Sephora recently closed all of its locations for an inclusion staff training after R&B singer SZA accused the store of racial profiling in late April. The move by Sephora is very familiar as Starbucks closed its stores for a day of training following an equally embarrassing moment of racial profiling last year.
It begs the question, how many more stores will be closed and made to atone for what many would categorize as insensitive behavior?
What we are seeing is culture debt.
Culture debt is the amount owed and the acquired responsibility by an organization to all of its stakeholders -- investors, staff, suppliers, customers, etc.-- for digging out of the culture deficit.
And your startup is probably suffering from it.
Many startups are already-- or, on their way-- to deep culture debt as they incur significant liability for not putting in and/or reinforcing frameworks that support positive culture structures. This culture debt is typically created because there is no human resources (HR) presence and underinvestment in core HR functions such as employee relations, retention, total rewards, employee engagement and training.
Culture debt shows up in a lot of ways ranging from ignoring complaints to pay disparities to uneven promotions.
Culture debt also creates morale issues, PR issues, consumer confidence issues, retention issues, legal liability and a whole host of other unintended consequences. When HR management is subpar, the culture debt will have a very real and noticeable domino effect that can kill your startup.
And, for anyone who has ever been in debt, it can be a huge challenge to get out of the red and into the black. Getting out of culture debt requires a commitment, ownership and most importantly, resisting the tendency to return to the behaviors that caused the debt in the first place.
If you want to avoid or get out of culture debt, you can follow this six step plan to do so:
1. Craft a list.
Write a comprehensive list that is an accurate assessment of all the actions and inaction that contributed to the culture debt. This requires an end-to-end inventory starting from on-boarding to off-boarding and everything in between. Such as determining whether your HR function is weak or if top performers are always let off lightly when they break the rules. Understand what got you in culture debt.
2. Make investments now.
Don't wait to hire a strong HR leader and don't put off focusing on culture. You can't cut corners when it comes to culture. I've seen all too many startups focus just on the product but not culture in parallel. It's a recipe for disaster--just look at Zenefits, a cautionary tale for all startups.
3. Assign ownership.
Getting out of culture debt is a big effort. Organizations have to assign owners so proper stewardship can happen. Do you have a strong HR function and mature leaders willing to keep the organization accountable?
Leaders need to take pieces of the work stream, assign resources to each and create accountability through solid objectives key results (OKR) and key performance indicators (KPI) to ensure the debt doesn't come roaring back.
4. Make a strategic plan.
Design a multifaceted strategy that communicates deliverables and timelines for digging out of debt. Be inclusive and make sure the all the right people are at the table adding input to the plan. Finally, determine the order of implementation-- ideally of easy, medium and hard tasks-- to tackle.
5. Monitor, adjust and report.
In executing the plan, there should be specific milestones to monitor progress and room to make adjustments. This is not a plan to be put on a shelf and never looked at again -- it needs to be monitored closely and have room for modification as business needs change and progress needs to be communicated.
Culture debt planning can't be all cloak and dagger, transparency is key. Stakeholders value knowing the status and feel more confident when they have an understanding of actions being taken.
6. Be a startup with a conscience.
This is like the rainy day fund should things go south. Establishing goodwill from the start shows intentions in earnest and creates greater benefit of the doubt. This means being committed to, taking ownership even when missteps occur and staying the course to doing the right things and not reverting back to the ways of old. When organizations are well intentioned, critics are more forgiving because the good character of the organization is apparent.
Eliminating culture debt is never easy, but it can be done when you stick with the plan and most importantly, have the right people in the room to chart a better course.