Why Settle for Cookie-Cutter People and Culture Practices?

(Illustration by iStock/iStock/Alisa Zahoruiko)

Organizational performance depends on thoughtful policies and practices with respect to employees and culture. That may seem obvious, but we have all had our experiences with less-than-stellar situations. The reasons range from inertia (“we’ve always done it this way”) to questionable motivations (perhaps that employee wellness program isn't actually designed with employee wellness as its primary goal).

Often, culture is simply neglected. Although most of us have heard the quotation attributed to Peter Drucker, “culture eats strategy for breakfast,” leaders don’t necessarily act as if they believe it. Because culture is amorphous and subtle, it often takes a back seat to more tangible and seemingly pressing issues on a leader’s to-do list. Yet we have found that getting people and culture practices right is crucial and often involves going against the conventional wisdom in human resources circles. It takes experimentation and iteration, some mistakes along the way, and a whole lot of listening and feedback from staff at all levels of the organization.

Look, no organization is perfect, and we are as leery as anyone about articles that proclaim that this nonprofit or that company has the secret recipe for building a great culture or achieving great results. That said, after spending nearly a half-century of person-years between us tending to the people and culture of the Center for Effective Philanthropy (CEP)—and seeing our colleagues work with hundreds of foundations whose cultures we get to see up close—we’ve learned a bit that we think is worth sharing.

Two of us (Phil and Alyse) had the opportunity to help create a culture essentially from scratch as the first and fifth employees of CEP two decades ago. Leaha joined eight years ago and helped dramatically advance our approach to recruiting and to diversity, equity, and inclusion (DEI). Over these years, as CEP has grown to a staff of 60-plus and a budget of $15 million and has developed a reputation as a good place to work, we have resisted reflexively accepting the industry standard approaches. Our view is that the best cultures, like the best cookies, are made carefully from scratch—from a continually iterating and improving recipe—not squeezed from a tube.

We have come to believe in six people and culture approaches that in many respects go against the grain.

1. Hiring processes that prize skills, not degrees or connections.

Our approach to hiring is focused on finding the best people for the roles we have, which requires reducing opportunities for bias and eliminating practices that unfairly advantage certain candidates. While we haven’t always done everything we will describe here, we have for years employed approaches that, while becoming more common, are still relatively rare.

For starters, we reject the common practice of folks using connections to help family or friends get an advantage in a hiring process. Some organizations even create financial incentives for referring candidates who become employees, which can reinforce an insular and clubby culture. To be sure, we use networks to spread the word about openings—and we also try to tap into the networks of others—but personal connections confer zero advantage in our processes. When Phil gets emails or calls from a funder or client’s president advocating for CEP to hire their daughter or nephew—sadly, he gets more than a few of these—they are not shared internally and carry no weight whatsoever.

In 2017, we began redacting college and university names and last names from resumes, noting that a few employers—from consulting and auditing giant Deloitte to small nonprofits like the American Alliance of Museums (AAM)—were experimenting with this approach. We did it because we hire a lot of people straight out of college and have found that where someone went to school is not necessarily a good predictor of success. There are myriad reasons an individual might attend a less selective or “prestigious” institution. What matters is what folks did with the opportunities they had. We also redact last names to guard against implicit racial bias.

We rely on short assessments as an additional way to reduce opportunities for bias. So, for example, when two candidates are interviewed and one is judged to be stronger when it comes to, say, quantitative analysis, we can check to see who actually scored better on our quantitative assessment. It’s happened more than once that a woman candidate is judged lower than a man in an interview on these skills, only to then outperform the man on the assessment.

Indeed, there is often a disconnect (in both directions) between the way a person describes their skills and their actual abilities. So it’s crucial to ensure against getting duped by someone who talks a good game or discounting a candidate who exhibits extreme humility. No assessment is truly “objective,” of course, and factors from time of day an assessment is taken to stereotype threat can influence performance. But the use of multiple inputs to come to an informed and fair appraisal of a candidates’ skills can help improve the recruiting process. At the same time, we work to ensure the process is reasonable and efficient for candidates, in order to be respectful of the time and energy of those we interview.

2. A standardized approach to base pay that ensures against inequities.

We publicize our salaries in job listings, of course. This practice has become more common in recent years and even has become the law in a number of cities and states where employers above a certain threshold number of employees are required to list a salary range or scale in job postings. But what we show is a single number, not a range. We don’t pay more for experience or degrees, though experience and degrees might help qualify someone for a particular role. We pay for the job being done—and we don’t negotiate salaries with those we hire. So, if you’re deemed to be the right person for the job, then you’re paid what that position pays. This ensures against gender or race-based pay gaps. Aside from a geographic market-related adjustment (those in our San Francisco office are paid 10 percent more than those in our Cambridge, Massachusetts office) salaries for the same roles are identical.

Sometimes folks ask us, “don’t you at least have merit increases in base pay?” The answer is no. We’ve always been adamantly against this practice. We’ve never understood why you’d pay someone higher in future years for strong performance in a past year. Yet this, too, remains a common practice at nonprofits, foundations, and companies.

