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The Secret to Creating a Great Company Culture: Open Communication and Feedback What's your company's unique system for encouraging trust?

By Sujan Patel

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Opinions expressed by Entrepreneur contributors are their own.


This article is included in Entrepreneur Voices on Company Culture, a new book containing insights from more than 20 contributors, entrepreneurs, and thought leaders.

In the early days of her consultancy career, IBM performance marketing expert Jackie Bassett was assigned to a project that, she's written, she "didn't like very much like." She was obliged to work crazy hours alongside a demoralized team with minimal instruction as to the expectations of her role.

Related: 6 Things Leaders Must Do to Earn Trust

Although Bassett knew deep down that her performance wasn't up to scratch, no one said anything. It wasn't until her written performance evaluation, which was handed to her more than a month after the project ended, that she realized her superiors were unhappy with her work.

Bassett was left wondering, "Why didn't she [her team leader] say anything?"

Sadly, this is far from an isolated incident. It's not unusual for companies to provide scheduled feedback -- such as when a project wraps up, or during a yearly review -- yet fail to offer it when it's needed most, and is most valuable: in real time.

Don't reserve feedback for "special occasions" like yearly reviews or the point at which something's gone wrong -- or spectacularly right. A simple "great job on xyz today" will go a long way toward boosting morale and creating a workplace in which feedback becomes part of the culture.

In fact, employees who receive regular feedback have been shown to work harder, be more engaged and offer greater loyalty to their employers. And the most successful companies have built a strong culture of feedback by making it a normal, everyday part of company life.

Let's take a look at how some of them do it.

They don't label employees.

(And they often avoid performance reviews, too).

In an interview, Bill Sims, the author of Green Beans & Ice Cream, described how Microsoft had ended the use of a system known as "forced rankings." Part of performance reviews, forced rankings used a scoring system to identify the best- and worst-performing employees. The worst-performing employees might then be fired.

The problem with such a system (aside from its glaring brutality) is that performance reviews tend to focus on isolated examples of each employee's work. They're often carried out by top-level management with little, if any, direct contact with their employees' day-to-day performance. Instead, those managers rely on third-party reports from lower management and team leaders.

In short: performance reviews are ineffective at improving performance.

Instead the way to go is to empower and encourage those who work directly with your staff. In this way, you can appraise and praise employees' work as it happens.

Related: To Establish Trust Leaders Must Get Their Hands Dirty

They separate positive and negative feedback.

A popular management strategy is to cushion the blow of negative feedback by wrapping it in positivity. This is more commonly known as the "sandwich approach."

At first glance, the sandwich approach seems logical. It certainly feels like the kinder way of delivering bad news, but in the long run, it devalues positive feedback. If you need to address poor performance, focus on the issue at hand. Likewise, offer positive feedback when it's called for -- don't ever "save it" in order to soften its bad-news component. Research has shown that aspects of both positive and negative feedback are best shared as soon as possible.

They ensure that positive feedback outweighs negative feedback

Both positive and negative feedback are very important. Positive feedback helps boost staff morale, while negative feedback allows you to address problems head-on. Both forms of feedback serve to improve performance.

That said, a staff member on the receiving end of so much negative feedback that it outweighs the positive will understandably start to feel its brunt. If this happens, chances are there are one of two issues at play:

  • A genuine problem with the staff member's performance
  • A problem with management's approach to feedback

The first example is a separate issue that is unlikely to be resolved solely by feedback of any sentiment. The second example is the fault of management, which needs to overhaul its approach to ensure that positive feedback significantly outweighs the negative. How "significantly" should that be?

Research conducted by academic expert Emily Heaphy and consultant Marcial Losada found that the average ratio of positive to negative comments for the highest-performing teams included in the study was 5.6 (nearly six positive comments for every negative one).

They devise unique systems for encouraging trust and feedback.

An effective culture of feedback has to be built on trust. If your staff members don't trust one another, or trust you, how can you expect them to take feedback seriously?

To get around this, Shopify CEO Tobi Lütke implemented a system called the "trust battery." The trust battery is "charged at 50 percent when people are first hired," he's written. "And then every time you work with someone at the company, the trust battery between the two of you is either charged or discharged, based on things like whether you deliver on what you promise."

The concept stems from the fact that humans already work that way; the battery simply serves as a metaphor.

The trust battery helps to strengthen the impact of another system that's unique to Shopify: an internal wiki that openly displays each employee's strengths and weaknesses. The wiki helps accelerate the process of learning about colleagues and how they work best (and how best to work with them). It's a great idea, but one that can only work under a culture of complete openness and trust.

It also explains why Google executive Larry Page can get away with "bursting into a room and making a big show of announcing that a set of ads sucked."

Related: 5 Obvious-Yet-Underused Ways to Build Trust

Most execs would terrify their employees with such an outburst, but Google has spent so long building an open, communicative culture of trust that in this context, it works. What's your company's unique system for encouraging trust?

Sujan Patel

Entrepreneur and Marketer, Co-founder of Web Profits

In his 14-plus years as a marketer and entrepreneur, Sujan Patel has helped hundreds of companies boost online traffic and sales and strengthen their online brand reputation. Patel is the co-founder of Web Profits and Mailshake.

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