How bad culture destroys companies

I consult tech companies of different sizes and revenues every day and surprisingly often I see that their leadership pays little to no attention to the company culture.


Founders allocate a ton of time to understand the tech, sales and marketing of their startup. But for some reason they think that building a stable team is as easy as posting a generic SEO’d job ad in Google and hiring the first candidates to ‘save’ their time on interviews.

I see this both in well-funded ventures and small, boot-strapped teams.

Well-funded guys think they can solve anything by pouring out money. While struggling early-stage startups don’t have enough budget to build a healthy foundation.

I believe bad culture means bad leadership. And bad leadership means an unstable business — ultimately a meaningless business.

Poor company culture leads to toxic communication (internal and external), careless ineffective work, no connection with the company and people motivated just by their salary.

What's the result?

High staff turnover and non-existent knowledge transfer leading to lower revenue, higher expenses, unfulfilled obligations and a bad reputation.

Here are some examples of stinky culture 👇

Overbilling clients

You’ll be probably surprised how often agencies or service companies — my guess is +90% — with people-per-hour agreements trick their clients with timesheeting. Someone wants to raise their salary — the manager says they can work on two other projects and submit full-time there.

Why does it matter? This agency theoretically gets more revenue at the end of the day, right?

Imagine being that person who is forced to lie to keep their work, to get ahead, and thinking that’s just how things should work. They learn a lot from their companies and start freelancing at the workplace.

Or they just take the company’s clients away with them — I’ve seen both happen.

I like this quote from one of our clients:

Strong retention and customer relationships is how you win in this new world.

This is just as true for employees as it is for customers.

Working with ghosts 👻

This usually goes together with a first example, but it’s a bit different. I know some crazy examples like someone reporting progress to a client for other people who are on vacation.

Or people chatting under another person’s name. People committing code under their colleague's GitHub nickname with meaningless changes daily to keep the stats going.

A mirage of productivity.

I worked with a design agency who hid their designers behind the manager — it happens quite often in design agencies and other companies that target short-term projects and a big number of clients.

The shift was obvious! After a few good first pages delivered, suddenly I got surprising styles and different quality with every new iteration. It was so glaring and frustrating to see that they were rotating people while pretending nothing has changed — ugh.

If you pay some vendor per hour, ensure you have the maximum visibility and know the person who’s really doing the job — not just their manager. If possible, structure your quote by measured deliverable, not by the hour.

Immature leadership

I believe that being afraid to admit any faults or uncertainty to your team is harmful.

I've seen many CEOs try to seem like some ideal super-human. It spreads through all the company culture. People start thinking that the path to success is made just of successful steps.

Soon everyone thinks that failure is not allowed — that it’s a sign of weakness.

They are afraid to show work in progress, afraid to ask for help. They think that the world consists of perfect things and don’t know that perfection is non-existent in the real world.

Lack of an iterative, supportive culture leads to delayed, low-quality results.

I know one company that communicates only via project management and other work tools where it’s not common to jump on a call with a teammate to discuss something. So wild during Covid remote times 🤯

I’ve seen people get promoted one day and downgraded the very next day.

It’s very common for a short-sighted manager to expect they can hit the start/stop button on their team whenever they need them. And then they expect people to like working with them on this basis.

These are all signs of bad company culture and lack of strategic vision.

If you’re a strong leader, you’re conscious about the real world and you accept it. You won’t be afraid to share your plans in public.

And if those plans fail, you won’t be afraid to say that something went wrong.

You ask for help when you need it and you will appreciate the work done by your team.

In Paralect, we spend a ton of time and energy fostering a healthy company culture and we educate our partners on building strong, collaborative teams.

We cultivate an open-minded, supportive culture and have built a platform for people to grow. To the point where they can start their own company by applying what they've learned here.

I’ll dig into how we’ve done this in another post.

We’re not perfect and we’ll never be. But we’re on our endless way to it.

If you have a 🔥 idea and are ready to build a company culture that doesn't stink, have a look at our new Paralect Accelerator. It might be just the launch pad you need 🚀

You might also like