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Lesson 36

Culture design & management leversModule 07 · Organizational culture

IGNITE EXTENDED / LESSON 36

Culture design & management levers

How do hiring, rewards and leader behavior reinforce a strategy?

A culture-design logic and management-lever map.

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36 / OpeningCulture design & management levers

The decision and the learning goals

  • Connect a desired behavior to a strategic requirement
  • Align several management levers rather than relying on slogans
  • Identify tensions between culture, inclusion and changing conditions
90-minute workshopOpening 5 minConcepts and original examples 35 minPractice 25 minDebrief 15 minReview 10 min
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36 / TheoryCulture design & management levers

Culture design starts with the work required by strategy

The design-and-management lecture links strategy to key success factors and then to the behavior needed to perform the work. Cultural attributes should have a reason within that chain. Generic positive words do not explain which actions employees should take when choices conflict.

Separate alignment with strategy from the broader effects of commitment and coordination. A value can help people work together without differentiating the company’s strategy. A complete design should explain which effect each attribute is expected to produce.

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36 / TheoryCulture design & management levers

A culture statement needs observable consequences

The source evaluates statements for authenticity, strategic alignment and their ability to connect with members. Credibility comes partly from what leaders do when following a stated value becomes costly. Employees infer priorities from those decisions.

A useful statement helps someone choose in an uncertain situation. Ask what would change if a value were removed or reversed. If no consequential behavior changes, the wording may be too generic. A statement also needs a language employees can interpret consistently.

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36 / TheoryCulture design & management levers

The logic of cultural design

The logic of cultural designStrategicrequirementsNeeded behaviorsManagementpracticesObservedbehavior

Work backward from what the strategy requires, then check whether practices produce it.

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36 / TheoryCulture design & management levers

Choose cultural content for a reason

  • What must people do to deliver the strategy?
  • Which expectations help them coordinate and commit?
  • Where might the founder’s preferences help or hinder?
  • Which tensions and trade-offs should be made explicit?
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36 / TheoryCulture design & management levers

Use several management levers

LeverObservable design choice
LeadershipWhat leaders model and explain.
SelectionRelevant behaviors and capabilities sought in hiring.
OnboardingWhat newcomers learn and experience.
OrganizationInformation, participation and decision boundaries.
RewardsWhich behavior is recognized or discouraged.
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36 / TheoryCulture design & management levers

A slogan and a consistent system

People learn priorities from repeated consequences. A value statement becomes credible when leaders, incentives and routines support the behavior it describes.

Slogan

“We value learning.”

System

People can surface bad news, review evidence, revise a decision and receive credit for useful learning rather than hiding a failed test.

Worked application

Illustrative application: “raise problems early” conflicts with managers who penalize teams for reporting a delay. A consistent system investigates early reports, helps resolve the obstacle and distinguishes transparency from careless execution. Examine a real difficult decision to see which rule members expect to apply.

Find and repair the contradiction in the management system. Rewriting the statement alone leaves the learned expectation intact.

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36 / Source insightCulture design & management levers

Why culture management usually fails: inconsistency

The closing summary of Carroll's teaching note on managerial levers. It argues that the levers rest on well-understood social and psychological processes of influence, motivation and commitment, yet companies rarely deliver on culture's promise because managerial actions and structures are inconsistent and efforts are episodic. It also notes that goodwill gestures, such as Netflix's approach to vacation, should be promoted only when consistent with the culture.

The diagnosis is not lack of knowledge but lack of consistency over time. A culture program that runs for one quarter and then yields to other priorities teaches people that the old expectation still governs.

Source insight · S48 · PDF page 59 / 31
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36 / Reading debriefCulture design & management levers

Managerial levers for organizational culture / summary

Selected reading: PDF pages 1, 2, 3, 4, 5

The note argues for a comprehensive and consistent system of cultural management. Structural design and everyday consequences complement leader agreement, compensation changes and communication.

  • Strength has two dimensions

    A strong culture combines agreement about values and norms with intensity of adherence. Its content still determines whether that strength helps the work.

  • Several classes of levers

    The note groups levers around cultural content, employment, organizational design and incentives. Managers can affect behavior through more than training.

  • Consistency carries information

    People interpret exceptions, leader actions and real consequences as evidence of what the organization values.

  • Design supports indirect control

    The intended system should encourage the behavior even without repeated managerial intervention. Implementation requires judgment about fit and conflicting effects.

