Pop quiz! Heard any of the following around the office recently?
- “Why bother? Someone’s always going to say ‘no’.”
- “The people we need most are leaving.”
- “I’m not sure what I’m doing here anymore.”
- “We’re good at saying hard things – by email.”
- “We’re on our fourth re-org in four years – and nothing’s working.”
Yes? Statements like the above predict the need for culture change. And the issue is likely pressing: the way your employees are speaking about your business suggests a near-crippling level of frustration and disillusionment that could already be causing significant commercial issues.
The fact is that while “culture” can seem nebulous–or even nonsensical–a healthy culture where employees are enabled and engaged is a critical part of every financially successful business. In their pivotal book, Corporate Culture & Performance, Harvard Professor John Kotter and James Heskett defined strong businesses as being able to “facilitate adaptation to a changing world… If customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered to do just that.” Every business needs this type of empowerment in today’s fast-moving world or they will fail to innovate and grow.
The professors went on to prove the commercial impact of such a culture. The data stuns. Over 10 years, firms who embrace responsive and forward-thinking ways of working enjoy average revenue growth four times greater than those who don’t (682% compared to 164%). Stock price differentials are also stark (901% compared to 74%).
Leaders know the importance of culture
According to PwC, 86% of C-Suite executives believe culture is critical to their organisations’ success. Indeed, 60% see it as a bigger success factor than either their strategy or their operating model. Despite this, almost all (96%) say “some change to their culture is needed”, with over half (51%) believing their culture requires “a major overhaul”.
I work with some of the most dynamic, experienced and interesting leaders in the world. Yet, even they admit that being able to manage and develop their cultures is a major barrier to organisational effectiveness. Why? There are many reasons but here are the three most fundamental.
1. No shared concept
Do your leaders have a shared definition of what ‘culture’ is – and how it relates to your organisation?
Culture is not your values, your diversity programme or your vision (although all these contribute to it). It is not good enough to use the word as a sort of dropbox for every non-specific complaint you might have. If you don’t have a shared concept about what culture is, everyone may be trying to solve a different problem–a recipe for getting nowhere fast.
Culture is the social order of a business. It is the unseen narratives, legends, hierarchies, processes and politics which govern what gets done and how. You might consider it to be the Operating System of a business. Look at your iPhone. The OS is not the star of the show but it runs all the applications and impacts the functionality of the whole device.
2. No shared language
Do you have a language to discuss your culture that everyone shares and understands?
This is not about a set of aspirational values. Progress does not come from pushing adjectives around on paper. Language is the tool through which we manipulate concepts. If we can’t find a mutually comprehensible way to describe to each other what we’re experiencing, we can’t hope to change it.
3. No meaningful data
Measurement is not a new thing in people management. But, when it comes to culture, employee engagement and pulse surveys aren’t sufficient. They will often tell you what is happening, not why. They don’t analyse culture in the correct way, as they don’t consider key factors such as conflict or risk tolerance. And the data they produce is often questionable, as it doesn’t interrogate the non-conscious thoughts and feelings that shape all our behaviour.
Without a shared concept, language and data as a foundation for management, it is impossible to change or develop anything. If you need proof of this, consider how you would manage company finances without an understanding of what money is, a language to describe transactions, and accounting data.
As a starter for ten, why not start your next management meeting by asking everyone to define and describe your culture? The answers you get might be revealing. Even if what you find is that everyone is on a different page, at least you know what you’re facing. As daunting as that may feel, it is the first step to a better, more profitable future.