What are the most important elements of corporate culture?

Find all the answers in today′s newsletter plus so much more - such as the commercial impact of employee disengagement. And: read all about the People Value Impact Calculator - a great tool to address the transparency requirements of the European Union Corporate Sustainability Directive. Enjoy the read.

In the Changing Role of the Office, It’s All About Moments That Matter

Research conducted for 微软 back in 2022 confirmed three key moments when being in the office was identified as business critical:

1. Strengthening team cohesion
2. Onboarding to a new role, team, or company
3. Kicking off a project.

These are the moments when in-person presence matters:

Some Employees Are Building Value, Some Are Destroying It

According to new 麦肯锡 research, employee disengagement and attrition could cost a median-size S&P 500 company between $228 million and $355 million a year in lost productivity. More than half of all employees do report being relatively unproductive at work. That′s an alarming figure!

This is what they say: “Their latest research into six types of employees shows how companies can re-engage workers while amplifying the impact of star performers. The central challenge for organizations is to move as many workers as possible away from the highly dissatisfied group (which is probably larger and more destructive than most C-suites realize) and toward greater engagement and commitment. Such a strategy would give workers the opportunity to develop their skills, reducing dissatisfaction and attrition rates and bringing clear financial and organizational benefits over the long term.”

1. The quitters: Headed for the door (or already gone) McKinsey estimate this group to be around 10% of the workforce in a typical organization. The quitters are not necessarily the lowest performers in an organization, but they may be some of the least satisfied and committed. Eventually, those feelings can affect their performance and cause them to leave.
2. The disruptors: Actively disengaged and likely to demoralize others They estimate this group to be around 11% of the workforce in a typical organization. Of the six segments, the actively disengaged group has the potential for the largest negative influence. This is not necessarily because of their behavior but because of how an organization treats them, coupled with the perception of their peers.
3. The mildly disengaged: Doing the bare minimum They estimate this group to be around 32 percent of the workforce in a typical organization. Mildly disengaged workers, who report below-average commitment and performance levels, are neither satisfied nor actively disengaged and disruptive in a way that harms the organization. They do put in the time and effort to fulfill minimum job requirements, but they are not proactive, lagging behind in well-being and self-reported performance. Leaders should not expect these workers to make sacrifices for the company over their personal lives.
4. The double-dippers: A growing phenomenon They estimate this group to be around 5 percent of the workforce in a typical organization. Double-dippers, who are uniquely dispersed along the satisfaction spectrum, are full-time salaried workers who hold two or more jobs simultaneously, likely without their employers’ knowledge. This phenomenon is present across our multinational survey sample, particularly among those working in mostly remote settings.
5. The reliable and committed: Going above and beyond McKinsey estimates this group to be around 38 percent of the workforce in a typical organization. On the positive side of the satisfaction spectrum, this archetype represents the organizational core: reliable performers who execute on business-as-usual activities. Because they are satisfied and committed, they will go above and beyond for their employer. For example, they help their peers by sharing ideas for projects on which they’re not formally staffed while also performing activities that promote the organization, such as volunteering for extra work.
6. The thriving stars: Creating value and elevating others They estimate this group to be around 4 percent of the workforce in a typical organization. The thriving stars are the top talent in your organization: these are the rare employees who bring disproportionate value to the company. They achieve high levels of sustained well-being and performance because of a virtuous cycle of factors. They create work–life balance because they are adaptable and resilient. They have found meaning and purpose at work, allowing them to achieve stellar performance not just for themselves but also for the people around them. Thrivers can have a hugely positive impact on performance and productivity by, among other things, creating psychological safety and trust in a team setting.

There′s more detail to those six archetypes, but most importantly there are a number of actions companies can take to address those groups. Definitely a must read for all leaders, since this is a topic that affects all companies.

Here′s the link to this excellent piece from McKinsey.

10 Things Your Corporate Culture Needs to Get Right

What elements of culture matter most to employees? Being able to answer this question is critical when companies and leaders intend to improve engagement scores. A recent publication from the 美国麻省理工学院 - 斯隆管理学院 leveraging the Glassdoor Culture 500 index identified those ten things leaders need to be aware of. The researchers confirm, that their multiyear research into corporate culture using Glassdoor data reveals that cultures vary widely in quality in the eyes of their employees: “When people create a review on Glassdoor, they rate their employer’s culture and values on a scale of 1 to 5. They analyzed the average culture score for companies in the Culture 500 — a sample of large organizations, mostly based in the United States. The typical company has an average culture rating of 3.6, but scores ranged widely — from 2.1 to 4.8 on a 5-point rating of 3.6, but scores ranged widely — from 2.1 to 4.8 on a 5-point scale.”