Reading debrief · S48 · PDF pages 1, 2, 3, 4, 510 / 31
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36 / Reading debriefCulture design & management levers

Managerial levers for organizational culture / discussion

Selected reading: PDF pages 1, 2, 3, 4, 5

Critical points

Strength and usefulness

Intense agreement can support a harmful or unsuitable norm. Specify the strategic behavior before selecting ways to strengthen it.

Agreement and diversity

Shared expectations about relevant behavior do not require identical backgrounds or viewpoints. Preserve the distinctions needed for effective work and challenge.

A local contradiction matters

A reward or prominent exception can undermine repeated messages. Investigate actual decisions and consequences before declaring a change successful.

Reading debrief · S48 · PDF pages 1, 2, 3, 4, 511 / 31
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36 / Source insightCulture design & management levers

Uber's 2015 cultural values

Uber's fourteen values from 2015, including 'always be hustlin'' (get more done with less, working longer and harder), 'meritocracy and toe-stepping', 'principled confrontation', 'super pumped', 'be yourself' and 'let builders build'. The page asks what you think of them.

Each value is specific and was strongly held, which is what made the culture strong. Read them as a set: together they reward aggression and individual heroics and say nothing about how conflict, power or complaints are handled, so status could override everything else.

Source insight · S46 · PDF page 3412 / 31
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36 / TheoryCulture design & management levers

Management levers reinforce or contradict one another

Hiring, onboarding, job design, rewards, leader behavior and peer processes all teach people what matters. The lecture and managerial-levers note emphasize using several levers consistently because a written statement cannot overcome a contradictory system by itself.

Trace a desired behavior through the employee experience. People need the ability, opportunity and credible expectation to act. Watch for a conflict between a collective value and an individual incentive. Repetition over time helps expectations become shared, while exceptions for senior people can weaken credibility.

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36 / TheoryCulture design & management levers

Shared expectations can coexist with different backgrounds

The source treats diversity as a difficult challenge for organizations relying on strong shared culture. A company can seek agreement on relevant work behavior without assuming that personal similarity is evidence of that behavior.

Translate an intended value into a job-relevant observable practice and a consistent evaluation process. Distinguish disagreement about ideas from failure to meet a legitimate work expectation. A culture that suppresses information from people with different perspectives can weaken the very decisions it seeks to coordinate.

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36 / TheoryCulture design & management levers

Conventional controls and management through culture

Adapted from Carroll’s Design and Management lecture. These are analytical contrasts, not a rule that an organization must choose only one column.

Management issueConventional emphasisCultural emphasis in the source
RulesDetailed instructionsGeneral expectations that guide new situations
InformationLimited distributionBroadly shared context
Leader behaviorStatus and exceptionsVisible participation in the same expectations
OnboardingTransfer of informationSocialization into shared ways of working
SupervisionManager monitors conductPeers also provide advice and accountability
MotivationExplicit pay and sanctionsMeaning, belonging and internalized expectations

A practical organization combines formal controls and cultural mechanisms. The relevant question is whether the combination supports the work and produces acceptable consequences.

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36 / TheoryCulture design & management levers

A complete culture intervention

New teaching example applying the source’s managerial-levers framework.

LeverReliability exampleEvidence to inspect
Leader modelingLeaders report their own mistakesHow leaders respond when a report is inconvenient
Employment systemPractice issue escalation during onboardingNew hires can demonstrate the process
OrganizationGive teams access and bounded authorityA team can resolve the issue without an unnecessary handoff
RewardsRecognize useful early warningsRecognition matches the stated expectation
Peer processUse a constructive incident reviewPeople share consequential details without concealment

The plan requires repeated, consistent behavior. A successful launch announcement does not establish that the expectation has become a norm.

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36 / TheoryCulture design & management levers

A credible culture statement

  • Specific enough to guide a difficult choice.
  • Connected to the company’s purpose and work.
  • Understandable to the people expected to use it.
  • Consistent with decisions, rewards and what leaders do.
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36 / TheoryCulture design & management levers

Find the contradiction

Stated expectationContradictory practiceQuestion
CollaborationOnly individual heroics are rewarded.What behavior will rational employees repeat?
Customer careSpeed is rewarded regardless of service outcome.What trade-off is actually encouraged?
Speak upBad news leads to blame.Why would someone report a problem early?
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36 / TheoryCulture design & management levers

Culture and diversity need careful distinction

  • Define job-relevant behavior rather than social similarity.
  • Different perspectives can expose weak assumptions.
  • Shared expectations need not require identical backgrounds or personalities.
  • Watch for “fit” becoming a label that excuses exclusion or unexamined preferences.
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36 / TheoryCulture design & management levers

Implement and revise

Culture design starts with a behavior needed for the strategy, then checks whether the management system actually encourages it. Treat adoption as an observable process.

