Returns to shareholders 60% higher than the median.
Responsible for up to half the difference in operating profit between organizations.
A 20% increase in scores from employees rating their employer.
Viewed by 82% of CEOs and HR leaders as a potential competitive advantage.
If we told you there was an employee, consultant, or piece of tech that could have this sort of impact, what lengths would you go to get them? How much time and money would you commit?
And yet, the thing that generates those effects – an influential corporate culture – is something only 20% of businesses surveyed in 2017 said they considered thoroughly at board level, and only 12% of executives (2016) believed that their companies were seeking to drive.
Are you one of those? If cultural problems are holding back your business, or you want to separate yourself from the pack, this is how to build a corporate culture that gets results (and sticks).
Culture and Corporate Performance
The link between corporate culture – the (seen and unseen) behaviors that reflect how an organization operates in practice – and organizational performance is evident.
A robust corporate culture drives employee engagement and performance, helping you to deliver your corporate strategy and objectives. It also has positive effects on external reputation, attracting the top talent and differentiating it from its competitors in the eyes of customers. The inverse is also true, of course. A ‘toxic’ culture can be just that, quickly poisoning all aspects of the company.
Of course, a positive corporate culture doesn’t happen by itself, or overnight. Building a culture that works for your organization requires ongoing attention and investment from the C-Suite.
It takes time, may require short-term returns to be sacrificed for longer-term benefits, and can be challenging to measure using traditional performance metrics. The evidence is clear: not only is such change achievable, but the rewards for that investment are also unignorable.
Building a strong corporate culture
Understand the present
The signs that a cultural change is needed may be quite evident – poor performance, legal or regulatory breaches, misconduct, employee turnover, etc. Or that need may be situational – a merger, change program, or disruptive shift in market dynamics could all be reasons to examine whether your culture is driving, or impeding, your corporate strategy.
Before making a change, however, you need to understand the present. The first step, then, is to forensically analyze your existing culture – how it manifests itself, what should be reinforced, and what needs to change.
Your own view of the effectiveness of your culture is likely inaccurate. To get a real sense of your business’ culture – one free from your own biases – you also need to see how it is perceived from the bottom looking up. Whether you use interviews, focus groups, pulse surveys, or some combination of these, it’s vital that you get a holistic, unfiltered view on your company’s “cultural health.” Starbucks, for example, used social media views from employees (specifically, Glassdoor reviews) to gain a detailed, candid insight into their opinions of its culture.
Visualize the Future
Now you’ve identified where change is needed. The next step is to define what that change will be.
What cultural qualities will be the foundation on which your corporate strategy is built?
What does “success” – your new corporate culture – look like?
Corporate culture is not comprised of just one thing. There are many facets and layers that are needed to make up a productive culture that is clear, accessible, and durable.
At the highest level, it is essential to have a single vision or goal that the whole business is working towards.
Some call this the business’ North Star. It will be different for each company. It is the common purpose that unites a workforce, regardless of their role, and provides meaning and focus for their work.
And it is often the aspect of a new culture that is most readily identifiable as distinct from what has gone before. Take Microsoft, for example. When Satya Nadella became the company’s CEO in 2014, one of the first things he did was to define a completely new vision for the company – one which deliberately emphasized people, rather than products, in an attempt to distinguish it as far as possible from what had gone before.
That said, while the specific circumstances in which Microsoft found itself necessitated a more ‘revolutionary’ reshaping of the company’s mission, it’s equally valid that a mission formulated without any reference to the past is unlikely to succeed.
Absent extreme external changes, a 180-degree cultural change is typically neither necessary or effective. What’s more, the extent and immediacy of change are likely to be too much for your workforce to adapt to, making it challenging to take root.
The vision is something that should come from the top of an organization. Defining a culture will require choices and trade-offs to be made that are rightly the responsibility of the C-Suite.
Moreover, doing so demonstrates the organizational importance of the vision, and the centrality of it to everything the company does. It’s vital that the vision is something the organization’s leadership genuinely believes in and – as we will come back to – that they role model and embody it in all they do.
Again, however, much as the overall vision may be set at the top of the organization, if it is to take root, employees must play a central role in its articulation – particularly in defining the values on which they place importance and the behaviors that they believe embody (or contravene) those values.
Seek views as broadly as possible, listen openly and dispassionately, and then work to refine what you hear down into a set of focused values or behaviors that will help deliver your cultural vision.
Those values and behaviors are as important as the overarching vision: they are what grounds the vision, and makes it ‘live.’ By codifying those values and behaviors, you are not only helping to define what you want to see, but you are helping your employees to get there.
Change can be difficult, but by articulating what you value and the behaviors you want to see (and by subsequently rewarding those that demonstrate them) you provide a signal for how those changes can and should be made.
A textbook example of this is Netflix. Read the company’s culture statement, and – even as an outsider – you can instantly understand not just what the company’s culture is, but also what that means in practice.
By using specific – and candid – examples (a senior employee who arranged kickbacks) and engaging visual metaphors (being the kind of company where people in the office pick up the trash they see), Netflix succinctly tells you both what workers can expect, and what it expects from them.
Make The (Lasting) Change
Of course, nothing will change until analysis and aspiration turn into action – the new culture needs to be implemented and embedded.
This is where executives have to take responsibility, be at the forefront of the implementation, and set the tone from the top.
As an executive, it’s your duty not only (and repeatedly) to communicate and explain the cultural change you want to see, but also to reflect it in how you act, and to be a role model for your entire organization. Think of your role as “show and tell” – on loop. “Do as I say, not as I do” might work with your kids, but it doesn’t cut it when trying to implement cultural change: indeed, a disconnect between executives’ words and their actions is one of the prime reasons why change efforts fail.
Of course, implementing change is not something that the C-suite need, or should, do alone.
Many companies find success in appointing “culture champions” to act as passionate advocates for the new culture, for example, making it accessible, and helping to foster organization-wide buy-in. Others have used eye-catching visual actions or symbols as a means of reiterating the cultural message.
Deloitte, for example, gives each of its leaders a compass to represent the strategic and moral direction they are expected to set, while McKinsey gives the case of an agricultural firm which put small, rubber elephants in their meeting rooms to encourage employees to be candid and “address the elephant in the room.”
The final limb of effective implementation lies in your processes and infrastructure and ensuring that these are in alignment to help foster your desired culture.
This starts with your hiring processes and whom you recruit. Equally vital in, say, your feedback and reward mechanisms, your day-to-day internal communications, and even your physical premises. By aligning these tangible mechanisms with your culture, you are ensuring that you aren’t merely trying to “think yourself to new way of acting,” but are positively “acting your way to a new way of thinking.”
Whether incremental or revolutionary, as a senior executive, cultural change starts with you. By committing to and embodying that change, and engaging your whole organization in the process, you can drive a step change in your employees’ engagement and wellbeing, in your corporate effectiveness, and – ultimately – in your bottom line.