The one question that the researchers looked into was this: Which elements of corporate life shape how employees rate culture?.

To address this question, they analyzed the language workers used to describe their employers. When they complete a Glassdoor review, employees not only rate corporate culture on a 5-point scale, but also describe — in their own words — the pros and cons of working at their organization. The topics they choose to write about reveal which factors are most salient to them, and sentiment analysis reveals how positively (or negatively) they feel about each topic. (Glassdoor reviews are remarkably balanced between positive and negative observations.) By analyzing the relationship between their descriptions and rating of culture, one can start to understand what employees are talking about when they talk about culture.

Here are the 10 Elements of Culture That Matter Most to Employees:

1. Employees feel respected. Employees are treated with consideration, courtesy, and dignity, and their perspectives are taken seriously.
2. Supportive leaders. Leaders help employees do their work, respond to requests, accommodate employees’ individual needs, offer encouragement, and have their backs.
3. Leaders live core values. Leaders’ actions are consistent with the organization’s values.
4. Toxic managers. Leaders create a poisonous work environment and are described in extremely negative terms.
5. Unethical behavior. Managers and employees lack integrity and act in an unethical manner.
6. Employees’ assessment of all employer-provided benefits.
7. Employees’ assessment of workplace amenities and perks.
8. Learning and development. Employees’ assessment of opportunities for formal and informal learning.
9. Job security. Perceived job security, including fear of layoffs, offshoring, and automation.
10. How employees view reorganizations, including frequency and quality.

In analyzing the data, the authors conclude: “The single best predictor of a company’s culture score is whether employees feel respected at work. Respect is not only the most important factor – it stands head and shoulders above other cultural elements in terms of its importance. Respect is nearly 18 times as important as the typical feature in our model in predicting a company’s overall culture rating, and almost twice as important as the second most predictive factor.”

Obviously, respect for employees varied by industry: “In sectors with a high percentage of professional and technical workers — such as management consulting, enterprise software, and semiconductors — employees were less likely to mention respect compared with all industries (horizontal axis) — and when they did discuss respect, the sentiment was more positive (vertical axis). In industries with a large number of front-line employees — including casual restaurants, grocery stores, and specialty retailers — workers were more likely to mention respect and talk about it in negative terms than were employees in other industries. Read all the insights around those 10 key things here.

EEA Demo Shows How People Value Impact Calculator Measures the Impact of HR, Marketing, and Other Engagement Efforts

The new European Union Corporate Sustainability Directive is impacting business even outside the EU – companies are required to be transparent about the impact of their efforts against all stakeholders. But how to calculate that impact? Recently, The Enterprise Engagement Alliance (EEA) has teamed up with TM Evolution, a compensation and work life people analytics company, to create a practical way for almost any size organization to analyze the impact of investments in all stakeholders.

Bruce Bolger , EEA Founder: “The People Value Impact Calculator (PVIC) makes it easy for the C-suite and management overseeing all stakeholder groups to not only measure the ongoing impact of customer, employee, supply chain and distribution partner, and other engagement efforts, but to compare results with past performance.”

Here are just some of the reports that can easily be generated with PVIC based on available data. Stakeholders can also include shareholders, communities, volunteers and donors, literally any organizational stakeholder:

Bruce Bolger, EEA Founder: “The People Value Impact Calculator (PVIC) makes it easy for the C-suite and management overseeing all stakeholder groups to not only measure the ongoing impact of customer, employee, supply chain and distribution partner, and other engagement efforts, but to compare results with past performance.”

Here are just some of the reports that can easily be generated with PVIC based on available data. Stakeholders can also include shareholders, communities, volunteers and and donors, literally any organizational stakeholder:

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1.??? Boards, C-Suite, Mergers and Acquisitions, Investors

a.??? Consistency of achieving specific organizational goals and objectives over time.

b.??? Connection between executive pay, book value, stock prices, profitability, diversity and more.

c.???? Identification of the cost and risks of customer, employee, and distribution partner turnover.

d.??? Determination of human capital return on investment and marketing return on investment over time.

e.??? Cost and nature of lawsuits and regulatory issues.

f.????? Relationship between profitability, sales, and profits and employee and customer engagement scores and turnover.

g.??? Human capital and marketing ROI; revenues and costs per customer and employee pay by demographic group.

h.??? Turnover by type of employee, demographics, or pay.

i.????? Impact of customer, employee, and distribution partner disengagement in terms of sales or profits.

