Can You Tie "Data" To "Culture?"

The importance of culture

Culture has become increasingly important, even to execs, in the past decade. Some of the notable findings around culture tying back to the business include:

• 94% of executives believe that a distinct workplace culture is important to their business.
• Strong cultures are associated with 20% higher productivity and significantly less turnover.
• 13 companies have appeared on every edition of Fortune’s 100 Best Companies To Work For, and those 13 companies outperform the market by 495% annually.
• 88% of job seekers consider the culture a top priority in their search.
• An average employee is 26% more likely to leave their job as the result of a bad culture. (That percentage has been shown in some studies to be higher for executive talent, who often have more options.)
• 32% of job-seekers would take a $10,000 pay cut on compensation package for a perceived great culture.
• 38% of American employees define culture and a purpose within the culture as key to their work and retention.

We know culture is a big deal, and a defining feature of modern organizations.

But, um, what exactly is it?

Deloitte has long been a leader in the research space for culture and engagement, and even they admit that only 28% of executives understand what “culture” means , and only 12% believe their company has a strong culture that’s aligned with getting the best talent.

We talk about it a lot, and it seems important, but we also don’t seem to know exactly what it is.

Can we fix this?

Begin here: “Data Is The New Oil”

Businesses have become significantly more data-driven in the last 20 years. Amazon and Facebook are shining examples of companies that achieved huge market caps and made their core people very rich by harnessing the power of data. It became big business. If you’re not data-driven right now, you’re behind.

And this is where culture has a problem. We vaguely sorta understand the importance of culture — see the research above — but we don’t tend to have actual data on culture. There is a huge market for engagement surveys and pulse tools, yes. Those exist. But those are often snapshots in time, or done too infrequently, or have low participation rates because people are busy with their actual deliverables. It’s a big market, but it’s hardly perfect in terms of linking “data” to “culture.”

Some good news: There are ties between culture and money

Now, we do have some ties between “culture” and money: Per some research from Harvard professor emeritus James Heskett, “half the difference in operating profits between organizations can be tied to culture.” Heskett’s argument is about how an effective culture helps you keep people; keeping knowledge in-house means your processes run smoother over time, and process is typically considered the key to scale, with scale then being a key to revenue growth. Lower recruiting, hiring, and training costs are going to benefit bottom-line metrics too.

In summer 2016, there was also research showing that “people problems” — i.e. bad hires, unproductive meetings, conflict avoidance; all things that could fall under the umbrella of “bad culture” — cost organizations about $144,541.30 per day. (These numbers are calculated in the aggregate.) If you extrapolate that by 365 days a year, these “people problems” can cost a company $52.7M per year. That’s nothing to a major enterprise player, no, but to a midsize or small company? That can drive you into a bad financial position pretty quickly.

Bravely has also done research that “lack of alignment within a team” — a cultural factor — is the leading reason cited by 97% of employees for why work stalls or projects don’t happen or revenue dries up.

Some of these ties are more anecdotal and less things that can be instantly analyzed on a row of a balance sheet, but they matter — and many of us inherently realize they matter, but have a hard time prioritizing them week-to-week because of other concerns that are much easier to track and see losses/gains from.

Now we return to the problem we need to solve

Here’s where we end up on culture and hiring decisions often, then:

• The terms are fluffy.
• Executives don’t fully understand them.
• They are not really data-driven.
• They are not tied enough to revenue.

And look what happens at that four-way intersection:

A good case in point is whether HR systems actually educate business leaders about the quality of their human capital decisions. We asked this question in the Lawler-Boudreau survey and consistently found that HR leaders rate this outcome of their HR and analytics systems lowest (about 2.5 on a 5-point scale). Yet higher ratings on this item are consistently associated with a stronger HR role in strategy, greater HR functional effectiveness, and higher organizational performance. Educating leaders about the quality of their human capital decisions emerges as one of the most potent improvement opportunities in every survey we have conducted over the past 10 years.

