The word “culture” has many definitions, but within a business context it usually speaks to the connectedness between the people of an organization, the central mission of the organization, and how work is accomplished each day.
Until very recently, culture was often marginalized. It was frequently viewed by the executive management team as a peripheral concern. If cultural problems arose, the assumption was they could be easily remedied with the occasional happy hour. Even within many HR departments, culture was only urgently prioritized if there was evidence of a real, ongoing problem.
But culture runs much deeper than perks, and it can have a profound impact on the health of an organization. In fact, research indicates that culture is much more critical to an organization’s success than most top executives realize.
Just consider these statistics:
- Seven out of 10 workers in the US are either actively disengaged or not engaged in their work, according to Gallup.
- Bloomberg BNA estimates that US businesses lose $11 billion annually as a result of employee turnover.
- Companies with engaged employees outperform those without by up to 202 percent.
What is causing the epidemic of disengagement? One likely contributor is that people don’t feel their opinions matter within the workplace. Employees voices are consistently undervalued.
Most business leaders spend significantly less time thinking about culture than they do thinking about strategy — but how can you implement a strong strategy if you have a poor culture? If your people are disengaged and not connected to the intended outcomes of that strategy, how can you expect them to execute? Without a solid culture, business concerns like strategy, innovation, efficiency, customer satisfaction, and financial discipline are unsustainable.
Developing a winning culture requires the involvement and commitment of the organization’s top executives, even when they have other urgent priorities competing for their time and attention. One of the most critical challenges for HR and business leaders today is to figure out how to successfully create winning cultures without ignoring these other pressing business concerns.
Millennials Drive the Trend
According to the Center for Creative Leadership, rapid organizational change is one of the biggest leadership development challenges facing businesses today. In our volatile economic climate, organizations experience unprecedented degrees of turnover, competition, disruption, and uncertainty, making goal attainment much more difficult. The challenge for many leaders is how to get everyone moving in unison when the goal posts and the rules of the game are changing in real time.
The need to move organizations forward quickly and collectively is getting even more complicated as millennials begin to dominate the workforce. The millennial generation (individuals born between 1976 and 2001) will soon comprise nearly half of the US workforce. Millennials have a very different idea of professional success than the generations that preceded them. As more and more millennials join the workforce, they are driving profound changes in the cultures of organizations large and small.
As Bob Moritz, US chairman and senior partner of PwC, says: “When I was coming up, we knew what we were doing, but we didn’t ask why we did it. We didn’t give much thought to our, or the firm’s, role in society. For me, that point crystallizes the generational issues that PwC and many other organizations are facing as they hire greater numbers of millennials.”
According to Moritz, millennials not only demand to know the organization’s purpose, but they also want every action the firm takes to represent their values. They are more eager than previous generations to understand the decisions of the executive team, and they want to be asked for their input on important issues.
In response to these expectations, organizations like PwC are making changes to the traditional human capital approach, developing systems of evidence-based HR practices that address the shifting needs of the workforce. As part of these changes, many organizations are implementing crowd-sourced communications platforms that enable everyone to take part in the ideation process and have a say in where the organization is going.
Leading With Purpose
In a 2017 issue of Branding Roundtable, EY Executive Director of Advisory Services Sara Roberts argues that the key to business success in the current era hinges on an organization’s ability to create a purpose-driven culture:
“Purpose is a fundamental need for human beings, as individuals and in groups, in our lives and in our work. … The most productive, effective, and authentic way to operationalize purpose in an organization is to figure out how to support and drive value for the customer in line with that purpose. When key questions are asked, decisions made, and actions taken accordingly, the organization can be said to be leading with purpose. That clarity not only connects the business to the customer in a deeper way, but it drives innovation in service of customer value, leads to more sustainable growth and profitability, infuses authenticity into marketing and brand, brings employees and stakeholders together, and helps the world become a better place.”
A 2015 survey conducted by Harvard Business Review and the EY Beacon Institute found that 90 percent of executives “understand the importance of of [organizational] purpose.” However, less than half of executives believe their organization has a shared sense of purpose, and only 38 percent say that employees have a clear understanding of the organization’s purpose.
This gap between understanding and reality points to an opportunity for organizations to engage more deliberately with their purposes, connect more meaningfully with their customers and employees, and generate and execute on strategies and innovations that will drive growth and profitability.
Many organizations aiming to foster strong cultures prioritize the creation of clearly defined mission statements that can be articulated by every member of the team. Most critically, these organizations tie their missions to something deeper than logistics and transactions. Without a guiding mission, it is hard for anyone to know how to make decisions and prioritize actions.
