An organization’s culture acutely impacts business results, from customer loyalty, to innovation, to achieving strategic financial goals.
by Isla Bragg and Mikelle Parnes
Culture has proven time and again to be a powerful force that can either accelerate, or topple, the most well thought out corporate strategies. Organizations tend to focus and excel only on what they can tactically measure, and companies have learned to expertly analyze financial metrics, competitor performance, and operational efficiency.
By contrast, organizational culture, which seems vague, pervasive, and hard to quantify, is often still ignored. Yet as our workforce becomes increasingly skilled and savvy, culture can be a relatively cost effective way for an organization to differentiate itself as an employer and retain and engage top talent to support and achieve its most strategic goals.
It is time to start measuring and maximizing culture.
What is organizational culture?
Organizational culture is often described as “the way we do things around here.” While culture is invisibly shaped by the collective values of organizational members who keep social norms in place, it can also be observed in everything from employee attitudes, business policies, decision making, and leadership style, to performance measurement, rewards, use of language, dress code, business hours, organizational structure, and more.
At the root of any organizational culture are the values held by organizational members. These values often manifest in observable employee behaviors and artifacts (such as office layout, decor, and dress code). Every organization has a culture, either by design or by default. If your organization has not purposefully defined, established and nurtured a desired culture, then an unintentional “way of doing things” has developed.
Humans are social creatures – we look toward the actions of others, often subconsciously, to understand how we should behave. In this way, the perceptions and behaviors of employees becomes pervasive across entire departments and offices, guiding the behaviors of all employees, regardless of age, gender, location, role, or rank.
Culture's profound impact on business
When intentionally developed and nurtured, corporate culture can be a huge competitive advantage, resistant to imitation by competitors. Organizations with strong workplace cultures report more than five times the revenue of organizations with poor cultures. Companies with positive cultures also significantly outperformed other organizations in workforce growth, stock prices and net income.
Think of the most successful organizations in your industry. Do they have a distinctive culture that you can define? Most industry leaders–Amazon (and its subsidiary Zappos), Apple, Disney, General Electric, Google, Microsoft, Nordstrom, REI, Southwest Airlines, and Starbucks–have cultures that employees and customers alike recognize. It’s no coincidence that companies with strong cultures have made it to the top of their industries.
Despite its importance to bottom-line success, culture is often ignored because people have difficulty recognizing the culture that surrounds them every day. When culture is not measured and managed, it can influence the behaviors of employees in unplanned ways – often devastating employee engagement and retention, obstructing corporate strategies and goals, and ultimately eroding the bottom line.
How an organization can leverage culture
A key place to start leveraging culture within your organization is to start using metrics to purposefully modify or leverage their culture to achieve strategic goals. This approach helps to quantify the values of individual employees, teams, and the workforce as a whole to understand the current, actual, organizational culture. From there you can start to identify values that support business goals, develop a culture from these values, and track progress with value-based metrics.
- Measure your current culture
Capture your organization’s culture with hard data to ensure a concrete understanding of where you are today. By utilizing a brief culture assessment survey, such as RoundPegg, determine your employees’ personal core values that drive their behavior and the culture of your company. Employees’ values may be aggregated across the entire employee population (and may also be broken-down by departments, geographies, etc.) revealing the alignment between your employees’ values and your organization’s aspirational culture. In addition to identifying the values held by your organization, determine how intensely and consistently these values are held across your workforce and if there are potential conflicts that may impact business results.
- Define an optimal culture
Your culture vision should articulate what your organization values and why these values matter. Based on the values already present in your workforce, define desired values and culture that will drive employee behavior to align with your strategy. This requires an understanding of how daily employee behavior and perceptions can either support or impair company goals. Does your strategy require employees to work as a team? Be creative? Create order and follow guidelines? Work autonomously? Your aspired culture can be as unique as your strategy. One culture does not fit all; rather, it is about aligning the aspects of culture that affect the attainment of your goals
- Embed culture in the organization
To make the desired culture real, your values must be instilled pervasively throughout the organization. Attempts to instill your values in the organization will certainly fail if your efforts are limited to sending a list of values to HR with the order of cascading the new culture down the management hierarchy. It takes much, much more.
Values must be intentionally embedded in every phase of the employee life cycle, from screening candidates to motivating, measuring and rewarding your veteran employees. When hiring new talent, select candidates that support your culture and will be successful in it. After employees are hired, they must be measured and rewarded based on their culture fit. Designing competencies and performance metrics in support of aspirational values and culture will drive employee behaviors to support the desired culture – making your aspirational culture your actual culture.
- Transform the way you work
Culture lives in your employees, making it essential to consider how this transformation affects your people. Even more so than other transformation efforts, changing your organizational culture will require purposeful management and leadership attention. You can support this by embedding your new culture and values through performance management program review, talent acquisition process enhancement, strategic communications, stakeholder engagement, role model selection and even leadership coaching, if desired.
In other words, it is important to translate your desired values into behaviors, processes and artifacts that drive your organization to literally live the values that are written on the wall. Using real data will allow you to measure progress as your organizational culture begins to transform.
Through metrics, you will know when your optimal culture has been achieved. Similar to assessing employees’ actual personal values in Step 1, you can utilize web or mobile based pulse surveys to capture employees’ perceptions of how well your organization is actually living its espoused values. Slalom can even help compare how well you are doing in relation to other companies.
Be the company you want to be
Your organizational culture touches every aspect of your business, from the candidates that join your team–and the behaviors and engagement of your existing talent–to the ability of your employees to innovate, make decisions – and stick to them. Culture impacts the satisfaction of your customers and the perceptions of your stakeholders and investors. Ultimately, culture impacts the success of company strategies and your bottom line.
Don’t be careless with culture. Measure it, mold it, and make it matter.