How do you show senior leaders the ROI of Culture Change?

I think we first need to start to evidence the roi of the current culture and from there we build the case of chance and benefits from that change. Most times we speak about culture as a very abstract concept but when you want to show the value your culture bring to your business you need first to identify the main attributes of your current culture and from those attributes identify how they help impact and generate value for the company after establishing those links we can assess its contribution to roi and build a case or not for a potential change in the culture

It is beneficial to understand the goals and challenges related to the culture change. Conduct a diagnostic to identify what you want to accomplish (future state), where you are now (current state) and identify the gaps. Action those gaps, keeping in mind that Leaders drive engagement. Utilize change management techniques to drive the communication strategy. Include employees in defining the vision, mission and goals, align on values and ensure leader behaviors are aligned with the strategy. Reward and recognize the behaviors you want to see and remember to enable all voices to be heard, creating an environment of safety and trust. Measure leadership skills, retention, and engagement to show senior leaders the ROI of culture change.

Define the Problem to Solve through deep understanding of the need and nature of the change. Understand who it impacts and what pain points it could remove for customers and employees first. This can be found by building rapport and walking in the shoes of customers and employees. For example, if they are overwhelmed with volumes of sales orders, automation can help but they need to be listened to and supported with being dissatisfied with current state and its impacts on them, and to be involved in shaping future state to be a part of the change. That way there is less resistance to the change when it comes to adoption uptake.

As Leaders we need to recognize that we have a profound impact on the culture of our organizations and that the nurturing and shaping of the culture is one of our primary roles (if not THE primary role). When we consider the impact of culture on performance and frame the opportunity in concrete everyday actions that move is closer to the culture we aspire to have (and accept there will be missteps and corrections needed along the way) we can unlock effectiveness in delivering our strategic goals

Culture is an emergent property of the group of humans that comprise it. Part of this early stage is a better understanding of your people -- not just personality, which can change across contexts, but the underlying "hidden human forces" that influence behavior and ultimately the culture. This essential stage informs your current and ideal future state for the culture, identifying early ambassadors as well as the people who will resist. This also informs your leadership development pipeline -- who fits your future culture? Who are your next-gen leaders? Unless we work at the deeper level of humanity, the vast majority of change efforts will continue to fail.

Investing in cultural change means investing in mindset, strategy, priorities, processes, the way teams work, structures & activities. It also means investing in corporate image & ESG initiatives. Changing should lead inevitably to strategic & structural changes to be impactful. To calculate ROI thus, one should calculate the impact of the change across all these areas as well as the opportunity cost (or even risk) of not changing, and this in long term ie at least 3-5 yrs. A ROI calculation on an annual basis or not including structural & strategic changes as part of the culture change impact, would just not lead to a worth-the-effort impact & investment & could lead to wrong decisions on whether this change is necessary & profitable.

Value and cost also need to take into account how receptive the organization may be. It's not easy to do! And the longer the organization has existed in its existing state, it makes change harder still!

Even though some of these valuable effects and costs can be difficult to define, take the time to make good estimates. For example, what is the most important benefit to your company of having healthier employees who are passionate about your purpose? Is it you have lower turnover? Or that you have higher engagement, which often leads to greater business performance? This makes a difference in terms of what cultural actions will make the more significant difference.

Top leaders get serious about a cultural-change effort once we help them create a tool to measure the cultural change, where they are in the journey, and the performance improvements. We use a PulseSurvey to measure the effectiveness of the directors in leading the change, the effectiveness of team leaders in implementing the change, employe engagement, leadership effectiveness, motivation, empowerment, the desired cultural changes, and the momentum of change. We also identify and measure the KPIs that are expected to improve. An improvement in the culture should reduce absenteeism. Often the monetary gain from the decrease in absenteeism alone is far greater than the cost of the cultural-change project.

The challenge here is that Culture Change is more based art than science. It can be difficult to allocate a financial number to the impact of a negative culture, to any organization. However, when there is a positive culture the organization will be aware of the sense of ownership, accountability and transparency that make a great working environment.

