Investing In Culture — Why Our Thesis for Culture-as-a-Service Platform, Nectar, Rings True to You Today and Tomorrow

The PeakSpan team is thrilled to announce a commitment of up to $40M in Series B growth financing for Nectar, a leading provider of employee recognition software for small and medium-sized organizations. Nectar sits within PeakSpan’s Human Capital Management theme — specifically the Employee Engagement and Experience subsegments, in which we have been highly active with numerous partnerships and exits over the past several years. This thought piece explores the business case for driving exceptional organizational culture through the democratization of employee recognition, engagement, and communication with the goal of improving employee engagement, reinforcing values and culture, and driving authentic alignment behind a shared mission.

Part I: The Culture Correlation

What characterizes the culture at your place of work? What are the core values or guiding principles that define your organization? At its core, the culture of an organization is the collection of behaviors and shared values of its employees. These shared values and behaviors form the connective tissue that influence how a workforce functions, impacting operations and performance. So much so, that $8.8 trillion dollars was left on the table in 2023 alone, because of disengaged employees — for perspective, that is equivalent to 9% of global GDP[1].

A well-defined set of values can encourage workforce behaviors that drive specific business outcomes. You may be familiar with some of these cases below:

· Google is known for its innovative and inclusive culture that encourages creativity, collaboration, and risk-taking[2]. The company also offers employees flexible work hours and wellness programs. How does this translate to Google’s productivity? Promoting a culture of innovation has contributed to groundbreaking products, while committing to employee well-being and autonomy[3] attracts top talent, aiding sustained growth and market leadership.

· Patagonia is committed to environmental sustainability and social responsibility[4]. The business outcome: Patagonia’s culture strongly resonates with environmentally conscious consumers and their commitment to ethical practices attracts like-minded employees and customers, all contributing to brand loyalty and market differentiation.

· Enron, a former American energy, commodities, and services company maintained a culture widely considered to be “aggressively competitive and at times unethical[5].” The outcome is one we know all too well — eventual collapse in 2001. The negative culture contributed to significant financial losses, legal repercussions, and damage to stakeholders[6].

These cases serve as blueprints and cautionary tales, highlighting how important it is to the success of a business to carefully craft culture. So, how can we establish a culture that drives towards optimized business productivity? My team and I immersed ourselves in this topic for several months, engaging with innovators and experts, including Dr. Andre Martin, Culture Expert, Former CLO of Target, Nike, Mars (and others like Google), and Author of Wrong Fit, Right Fit. Here’s what we learned:

Your Culture Is the Repetition of Behaviors That Showcase Your Values — It Can Change

Two of the most powerful methods used to influence behaviors are positive reinforcement and social learning. Positive reinforcement involves providing rewards or positive consequences (intrinsic or extrinsic) immediately following a desired behavior, with the goal of increasing the likelihood that the behavior will repeat in the future. This approach is powerful because it impacts behaviors in the long-term and is effective across age groups and cultural backgrounds. Why? Neuroscientific research has shown that positive reinforcement activates reward pathways in the brain, releasing neurotransmitters like dopamine that reinforce learning and behavior[7]. Positive reinforcement also enhances motivation and engagement from this linkage. Moreover, the act of observing individuals being rewarded for specific behavior stimulates a process of imitation among others in the social group. This amplifies the impact of positive reinforcement through the mechanism of social learning, creating a powerful cycle of behavior adoption and reinforcement within a workforce[8]. So, why limit positive reinforcement to a once or twice-per-year review? Why limit positive reinforcement to what managers see or what employees self-report? What would happen if you reinforce all positive behavior, even the “small things” that managers are not privy to? What would happen if you democratize positive reinforcement throughout an organization and enable cultural improvement, at scale? This question is one we asked ourselves at PeakSpan, leading us to adopt and soon after, invest in Nectar.

Part II: Positioned To Lead

Founded in 2019 by Co-Founders Trevor Larson, Jack Horne, and Drew Hollis, the Nectar team brings to bear an exceptional collection of innovation, determination, and humility that threads every facet of the organization. Below details the three key elements crucial to our thesis.

Nectar’s Employee Recognition Software Democratizes Positive Reinforcement + Automates Social Learning

Nectar enables all employees to recognize and reward their colleagues within the flow of work (Slack, Teams, Mobile App) regardless of workforce dynamics (e.g., remote, hybrid). Employee recognition boosts morale and motivation, increases productivity, enhances retention, improves employer branding and drives innovation[9]. Why does this work?

• Behavioral Conditioning: When employees receive recognition for their efforts, they are more likely to repeat those behaviors in the future[10].
• Intrinsic Motivation: When employees feel valued and acknowledged for their contributions, it reinforces their sense of competence, autonomy, and relatedness (according to Self-Determination Theory — the framework and study of human motivation and personality[11]), thereby enhancing motivation.
• Social Validation: When peers and leaders acknowledge achievements, it validates employees’ efforts and strengthens their identity as valuable contributors to the team, fostering a sense of belonging[12].
• Emotional Health: Triggering positive emotions like pride, satisfaction, and happiness, contribute to a positive work environment and improved morale[13].
• Trust and Rapport: Frequent recognition builds trust and rapport, which is essential for effective communication, collaboration, and job satisfaction.

“In every team I have ever had, I instituted a practice called “positive gossip” at the end of every team meeting. We would share examples of individuals or teams who were working the way we want to work and then would send a note or email to everyone following the email. This practice has ripple effects across my department as we became more aware of what was going right and calibrated on the behaviors we wanted to see every day.” — Andre Martin

Nectar’s Approach to Culture-Enhancement Was Tailor-Made

Nectar’s customers are often plagued with limited resources within HR, resulting in infrequent recognition and / or an overemphasis on monetary rewards. Relying solely on monetary rewards for recognition can be limiting. Employees often value meaningful and personalized recognition beyond financial incentives.