2.??? Human resources

a.??? Relationship between human resources costs and sales, profitability, and employee engagement.

b.??? Pay equity, turnover, and engagement by demographic group.

c.???? Impact of incentive and recognition programs on engagement, retention, referrals, etc.

d.??? Relationship between investments in training and development and human capital return on investment, turnover, engagement, productivity.

e.??? The connection between employee engagement, customer engagement, and sales.

f.????? The cost of labor disputes in terms of revenues, profits, and employee and customer engagement.

g.??? Employee productivity.

h.??? Cost of disengagement—impact on overall sales and profits based on engagement levels.

3.??? Marketing

a.??? Marketing return on investment.

b.??? Impact of marketing on achieving organizational goals.

c.???? Return on investment and impact on customer retention of customer service processes.

d.??? Connection between specific marketing initiatives and their goals, such as increasing the sales pipeline or customer engagement levels.

e.??? Impact of incentives or loyalty programs on sales, profitability, customer retention, referrals.

f.????? Costs and profitability per customer.

g.??? Connection between customer turnover and sales and profitability.

h.??? Cost of disengagement—impact on overall sales and profits based on engagement levels.

4.??? Channel Partners

a.??? Revenues, costs, and profitability per channel partner.

b.??? Channel partner marketing return on investment.

c.???? Connection between distribution partner sales and engagement levels.

d.??? Impact of incentives and loyalty programs on sales, profits, engagement, and turnover.

e.??? Impact of channel partner engagement on overall sales and profits.Cost of disengagement—impact on overall sales and profits based on engagement levels.

This link provides you with more details and YouTube video tutorial. Definitely relevant for all businesses.

Research: The Growing Inequality of Who Gets to Work from Home

Some of it is obvious, other parts not so much: Working from home is not feasible for many workers – think of factory work for example. In a recent article on the Harvard Business Review, Peter John Lambert, Nick Bloom, Steven J. Davis, Stephen Hansen, Yabra Muvdi, Raffaella Sadun, and Bledi Taska, Ph.D. share research on job postings, which finds remote work is far more common for higher paid roles, those that require more experience, are full-time, and require more education.

They look at this as a potentially growing divide and ask managers to be aware of this divide, “as it has the potential to create toxic dynamics within teams and to sap morale.”

Making Sense Of Corporate Purpose

William Ocasio, Professor of Business and Leadership at Gies College of Business - University of Illinois, Matt Kraatz, Associate Professor at University of Illinois and David Chandler, Professor at the University of Colorado Denver Business School have recently published this article in the “Strategy Science Special Issue” on Corporate Purpose. This is the abstract:

Both the societal purpose of the corporation and an individual corporation’s sense of purpose have been subject to increased attention by business elites and academics alike. This special issue presents diverse viewpoints on these two distinct yet interrelated topics. In this introduction, we present the various contributions and build on their insights to develop our independent sensemaking of what corporate purpose entails. Thus, we define corporate purpose, at both the organizational and societal levels, as an institutionalized ideal, a historical, value-based aspiration guiding strategic decision making and practices. We interpret the current societal movement on corporate purpose as one rejecting the logic of shareholder capitalism and proposing sustainable capitalism in its place: an ideal for corporate purpose based on sustainable prosperity for society and its population. At the organizational level, corporate purpose can thus be articulated as a distinctive and meaningful intent to enhance the lives of people. We identify four strategic issues to consider in reconstituting a corporation’s purpose: corporate governance, strategic leadership, stakeholder engagement, and implementation. We conclude by highlighting the centrality of purpose to corporate strategy, an emphasis that was present in the field during its origins but one that got displaced under a logic of shareholder primacy.

For everybody interested in this space, here′s the link.

This has been the 59th edition of the newsletter - let′s ?make soulless companies a thing of the past this year! The next edition of the Building Corporate Soul newsletter will be in your mailbox on March 18.