Corporate culture has long been examined by academics and thought leaders. But it never seems to garner the broad attention it deserves within a company until something goes horribly wrong.
Over the last several decades, we’ve seen multiple scandals revolving around a culture gone awry. Accounting irregularities sent executives to prison while the global financial crisis saw some of the world’s largest banks and insurance organizations collapse or require rescue.
Culture isn’t just “a nice thing to do” for employees. Rather, culture done right can supercharge business results.
Some would argue that even though these scandals left deep financial and brand damage, there hasn’t been enough progress in addressing corporate culture issues that arguably are the underlying drivers of problems, poor business performance and harm to the bottom line. In fact, it seems almost daily we’re seeing even more corporate culture lapses in the headlines. A few recent examples that caught my attention:
- Following the announcement that former Wall Street darling General Electric has again replaced its CEO amid falling profits, one analyst opined, “GE is bloated and its culture is destroyed.” Earlier this year, The Wall Street Journal reported that the company’s “success theatre” culture that disdained bad news resulted in overly optimistic forecasts and failed strategies.
- McDonald’s, one of the world’s most recognizable brands, saw an employee walkout in ten cities to protest a culture of sexual harassment across the company’s network of franchise restaurants.
- Following Uber’s massive customer data breach cover-up, not only is Uber on the hook to pay a $148 million settlement, the terms also require the company to reform its corporate culture. More specifically, Uber must “maintain a Corporate Integrity Program that includes a hotline to report misconduct, quarterly reports to the board, implementation of privacy principles, and an annual code of conduct training.”
There’s no mistaking that corporate culture problems are costing these companies dearly when culture has the power to give companies a competitive edge. The bottom line is that culture and values define the behaviors that determine how work gets done. A strong, strategic business culture translates into business success while a frail or undefined culture can sink profits and drive away employees.
Eagle Hill Core Values Poll:
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In fact, it’s well documented that culture is linked to business performance. One study, for example, by academic and corporate researchers that examined the relationship between culture and sales at 95 auto dealerships over a period of six years found that “culture causes performance.” More specifically, the researchers found that companies earning high marks from employees on culture had higher profits.
Certainly, there is much room for organizations to improve and rethink their approach to corporate culture — for companies big and small, old and new.
But where does one even start? And can you have an impact on culture if you’re outside of the C-Suite?
Don’t leave culture to chance.
The first step is intentionality – clearly define the desired organizational culture and core values. But don’t do this in a vacuum. Seeking input from employees at all levels will help create a genuine culture that leadership and employees embrace and, more importantly, is tied to your business strategy.
The next step is to assess how well your actual culture is aligned with your desired culture. Here again, one approach is to engage with employees – in small group settings or anonymous surveys, for example. Analyze where there are gaps, then develop a re-alignment strategy.
As an example, one technology company historically was known for having a culture that focused on individual achievement. There was a hyper-competitive culture where everyone was fighting to be the smartest person in the room. This culture worked in the early days, but as the company grew and faced increasing competition, it was clear the company had to move to a more collaborative, problem-solving approach. The company implemented a number of changes to create a more collaborative work environment – from training programs to changing performance review criteria.
Keep in mind – tackling culture isn’t limited to the C-suite. Companies need leaders at all levels to be mindful of culture. Is your team aligned with the corporate culture and values? If not, start having conversations with your team about the culture and values and if there is a need to re-align. Or, perhaps you’ve discovered that a broad swath of employees is disconnected and or wants to change company culture. That’s an opportunity for managers to provide bottoms up input to leadership, which ultimately can help improve business performance.
Merriam-Webster defines the set of shared attitudes, values, goals, and practices that characterizes an institution or organization
If you can’t measure it, you can’t manage it.
Culture often is viewed as one of those “soft” issues that seems like it would be difficult to measure. But it is measurable. And it must be measured.
Here again, the first stop is with employees. One mistake some companies make is focusing too heavily on employee “happiness” as a major culture gauge. Yes, you want employees to be happy because happy employees typically deliver better results.
Instead, a better measurement of business culture is employee engagement. Why? Because engaged employees are not only happy, they are delivering business results.
Carefully crafted feedback surveys are a strong tool for measuring how a company stacks up on culture, values and engagement. Do employees at all levels know the culture and values? Is it driving their day-to-day activities? Are ethical lapses frequent or unreported? How do they feel about their co-workers buy-in? Is leadership a driving force or a culture killer?
And, there are many other metrics that are less obvious that reveal culture –absenteeism, attrition and retention, and customer satisfaction to name a few. And speaking of customers, these are stakeholders that can provide rich input for measuring how well the company’s culture and values stack up. If a company’s culture and core values center around providing exceptional customer care, customer input that is in conflict is a with this value is a major red flag. Analyzing feedback from other audiences like investors and vendors also can hone in on whether corporate culture is driving business outcomes – these are stakeholders that can offer insight on values like integrity.
Over time, tracking and analyzing responses will provide a real sense of the cultural heartbeat of your organization. You’ll also be able to compare various departments or divisions, which can provide insight on your leadership team and managers. Then, overlaying the culture results against business unit performance can provide an even deeper view of how culture is fueling or harming business performance.
Know that culture evolves.
Culture is dynamic. As a company grows, it can be a challenge to stay true to your original culture. Continual measurement and engagement with employees and other stakeholders will tell you if you’re doing it right or if it’s time to reflect and re-calibrate. Or maybe your company is in an acquisition mode. Merging corporate cultures can be more complex than merging product lines or technologies.
And sometimes, there are external factors that requires revisiting corporate culture and values.
One example is Starbucks, a company that has a reputation for carefully cultivating its culture. The company garnered international attention for racial bias incidents that were captured on video and went viral at a time when there is an ongoing national conversation on this very topic. The company handled the situation well – engaging company leaders, hitting the pause button, and closing the doors at all stores for an afternoon for a conversation and expert training on race and bias.
As companies evaluate and rethink their approaches to corporate culture, perhaps the most important new frame to rethink of culture is to consider it a hard asset that adds real value to your company. Culture done right will give you a competitive advantage to recruit and retain top talent that will drive business success. Culture isn’t just “a nice thing to do” for employees. Rather, culture done right can supercharge business results.