Managing Corporate Culture Now Means Managing Great Expectations
November 10, 2021 – The pandemic has disrupted every aspect of society, including the workplace. Nascent trends in employment, recruitment, and retention that existed pre-pandemic have acquired new momentum and force over the past 18 months and have now been joined by new factors.
Collectively, this is changing how work is organized inside companies and how employees view their jobs and their relationships to them. The spoken and unspoken social contract between employees and employers is being renegotiated before our eyes, and it is far from settled.
“Even before the pandemic, we saw that employee expectations, especially among millennials and Generation Z, were changing with respect to how businesses should operate,” said Mitchell B. Reiss, an international consultant specializing in geopolitical risk, institutional turnarounds, and non-profit leadership. “Data suggested that these cohorts, unlike their predecessors, did not ‘live to work’ but ‘worked to live.’ Yes, they enjoyed the perks that came with many office settings, including free beer and meals, but according to a recent workplace survey, employees prioritized meaningful opportunities where they could learn and grow personally and professionally, and they craved constructive feedback, career mentoring and recognition.”
“Employees expect their organizations to share their personal values and sense of social responsibility for the community and environment, and the institution should still delight its customers and make a profit,” said Daniel P. Forrester, founder and chairman of THRUUE. “Employees, especially younger generations, believe that every type of organization can right social wrongs and drive systemic change, whether by creating a fairer and more equitable workplace, by ensuring a safer community for all races and religions, or by confronting climate change through multiyear commitments to reducing the firm’s carbon footprint. The collapse of faith in government as the key agent of social change, well documented by Edleman’s annual trust barometer, has created a significant void—86 percent of employees expect their CEO to speak out publicly on societal issues. CEOs now need to be transformational leaders and social activists.”
Mitchell B. Reiss is an international consultant specializing in geopolitical risk, institutional turnarounds, and nonprofit leadership. He is past president and CEO of the Colonial Williamsburg Foundation, which was recognized by Forbes as one of the “Best Places to Work in America.” He also served as president of Washington College and as an ambassador at the State Department.
The Debate is Over
Other social upheavals have shaped new workplace expectations, such as Black Lives Matter and the nationwide protests in response to the death of George Floyd and the ongoing #MeToo movement as well as public discussions about sexual harassment. A commitment to environmental, social and governance standards, with requisite transparency and accountability measures, has also become increasingly important to the investment community. “For example, according to one consulting firm, companies that have publicly committed themselves to achieving net-zero carbon emissions more than tripled assets under management from the last quarter of 2020 to the first quarter of 2021, from $9 trillion to $32 trillion. It appears that CEOs are now expected to ensure their organizations capture these metrics and know how best to deliver these results.
“The debate over remote work, which so many firms had previously struggled to address, is over,” said Mr. Reiss. “Habits and norms established over half a century, including commuting, business travel, onboarding, all-hands meetings, coaching, mentoring and routine management, were reimagined, rewritten or erased in weeks. Now CEOs will have to manage the tension between reopening offices and addressing employees’ myriad health and safety concerns as well as acknowledging a preference by many for remote work.”
“Additionally, voices calling for prioritizing employee safety—including mental health—over profits, have gotten louder and forced firms to respond by offering workplace benefits that promote flexibility and personal days that do not count against vacation time,” Mr. Forrester said. “Companies have met greater demands for diversity, equity, and inclusion by institutionalizing new positions in human resources and in the C-suite. Firms that have only paid lip service to respecting employees’ work–life balance risk devastating reviews on Glassdoor, Facebook and LinkedIn; costly employee churn; damaged brands; and greater obstacles to hiring new talent.”
Daniel P. Forrester is an author, entrepreneur, founder and chairman of THRUUE Inc, an expert consultancy connecting culture to strategy in service of growth. He has advised the CEOs and boards of dozens of for-profit and non-profit clients on how to transform and grow with purpose and shared values.
“Prospective employees are increasingly selecting firms on what the organization stands for,” said Mr. Reiss. For many people, finding an employer who matches their values is a higher priority than financial reward. “Employees have taken to heart the August 2019 Business Roundtable statement that the purpose of the corporation was not simply to deliver shareholder value but to deliver value to all its stakeholders, including the surrounding community,” he said.
Managing Culture Now Means Managing Expectations
Meeting or exceeding this evolving list of growing employee and stakeholder expectations has recast the CEO as the chief expectations officer. But what levers can the CEO pull to manage so many disparate trends and views, and how will the CEO measure progress?
