A company's culture -- the way people who work there think and act -- is shaped by its founder and almost always changed by every CEO who takes over after the founder leaves

If you work for a company whose CEO is its founder -- and the company continues to grow rapidly -- then the company's culture is likely to be deeply ingrained into its organization and processes. And it's probably a good-culture company.

But if the company is struggling, then its culture is probably broken as well. If you work for a company with a broken culture, you need to get out because it will hurt your career. And if you are thinking about going to a new company, you have to make sure that it's a good-culture company -- rather than a broken-culture one.

But companies don't advertise which type of culture they have -- you have to find out for yourself. And in so doing, there is a danger that if the company does articulate its culture publicly, what it tells the public may not be the complete picture. Here are 5 tests to find out if a company's culture is broken. 

Does the company suffer high CEO turnover?

If the company has a significant amount of CEO turnover in its past, that is a very bad sign. Of course, the reason for the turnover is critical. If previous CEOs were forced out due to ethical or legal problems, then you should be worried. But it is always possible that the current CEO is doing a create job of fixing the company's culture. If the company has been doing well and CEOs have been regularly retiring at a ripe old age, then new CEOs are not a bad sign.

Is the company's financial position getting shakier?

If a company is not generating positive cash flow or has borrowed too much money, there is a good chance that its CEO is not committed to the company's long-term survival. Perhaps the CEO believes that the company can eventually become profitable if it can only get big enough.

But in most cases, this does not happen because the company is unable to raise its prices enough to cover its costs or it can't get more efficient as it gets bigger. While a deteriorating financial position is a clear sign of a broken business strategy, it's also evidence that the company's board is more loyal to letting the CEO stay in charge than to the company's employees or customers.

Is the company growing more slowly than its markets?

If a company is growing more slowly than the industry, investigate the causes of its lagging market position. Test the idea that its lagging growth is due to weaknesses in the company's product, pricing and customer service.

And there's a good chance that these problems are signs of a broken culture. For example, you should investigate whether the company rewards people who meet sales targets -- even though they do it by making promises to customers that they later break. Or look for signs that the company does not respond well to customer's questions about product installation or maintenance. 

Does the company struggle to get and keep customers?

If customers are leaving the company, not using the company's product, or not buying more the company certainly has a broken culture. Yet it is worth finding out why this is happening -- for example, are rivals selling a better product for a lower price? Are those rivals offering customer frequent product improvements and lower prices?

If so, find out whether the company's culture does not place sufficient emphasis on product innovation and excellent service. If so, its culture is broken and you should not be working at the company.

Is the company unable to attract and retain top talent?

If the company is unable to attract top talent and is suffering high amounts of unwanted turnover, then investigate why. Does the company treat workers harshly? Does it have a bad reputation among the most talented people? Does it provide workers with relatively low compensation? Is its mission uninspiring?

Most likely the company either has no articulated culture or there is a big difference between what the company says about its culture and how the company's CEO and top executives conduct themselves.

If a company exhibits these five signs of a broken culture, you should go to a good-culture company. By doing the research discussed above -- please contact me on Twitter if you need help investigating -- you should be able to find one.

Published on: Aug 15, 2018