3. Performance-based incentive compensation that rewards group, not individual, performance.

We’ve always had a significant proportion of compensation that is tied to performance and paid as a bonus at the end of the year. But, about a half dozen years ago, we eliminated totally the portion of this calculus that was based on individual performance—coincidentally, at around the time that we noticed more and more nonprofits adding individual performance incentives—and made it entirely dependent on overall organizational performance. We did this based in part on our understanding of the available research, represented in books like Daniel Pink’s Drive, which suggests that, once you’re paying above a certain level, individual incentives can undermine incentives to collaborate; that they may not actually motivate staff; and that subjectivity of evaluation—and bias—can create problems and unfairness. We had also experienced some of these negatives firsthand.

For example, some of our staff perceived differences in incentives across and within teams. Others reported feeling demoralized when their performance-based incentive compensation was in the “typical” range—even though we intended this to be indicative of strong performance that meets our high expectations. Eventually, some on our staff came together to suggest we shift our approach, arguing that we were inadvertently undermining overall organizational performance. So we listened and responded.

We benchmark total compensation regularly against the market to ensure we’re competitive. We also, of course, implement standard market-based pay increases each year. It can be hard for someone in the same role for years not to get a bump beyond these increases, but we try to help them understand the flip side: that they got paid above the median benchmark for the role when they assumed it, even before they had come up to speed. Due to the transparency of our processes, they know they are paid the same as others who do the same job at the organization and they can, of course, compare their salary to publicly available data.

Notably, we have noticed no drop-off in performance or motivation of our staff since disconnecting pay from individual performance reviews. On the contrary, our staff survey results are, on many measures related to engagement, for example, stronger than they have ever been. New staff are often struck by the lack of unhealthy competitiveness or politics in our culture, and by the lengths people go in order to help their colleagues succeed.

4. A feedback and performance-oriented culture, across all levels, with everyone able to give input.

An approach to base pay and incentive compensation like the one we described only works if strong performance is supported and managed well through strong feedback mechanisms. Our performance management system is built on the premise that all staff can continue to learn and grow in ways that will benefit both the organization and their career trajectory, and that feedback is crucial to continual development.

With that in mind, we have multiple “mini-reviews” each year to encourage continuous communication between managers and those they manage about how it’s going—and to avoid the once-a-year high-stakes reviews that remain all too common at many organizations. 360 feedback is also a crucial component of our culture. For example, all staff are able to provide feedback on Phil, which is collected by an external third party and which goes to the board of directors’ compensation and organizational performance committee (and eventually the full board) at the same time Phil sees it. No one is protected from critical (or positive!) feedback.

Of course, we are far from perfect. Many of us at CEP still struggle, at times, with being direct enough with each other about our feedback—and about disagreement. We also observe a tendency to sometimes use written feedback mechanisms as a crutch—to avoid the one-on-one conversations that are necessary and ultimately more productive. It seems hybrid work has exacerbated this problem, because it makes it less likely that someone will be able to walk down the hall and find their colleague to discuss a challenge or issue. So getting better about giving and receiving feedback is a major ongoing focus for us, and we have frequent staff discussions and professional development sessions on the topic.

Crucially, we aren’t afraid to part ways with staff when it isn’t a good fit or when, after a fair process, it’s clear someone can’t perform at the level we expect. This happens less than it used to, as we have improved our processes for screening job candidates and orienting new employees, but it does happen. When it does, our focus is on treating with respect and fairness the person to whom we are saying goodbye. To the extent that there is “fault” when things don’t work, it is usually shared.

When staff leave for whatever reason, we celebrate them. Because we’re a relatively small organization, we know we can’t provide everyone with continued opportunities for promotion and growth. We see our strong alumni network as an asset—staying connected and even welcoming back some who rejoin CEP years later.

5. A deep commitment to DEI that rejects the performative, emphasizes accountability for results, and avoids dependence on consultants.

We have all seen how sporadic and ineffectual the DEI efforts of organizations and companies can be, too often coming in response to external events or internal advocacy rather than a genuine, sustained commitment from leadership. It’s not surprising, in this context, that we hear more and more claims that DEI efforts have “failed.”

We believe progress on DEI requires written goals against which progress is regularly assessed. Goals are more effective when they are focused on behaviors applying DEI and the building of competencies rather than changing minds. DEI goals should be specific to one’s context: there is no one-size-fits-all solution.

We stay away from practices that evidence suggests are ineffective or counter-productive, even if they are trendy: for example, utilizing certain formats for sessions on privilege, or mandatory, generic diversity training just to check a box. Like many organizations, we have been burned by bad external DEI consultants—like one group (now defunct) that seemed to apply the same recommendations to every organization regardless of context and equated any organizational hierarchy with evidence of a “DEI problem.” We are upfront about the fact that, like at every organization, there is hierarchy at CEP: Indeed, it’s necessary for us to be effective. But hierarchy can co-exist with an inclusive culture in which every voice is heard and valued. Furthermore, hierarchy is a lot easier to accept when diversity is present at all levels.

