letting it self-maintain with performance evaluations, retention and turnover. It must be constantly assessed against the market, customer satisfaction, internal goals, and staffing needs. While the vision, mission, and values of the company remain standardized for long periods of time, corporate culture is an ever-evolving means to accomplish your objectives. It drives, incents, connects, and deploys your resources of a human variety, and without the proper tools to monitor it — and the sense to pay attention to red flags once they’re raised —you will meet with obstacles that are unpleasant. Most important, they can usually be avoided.


The proprietary culture assessment tools I’ve developed from years of experience paired with recent technological advances act as a canary in a coal mine. They’re capable of assessing the culture from all aspects, and paired with market information and 11 other data inputs (13 in total), they can give you a 360-view of your company that can warn of disasters such as these along with other issues, such as turnover/employee defection, potentially derailing internal disconnects, and so much more. You need to monitor corporate culture effectively and often, and I have the tools that can accomplish this and so much more.


More than ever, companies must truly look deep inside their ranks to ascertain what is going on. It’s no longer sufficient to simply rely solely on client and employee engagement data to give you a view of what’s happening with your company; this type of insight only scratches the surface at best. Most employee engagement data tell us 86% of people are disengaged, which is a warning sign within itself. Don’t you want to know why before that expense and productivity issue hits your bottom line? I know I would.


I believe that companies need to take on the issue of culture more than ever before. Dig deep and use tools like my Capacity Framework to connect deep, disparate data for a powerful, actionable source of information: customer data, engagement data, exit interview data, performance data and metrics, talent data and more. Prioritize your corporate culture, and take action on this type of data, outlining the top strengths and challenges for your company. It’s only by connecting all the dots that you will truly paint an accurate picture of what’s going on in your organization, and armed with that knowledge, you can take action and manage your culture as you would any other asset within your company. For it is an asset, perhaps your greatest, and it must be constantly minded as if it could tear your company apart if mismanaged.


Because the truth is — and this Zenefits example is an illustrative example — it most certain can.


About the Author: Rita Trehan is the Founder and Principal of Rita Trehan, LLC, a change management and leadership advisory firm focused on corporate leadership, emerging technology, and cutting-edge organizational design. As a seasoned top executive that has successfully transformed organizations at the Fortune 200 and beyond, she has extensive experience working with CEOs and top corporate management on process and organizational improvement for maximum profitability. A soon-to-be published author, Rita regularly speaks at industry conferences around the world. You can contact Rita on twitter at @rita_trehan and connect with her via LinkedIn. Rita’s blog can be found at www.ritatrehan.com.

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