Corporate Culture Matters At These Companies

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Yahoo's CEO made the headlines when she seemingly removed the ability for employees to work remotely, a big culture change for a tech company. The move highlights how social issues can often be more important than money when it comes to running a business. As an investor, corporate culture is something that should be watched.

Working from home

Yahoo's relatively new CEO Marissa Mayer came from rival Google to much fanfare. One of the big issues was that she was expecting. She gave birth and then worked from home for a time while taking care of her newborn. News that she has seemingly rescinded the company's work from home privilege came as something of a shock to me.

The obvious reason of it looking like a double standard aside, part of the corporate culture of so many technology companies is the flexibility of work schedules. In fact, there's a great deal of research supporting the notion that today's younger workers crave the ability to better meld work and home life. The ability to work from home is a key aspect of that.

Moreover, what used to be considered a perk is, at this point, almost an assumed right at the types of technology companies Yahoo! is competing against for talent. While Mayer believes the move will foster a more creative and collaborative work environment, it could also lead to a culture change that drives creative people away.

Culture Club

Corporate culture is tricky and can be hard to discern from the outside. However, take one step into a company, or compete against them directly, and it can quickly become obvious. The pluses and minuses of a culture can also spread like wildfire to new employees. For example, a driven culture quickly leads less aggressive types to leave and pushes self starters to work even harder. Less positive corporate cultures have a similar effect, but in a negative way.

A bum merger

One of the places that corporate culture most often causes friction is mergers and acquisitions. Take the AOL (NYSE: AOL) and Time Warner (NYSE: TWX) marriage. While it started out as AOL buying Time Warner, a struggling AOL and infighting between the leaders of the two companies led to publicly noted strife.

An anonymous quote from a Time Warner executive for a 2003 LA Times article shows how bad it got: "We've all got to stop shooting at the AOL people and give them a chance. They're working really hard trying to fix this thing." Time Warner eventually wound up being the lead entity as AOL's walled garden approach to the Internet had clearly passed its prime. AOL was spun off as a separate company in late 2009 after a rocky marriage that lasted less than a decade.

The HP way

Mergers and acquisitions aren't the only events that should lead investors to monitor corporate cultures. Mayer's change at Yahoo! clearly demonstrates that management changes can also turn corporate cultures on their heads. That can be both good and bad.

Hewlett-Packard (NYSE: HPQ), for example, ran through several high-profile CEOs in the last decade. Each one came with their own style and approach. That none was able to stick, suggests that the vaunted HP way instilled by the company's founders wasn't an easy fit. That said, Meg Whitman, the company's newest CEO, came in and quickly moved everyone into cubicles—herself included.

This was a big shift at a company that was in the technology space, but was far more buttoned down than most of its competitors. However, it was a clear attempt by Whitman to bring the collaborative and entrepreneurial style she was used to at her former employer, eBay, to her new company. With so many high-level changes at the company, fostering more collaboration was probably the right move, a belief backed by recent improvement on the business front.

Watch and listen

It can be hard to get a sense of a company's culture. However, if you pay enough attention, you can figure it out. Read the company's press releases, listen to corporate events, and watch the way in which the company is portrayed in the media. All of these things will give you an idea of what the inside of a company is like.

There are even some web sites dedicated to giving employees an anonymous outlet for sharing their experiences, but these tend to attract more malcontents than happy employees. Clearly, try to avoid companies with poisonous cultures. Hard-driving cultures can work in some businesses, though not in all. Creative environments, meanwhile, tend to be good all around.


Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends eBay and Google. The Motley Fool owns shares of eBay and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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