Culture: six pointers to make an intangible asset tangible

By Pierre-Antoine BALU , Global capability leader Culture, Leadership & Change and Alice Zhou , the Katzenbach Center for Culture and Leadership, Director, PwC US?

Think your organisation’s culture is intangible? In fact, its impact is anything but. Culture’s influence on enterprise performance can be greater than any other factor. Indeed, Strategy& found that those organisations who have a distinctive culture are 1.7 times more profitable relative to their industry peers. Hardly surprising then that senior leaders consistently rank it as the most important enabler of business success – even ahead of strategy.

Yet despite this, culture is often undervalued and underestimated. It’s easy to see why. While organisational charts and structures are easy to depict and analyse, culture feels much harder to pin down, essentially because it’s about humans and their emotions. And to compound the issue, ‘culture’ often means different things to different people.

So, what is culture? In our view, it’s the personality , “social glue” or “nervous system”of an organisation, manifesting itself in the patterns of behaviour that determine how things get done. An example? When a leader comes to an employee and makes a suggestion, is it really a suggestion, or actually a command? Both of them will instinctively know. That's culture in action.

What’s more, culture has never been as business-critical as it is today. The top-line message from PwC's 27th Global CEO Survey is that reinvention is now imperative. And reinvention is unlikely to succeed without the right culture. So all businesses must understand where their culture is now – and be able to influence it towards the desired behaviours.

How to do this? Here are six pointers that we’ve found work in practice.

1. Understand how your culture supports your strategy – and engages employees

If culture is misaligned from business strategy, then the strategy will fail and employees will feel disengaged. Say your strategy is to be a fast, innovative first-mover. In this case, you’ll need a culture that emphasises empowerment, risk-taking and makes employees feel secure doing so ( psychological safety). But all too often, an “authenticity gap” opens up between the culture and strategy: in PwC’s CEO Survey , 57% of leaders say their organisation allows small-scale errors and agreeable dissent – yet in the Global Hopes & Fears Survey , only 30% of employees agree.

1. Assess culture both quantitatively and qualitatively?

The first step towards closing such gaps is to assess the culture and understand how it needs to change. This assessment must have both quantitative and qualitative aspects, combining employee sentiment surveys with interviews to collect anecdotes and understand everyday experiences. Together, these inputs help to define metrics for the behavioural changes required.

1. Focus on a “critical few” desired behaviours – not a longlist

If you want to get people to start doing some things differently, you can’t give them 20 behaviours to think about. Instead, zero in on the most important behaviours that you want to promote, and ask them to focus on those. To help, it’s important to understand what's currently obstructing the desired behaviours – incentives? workload pressures? skills? – and what levers to pull to effect change. Furthermore, these “critical few” behaviours should be translated into concrete actions, management practices, new routines, rituals to be embedded in ways of working.?

1. Culture isn’t primarily a matter for HR, but for leaders

There’s a common misconception that the HR function should lead on culture. It shouldn’t. True, HR plays a valuable role in aspects like setting incentives, recruiting the right talent and providing training. But it’s leadership – supported by HR – who must be in the driving seat for culture, behaving and communicating every day in ways that bring it to life. Ultimately, the CEO is the Chief Culture Officer.

1. Tap into “informal leaders” to influence change bottom-up as well as top-down

Alongside the top-down influence from leaders, a further powerful lever is identifying and engaging informal leaders throughout the organisation. These are people across the workforce who are well-connected, understand what's going on, and can influence others by force of personality. They can also be an upwards conduit for hard truths.

1. Be authentic: don’t try to be all things to all people

As with strategy, there’s no one-size fits-all culture. Just as it’s virtually impossible to be both the most premium and lowest-cost player in a market, so you can’t have a culture that’s both fail-fast and compliance-centred. So you need to make choices, and those choices will be shaped by your strategy. The key is to be authentic and not pretend to be something you’re not.

So, is your culture fully aligned with your strategy – and will it hold firm through your reinvention journey? If you don’t have the answers yet, you need to find them. We can help. Watch our recent LinkedIn Live where we discussed this topic in more detail.?

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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.