Why Company Culture Is Your Hidden Profit Driver | Dan Pascone with Jay Doran | Ep #31

Jay Doran is the founder and CEO of Culture Matters, an advisory and consulting firm, and the host of the Culture Matters podcast. For over 10 years, his core expertise has been working with founders as they mature into the role of CEO. Jay describes consulting as a helping profession: the people behind the scenes who ask necessary questions and give honest feedback, acting as an accountability mechanism for leaders.

He built his reputation on partnership conflicts and distressed situations, including mergers, which he says made him a better advisor. Dan recently joined Jay’s podcast as a guest, and this episode is the return visit.

Dan put the question plainly: this is a show about money, so how does culture help a company make it? Jay’s answer is that culture isn’t a feel-good extra. He describes it as the values of the organization, the story that drives it, and how leadership actually works. At its root, he says, it’s people going to work, serving customers, and building their lives while they do it.

His chain runs like this: culture is a consequence of customer service, and the way a company reinvests in its people drives that service, which drives profit. That makes it a hiring conversation and a reinvestment conversation, not a mood. Profit, he says, comes after the service creates more value than was there before.

Retention is part of it. People have more options now and stay with companies for shorter stretches. Jay asks leaders to consider how to get the most out of someone who may be around for a short time, or how to build a culture where someone wants to stay longer. The longer a really good person stays, the more they’re worth to the company. To see how engagement gets measured, Gallup’s workplace research is a useful place to start.

Jay says culture is often treated as amorphous and philosophical, squeezed into a niche like mergers and acquisitions, or reduced to beanbags and pizza parties. Dan asked what replaces those perks in a remote or hybrid company. Jay’s answer is that pizza and beanbags aren’t the problem. People will naturally want to get together if they have relationships at work. The better question is what builds those relationships. He says they’re a symptom of:

• Clear aim: a vision the team understands without it needing to be talked about.
• Trusted management: leaders who live the core values.
• Accountability: coaching and self-development platforms that create a feedback loop.
• Reinvestment: the company visibly putting capital back into the business and its people.

Jay compares it to a financial advisor who has an advisor of their own: self-aware, with a feedback loop built in. When the team stops showing up for the extras, he says, it’s telling you something is missing. He also reminds leaders that the people working for them are often as smart as they are, or smarter. And like any relationship, culture has ups and downs. It’s revealed in the bad times and invested in during the good ones.

Jay says the world has changed. When technology lets people work from home fully or in a hybrid setup, it changes how a company invests its capital in its people. He notes that very senior leaders now say culture isn’t pizza and beanbags and is something they need to pay attention to. If it isn’t right, he says, the math behind a private equity investment may not work, a merger may not work, and talented people may keep fielding offers from the next company. His word for it is a hedge.

His background shows why. Jay says the 2 biggest disruptors of a small business are personal divorce and business divorce, and he cut his teeth on distressed assets because distressed cultures become distressed assets. In a merger of 2 cultures, he says, a small company can infect a big one, like an infection in a wound that’s trying to heal. He believes companies that don’t understand culture risk failing, though he’s quick to note he’s incentivized to say so because he likes culture. He isn’t here to impose what anyone’s culture should be, only to say it matters.

Jay describes the usual path: sales first, then marketing, then customers, then a need for help with fulfillment. At that point, the founder needs people who care about the business as much as they do. But those people don’t get the big win, so they have to like you at some level and believe they’ll get paid. Much of the early journey runs on intuition, with some fear and not much clarity, and Jay says that’s part of the process.

What a founder needs to model also depends on the stage. Someone who started yesterday faces different demands than someone 5 years in or 15 years in, because size, headcount, and customer count change the job. When a founder hits the goal, the questions change too:

• What’s next? Hitting the goal raises the question of what the goal becomes.
• Who’s on the team? And do they know what they’re doing?
• Has the role changed? What people need to be doing may be different now.

Jay adds that a founder’s best year can create a surprising letdown, such as boredom or apathy, and an urge to chase that high by starting something new. Without the people and the clarity, that may be exactly what the organization doesn’t need. The same impulses that made the business great can destroy it.

He compares the journey to market volatility. A chart of the S&P 500 isn’t a straight line, and you have to look farther and farther out for the longer-term picture to show. The entrepreneurial path has its own swings, and his message is to stay in the game. The comparison is about perspective, not a promise about any investment.

