Why Assess Your Organizational Culture?

Culture. It sounds soft, vague. A popular buzz word. But does it have any impact on real business results and financial performance? Absolutely.

Can Culture be measured quantitatively? Yes. With the right assessment tools and framework.

Is it truly possible to change an organization’s Culture? Yes, but it requires discipline and intentionality, as well a strategic action plan for the changes that need to happen.

First, let’s start with understanding what Culture is, and how it drives business performance.

A common way people think of Culture is “the way we do things around here”. It embodies the Beliefs and Assumptions held by members of the organization. However, this definition is hard to get one’s arms around, and understand how it relates to business results. That’s because this definition hides the critical elements of organizational effectiveness that are the performance dimensions and behavioral manifestations of Culture. These performance dimension fall into 4 categories:

·??????Mission: defining a meaningful long-term direction for the organization

·??????Consistency: defining the systems, processes and values that create stable, reproducible outcomes

·??????Involvement: building human capability, ownership and responsibility

·??????Adaptability: translating the demands of the business environment into action

A 15 year longitudinal study of over 127 publicly traded companies demonstrated remarkable links between an organization’s Culture score (measured by the Denison Organizational Culture Survey) and performance on 3 key financial measures: Sales Growth, Return on Assets, and Market-to-Book Ratio.

Companies with scores in the top 25% of the culture assessment saw over 330% higher growth rate in sales, 292% higher ROA, and a 160% higher Market-to-Book Ratio than the companies in the lowest quartile of culture scores. And these performance disparities were maintained over time. The validity of the Denison Organizational Culture survey as a predictive instrument of financial results comes from the survey’s focus on performance dimensions that directly reflect how an organization’s Culture manifests itself in actual business practices and behaviors.

The next logical question is: how do you improve the organization’s Culture and capture improved business results?

There are 5 steps to this process:

1.??????Assess the organization’s culture and educate internal staff on the results and meaning of the assessment. The Denison Organizational Culture Survey provides validated, quantified results for each of the 4 Culture performance dimensions (Mission, Consistency, Engagement, and Adaptability) and benchmarks each dimension (and their sub-components) against thousands of other companies for a comprehensive picture of the organization’s strengths and weaknesses. The data is also provided in slices that provide views into each function, seniority level, and employee tenure, providing a detailed view of sub-cultures that may pervade different parts of the organization.

2.??????Create a shared understanding of the data and implications of the culture survey. At this stage it is essential to have open dialog regarding the results of the survey and the behaviors, beliefs and assumptions that are driving them, as well as the business consequences (good and bad) of the culture dimensions scores.

3.??????Align on the 2-3 most important areas to improve to deliver the organization’s key objectives and strategies, and gain commitment to do the work required to improve them. Commitment and enablement to address the uncovered issues are the key deliverables in this step of the process. It is important to limit the number of focus areas to 2 -3 in order not to stretch the organization beyond its capacity to execute while managing the on-going business. Additionally, working on the 2-3 most important dimensions will have a positive impact on the other dimensions of culture.

4.??????Select the teams that will lead each area of improvement and develop Action Plans. In most cases, teams will be cross functional so that all aspects of the business issue are represented and addressed. One of the first tasks of the Action Team is to align on what success or improvement looks like, and what behaviors need to be evidenced. Then the team generates ideas for how to move the culture forward in the specific culture dimension, followed by concrete plans, processes, and action steps.

5.??????Implement and evaluate progress. As the action plans are executed it is important to measure progress and link back to the organization’s or group’s performance. Keep driving the objectives and strategies of the organization and linking the actions back to those cornerstones. Mini Culture re-assessments can also be used to measure interim progress. ?

The first step to improving your business results is to assess your culture. The next is to realize that managing Culture needs to be a key business process, because strong and effective Culture is central to the business’s performance and results.

If you are interested in assessing and improving your organizational Culture and business results, or learning more about it, reach out to me. We are certified in the Denison Organizational Culture assessment and have been successfully using it to help organizations transform their performance for over a decade.?