When working with senior teams on the topic of organizational culture, I am sometimes reminded of Mayakovsky’s 1926 poem, “Talking with the taxman about poetry“. In this piece Mayakovsky argues with his comrade the taxman over how to account for the fiscal value of his literary output and what a hard, undervalued endeavor writing poetry can be. The irony of trying to account for the value of poetry in hard dollars (or rubles in Mayakovsky’s case) isn’t lost on those brave souls who try to tackle organizational culture.
Most senior executives understand the importance of workforce culture, but many remain dubious — both about its importance and an organization’s ability to change. Dealing with skeptic executives can be challenging, but the value of a purposeful culture cannot be denied. Studies such as Kotter and Heskett(1) and Collins and Porras(2) examined the correlation between a company having a defined purposeful culture and delivering on business results. If we think of an organization not as a machine but as a social construct, culture can be seen as the overall health and vitality of whole entity — and the healthier companies thrive.
Whether you like it or not…
The first thing to know about culture is that it is not optional. You can’t choose to be culture-less. So wouldn’t it be beneficial to have one that works in favor of — and not against — your financial goals?
Developing a purposeful culture means starting with a goal/vision/definition of what type of culture you require, then establishing some clear guidelines to gauge your initiatives against. Does the initiative support the espoused culture or does it go counter? Simple tweaks can often ensure alignment.
Most large companies have — at some point — defined their espoused culture through mission statements and competencies, though the most effective aspirational cultures are defined by values and made concrete through behaviors.
There’s no doubt that managing your culture requires constant attention, and if it’s not something you’ve addressed before it’s likely to be a lot of hard work. Kotter and Heskett, in the landmark study that led to their classic book Corporate Culture and Performance, estimate it can take 5 to 15 years to actually change a culture, depending on the size of the organization.
It seems daunting, but if you’re committed to employee engagement the ultimate, long-range benefits of taking action outweigh the organization that you might get by default:
- A culture that may be supportive of engagement now (by luck or market forces) but is not necessarily sustainable.
- A neutral culture that forces your organization to work harder and invest more in “private good” engagement efforts.
- An organization that continuously incurs preventable expenses in image repair and turn-over costs.
- A toxic culture that undermines all your other employee-engagement strategies.
There is a simple but significant way to help achieve [long term value]: Evaluate and compensate CEOs, at least partly, on their ability to create a culture of aligned, engaged employees. That would require […] balancing financial metrics with measures that track the ability to forge internal alignment.
– Kenneth W. Freeman in HBR blog (Oct 2011)
In these discussions, senior leaders are quick to jump to benchmarks. How does our culture compare to that of other firms? This begs the question of how you measure something as amorphous as culture — and how do you evaluate it objectively when you are part of it? Sure enough, researchers have devised numerous culture benchmarking instruments and continue to debate their value, usefulness, and reliability.
But in the case of many senior teams — and especially when dealing with company directors — their detachment from the day-to-day operations makes it challenging for them to appreciate the impact that culture is having on the business’s ability to meet objectives. How would a board member appreciate how the culture of the sales team is hindering the company’s ability to build meaningful collaborations with key clients? How would they know that it’s the strong culture in customer service that is preventing many clients from jumping to the competition? When we report back to senior leaders on how the culture is perceived among the rank and file, there is most often a profound disconnect between that world and the one seen from the C-suite.
More useful than external benchmarking is an analysis of the gap between your existing culture and your espoused culture. For example, our research indicates only about half of leaders do a good job of walking the organizational talk. According to our analysis of culture scans from a wide range of organizations, the behavior of only 56 percent of senior leaders and 51 percent of middle managers is perceived as very or mostly consistent with the organization’s values.
So, what does a high-performance culture look like?
Corporate culture at its most basic level is the sum of an organization’s behaviors and practices. It reveals itself in big and small decisions as well as daily practices (“how we do things around here”) that tend to perpetuate themselves.
High-performance cultures are shaped around the following three components:
- A clear, compelling corporate mission. A statement that answers the question of why the company exists.
- Shared organizational values. Core values guide employee behavior and influence business practices. Your business strategies shift to meet market demands — your core values don’t.
- Shared accountability. High-performance cultures require an environment that encourages employee ownership of both the organization’s bottom-line results and its cultural foundation.
One CIO explained why a high-performance culture matters in his department:
“The most fascinating aspect of this to me is that the organization has learned to draw strength, passion, and energy from within itself. It is no longer necessary to our very survival that I be available to offer my passion and energy. Not only has it dispersed itself among my leadership team, many leaders have emerged at all levels of the organization with a newfound confidence and self-awareness of what we stand for and what we are capable of.”
Culture’s impact on engagement
Every engagement initiative that we undertake touches culture. Culture and engagement have a symbiotic relationship — engaged employees embrace and build the culture at the grassroots level, and culture can corral the bad behavior of the outliers. As employees our behavior is benchmarked by that of those around us — if working hard is part of the culture, the slackers soon stand out. So while an effective engagement strategy starts at the individual level, there is a strong cultural impact in helping move the center of gravity for the whole employee population towards higher levels of engagement.
In our experience, a high-performance culture can positively impact employee engagement in the following ways:
- Provides meaning and emotional connection to a workforce searching for employment that offers more than just a paycheck.
- Prevents bad business practices and behavior. High-performance cultures weed out leaders who don’t live the core values before those leaders’ behaviors damage morale and drive top talent out the door.
- Guides and inspires employee decisions — whether their manager is watching or not.
- Encourages innovation, risk-taking, and trust — all qualities characteristic of an environment that encourages employee use of talents and discretionary effort.
- Supports “fit.” When an organization focuses on values, not just results, hiring and firing decisions are easier to make. Better yet, bad hires often self-select out.
- Attracts and retains star performers who not only have the skills required to achieve ambitious business goals but who are also invigorated by the company’s core beliefs.
- Provides fixed points of reference and stability during periods of great change or crisis. It also helps ensure that, if a crisis hits, leaders at all levels act in a way employees can be proud of.
- Aligns employees with diverse interests around shared goals. A high-performance culture creates a sense of community and encourages teamwork. The result: a feeling of belonging to something bigger than one’s self.
Leadership development is culture change
As you review your organizational development plans, you will find that many initiatives already underway can step in to support your culture goals. Take leadership development. We frequently work with clients who are chasing specific outcomes when conducting leadership development. By spending a little time understanding the espoused culture, we can weave this into each initiative and help tie back to and reinforce the behavioral anchors that will help the organization move forward.
So, if you are a senior executive and still have reservations about investing time on your organization’s culture, remember:
- Culture is not optional — and letting your culture evolve organically will work against you.
- Defining culture is the important first step — you do not need a “culture initiative” per se.
- Leadership development and all employee-engagement initiatives are opportunities to reinforce and build the culture.
- Executives ultimately have to hold themselves and others accountable for steering the culture.
1. Corporate Culture and Performance by John P. Kotter and James L. Heskett.
2. Built to Last: Successful Habits of Visionary Companies by Jim Collins and Jerry I. Porras.
Fraser Marlow is based in BlessingWhite’s Princeton headquarters and manages all marketing & research functions. He can be reached at firstname.lastname@example.org.