Dan framed the shift. Early on, you figure out how to sell. Then you have to grow and scale, and that takes a different skill: leading people. He believes the ability to lead and get people to follow produces the best financial results. Jay’s answer starts with hiring. If you hire the right person, they’ll watch your values and your behavior, and you have to get out of their way. That doesn’t mean you stop working. It can mean picking up something heavier. It has to make sense to them and to the future of the company, and that’s where trust builds. Jay opened the show with a line about invisible threads being the strongest ties.

It’s also a change of context. A founder used to selling communicates with words to customers and with actions through fulfillment. Leading a team is a different pattern. If you’ve sold your way out of a job, Jay says, you have to figure out what your job is again.

Jay passed along a point from a search firm founder he interviewed: for senior leaders, compensation isn’t the motivator and can even be a demotivator. What motivates is opportunity and white space, meaning room to grow and room to be creative. The best people could take your job, Jay says, and they won’t want to if they see you carrying something heavier and everyone moving in the same direction. The economic piece still matters. He says incentives should help people feel proud of what they do and believe in the company. If equity is part of how you reward leaders, our 7-minute guide to equity compensation is a good primer.

On the other side, Jay says an institution that isn’t run well can wear down great people. Many who have checked out weren’t bad hires. They became disenfranchised. He also says to ask who hired them and why. Mistakes are inevitable, and what matters is the ratio: are you wrong 80% of the time or 20% of the time? His line: focus creates value, and the lack of it implodes it.

If most of your wealth is in a business you lead, culture isn’t only a leadership topic. It’s a balance sheet topic. Culture problems tend to show up in the numbers late, after the partner conflict, the key departures, or the stalled integration. By then they’ve already reached your personal net worth. Jay’s examples, from partnership disputes to mergers that don’t work, are situations where the value of 1 asset can move quickly, and for many founders that asset is the largest one they own.

The second thing people miss is that Jay’s volatility point applies to your personal plan too. Culture is revealed in the bad times and invested in during the good ones. A financial plan works the same way: it gets built in good years and tested in bad ones. The time to build liquidity outside the business is before you need it.

Finally, Jay’s personal hack is worth borrowing: everything has a consequence, so choose what you’re going to be terrible at. Be clear about what you’re giving up to get something. For a founder, that conversation belongs alongside the one about how much of your life and wealth is riding on a single company.

This illustration isn’t a client, and the figures are for education only. Say a founder has $5M of net worth, and the kind of culture problem Jay describes hits the business: a partnership dispute and the loss of a few key people reduce the company’s value by 25%. Here’s how the same event lands in 2 different setups:

• Mostly in the business: $4M of the $5M sits in the company and $1M sits outside it. A 25% drop in the business is $1M, which cuts total net worth by 20%, to $4M.
• Built outside the business over time: $3M sits in the company and $2M sits outside it. The same 25% drop is $750K, which cuts total net worth by 15%, to $4.25M.

Neither founder avoided the problem. The second one has $250K more left, plus more liquid assets and more flexibility to keep investing in the business while it recovers. The figures ignore taxes, fees, and deal terms, and real outcomes vary.

We’re a fee-only fiduciary planning firm, not a culture consultant. Jay works on the business. We work on the personal balance sheet around it. We start with the life you want and work backward, which is Life Driven Investing, our approach to building a portfolio backward from your life, not forward from a product. We sort money into our Four Liquidity Bands by when you’ll need it: 0–2 years, 3–5 years, 6–10 years, and 10+ years, so a rough year in the business is less likely to dictate your next 5 years of living. And we review the plan in our Quarterly Strategy Rhythm, a set quarterly review of your whole financial picture.

For many leaders, the longer-term goal is making work optional. We call that Hybrid Retirement, our term for designing your work on purpose so it becomes optional and flexible while your portfolio covers the gap. We cover how it works in our guide to how a corporate executive can plan a hybrid retirement.

This conversation is for founders, CEOs, and senior leaders in their 40s and 50s with household income of $500,000 or more whose wealth is tied to a business they lead or to company equity. If you’re building the team, the culture, and the company, and you haven’t yet built a personal plan that would hold if the business had a rough year, this is the kind of situation we help with.

If you lead a company, or hold meaningful equity in one, it helps to have a second set of eyes on how your business, your taxes, and your personal plan fit together. Book a free Wealth Strategy Call and we'll talk through your situation. It's a conversation, not a sales pitch.