By Charlie Coode, Culture 15
The collapse of Enron stemmed from a toxic culture of greed and corruption. The evolution of an informal chain of command and the absence of effective challenge at BP ultimately led to the Deepwater Horizon accident.
The wrong culture can have devastating effects on individuals, organisations, economies, and in the case of the BP oil spill, our planet. The right one can accelerate performance and lead to sustainable success.
So, how do you define what culture you have now, diagnose where you need it to be, and track if you’re on the path to sustainable success? First, understand the critical difference between employee engagement and culture assessment.
That culture is central to the success, or failure, of any organisation is well-established. Yet most organisations believe they can’t or shouldn’t measure culture, or they confuse measuring employee engagement with measuring culture.
Whilst measuring engagement taps into the zeitgeist – that employees want to feel valued by their employers – it does not sufficiently link to strategy and how work gets done (culture). This results in a lack of applicability – and therefore legitimacy – in the wider organisation and specifically with senior leaders.
The sophistication and proliferation of online survey tools and cloud-based platforms, and the numerical translation of an area that has traditionally been seen as qualitative and intangible has been seductive, and many organisations have been enthusiastic in their adoption of employee engagement.
As a result, many organisations feel over-surveyed. The basic premise of engagement surveys is that they measure sentiment at an individual level, aggregating the scores to create departmental and business-level averages.
A ‘one-size-fits-all’ approach to engagement has also lessened the legitimacy of the topic – how important engagement is to an organisation varies by ownership structure, management style and industry dynamics.
Why should culture assessment be the priority for leaders?
According to Coode Associates’ second annual Culture Barometer, 98% of CEOs agree that culture is central to organisational performance. Yet 54% see ‘competing internal priorities’ as the main challenge they face in shaping organisational culture. And why should culture be the priority when there’s so much else to deal with?
The reality is that failing to clearly define the culture an organisation needs, and then actively managing towards that culture, results in organisations falling short of both their targets and their full potential.
Often, mindset and behaviours that are vestiges of the previous needs of an organisation as it has grown, or of past acquisitions, get in the way of effective execution of the strategy or implementation of a changed organisation design. In these organisations, the pay out from actively managing culture is enormous. But it’s common to pedal hard and get nowhere.
Activity is mistaken for progress
It’s common to see organisations pedalling hard but not getting very far when it comes to diagnosing, defining and tracking culture. Believing that if they are regularly surveying employees, they are doing all they can.
The pandemic has accelerated the trend for measuring employee engagement, when instead, it should have put the importance of culture at the heart of performance. The combination of remote and hybrid working, and concern over employee wellbeing, has increased the importance of management teams understanding the mood of the people in their organisations.
Engagement surveys can give leaders a good sense of the mood in the organisation – and this is important, especially post-pandemic, but they are not a replacement for culture assessment, for two reasons:
1. Engagement is ultimately an output of culture, so if you want to change engagement levels you first have the change the culture; and
2. Engagement is not necessarily correlated with organisational performance. There are poorly performing organisations with high engagement and high-performing organisations with low engagement. This is the reason that engagement stays stubbornly an HR-owned area. Culture, on the other hand, is how work gets done in pursuit of your strategy, so the degree to which your strategy is aligned with what you need is a direct driver of performance and efficient execution, thereby elevating it to the leadership team’s agenda.
How can you move beyond employee engagement, to culture diagnostics?
To move beyond employee engagement surveys and track progress towards the culture you need to see organisational success, you need to start with three things:
Develop a new way of describing and measuring culture. Move away from measuring individual engagement to describing collective behaviours, from measuring sentiment to how work gets done (actual behaviours), and from measuring engagement in an absolute way (67% engagement score) to comparing an organisation’s actual culture against its target culture (making industry benchmarks absolute numbers much less relevant).
Closely link culture to strategy. Ask: What culture do we need? rather than looking at engagement as a distinct and absolute measure (i.e. Is 67% engagement good, bad or irrelevant to us?).
Properly match employee behaviours with the needs of the organisation. Ensure culture is focused on what the strategy requires of employees, which is often forward-focused, representing a change to the status quo, and is intrinsically embedded in the strategy. Asking an organisation what it wants (as all engagement surveys do) has a basic flaw. Not only will responses be typically based on an individual’s subjective reality, they will also be based on the status quo, reflecting most individual’s natural resistance to change.
To be effectively managed, culture must be elevated out of the HR team and onto the Executive Team’s agenda.