Company Culture Seen As X-Factor In Organizational Success

February 17, 2016 – Executives see the need to make culture a priority to drive alignment, collaboration, and performance, according to the recently released ‘Real World Leadership’ study by Korn Ferry Hay Group. The report, which polled more than 7,500 executives from 107 countries, found that “driving culture change” ranks among the top three global leadership development priorities.

The report affirms the critical role that leaders play in steering culture. Executives reported the most widely used strategy to improve culture is “communications,” followed by “leadership development,” and “embedding culture change in management objectives.”

In addition, the study found that “improving organizational alignment and collaboration” is the primary reason executives choose to focus on improving culture, followed by “improving organizational performance.”

“Culture is no longer seen as an afterthought when considering the business focus of an organization,” said Noah Rabinowitz, senior partner and global head of KF Hay Group’s leadership development practice. “Culture is the X-factor. It’s the invisible glue that holds an organization together and ultimately makes the difference between whether an organization is able to succeed in the market or not.”

Yet, research finds the alignment between strategy and culture is more often the exception than the rule in most organizations. In a 2014 Korn Ferry survey, 72 percent of respondents agreed that culture is extremely important to organizational performance. However, only 32 percent said their culture aligns with their business strategy.

The findings suggest that organizations need to make culture change a more significant aspect of their leadership development programs and overall leadership agenda.

“Culture change occurs, ultimately, when a critical mass of individuals adopt new behaviors consistent with their organization’s strategic direction,” said Mr. Rabinowitz. “Leadership development can be the most effective tool to change behaviors. And when leaders change their behaviors, others do so, too.”

“We believe that talent, leadership, and culture are intrinsically linked, and they are crucial to strategic execution,” said Arvinder Dhesi, a KF Hay Group senior client partner. “It’s a mistake for top leaders to believe that culture is somehow separate from themselves or a separate project. Everything that we do contributes to the culture. There’s no culture-neutral behavior.”

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A separate study released by Korn Ferry Futurestep found that nearly two-thirds (61 percent) of executives said organizational culture was the most important recruiting advantage for global organizations, followed by possessing a leading employer brand at 26 percent.

“Focusing on culture and how that brand is represented in the marketplace has a critical impact on attracting and retaining the talent that will drive business success,” said Neil Griffiths, KF Futurestep global practice leader for talent communications and employer brand.

Senn Delaney, an international culture shaping firm owned by Heidrick & Struggles, has shown through its work with hundreds of companies around the globe that successful culture transformation is possible. Mike Marino, a Senn Delaney partner and executive vice president, said four key principles must be followed to get it done:

  • Leadership must be purposeful about shaping the culture;
  • An organization, especially at the executive level, must undergo some level of personal change in how the organization is being led so as to be in alignment with the culture it wants;
  • A company requires a critical mass of people who think and see the same way in regard to how they want the culture to be. “Typically, that’s the top two or three levels in an organization depending of its size,” said Mr. Marino. “In a very large organization – we have some clients that are over 300,000 people – the critical mass might be 500, 600, or 800 people, maybe 1,000 people that you’ve got to make sure align on the same principle;”
  • There must be a sustainable strategy. “If we’re going to articulate a way of operating that we want, how do we embed that description into everything we do?” asked Mr. Marino. Who a company hires, how it manages performance, who it rewards, who it promotes, are all a part of sustainability, he said.

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Mr. Marino said that culture shaping is not about providing a detailed list of actions leaders should take to effect change. Rather, it’s more about recalibrating how they think and behave, and in turn how everyone in an organization thinks and behaves. “We try to create a mindset,” he said.

Organizational culture has reached a tipping point, said Senn Delaney founder and chairman Larry Senn. Dr. Senn is a pioneer in the field of corporate culture and has led culture shaping engagements for CEOs and other leaders of dozens of Fortune 500 companies, state governors, deans of business schools and presidents of major universities in a career spanning more than 37 years.

“Every company has its own unique culture, defined by a collective set of values and habits that condition actions of people within the organization,” he said. “Cultures happen either by default or design, and successful leaders shape their cultures instead of allowing their cultures to shape the company.”

Most CEOs know that culture matters (“Culture is driven from the top down,” he said) and that it can have a strong impact on business results. “Companies that focus on culture are becoming icons for job seekers, especially the future generation of leaders who place a premium on work-life balance and culture fit in choosing where to work.”

Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media

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