Having a purpose-driven culture will become even more important as organizations start to hire more freelance workers. According to recent research from Waggl and Medius Advisory Group, 70 percent of organizations clearly articulate their missions and value statements to on-demand workers. As an example, look at a purpose-driven organization like Lowe’s, which has identified its purpose as “To help people love where they live.” This purpose empowers workers in ways that go far beyond merely selling home improvement goods for a fair price.
To effectively transform an organizational culture, you need to start from the inside out, beginning with the foundation of all human relationships: trust.
Research indicates that cultivating high levels of trust is critical for long-term business success and viability. As Great Place to Work puts it in a 2016 report:
“Regardless of industry, company size, or leadership styles, a high-trust culture is a defining characteristic of every company that wins a coveted spot on the Fortune 100 Best Companies to Work For list … These are companies that consistently outperform their competitors and the rest of the market. They define what it means to be great, and these companies ensure everyone in the C-suite knows how to foster a high-trust culture — which fuels the organization’s continued success.”
The Great Place to Work report also notes that high-trust cultures see 50 percent reductions in turnover rates against industry competitors and stock market returns 2-3 higher than market averages.
It should be evident by now that trust must be part of an organization’s DNA in order to create a winning culture. But what happens if trust isn’t present in an organization? Can anything be done to cultivate it?
Giving Employees a Voice
The best antidote for mistrust is to create an open, two-way dialogue between leadership and employees.
In traditional organizations, decisions are often made in closed rooms by small, narrowly defined sets of leaders. Decision-making is rarely shared with the larger organization. If the people responsible for executing on those decisions are to be engaged, this has to change. In order for all members of an organization to trust their leaders, they need to have visibility into decisions as they are being made.
Providing greater visibility into executive decision-making eliminates the traditional knowledge hierarchy, and it can offer many benefits to the organization as a whole. For one, it builds collaboration between coworkers, teams, departments, and offices. Wider dispersion of knowledge can contribute to shared goals, and it allows all levels of the organization to grasp the larger vision of where the organization is trying to go.
Furthermore, involving everyone in the ideation of solutions often cultivates connections between employees and the process, which leads to more personal investment. This increased investment contributes to organizational agility, performance, and resilience in the face of changing business conditions.
Not only should executive decision-making become more transparent, but employees should also have a forum to express their ideas and opinions. In order for your organization to succeed in an environment of constant change, leaders need to stay in constant contact with employees. The traditional annual survey is no longer sufficient.
Fortunately, new developments in pulse survey technology have given organizations many options for establishing open forums for continuous feedback. these ongoing streams of two-way communication generate immediate input, build alignment across organizations, and facilitate forward momentum and growth.
Providing an open forum for continuous dialogue affords the greatest benefit of all: the ability to tap into the voice of your people. Your people are your organization’s most important asset, and there is no way to transform your organizational culture without listening to their voices.
4 Steps Toward Culture Transformation
Enterprise-level culture transformation doesn’t happen in nanoseconds. It requires staying power and a clear focus on the dynamics of the system. The best approaches to cultural transformation combine the power of continuous real-time data within a action-oriented methodologies grounded in what matters most for your organization.
What should an organization do if it wants to change its culture? Here are four steps to successful cultural transformation from Dan Denison, professor of management and organization at the International Institute for Management and Development and CEO of Denison Consulting:
- Clarify how the culture of the organization is influencing the performance of the business. All successful transformations start with a thoughtful discovery process. Interview key stakeholders and utilize technology that gathers and shares real-time input to involve everyone in the organization.
- Establish an accurate and comprehensive baseline. Creating a baseline helps to capture a breadth of understanding around key aspects of organizational effectiveness, which are critically important to long-term success and are often closely linked to strategy implementation.
- Crowdsource perspectives on key priorities. Disseminate results from the enterprise-wide analysis and use a real-time feedback platform to surface ideas for taking action on those key priorities.
- Pulse the organization regularly. Identify key action indicators quarterly, or even monthly, to ensure that the right actions are being taken, allowing for course correction as needed.
Pulse surveys can help provide perspective on timely issues as they arise — e.g., What is most important for leadership to clarify during our upcoming all-staff meeting? — but the real value comes from harnessing the power of this technology to facilitate a thoughtful action planning process that is grounded in what matters for managing the business.
Real-time feedback is a valuable way to feed an action-planning process that is grounded in a proven transformation process. It creates connection and collaboration, and when pointed at the organization’s key priorities, it creates alignment and facilitates adaptive change across the organization.
Great leaders understand that times of change offer an unparalleled opportunity to grow and thrive. The best way to do so is to tap into the organization’s most valuable asset — its people. By harnessing the collective wisdom of the people who best understand the dynamics of the business, the organization can become stronger and more effective than ever before.
Waggl is the most human way for organizations to crowdsource feedback.