Related: Why Your Culture Is Your Brand
“CEOs who give sustained management attention and allocate resources to building value-based constructive cultures can better manage these growing expectations,” Mr. Forrester said. “Nurturing a constructive corporate culture has always mattered, with studies showing that such firms are more innovative and profitable than their peers. Still, some CEOs do not make this a priority; the reasons vary, but metrics and incentives have much to do with it.”
“One reason culture takes a back seat for some CEOs is the perception that it can’t be measured,” said Mr. Reiss. “At a time when companies pride themselves on the ability to measure everything, capturing a workplace’s culture has seemed too amorphous, and it has evaded capture by a standard key performance indicator.”
“We also know that workplace culture is difficult to change and takes an immense amount of personal time by senior leadership, a reality that is more complicated when the workforce operates remotely,” Mr. Reiss said. “With the average CEO tenure now at an all-time low (18 to 36 months), many CEOs may figure that meeting with frontline employees, whose feedback may strike them at times are parochial, is not the best investment of their limited time. Yet, such feedback shouldn’t surprise CEOs because employees can be just as self-interested as any C-suite executive. And a final factor should not be underestimated: CEOs need to have a thick skin, take criticism, and sometimes manage expectations face-to-face and one employee at a time.”
Focus, Listen, and Measure
New expectations will test CEOs and require a new skillset, according to Mr. Forrester. “The good news is that there are several steps that CEOs and boards can take to become successful chief expectations officers,” he said. “First, boards must align CEO incentives with the top expectation and outcome they want the leader to manage. CEOs can optimize the organization around one variable. Boards should remember that long lists of expectations and priorities as CEO incentives (e.g., the ‘balanced scorecard’) have been discredited long ago.”
With CEOs shouldering so many expectations, boards should recall what economist Mike Jensen pointed out two decades ago: The BSC is flawed because it presents managers with a scorecard which gives no score – there is no single-valued measure how they have performed. Thus, managers evaluated with such a system … have no way to make principled or purposeful decisions.
Related: How Search Firms Are Managing the Culture Game
If boards want to motivate CEOs to achieve a strategy, they must signal what matters most among a host of expectations floating through boardroom dialogue. A good place to start is by routinely solving problems for customers while creating value and differentiation through a shared set of lived and activated core values.
Linking Culture to Value, Growth and Performance
In the wake of COVID-19, broad and lasting changes to the workplace have advanced a more integrated approach to talent management built around culture. Organizations that once synchronized their talent to corporate vision, core values and strategic objectives are now aligning people around purpose. And for good reason: Building sustainable cultures in the long run will attract, engage, and retain talent – and give organizations with strong cultures a key competitive edge.
To examine how companies are leveraging culture, Hunt Scanlon Media is convening 500 corporate culture leaders, business transformation experts, DE&I leaders, chief talent officers, heads of HR and executive recruiters at The Plaza Hotel of New York on March 16, 2022 to explore the link between culture, value and growth.
“Second, organizations need to measure their cultures and push data into every executive and sub-team leader’s dashboard,” Mr. Forrester said. “Leaders can keep score by adopting cultural performance indicators, which complement traditional KPIs. CPIs should be gathered from across the organization and include turnover; intention to stay; desire to refer others to join; sick days taken (or not); vacation days taken (or not); recognition practices and nonpecuniary rewards; and the ongoing presence of psychological safety, which is critical to innovation, collaboration and customer success. If the dashboard has multiple KPIs and is missing CPIs, then the CEO and leadership team will always be reacting to the reset in the workforce and failing to keep pace with employee expectations.”
“Third, CEOs need to make time to meet with and listen to employees using safe, two-way dialogue. If time will not permit meeting in small groups with all employees, then one method is to form and empower a diverse team of culture champions—representative frontline workers from across the entire firm,” Mr. Reiss said. “The CEO and leadership team should meet with the culture champions regularly and in confidence. Ideally, the team of culture champions will help the CEO to better understand the day-to-day concerns and expectations of the employees and through them get closer to understanding the customer. Champions can also serve as megaphones to transmit the CEO’s messages to colleagues from across the business. It will not go unnoticed if CEOs allow themselves to be vulnerable, holding themselves accountable for mistakes, communicating that they don’t always have all the answers, and even explaining that the firm will be unable to meet every expectation during this historic reset.”
“Adjusting to new expectations is never easy. But rising expectations must be managed, or the CEO and the firm will fail,” Mr. Forrester said. “The benefits are clear. As the market resets, you will attract and retain top talent. You will encourage employees to speak up—a sign of a healthy workplace. You will be honest with employees and customers about what you can deliver beyond a valuable service and product that meets a need. And you will grow and drive profitability.”
Related: Transforming Corporate Culture and Driving Performance in the New Workplace
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
