Organisational Culture is a Day Job

Organisational culture regularly appears near the top-of the-charts among both CEO and CHRO annual priorities. This year, it may come as no surprise that it features as second and first place respectively for CEOs and CHROs in the recent Conference Board Survey, faithfully shared as ever by the dependable Nicolas BEHBAHANI :

To someone who works with organisations to enhance the quality of their cultures, that organisational culture features near the top of these priorities this year does not surprise me.

However it’s worth wondering why it should be a priority at all. Saying company culture is a priority is rather like a farmer saying that laying down fertiliser is a priority, or pulling up weeds is a priority. These are simply jobs that always need to be done, and if they’re not the crops either won’t grow or the weeds will. It’s routine, not a priority. A day job, not a side hustle.

If strengthening organisational culture shows up high on a list of a CEOs' and CHROs' agenda then, it may be there is also a gap in understanding how culture works. Cultures are ‘always on’, always wilting or growing in one way or the other, like the crops in a field.

Thus HR needs to be systematic in attending to it, and if it’s not, don’t be surprised if the weeds start to take over and the crops start to wilt. If Culture is 'a priority', it’s clear something is seriously wrong.

Getting to grips with Organisational Culture

A simplified definition of organisational culture is the sum of behaviours and beliefs among employees within that organisation. But how do we identify that? It seems so slippery and fickle, like trying to get into employee’s heads and hearts, which in any case change all the time too.

As it turns out there are a number of indicators that while not perfect, can give us a decent enough insight into where a company is at with regard to its culture (and bear in mind larger companies will have subcultures too). But to keep this simple here are some of the key ways to get to grips with where a company’s culture is at:

·?????? Engagement surveys, with especial focus on verbatim comments

·?????? Exit interviews, again with great attention paid to verbatim comments

·?????? Glassdoor ratings and reviews

·?????? Hard data including internal promotion rates (including who gets promoted), attrition (who gets exited and why), talent reviews and outcomes, and learning/development initiatives and engagement of employees in these

·?????? Senior Leadership and Management feedback on what’s helping and hindering their functions in achieving organisational / CEO goals, with clear examples of areas of friction and costs attached

·?????? Company values and the extent to which Leadership’ lives them

·?????? Focus groups, if drill downs are required

Broadly right better than precisely wrong

It was the economist John Maynard Keynes who said it’s better to be broadly right than precisely wrong.

Because of the ‘noisiness’ of the above data, it's unlikely you will be able to obtain an accurate picture of your culture. But the financial impact of a culture is so large (as many of my previous posts have shown) that noisiness of data should not be given as an excuse to neglect managing the above data points. Broadly right, in other words, will do just fine.

Yet most HR departments I have worked with do not analyse (or in some cases even conduct) exit interviews. This is an area of concern. Does HR believe it seriously thinks it is above learning from feedback? What if the Marketing Department suddenly declared it was not going to measure feedback from lost customers? And while we’re on that point, does HR as a function ever request service-level feedback from the employees it is supposed to represent? Without feedback at scale, we are running blind.

This is unfortunately the state of play in many organisations today. HR rarely attends to a systematic gathering of feedback and data, and instead tends to fall back on anecdotal views of where the company’s culture is at, without any robust collection or analysis. Nor do HR Departments tend to ‘join up’ whatever data they have at their disposal, leaving the whole affair of managing a company’s culture to be a matter of guesswork, hypothesis and storytelling.

Thus we are left with a reactive approach where culture, like Banquo’s Ghost, keeps returning to the top of their and the CEO’s list of priorities. Whatever happened to if you can’t measure, you can’t manage?

Does Culture impact business outcomes?

Sometimes HR Professionals can devolve into windy debates about ‘correlation and causation’, such as chicken-and-egg questions like ‘does culture precede organisational performance, or does performance precede an organisational culture?'

The outcome of this behaviour, unfortunately, is that efforts to work on the culture are stymied, and nothing gets done.

But this is a chimera. Corporate culture does influence organisational business and financial outcomes, even if there are also two-way / correlative influences.

For example, a robust 6 year study done on numerous outlets of an automobile business found that in the words of the authors ‘culture “comes first,” consistently predicting subsequent ratings of customer satisfaction and vehicle sales’.[1] Another randomised treatment study involving target behaviour change within 3,000 company Headquarters found that the changes made to the culture? led to significantly lower attrition, greatly improved employee wellbeing, closer social ties and support networks and… improved business outcomes.[2]

These two studies are just starters. There are dozens of examples where I can describe how an organisational either promotes or prevents critical areas of attention such as innovation, ?digital transformations and in some cases simply the carrying out of day-to-day business in a vaguely competent manner. All of these need a productive, vibrant culture in order to be achieved, as culture really does precede performance.

This indicates that HR would do well to avoid intellectualising this matter and make proactively managing and treating culture part of its SOPs rather than as some perennial nice to have. This requires a robust, joined-up approach which unfortunately appears to be lacking within at least some parts of the profession.

What you can do now

If you’re interested to find out more on this or would like support with culture change in your organisation, feel free to ping me a message on linkedin. Also I’d be keen to hear how well companies you have worked for tend their organisational culture in the comments below.

Now, back to that day job....

[1] Boyce et al 2015 - Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships

[2] Alan et al 2022 - Improving Workplace Climate in Large Corporations: A Clustered Randomized Intervention