01

Specify behavior

Replace an abstract value with an action in a situation. Example: engineers disclose a release risk before the deadline, explain the customer consequence and propose a next step.

02

Align the system

Examine leader reactions, rewards, hiring, routines and resource allocation. A request for early disclosure conflicts with a reward system that recognizes only hitting the date.

03

Observe practice

Look at real decisions and what peers encourage or discourage. Counted activities can help, but investigate whether people actually share consequential information.

04

Revise contradictions

Change the management response or incentive that undermines the behavior. Review again after the change. A new slogan leaves the contradiction in place if consequences remain unchanged.

A credible cultural statement can be illustrated with a decision the organization would make differently because of that norm.

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36 / Source insightCulture design & management levers

Susan Fowler's 2017 account of Uber

A summary of the issues engineer Susan Fowler described in her February 2017 blog post: a manager's propositions, HR telling her he was a 'high performer' who would not be punished, other women with similar stories, claims that HR misrepresented repeat offenses, political games among managers, an altered performance review, denied transfer requests, retaliation and a falling share of women in engineering.

Every item is a management lever acting against the stated value 'be yourself': HR process, performance review, transfer decisions and treatment of high performers. The values on the wall lost to what the system rewarded and tolerated.

Source insight · S46 · PDF page 3521 / 31
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36 / Source insightCulture design & management levers

Uber's 2017 cultural norms

The eight norms introduced by new CEO Dara Khosrowshahi in November 2017, replacing the fourteen values: we build globally, we live locally; we are customer obsessed; we celebrate differences; we do the right thing, period; we act like owners; we persevere; we value ideas over hierarchy; we make big bold bets.

Compare with the 2015 list: the content shifted from aggression and hustle toward integrity and inclusion, but rewritten words alone cannot change the norm. The test is whether hiring, promotion, investigations and exceptions for star performers changed with them.

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36 / Source insightCulture design & management levers

Diversity: the unsolved challenge for strong cultures

Three points: culture is the secret sauce and commitment mechanism for some firms; managers will not abandon it for a laudable public goal; the ideal is homogeneity on cultural characteristics with maximal diversity on all other traits. It asks how to achieve that given social processes of influence.

The ideal works only if 'cultural characteristics' are defined as job-relevant behaviors. Social influence pushes groups to hire people who look and sound like them and call it fit, which is how strong cultures drift into exclusion.

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36 / ApplicationCulture design & management levers

A learning culture that punishes experiments

A fictional company says it encourages evidence and experimentation. Promotions go to people who never report a failed test, while managers criticize any revision of an earlier decision. The formal values and the reinforcement system point in different directions.

Which management levers need to change together?

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36 / Current practiceCulture design & management levers

Current practice: culture levers in hybrid and remote teams

Hybrid can help retention without hurting performance

A randomized trial of 1,612 employees at Trip.com, published in Nature in 2024 (Bloom, Han and Liang), found that two work-from-home days a week cut quit rates by about a third, with no detectable effect on performance reviews or promotions over two years. Managers' estimates of hybrid's productivity effect moved from negative to slightly positive after the trial.

Proximity changes who learns the norms

Emanuel, Harrington and Pallais studied software engineers at a Fortune 500 firm: engineers whose teammates sat in the same building received about 18–22% more online code feedback than those with distant teammates (the figure varies across versions of the paper), while sitting together reduced output, especially for senior engineers. Mentoring and norm transmission are the costs of distance; they must be designed in deliberately for remote staff.

Office policy is itself a culture lever

Amazon announced in September 2024 that corporate staff would return to the office five days a week from January 2, 2025, with Andy Jassy arguing that in-person work makes it easier to learn and strengthen the company's culture. Whatever the policy, the lesson for Relay is to state which norms it is meant to build and check whether they show up for remote and in-office staff alike.

