Culture - We all talk about it, but do we really buy into it?
Let us start with understanding some terms, because even as experienced NEDs, lots of phrases are used when we talk about culture and it all begins to get a little confusing.
According to Harvard Business Review. “Strategy and culture are among the primary levers at top leaders’ disposal in their never-ending quest to maintain organizational viability and effectiveness. Strategy offers a formal logic for the company’s goals and orients people around them. Culture expresses goals through values which guide activity through shared assumptions and group norms.”
Company values are a set of principals which guide behaviours. In other words, it’s the shared nature of these values and beliefs which create a unique environment in our portfolio’s workplaces. The stronger the bond, i.e. that collective feel, then the stronger the culture.
The good news is that there is a clear business case for your companies to spend time developing their culture. If you can help to build and embed a positive culture into your organisations then they could, according to data from Gallup, benefit from
- 22% higher profitability
- 21% higher productivity
- 65% lower turnover
These three elements alone will mean that your companies can outperform their peers. It will also mean that they can attract the very best talent and even punch above their weight, pulling in highly skilled people from larger organisations who want to drive innovation and change in smaller businesses.
Culture - what is it?
It all sounds straightforward enough. With the right approach, a strong culture will influence your company’s bottom line. But one thing is for sure, offering fresh fruit and free yoga classes won’t make the teams more productive.
Culture needs to run deep within the organisation and according to Vikki Sly, Head of People at global software business, Blue Prism which employees more than 2,500 people, your culture should be ‘the things your team do when you aren’t looking’.
Clearly defining culture is essential. You will want to make sure that your companies are upfront about your culture during the recruitment process, assessing teams’ performance against it throughout the year, and your Executive Team should also be willing to part company with employees who don’t share your company values, even if that is your top sales performer.
RESEARCH BY DELOITTE - 94% OF EXECUTIVES and 88% OF EMPLOYEES BELIEVE A DISTINCT CORPORATE CULTURE IS IMPORTANT TO A BUSINESS’ SUCCESS.
In an article by Forbes Magazine, the author examines how organisations can create a positive workplace culture. We have extracted some of the key points below, alternatively if you want to you can read the full article you can do so here.
“Establish clear ethos and values for the organization - It is not enough to state this in the mission statement, brand story or in marketing and promotional material. It is crucial that demonstrable actions are taken regularly so that the employees feel an individual and personal responsibility towards these values
Foster collaboration and communication: Leadership and management style that encourages teamwork, open and honest communication is vital to creating a positive feeling in the workplace. Open and honest communication also means that regular audits are taken to evaluate how people are interacting with each other, feedback is welcomed and taken on board, and opportunities for social interaction are enabled.
Create an inclusive work environment: A positive workplace is one where all the employees are valued, supported and nurtured irrespective of gender, sexual orientation or colour. All employees should have equal opportunities to progress and equal access to all the perks and rewards on offer.
Create clear goals and rewards for the employees: Motivated and engaged employees can be created if they are treated equally and have clear goals that they can work towards. Having a transparent policy for progression and promotion offers the staff an opportunity to measure their performance. Measurable performance indicators will mean that there would be healthy competition, but this kind of honest policy statement would help avoid negative feelings and resentment amongst the team members towards each other.”
Board’s oversight of Culture
“Leaders at every level should “set the tone at the top” by modeling desired behavior. The board should also regularly evaluate how the CEO and other senior executives are modeling desired behaviors and communicating the desired culture to the organization.”
EY has pulled some really useful information together regarding the role of the Board and its influence on culture.
An article which we like in particular, Five ways to enhance board oversight of culture, poses some useful questions (outlined below) for you to consider - you can read the article in full here.
- Does the board set the right tone at the top and give sufficient attention to culture as a key enabler of purpose and strategy? And does the board itself embody and reflect the company’s values?
- How comprehensively and specifically has the board discussed the importance of culture and helped define the desired culture?
- How does culture appear on the board agenda? Is it a specific agenda item that features, for example, once a year? Or is it considered in a more embedded way throughout all board discussions and decisions?
- Is the company’s culture intentionally defined in the context of strategy, and is there a shared understanding of it throughout the organization?
- Can the board articulate the company’s cultural strengths and gaps to close, along with the changes needed to best manage behavioral risks and align culture with strategy?
- Has the board discussed metrics that could be gathered and monitored as a barometer for cultural fitness? Does management’s reporting to the board need to be adjusted to capture better data for the board’s consideration related to culture matters?
- How does the board take into account the potential cultural context underlying the achievement of key performance indicators (KPIs)? For example, if all KPI targets are met or significantly exceeded, over an extended period, does the board ask why?
- Does the board examine any potential cultural pressures that may be present to artificially “keep up” certain metrics or KPIs and, if so, consider any related risks?
- How thoroughly has the board and/or committee discussed the impact of culture on risk, risk management and the internal control environment?
Culture - How do you measure it?
Well you can start by asking your company’s employees and their clients and be as direct as you can. Using survey tools such as SurveyMonkey you can send out free and anonymous surveys to canvass different sets of stakeholders who can assess the business against an agreed set of values.
It’s easy to analyse the results and it is a quick and inexpensive way for you and the Executive Team to get a snapshot of how the company is performing. The important thing to remember is that the Board must put in place a clear plan of what needs to be done to improve or you will soon lose the trust and goodwill already generated.
Net Promote Scores (NPS) - This is probably one of the best-known tools in the industry. If your company’s score is very low -100, then your respondents are considered ‘detractors’ or to the opposite end, +100 then they are seen as ‘promoters’. But don’t worry if you don’t hit the 100 mark, +70 is considered exceptional and +50 is considered excellent. If you haven’t come across NPS before then the company offers a useful e-book which provides some further guidance which you can download this here.
Culture - How do you grow it?
In some ways your company’s culture is like parenting. As we have already said, culture is how the team behaves when you’re not there; much the same as when you are raising the next generation of your family. You want to make a great impression on them, instil the values that are dear to you so that when your back is turned, the organisation is run in the very best possible way.
- If you can, the Executive Team should use their own team to help document the organisational culture and behaviors and be open where you have work to do to improve elements of it. Use a cross functional team and make sure they get a good mix of experience including some new starters as well as some time-served individuals to ensure you produce a balanced viewpoint.
- Introduce a system which promotes immediate recognition of those who are exemplifying the company’s values. These should be on the spot if you can make it work and they don’t need to be expensive. For bigger acts of gratitude, where you might want to reward with a gift, avoid vouchers as monetary rewards can work against you (and also has tax implications). Simple things work well, and even better if you know your employees and pick something personal to them.
- Be clear about the sorts of behaviours that don’t work for your business and ensure the Executive Team is ready to pick up on these quickly to provide feedback. Ask a group of employees to come up with a short guide highlighting things which don’t fit your organisation’s culture. It might be something simple like leaving tea bags in the sink, to web-meeting etiquette, right through to more sensitive topics like how you deliver potentially negative feedback in large meetings. These guides can be easily rolled out and included in a new starter’s induction pack. Clear guidance like this will certainly set the tone for the sorts of behaviours which don’t work for your organisation.
- Tie behaviours in with your regular performance reviews; feedback should be given on a regular basis and financial bonuses should be adjusted if you can evidence a disconnect with your company’s values. This might sound controversial but taking a firm stance is important to ensure a harmonious culture.
- Finally, and perhaps most important of all, the sooner you do this the better! It is much easier to shape the culture of a young business rather than pivot a more established company into something else.
Culture - what to do next?
Culture used to be considered a fluffy subject by some, but if you want to get ahead of the competition and win the hearts and minds of your employees, then add it to your Board agendas today.