The 5 Real Reasons Business Leaders Fail at Culture Management

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A March 2015 Forbes article cited “company culture” as the hottest topic in business today. In a recent survey of 3,300 executives from 106 countries, top managers said culture is the most important issue they face – more important than leadership, workforce capability, performance management, or anything else.*

A few stats jumped off the page, including:

  • 81% of leaders believe that a high performing culture is necessary for success
  • 65% believe they need to change their culture
  • 76%believe it’s changeable, which is good news but…
  • Less than 10% succeed in building one. That’s right! Less than 10% of leaders actually build a high performance culture.

 

Why? 

I’m not an expert, influencer or thought leader when it comes to company culture. The following observations come from two years with a company ranked #44 on the Fortune 500 and over a decade in the startup arena with some notable wins and failures. Over the last couple of years I’ve been behind the scenes talking with leaders who are working on company culture. Leaders from fledgling startups to those with billion dollar valuations and some of the largest most recognizable brands in the world. The scope and nature of those discussions varied widely. From “the culture is what I say it is” to companies adopting holacracy and everything in between. In all cases, the relationship between success, failure and culture are clear. If any of these observations help you with company culture they will have hit the mark.

Lack of data

Most companies know where they want their culture to be. Few have an objective understanding of the current state. Without establishing a baseline it is difficult, if not impossible to demonstrate progress, let alone ROI. It’s no wonder that culture has a reputations as elusive, soft or amorphous. Culture is no longer an exception to the rule of measurement that defines our day. Culture is measurable. Leaders who have formerly been accountable for business outcomes are increasingly being held to a higher standard of inputs including building, engaging and retaining high performing teams. Leaders without culture data are operating from a deficit.

“In God we trust, all others bring data” – William Edwards Deming

A map is only useful if you know where you are. The same way a GPS marks your location and plots the best course to arrive at your destination, software can be used to understand the “location” of your current culture before charting a course. That means you can build hiring profiles that actually work, align business objectives and processes to people and their goals, retain top performers, drive sustained engagement and systematically build the culture you want.

Leaders who don’t walk the talk

Integrity was among Enron’s stated values. Companies often confuse aspirational and actual culture. Intentional or otherwise, the consequences are the same. Effective employer branding has the power to shape the perception of a company as fostering innovation and collaboration, a place where employees learn and develop their skills, experience and careers. If a brand walks the talk it’s earned a meaningful competitive advantage. 46% of new hires stick around less than 18 months and only 11% fail due to insufficient skills or experience. If integrity is about lining up actions with beliefs, companies must align their employer brand with the employee experience.

Before websites like Glassdoor, Indeed and LinkedIn it was challenging for candidates to get a handle on a potential employers’ culture and for leaders to be self aware about their own culture. Today, it’s all but impossible for companies to simly chalk high turnover up to “the cost of doing business.” When you aren’t living up to the expectations you set with candidates and employees, they let you (and the rest of the world) know. This kind of transparency is here to stay.

Confusing employee engagement and culture

There are a number of effective solution providers helping companies fix what’s most broken with the traditional approach to engaging employees. They know that surveying more frequently using fewer statements, using an individual, rather than universal lens to interpret the data, being quicker to act and developing leaders to take ownership of their team’s engagement are all better ways to improve results, not just engagement scores. The relationship between performance, innovation, retention and employee engagement are clear. Engagement matters. Culture and engagement are inextricably linked but they’re not the same thing.

Using engagement surveys to measure culture is pseudoscience that undermines efforts to improve both. As a data set, engagement scores are subject to a number of confounding factors. If we ask people what they think or how they feel about our company culture their responses are going to vary according to their level in the company, how long they’ve been around, recent performance, the office they work at and even whether they’re having a good or bad day. Engagement is personal. Understanding people is requisite to appropriately responding to what they say, think and feel.

Substituting perks for culture

Perks are excellent ways to communicate and reinforce culture but they don’t define it. People’s core values drive their actions and actions define culture. Substitute perks for culture and you risk people joining the company and sticking around for the wrong reasons. It’s easy to imagine candidates being wooed by a rich benefits package, flexible work hours, a company car, generous maternity and paternity leave, contemporary office design, free lunch, pet care, dry cleaning, concierge services, gym memberships and even haircuts. Don’t get me wrong, perks are great ways to attract and retain talent but don’t mistake the medium for the message. Strong perks don’t cover weak cultures.

Attempting to change rather than align culture

People make up culture and the ROI on changing people is abysmal. Look no further than your manager, direct reports or significant other. Cultivating a strong, well-aligned culture is a process, not an event. It isn’t about decrees, mandates or attempting to change people. It’s about clearly defining the values of leadership and employees in order to align the organization around a small set of common core values. It is possible to align the way you attract, manage, develop, retain and engage employees with their values and the aspirational values of the organization.

If the science behind culture alignment is something you may want to learn more about, check out “Culture Change vs. Culture Alignment.” You’ll find research based insights about the ways in which employee values and company culture can be aligned along with tips to help you close potential gaps and build on existing strengths.

As human beings, we want to be part of something greater than ourselves. We want be part of groups in which we can contribute and be valued. Most of us want to make a difference in the world and spend our working hours with people who share a similar vision of how to get it done.

Building a workplace where people can see themselves fulfilling a mission, rather than simply doing a job is what culture is all about.

*Deloitte Global Human Capital Trends 2015 Report

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