We just keep spinning our wheels herein and talking about “A-Players” and “Purple Squirrels.” What if there’s a better way?

Tying data to culture

My friends at Mackenzie Eason , where I periodically do some work, went through hundreds of documents, white papers, research initiatives, and corporate year-end reporting to find terms associated with “culture.” Overall they came to these 26 terms. You can ignore the sub-script numbers within each box for now:

Now you survey employees with specific questions geared towards these 26 elements of culture, and then the sub-script numbers come in. Any number that’s negative or neutral (around zero) based on survey results is generally not associated with your culture; anything that’s a high positive number is associated with your culture.

In any client engagement, then, you can go find their core values — usually listed on the website, or in-office — and map those core values to these scores. You can do this once a year, twice a year, quarterly, or at whatever cadence you prefer.

Let’s say an organization has these stated core values, as one client they worked with did:

In this specific case, when running their survey scores, you find that 4 of the 7 core values are strongly correlated with culture per survey results:

This is good data, but it’s still very superficial, and it’s based on surveys — which, while an effective tool, have noted flaws as well.

We can make this data more robust, however. We can take survey results on culture and we can break those results down by:

• Department
• Race and Ethnicity
• Office location (HQ, other offices, WFH)
• Gender
• Age
• Leadership positions vs. non-leadership positions
• Revenue-facing roles vs. non-revenue roles

Now the data is getting more robust around culture, and you can see, for example, what areas of struggle revenue-facing roles have. If you adjusted those elements for those roles, could revenue increase?

There’s also a ton of potential experimentation around hybrid work models here — this is a way to see the cultural connection to the organization for in-office employees vs. remote employees, for example.

A common argument against WFH, for example, is that WFH employees are not active participants in the culture; oftentimes on client work, we see the opposite, however. In-office employees embrace the culture less, and remote embraces it more. But you need the data to actually be able to say that; otherwise it’s just assumptive.

You can also do this with hiring

This same type of data can be applied to the hiring process. Assessments have been around for generations, but relatively-simple assessments developed in the last 5–10 years can be sent to every candidate (or at least the second tier, after initial screens), and then hiring managers get a robust packet of information about behaviors, goals, personality, and likelihood of fitting into the culture. This part gets tricky because “cultural fit” can be a dog whistle for sameness, and you don’t want that — both for organizational health and within the current business climate.

But if you combine information on what your culture really is (some of the work we just described) with information about candidates, now you have a clear, data-driven picture of “Emily might fit in very well. I’d like to talk more to her” and/or “Daniel is what we need in this department, because the age/gender breakdown is skewing the wrong way and impacting how people feel about the organization. Let’s talk more to him and understand his approach and talents.”

Get data on your culture

“Data is the new oil.”

But oil only works for people and society if there’s a whole process around it — locating it, upstream, downstream, pre-production, in-production, shipping, pricing, etc. There’s an entire ecosystem that has developed around oil and gas for 100+ years. Around data yet? No. If anything, the initial approach to “the data revolution” has been an organizational mindset that we need to collect more and more data, which doesn’t help and just leads to analysis paralysis, because now decision-makers have too many things to look at.

Instead, what we need around data is a process and access to the right data, and nowhere is this truer than culture issues and hiring issues. Data can solve problems there, and it can lead you to an under-appreciated candidate who might end up saving a silo of yours. Data has a tremendous amount of possibility in the talent and culture spaces, but it has to be used properly. That means terms have to be defined, those terms have to be compared to your existing core values, adjustments need to be made to those core values, you need to understand how different subsets of your company think about the culture, and then you need to take all those data sets and apply them to hiring — knowing what you know, and knowing how your company has evolved over the last 5–10 years, who should you be bringing in?

Hiring is often relegated to “gut feel” status, i.e. a decision-maker saying “I like Andy” without any further clarification on why. Culture is often relegated to big words that don’t mean much. What’s the power if you apply data to both areas? It’s profound. Consider it a new era of “Talent Metrics.”