As we have worked on DEI, we have found that developing internal expertise is crucial, to help us gauge what to do (and not do) and to ensure continued focus. To that end, Leaha has, in her time at CEP, become a certified diversity professional through the Institute for Diversity Certification (IDC) and a qualified administrator of the Intercultural Development Inventory (IDI)—an assessment which we offer to all staff and discuss regularly. No DEI effort will succeed, however, if it’s seen as the province of one person, so other staff are supported in pursuing a wide range of DEI-related professional development opportunities as well.

We have frequent staff-led sessions on DEI topics of interest, from the history of anti-Black racism in America to a group watch of the PBS docuseries Asian Americans to sessions on mental health. We encourage folks at all levels and across all teams to suggest topics and help bring sessions into being. Crucially, these sessions are always optional, because we know that, for these opportunities to be productive, people need to want to be there. This also allows staff of color, who might not want to, for example, participate in a discussion of racism with their work colleagues, to opt out. On the other hand, when sessions directly relate to work responsibilities—like anti-bias training related to hiring and performance reviews—they are mandatory for those involved in the relevant processes.

6. Transparency, care, and trust.

Underpinning all of these policies is a culture we have sought, with the support of a working group of staff, to articulate in detail. Our statement on our culture includes 10 components, but underneath everything is transparency, care, and trust.

We’re over-sharers, as you can probably tell by now. At staff meetings and in other venues, we strive to be open about what’s going on at CEP. This may seem small, but we share materials we prepare for meetings of our board of directors with our full staff of 60-plus and invite questions. There are occasionally executive session materials—related to performance reviews of Phil, for example, or CEO succession planning—that don’t go to the full staff. But, for the most part, everyone sees everything.

We also have an uncommonly caring culture—which is a credit to every person who works at CEP. Folks look out for each other, stepping up to help when personal or family issues create challenges for a colleague and celebrating professional and personal triumphs. We start each staff meeting with thank yous—and the floor is open for anyone to thank a colleague or colleagues. It sometimes takes 10 or 15 minutes before we can move on to the rest of the agenda!

The foundation of our culture is trust. We assume folks we hire want to contribute and do their best, so we provide as much autonomy and freedom—and as few rules—as possible. We are often surprised when new staff check with their managers about whether they can step away to watch their child’s theater performance or get a haircut—rather than simply informing them. If the work gets done, and folks show up for the in-person and virtual meetings when attendance is expected, that’s what matters.

“Don’t you sometimes get burned?,” we have been asked. Of course. But the fact that an occasional individual will take advantage of a trusting culture isn’t a reason to change it. It’s a reason to engage that individual to see what’s going on.

Another thing we hear is leaders of organizations complaining about mistrust, feeling hurt that folks don’t “assume good intentions.” But why should they? Most people, by the time they are an adult, have been burned more than once by those in leadership positions—whether in school, at other employers, or both. So, we try to demonstrate trust in staff from day one, but we don’t expect that to go the other way so quickly. As leaders, we remind ourselves that we must earn the trust of our staff. Being open and transparent is, of course, a big part of how we do it.

Another essential component of trust-building is owning up quickly when we make a mistake—and apologizing. In our process of navigating the pandemic and our return to offices, we got countless things wrong. But we were open about it and took responsibility for mistakes. We also had an open and participatory process, with an advisory group of staff across the organization with whom we consulted about pretty much every important decision. That helped us make fewer mistakes than we would have had we tried to go it alone. It also helped staff recognize more fully just how challenging it all was.

A Work in Process

Mission matters, too, of course. CEP’s staff are generally inspired by what we do and feel pride in the influence we are able to have. It would be harder to motivate people and sustain a strong culture if that were not the case. But we chose to focus here on people and culture practices that we think could apply across organizations pursuing very different missions.

Approaches to people and culture should be honed to fit the context of particular organizations. We can’t say whether the practices we describe would work for an organization of 1,000 or more staff, or for a staff of 10, for that matter.

We also acknowledge that we have benefitted from various advantages that not all organizations enjoy. We have had an unusually stable leadership team. We have also benefited from the type of funding—consistent multi-year general operating support as well as strong earned revenue streams (earned revenue is the majority of our revenue)—that allows us to provide strong compensation and benefits to our staff.

We know not everyone is working with these advantages. But we do think we have learned a bit over the years that has broad applicability. There can be a tendency to default to certain practices without much thought. Just because something is widely done—like paying more for degrees rather than paying for the role or tying bonuses to perceived individual performance—doesn’t mean it’s right for your organization. 

People and culture matter for organizational performance to be sustained in the long run. We see in our work with foundations that what’s going on internally directly affects how an institution is experienced by those outside. Paying close attention to people and culture, and spending the time and energy to make sure each choice is a deliberate one, is perhaps the best investment a leader can make.

Read more stories by Phil Buchanan, Alyse d’Amico & Leaha Wynn.