A recent study directly links company culture to profits. Is your business's culture helping or hurting your bottom line?
Are you working toward a robust culture in your company because you feel you should, or because it will result in tangible business results? And either way, are you doing it right?
According to research recently conducted by the Human Capital Institute and PS Culture Matters, certain cultural facets are critical for reaping increased financial and performance benefits. They are professional growth and development, collaboration, job satisfaction, employee engagement, alignment with organizational values, organizational agility, innovation, communication, leadership, operational management and accountability. The most important are the first five, which are estimated to drive financial performance higher by 14 to 17 percent.
Paralysis in the Ranks
Unfortunately, among the North American companies that responded to the HCI survey, most of these cultural facets are not particularly strong. For example, more than three-quarters of respondents agree that their organizations are only "somewhat," "not very" or "not at all" successful at achieving a culture of professional growth and development. Companies also scored poorly on open communication (81 percent), organizational agility (77 percent) and accountability (77 percent).
Perhaps this negativity is one reason that 73 percent of the 11 essential facets are not regularly measured or evaluated in surveyed organizations. Managerial-level respondents seem to recognize that this impedes the growth and health of their organizations, but so far have been unable to devise a solution.
Clunky Companies Abound
HCI points out that a strikingly low percentage of surveyed organizations are effective at business agility (24 percent) and the attraction, deployment and development of key talent (21 percent). In a business world that relies on the ability to shift strategy on a dime and take immediate action, it's not hard to see why these cultures are suffering.
Another problem facing today's organizations is a lack of commitment to cultural change. Leaders who believe that a new culture can be developed and deployed in a day usually don't have much to show for their efforts. It turns out that "talking the culture talk" is simply not enough and will not produce the competitive advantage most companies are hoping for.
HCI notes that the companies with the most impressive financial results have established a means of measuring the cultural facets above more frequently, taking corrective action when something isn't working, and measuring again. Well-executed cultural change initiatives are clearly conveyed from the top down, and everyone in the organization is evaluated based on the identified metrics. Leaders use every available opportunity, including new marketing initiatives and all-hands meetings, to proactively reinforce cultural values and what they mean to the individual. And perhaps most importantly, they model the behavior changes they want employees to make.
Steps to Creating a Performance Culture
If your organization is to join the ranks of those who can trace their profits to their highly functional cultures, HCI recommends a few initial actions to take, including:
- Securing executive sponsorship if you aren't the CEO; managerial buy-in if you are.
- Developing a system to create repeatable and consistent processes for sustained improvement of the cultural facets above.
- Creating a Culture Committee to foster communication and execution of these processes.
- Correlating people-related metrics to the business metrics of most value to your organization.
- Actively and continually measuring the presence and practice of the metrics on which you are focusing.
Teamwork is the Magic Word
No matter what your role, you can't do any of this alone. HCI says that executives, senior managers and business unit and line managers must work together more cohesively to manage the presence and strength of these metrics-especially communication, accountability and innovation. Even metrics like employee engagement cannot reside solely in the human resources camp, and most involve collaboration with business unit heads.
Source: OPENForum
