Culture is Hard; Here’s How to Make it Easier
Building culture is an investment and an iterative process. Here’s how to get started.
Leaders know that culture is critical to a high performing organization. So why do they find it so hard?
So far, we’ve explored the advantages of organizational culture and why it’s so important. We’ve also looked at the link between top-performing companies and leaders that understand the advantage of culture.
Just to recap on that link: Louis Gerstner, who, as CEO of IBM from 1993 to 2002 orchestrated one of the biggest turn arounds in corporate history, growing its market cap nearly six-fold, from $29 billion to over $168 billion, summarized his success, “The thing I have learned at IBM is that culture is everything.”
Sam Walton, who built the top company on the Fortune 500, praised his own use of culture: “I think one of the greatest strengths of Wal-Mart’s ingrained culture is its ability to drop everything and turn on a dime.”[1]
So, incidentally, did his number one competitor Harry Cunningham who assessed Walmart’s success saying, “Sam’s establishment of the Walton culture throughout the company was the key to the whole thing,” he once said. “It’s just incomparable.”[2]
Add to that CEOs of highly successful companies such as Reed Hastings of Netflix, Tony Hsieh of Zappos (unicorn shoe retailer), and Satya Nadella Microsoft who have demonstrated that culture can be a strategic tool that builds incomparable advantages.
Few would disagree that their attention to organizational culture has paid off. In fact, a study by Deloitte found that 94% of executives and 88% of employees agree that a distinct workplace culture is highly important to business success.[3]
Leaders see the returns from culture building. Last time we talked about the three advantages of strong cultures:
1. Culture drives performance
2. Culture delivers differentiation
3. Culture enables adaptation and change
A Harvard Business Review survey found that 92% of respondents believe that improving their company's culture would improve the value of their organization.[4] Company leaders rank a strong organizational culture as more important to performance than strategy or their operating model.[5]
Think about that: Leaders rate culture as more important than strategy. Despite this, they recognize that their efforts are subpar.
Tellingly, only 15% of executives believe that their company's culture is where it needs to be. And eight in ten leaders believe that their organization’s culture must evolve in the next five years for their company to succeed, grow, and retain talent.[6]
I hear this angst about the need to change culture continually. It’s the reason why so much of my book Transformative is dedicated to helping leaders retool their organization and change their culture.
However, it’s clear from a quick scan of the headlines that organizational culture has fallen on tough times. The rise of “bro culture” and “hustle culture” work environments, public displays of poor leadership, leaked company missives threatening employees and other signs of weak leadership are everywhere.
It’s just too easy to default to a poor form of leadership.
Throw in the challenges of hybrid work, with all its employee appeal and productivity gains, and it makes it frustratingly difficult for leaders to connect with their teams and use culture as a strategic advantage.
This cultural deficit has a direct impact on your organization. A Deloitte study found that 82% of employees rated their company culture was weak and needing improvement. Interestingly, this assessment aligns with a recent drop in employee engagement, with only 32% of employees saying they are engaged in their work, down from 36% in 2020.[7]
It begs the question, why are we so bad at culture?
Several studies highlight the difficulties that leaders face in building strong cultures including lack of executive time, conflicting priorities, and delegating culture to as an HR responsibility.
While those are real issues. But they are largely symptoms of bigger, underlying problems that leaders have a lack of clear vision of what their culture can and do for their organization.
Along with that lack of vision is lack of understanding of how to define the right culture and implement it. There’s a reason for this: it’s simply not taught. And often it’s only learned when you’ve been in the type of environment where culture has been implemented well.
We covered much of advantages of designing the right culture in the last article. Going forward, we will focus on how to build and implement the right culture for your organization.
The principles and process I’ve developed is based on my own work as a CEO, and as a venture investor coaching leaders. I’ve honed this process by developing workshops and accelerator programs for leaders on building a foundation of culture and company values.
I consistently hear in these workshops an interest in developing a strong culture. I also hear a feeling of inadequacy in how to do it. This approach will give you the understanding, tools, and plan.
Over the next series of articles, we are going to dive deep on how to define and implement the organizational culture your company need, starting with building a vision for your culture, creating the right foundation, and how to create the right anchors and incentives to make it stick. You’ll learn along the way how to involve your team to create something they can buy into.
As we go through this, keep in mind two foundational principles:
1. Culture is your longest-term investment. Building a strong culture takes time and effort. You can’t buy it. But your cultural investment will outlast any product or strategy.
Short-term payoffs, which we spoke about last time, include employee engagement, retention, and organizational performance. The long-term payoff is market leadership, relevance, and the agility to survive change.
2. Second, building culture is iterative. It takes an active style of management. As a leader, your job is to both reinforce it continually and evolve it to be successful.
Ultimately it’s the responsibility of everyone in the organization to contribute to a positive culture.
Hopefully if you’ve made it this far your excited about the approach. In the next article I’ll start by breaking down what culture really is and understand two key attributes of culture.
Things to consider:
1. How clear is our vision for our organization's culture?
2. What difficulties do we have in articulating our cultural vision?
3. What obstacles have we faced in allocating time and resources to culture-building initiatives?
4. How can we measure the impact of our culture initiatives?
5. What challenges have we faced in getting our leadership team aligned on cultural priorities?
6. How difficult has it been to maintain high levels of employee engagement?
7. What obstacles have we encountered in empowering employees to be culture advocates?
8. What have we found most challenging to develop or apply in building a strong culture?
9. What opportunities have we had in discussing what our employees want in a desired culture?
Until next time, lead with purpose.
Will
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P.S.
One concern many leaders have expressed is whether it’s possible, in this time of societal divisions, political polarization, intolerance, and toxic interactions if it’s even possible to build a strong organizational culture.
Add to this question a general trend of diminishing trust in both public institutions and businesses. Polls show that public trust has fallen in near every type of organization: government, courts, law enforcement, the news media, banks, private businesses, and tech companies.
Here is the reality: Research and empirical evidence show that humans fundamentally seek meaning.
In a world of conflict, distrust, and loneliness, people want to attach more meaning to their lives, including their work. And when they do have more meaning, they tend to be more engaged, committed, and satisfied with their work.
This sense of trust and engagement provides the benefit of positive emotion, higher levels of well-being, and better mental health.
Simply put, our well-being improves when we are part of something bigger than ourselves.
Overall, evidence suggests that finding meaning in one's work is an important factor in employee well-being and organizational success. Culture, as we will discuss, is based on a common sense of mission and meaning as well as agreed beliefs, values, actions, and behaviors.
Moreover, research shows that when people finding meaning in their work, it can have a positive impact on organizational outcomes, such as productivity, profitability, employee retention, and innovation.
A great work culture is an antidote to many of the ills and disfunction people experience elsewhere.
[1] Sam Walton and John Huey, Sam Walton: Made in America (Bantam Books): 216.
[2] Ibid.
[3] Culture: A Catalyst for Innovation, Deloitte, 2018.
[4] The Culture Factor, by Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng. hbr.org/2018/01/the-culture-factor
[5] Katzenbach study, www.strategyand.pwc.com/gx/en/insights/katzenbach-center.html
[6] WSJ, Executive Transitions: Catalyzing Organizational Culture Change, deloitte.wsj.com/riskandcompliance/executive-transitions-catalyzing-organizational-culture-change-1485838936
[7] https://www.gallup.com/workplace/468233/employee-engagement-needs-rebound-2023.aspx