Sources: Bloom, Han and Liang (2024), Hybrid working from home improves retention without damaging performance, Nature · Emanuel, Harrington and Pallais, The Power of Proximity to Coworkers · NBER Working Paper 31880: The Power of Proximity to Coworkers · WBUR: Amazon tells corporate employees to return to the office five days a week · TechCrunch: These are Uber's new cultural norms (November 2017)

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36 / PracticeCulture design & management levers

Design a small culture system

Fictional service company competes through reliable customer handoffs. It wants early problem reporting and shared responsibility. Bonuses currently reward speed alone, and senior staff are exempt from the handoff process.

Your task

Specify two needed behaviors and align leadership, onboarding, information and rewards. Identify one risk of the proposed system.

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36 / DebriefCulture design & management levers

Worked answer and reasoning

  • Define early reporting and complete handoffs as concrete behaviors connected to the reliability strategy.
  • Remove unexplained status exceptions and align speed incentives with reliable outcomes.
  • Watch for excessive bureaucracy or blame disguised as accountability; observe whether problems become visible earlier.
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36 / Venture stepCulture design & management levers

Venture step: Align Relay's management levers at 22 people

Relay · venture step 36

Month 30, just after the Series A. Relay has grown from 9 to 22 people, 11 of them remote across four states; most new hires joined after the pivot to multi-location groups. Since the PHI near-miss, leaders say 'privacy is everyone's job.' In practice: sales commission pays on signed bookings regardless of implementation promises; engineering performance reviews count features shipped; onboarding is a two-hour HIPAA video; Daniel still approves urgent changes over direct message; incident reviews happen in an office meeting room with remote staff dialing in; nobody has been recognized for reporting a privacy concern.

Your task

Build a lever map: two concrete target behaviors tied to Relay's strategy, then for each lever (leadership, selection, onboarding, organization, rewards, peer process) the current practice, the contradiction, the change, and the evidence you will inspect in 90 days. Name one risk the system creates.

Relay · illustrative venture28 / 31
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36 / Venture stepCulture design & management levers

Venture step: worked reasoning

  • Strategy to behavior: Relay now sells 10+ location contracts to groups that run security reviews, so the required behaviors are (1) any employee stops work and flags a PHI risk before release or a promise to a customer, and (2) sales commits only to implementation scope engineering has confirmed.
  • Contradictions: booking-only commission rewards overpromising; feature-count reviews reward skipping privacy review; DM approvals by the CTO create a status exception; in-room incident reviews make remote staff second-class participants in the norm.
  • Changes: pay commission half at signing, half at go-live with no open security exceptions; add 'risks surfaced' and 'review quality' to engineering reviews; route every production change, including Daniel's, through the same review; hold incident reviews remote-first with a written pre-read; replace the video with a hands-on onboarding exercise in which new hires find planted PHI in a test fixture.
  • Selection: replace 'culture fit' with a work sample (find the privacy flaw in a pull request; for sales, respond to a customer's request for an unscoped integration) scored on a rubric by two interviewers, so 'fit' is not a stand-in for similarity.
  • Evidence at 90 days: share of near-miss reports filed by remote staff (should approach their half of headcount); number of production changes bypassing review (target zero, including founders); deals with post-signing scope disputes. Risk: review gates can become blame or bureaucracy that slows shipping; measure cycle time alongside the reports.
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36 / DebriefCulture design & management levers

Reasoning traps

Rewriting the values instead of the reward

When a value is contradicted by commission plans, review criteria or a senior exception, new wording changes nothing. Find the decision that teaches the opposite rule and change it first.

Letting 'culture fit' stand in for evidence

Fit judged by interview rapport selects for similarity. Define the cultural behavior you need, test it with a work sample and a rubric, and stay open to differences on everything else.

Designing the culture for the office

In a half-remote team, the meetings and hallway moments where norms are reinforced must be equally visible to remote staff. Otherwise a strong norm forms in one location and a weak one everywhere else.

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36 / ReviewCulture design & management levers

What you can now explain

A Relay lever map at 22 people: two strategy-linked target behaviors, the current contradiction and change for each lever, remote-inclusive processes, and 90-day evidence with a stated risk.

  • Culture design starts from the behavior the strategy requires and works backward to leadership, selection, onboarding, organization and rewards.
  • A culture statement is credible only when real decisions, especially costly ones and those involving senior people, are consistent with it; inconsistency is the usual cause of failure.
  • Shared expectations should be defined as job-relevant behavior so a strong culture does not turn into a demand for personal similarity.

Next lesson: Negotiation preparation & claiming value

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