A company’s culture unconsciously influences the decisions employees make. Those decisions that employees make impact the results and success of a business, both directly and indirectly. The culture then impacts how people respond in the moment, especially when decisions are complex and there is no set process. This in turn impacts the results and success of businesses, at a level the majority of leadership teams struggle to grasp.
Since 2021, there has been a 44% point increase in the importance of organisational culture according to a survey of over 500 global CEOs (Heidrick, 2023). Yet, the majority of businesses do not have a cultural strategy. Many people attribute the quote ‘culture eats strategy for breakfast’ to Peter Drucker. However, this quote was originally cited by various other influential people and organisations, way before it was attributed to Drucker. This is the impact culture has on people. It influences what we see, what we believe, and the historic myths we attribute to reasons, explanations and ‘the way we do things’.
Have a think about an organisation you have worked for. How would you describe that culture in three words? Is that the same three words others would use? Would other teams say the same? Or would different locations use different strings of words?
Despite CEO’s recognising the importance of culture, recent reports show that many do not know how to harness this concept. It is like it’s too big, too complex or too difficult to tackle. So they continue to say it is important, but fail to make any changes to develop their own culture. With CEOs facing unprecedented pressures on retaining talent, driving transformation and new ways of working, this is precisely when they should be turning to their culture strategy. Over 70% of transformation projects fail (BCG, 2020), and with 53% of CEO’s current reporting to be leading transformation projects (PWC, 2024) understanding culture has never been more vital.
Common cultural myths we see in boardrooms:
Myth 1 – Culture is soft
Sales, operations and finance are all concrete concepts. They can be measured. Everyone is familiar with them and they are easy to set targets on. The challenge with culture is that it involves thoughts, feelings and perceptions. It is difficult to measure, but that said it is not impossible to measure. There are methods to track efficiency in sales, operations and finance whereas in reality it is the culture which impacts all of these. Culture impacts how people behave, make decisions and respond to processes and procedures.
Myth 2 – Culture can’t be managed
Many leaders say ‘culture just happens’. Others say ‘yes it’s important, but you can’t manage it’. In reality, everyday leaders are managing culture but often unconsciously. Their behaviours, the way they respond to employees, what they say behind closed doors – all of this impacts culture. This is why culture can be managed. Yes it can’t be transformed overnight, but it can be cultivated and grown and improved over time. And to do that it needs to be managed, by everyone.
Myth 3 – Human Resources are responsible
Many people say Human Resources and People Managers are responsible for organisational culture. However, whilst there are many metrics that HR can access which indicate the current culture, they are not wholly responsible. CIPD (2023) research shows 99% of FTSE 350 boards have a Financial Director on the board, compared to only 2% who have a People Director or HR Officer. Whilst the skills and experience around the table may be diverse, the research shows the levels of HR expertise at the board is much lower (only 25%) compared to 100% having financial or accountancy expertise. IT, tech and data expertise is prevalent on 57% or boards whilst marketing expertise is on 49% of boards. Therefore, when culture is led from the how the leaders behave it is difficult to link it to HR as their responsibility when this profession is significantly underrepresented at the board table.
Myth 4 – Productivity is about what we do not the culture.
Organisations manage processes, procedures and hope people work in a way of boosting productivity. However, as Simon Sinek outlines it is often ‘how’ we do things which creates the real value for customers. Culture, which impacts productivity, is key to this. Culture guides the unconscious decisions people make whilst working for a company. It guides how helpful, loyal and inclusive organisations are.
Myth 5 – Culture can’t be measured
In the famous book, Measure What Matters by John Doerr (2017), John focuses on how if you don’t measure something then it doesn’t matter, or at least it won’t improve. And this is very true is many ways. So many organisations come up with ideas, but do often fail at the execution. And this is what we are seeing so frequently with culture. Successful leaders say culture matters, but they struggle to measure it. However, just because it is difficult does not mean it is impossible and with over a decade of data taken from measuring cultures it is becoming increasingly easy to measure, observe, analyse and understand organisational cultures at a variety of levels.
Myth 6 – there is no ROI for culture
HR have many of the metrics which can give insight into the impact of culture.
- Employee turnover
- Employee productivity
- Employee satisfaction
- Net Promoter scores
- Talent Succession success
- ROI for training & development
- Sickness & Absence Rates
- Regrettable vs Non-regrettable leavers
The list goes on and on. Many of these metrics are costs to the business which push down profit, impact performance and impede employee engagement levels. It is the culture, as in the way things are done, which drives these numbers. Yet, just focusing on the numbers is only one small element of the information, it’s bringing them all together, especially over time, that gives huge insight into the current culture, the direction of culture travel and where changes may need to be made.
However, whilst much of this data is gathered by the HR team, it is important to remember that the HR team is not solely responsible for culture. Often HR teams are under-resourced, have no seat at the board table and are the people who leaders and managers turn to when things go wrong.
Conclusion
In reality everyone is responsible for culture. The leaders to define and role model it. The managers to role model and sustain it. All employees to be part of the solutions.
To know more about how to bring your culture to life for all your employees, reach out to us.
