What is culture and why is it so important?
An organisation’s culture is the most critically important factor in creating a shared purpose and the positive environment which helps define future success. Culture is the combination of vision and values, collective norms and habits, practices and processes, traditions, ways of working and behaviours which together create a unique working environment.
What may be surprising is that CEOs value corporate culture more highly than corporate strategy, operating model and even product definition. Recent research shows that 84% of CEOs view culture as critical to business success.
It is also the reason most often given for why people leave their company. Research undertaken by Bateman Collins clearly shows that the reason why people resign is due to lack of cultural alignment between employee and company. In 88% of cases when executives left their organization, culture was quoted as the reason for them leaving. Employees stay working within cultures they enjoy, where they can contribute, feel valued, be successful and ultimately enjoy progression and promotional opportunities.
Culture is therefore important for employee engagement. In a recent survey 95% of candidates said that culture is more important than compensation. Organisations must pay attention to culture – to create a productive, well-functioning, positive and enjoyable work environment which celebrates success and engages employees.
Furthermore, a progressive company culture can help the organization promote its brand into its markets, engaging customers in a more effective way. After all, an energized and enthusiastic workforce is more likely to enthuse its customers. For organisations most attentive to company culture this can have huge benefits for the brand and how that brand engages with customers. Apple is an example of one firm which has utilized its culture to great effect in this way.
Culture also requires continuous investment. Leaders must define the culture they want to create, listen to their team and customers and possess the strength of character to embody and instil these values and behaviours all the way through the organization. This is easier to achieve in small firms and increasingly difficult in larger organisations.
The stewards of culture
Firstly, we will look at why the CEO is important. Culture is created and driven by leadership. The CEO must embody the company’s culture in thought, word and deed. This requires strength of character and clarity of purpose. Usually the CEO or entrepreneur creates the company culture at a company’s formation, although as the business grows inspiring all employees with the same positive culture becomes increasingly important. Leading by example is the first step in achieving a positive company culture. A good leader inspires good leadership traits and installs values in the leadership team which in turn is communicated to the wider organization.
What role does HR have to play in defining and safeguarding company culture? People strategy is now seen as so intrinsic to company performance that increasingly the HRD is viewed by most CEO’s as a critical partner to success. A recent survey shows that the HR or People Director is viewed as one of the three most important executives in the organization along with the CEO and CFO. This is precisely because HR is seen by the CEO as the guardian of company culture. HR have a critical role in assessing competencies, motivations, ways of working, values and behaviours which are all factors that form company culture. An effective recruitment process should incorporate HR to assess these cultural dynamics.
Ultimately, everybody within an organization has a role in defining and shaping its culture. The most successful companies are usually those who can instil a sense of collective responsibility and accountability for culture.
Transforming organisational culture in a digital age
Culture is even more important in the digital age as organisations seek to attract and engage a new group of employees and customers – millennials (Generation Y) and post-millennials (Generation Z). These groups are increasingly comfortable with technology and social media and have different expectations of employers. It is perhaps not surprising then that candidates are attracted to high tech industries which they perceive as having a progressive culture and a positive working environment such as Google, Facebook, Apple, Twitter, Adobe.
In 2018 the top 5 firms within the Sunday Times rankings were EE, Explore Learning, Admiral Group TSB and the Marriott Hotels. Within the Fortune 100, the top 5 were Salesforce, Wegmans Food Markets, Ultimate Software, Boston Consulting Group and Edward Jones. What do these organisations have in common? The leaders within these organisations regularly point to a strong company culture as being pivotal for their success.
However, the first step in this journey is appointing a leader who can engage, empower and ignite their workforce. A contemporary leader must possess a broader combination of IQ (intellect), EQ (emotional), TQ (technology and innovation) and CQ (cultural) than has historically been required. Marc Allera, CEO of EE understands this well. Allera is a keen cyclist who uses a stand-up desk to maintain his agility in the office, noting “anyone leading people understands the importance of having happy, engaged teams”. He also recognizes the importance of digital technologies to communicate key messages to colleagues and customers through 5500 followers on twitter.
Transforming an organisational culture is not easy and moving the cultural dial can take time. Appointing a CEO and leadership team with a strong CQ (cultural quotient) is an important first step. These executives must embody the cultural ambitions of the board and effectively engage and excite the organization to go on this journey of transformation. For those that are successful, the rewards are huge.
A framework for culture
Bateman Collins has developed a cultural profiling tool to help organisations define and refine their culture across 10 key components. A short synopsis of 5 of these is listed below:
Mission and Values – In “the importance of vision and mission for people strategy” we examine the benefits of a strong mission statement to provide the organization with strategic purpose. Mission, vision and values are key foundations of culture which instils in the workforce the ethics and behaviours which ultimately influence the workforce to do the right thing.
Responsibility and Empowerment – Employees who are given responsibility embodied in trust, respect, accountability and fairness are dynamically empowered. For organisations with a performance culture, agile and flexible working practices are a particularly useful balance to demonstrate this trust.
Learning and Development – Learning and development opportunities are one of the most cited reasons for candidates applying to organisations. This is particularly true for more junior employees where 81% of candidates with less than 10 years of experience accepted a job offer for the opportunity to develop.
Innovation and Creativity – Organisations which create the right atmosphere for innovation excite and enable their workforce as well as promote the right environment to develop innovative products which transform markets.
Collaboration and Communication – Openness, transparency and communication are critically important for success. Dynamic organisations which prioritise speed and ease of communication utilise open plan offices which enables leaders to keep employees regularly informed and helps to demonstrate flat organisational structures.
For more information on cultural profiling, please contact Barney Collins on 0203 740 9040 or firstname.lastname@example.org