“At Juniper Networks we did quarterly “Star” Awards. The award was great but the thoughtful recognition by the executive team meant a tremendous amount to the employees receiving the honor.” — Susan Lovegren, Former CHRO and Chief People Officer at Juniper Networks, Medallia, and AppDynamics.

Nectar’s Approach: Nectar built a platform that prioritizes meaningful recognition where all recognition instances are approved in real-time by a meaningful meter. Nectar also leverages a balanced approach to rewards including personalized praise, monetary rewards with diverse uses (Amazon purchases, company swag, gift cards, charitable giving, etc.), and social validation. Additionally, Nectar’s customers often fight an inability to tie recognition to business goals. When recognition efforts are disconnected from broader organizational goals and values, employees may struggle to see the purpose or impact of their contributions.

“Many of these tools are seen as “fluffy” or “nice to haves” because we haven’t done a great job of connecting them to the bottom line. However, in an era where burnout, languishing, quiet quitting, and a crisis of commitment dominate the headlines, the time for using recognition as a lever for growth is here.” — Andre Martin

Nectar’s Approach: Nectar directly ties recognition to business goals by (i) visibly posting the company’s key values on their Nectar social page and (ii) requiring every call-out to tie back to a core value — as exhibited in the example below. It is also worth noting that Nectar’s most recent product expansion, Nominations, showcases the team’s commitment to tying business objectives to all future innovations. Finally, Nectar customers often struggle with insufficient visibility and capacity throughout departmental management. Moreover, placing the burden solely on a select few managers to lead consistent culture initiatives is risky — a majority of management and executives are already burnt out[14].

“Outside of a platform, an HR leader would need to build the capability in leaders and make the ritual of recognition an expectation of every manager’s or leader’s role at the company. To do this, we would need to have leaders see themselves as “star makers” or developers of talent and culture. This isn’t always the case.” — Andre Martin

Nectar’s Approach: Nectar automates manual recognition workflows, increasing volume from 1–3 times per year to consistent. This is clear when looking at product usage — not only is Nectar user-friendly, but a user favorite, demanding very little training and garnering engagement levels that are typically unheard of in the HR software community[15]. Nectar’s solution also expands behavior visibility from a select few to an entire workforce. Nectar achieves this by emphasizing peer-to-peer recognition — a crucial tool to fight quiet quitting.

“Quiet quitting is what happens when someone psychologically disengages from work. They may be physically present or logged into their computer, but they don’t know what to do or why it matters. They also don’t have any supportive bonds with their coworkers, boss or their organization.” — Gallup

Peer-to-peer recognition promotes camaraderie and aims to establish mutual respect among team members. For instance, a shoutout from a peer may feel ‘more genuine’ as it comes from someone who is “in your shoes” and understands the challenge / workflows firsthand. Employees also strengthen relationships thus, encouraging collaboration and fostering a culture of teamwork. Enabling the whole organization also expands the scope of recognition beyond hierarchical structures. Employees across various levels and departments can acknowledge each other’s contributions, creating a more inclusive and supportive environment. This often means behaviors that have previously gone unnoticed will surface — after all, managers cannot be around to see and callout everything. Real-time visibility into each other’s work sets the tone for prompt recognition and establishes the norm of ‘continuous improvement and learning.’

Tomorrow –

The reality we face is that almost all employees and managers feel unprepared for the future of work[16] — coined The Great Reflection. Gartner research analysts have guided employers to respond with “The Human Deal”, taking measures to ensure employees feel further understood, autonomous, valued, cared for and invested in. Nectar’s platform serves as one of the strongest systems of engagement available to SMB businesses that want to prioritize connectivity and enhance experience and culture at scale.

“In the post-pandemic workplace, employees are looking for three things: meaning, flexibility, and connection. Recognition can help with all three. Recognition shows your employees that you see them, value them, and that their work is important. Further, the more they know what great looks like, the more flexibility and freedom you can give them where work gets done. Lastly, recognition connects us as it focuses our attention and intention on finding people who are ‘doing great things.’” — Andre Martin

This seems to ring true today, tomorrow and for a while to come.

In conclusion, we see Nectar as having all the makings of a future market leader in the employee recognition and culture space: i) world-class management team, ii) ample expansion vectors, iii) best-in-class product, user experience, roadmap and support team, iv) robust market size with core unaddressed demand, and v) intense product-market fit. Moving forward, Nectar will further invest into GTM and product expansion to continue serving their customers with best-in-class engagement and experience solutions. The PeakSpan team looks forward to supporting Nectar with capital and value-add resources as they embark on the next phase of their journey in transforming cultures across the U.S. and beyond!

[1] State of the Global Workplace: 2023 Report

[2] Google’s Culture

[3] Book: WorkRules

[4] Patagonia Culture Statement

[5] Harvard Business Review: Enron’s Culture

[6] Wall Street Journal

[7] National Library of Medicine: The Brain’s Reward System

[8] Social Learning Theory; Albert Bandura

[9] Quantum Workplace Research

[10] National Library of Medicine: Operant Conditioning

[11] Center For Self-Determination Theory

[12] Society For Personality and Social Psychology: Social Verification Theory

[13] National Library of Medicine: The Role of Positive Emotions in Positive Psychology

[14] Deloitte: The C-Suite’s Role in Well-Being

[15] Feedback from Nectar customers

[16] Gartner