A Look at What is Driving Winning Cultures Today

June 11, 2024 – Can you provide the big picture right now for culture today?

Organizations and leaders across the globe are facing ongoing and increasing pressure from external factors that directly impact their businesses. Economic and geopolitical instability, artificial intelligence and cybersecurity, and rampant misinformation are creating more risk and uncertainty than ever before. Heidrick & Struggles recently surveyed more than 3,000 board members and CEOs globally and found that these external factors are undermining confidence in their ability to meet their 2024 goals. How does the current volatile market affect this? In this climate of volatility, organizations across industries are engaging in cost containment, restructuring, and transformation efforts to minimize risk and navigate the uncertainty. At the same time, these efforts to achieve stability internally are challenging the essential infrastructure of culture and leadership. This has caused 26 percent of the CEOs we surveyed to identify leadership attraction, development, and retention as one of their most significant issues, in addition to 30 percent of the same respondents focusing on building healthy organizational cultures.

How can you evaluate if an organization has a good culture or not?

There is a clear, recognized connection between culture and financial performance. In a recent research study that analyzed the organic growth of the 500 largest global, publicly traded companies, we identified 102 organizations that comprised the top and bottom 10 percent based on organizational performance. We then surveyed a sample of employees in these organizations to find out their views on their company’s culture based on 19 identified factors; the companies with the highest culture ratings also had significantly stronger financial metrics and delivered double the rate of organic growth in a three-to-five-year period over those companies whose culture scores had the lowest ratings. The 19 factors of culture we measured in our study are the culture foundations and culture drivers that make up Heidrick & Struggles’ proprietary Organization & Culture Accelerator Questionnaire (OCAQ). This assessment includes empirically supported factors that drive sustained financial performance over time in organizations, not solely relying on an employee engagement survey or other employee listening strategies. Specifically, it looks at:

• An organization’s ability to mobilize, execute, and transform with agility, all of which are key factors for accelerating performance.
• Individual perceptions of behaviors in the organization and employee experiences.
• Ratings of key outcomes, such as the current and future performance of leaders, team, and the broader organization.
• Global and industry benchmarks.

Now, more than ever, leaders need in-depth insights into the behaviors that either accelerate or stall their ability to deliver on strategic goals.

Do companies struggling to create a good culture need a
mindset change?

Creating a strong, sustainable culture depends on a variety of factors. First, organizations need to ensure they engage every employee in a clear and compelling direction. Constant changes in strategy and priorities leave leaders and teams frustrated, creating increased complexity. When every team is pulling in the same direction to create a shared future, there is far greater collaboration, creativity, challenge, and inclusion. That’s why businesses driven by a strategic purpose enjoy 270 percent better rates of success with innovation and transformation efforts, according to Harvard Business Review. It takes total alignment at the top and a full integration of purpose and strategy, all articulated comprehensively so that employees retain it and can use it to make decisions in their work. Second, leaders must raise the bar on employee performance by holding themselves and everyone accountable for what they are trying to achieve and how they will accomplish it. This requires leaders to coach their teams and have direct conversations about workplace behaviors.

What are some other obstacles?

Too often, we see leaders set unreasonable standards on higher quality or faster for less, while compromising on the behavioral standards needed to deliver strong results. Conversely, we see leaders who focus too much on creating a ‘nice’ culture, where the balance falls too much on everyone feeling happy, resulting in the performance standard slipping. Culture is about much more than just changing mindsets. It is about creating an environment where every employee can do their best work. Our research on accelerating organizations showed that those with higher performance are more adept in resilience, simplicity, challenge, inclusion, and agility. While every organization is on a continuous journey that is specific to them to enhance their employee experience, it is essential that they connect culture to a clear, widely communicated direction and maintain leadership excellence. These three areas will create a multiplier effect on performance.