All organizational change is the sum of the individual changes that folks in the organization make. So, when you're thinking about feasibility, add in the costs of supporting all the individual changes needed that will add up to the culture change.

When you use a team of people from the organization to help analyze the situation, design the future state and particularly to generate the change plans, then planning becomes much more robust and the transition is somewhat easier.

The key to calculating/demonstrating ROI is to focus only on the cultural components you are trying to change. Starting with the business outcomes you are trying to achieve, determine the change(s) needed, then calculate the financial impact. Be sure to choose clean change metrics that are not influenced by too many other factors.

Trust is the glue of culture transformation. Measuring Trust, within the organization, will assist in determining where there may be gaps. Solid employee engagement survey data can assist and when using a data analysis based approach, to clearly separate the positive from the negative, the organization can make real progress, quickly!

Creating the culture-change strategy, measurement tool, project structure, and implementation plan is relatively easy. The success of a cultural change effort is mostly determined by an organization’s ability to overcome the resistances and inhibitors of change. It is critical to conduct an inhibitors analysis with the top team at the beginning of a project and create an inhibitors strategy that will allow them to identify and remove inhibitors throughout the transformation process. This is a key element of our Pulscipline? cultural change management system that has a 100% success rate in implementing cultural change in large and small organizations around the world.

The story is more than the return on investment of the traditional ROI metric… Does it hold for the short and longer term? Is it purely transactional or relational? When you take care of people in good and challenging times you show vs tell your conviction, loyalty, and you cultivate what you sow. ROI3 is what I believe can be a true difference maker short-medium-longterm 1-Return on investment In context of 2-Ripple of Impact, and 3-Ripple of Influence. When you are in alignment people know When you are not, people know - they see it, smell it, and sooner or later run from it!

Go beyond 1-way communication to active engagement and dialogue about what the future-state culture means for each team, especially when operating cross-culturally. The era of telling people what to do is over.

The call to action is conducted in 3 steps. In the first step the directors develop directing-change skills and then set up critical systems for implementing change. In the next step, the leadership is taught leading-change skills and begin making adaptations to their leadership style in line with the desired culture. With the leaders setting an example of personal change, we come to step 3, Engaging Employees. Here the employees are formally presented with the vision and strategy of the cultural change, they fine-tune the description of the desired culture and develop needed skills. The employees then implement the desired behaviors in previously set up systems supported by leaders who are now capable of leading them through the change.

It's worth to ponder: You've got two companies, same industry, different outcomes. Why? Not just products. Not a brilliant strategy. Not the smartest people. It's the hidden factor: COMPANY CULTURE. Culture drives innovation, strengthens teams, and fuels progress. ?? It’s key to success. Business performance largely springs from company culture. Investing in culture equals investing in outstanding outcomes.

There's new research that correlates the CEO's personality to the company culture. For example, Extraverted or sociable CEOs were associated with agility, collaboration, and execution. To tie culture change back to ROI also includes asking the ELT how they will role model the change the company wants to be reflected in the culture.

Culture change is not something that executive leaders need to be "sold," or "buy into," but something they have to personally run. Not just champion. Run. Own. If change isn't driven from the top through individual change of the executive leaders, it won't cascade to other leaders in the org. If any tier of leadership opts out for any reason, the change will be seen as a short-term corporate gimmick and will definitely fail. It has to be sustained long enough and by enough people for everyone to realize they can't just wait it out.

Convincing senior leaders to invest in culture change is like trying to convince a cat that swimming can be fun – not easy! To prove the ROI, you'll need to speak their language: show them how a healthier culture can boost productivity, reduce turnover, and even attract top talent. As a culture change practitioner, this is your golden ticket to career success because, let's face it, turning a grumpy cat into an Olympic swimmer is quite the feat!

Another way to show Leadership Teams the ROI of Cultural Change initiatives is using case studies and success stories. Highlighting the successful outcomes of cultural change initiatives in other organizations can provide senior leaders with tangible evidence of the benefits it can bring. I found it useful to share case studies from similar industries or companies, emphasizing specific changes made, the benefits that were realized, and how they measured success.