The Importance of Culture in Driving Growth, Performance & Value
April 25, 2022 – Culture is hardly a new concept. Well before the rise of various models and frameworks to evaluate organizational culture, companies recognized the risk of hiring a cultural mismatch — such as the lone wolf in a company that values collaboration. New employees, especially leaders, who clash with the culture are often ineffective, and are likely to quickly depart for a friendlier environment.
As the ramifications of COVID-19 continue well beyond the pandemic, broad and lasting changes to the workplace have advanced a more integrated approach to talent management built around culture, according to executive recruiters. Organizations that used to synchronize 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, according to executive recruiters.
“Most companies make statements about what they stand for and how they want to operate – around company values and purpose,” said Steve McLay, brand and marketing leader at Walking the Talk, the culture division of ZRG Partners. “But having a great company culture means living that every day: aligning the way people behave, the way they make decisions, what they prioritize, the behaviors their processes and systems encourage. The greater this alignment, the more the company is walking its talk, and this is the characteristic of any great culture. It doesn’t mean all great cultures have to be the same, but rather than all great companies can be trusted to walk their talk.”
Priority Patterns of Behavior
Culture is shaped by the patterns of behavior that are encouraged and not tolerated over time, according to Mr. McLay. “For every organization, certain patterns of behavior are crucial to their ability to execute successfully on their strategy,” he said. “For example, fast decision making, customer centricity, acting as one-team, being innovative. If these become the norm across the organization, performance will improve. What ‘good culture’ means is different for every organization and defining the priority patterns of behavior is an important part of culture leadership.”
Where everyone feels welcome, included, and valued for the contributions they can make are some key elements of having a great company culture, according to Louis Montgomery, a partner and human resources and diversity officers practice leader at JM Search. “This includes respect for individual differences and a positive, growth mindset,” he said. “It’s the kind of place where individuals feel like they can make a difference. It’s the kind of place where innovation and new ideas are valued and actively sought out. It’s the kind of organization that promotes learning and individual development. It’s the kind of organization where collaboration is not only welcomed but expected. A great company culture is one in where people are encouraged to speak their minds and where differences of opinion are welcome. A place where people can disagree and not be disagreeable. Lastly, it’s a place where people feel what they do on a daily basis matters, and they can see how their efforts lead to good business outcomes.”
Healthy cultures can also lead to more discretionary effort of behalf of employees, Mr. Montgomery said. “If you feel good about your organization, you’re willing to put in the extra time and effort to get things done. Another way it leads to better performance is that it encourages people to be innovative. A good culture promotes a sense of ownership and that feeling leads to people wanting to do their best on a consistent basis, and to not just do their job but to work on ways to make things better. A good company culture encourages people to collaborate with colleagues in other areas that can lead to more innovation and process improvement. Lastly, a good culture encourages people to promote their organization, which includes referring prospective colleagues, who they respect and would enjoy working with. In short, a good culture creates a virtuous cycle.”
“In our experience, cultivating this kind of company culture begins with a leadership team that models culture from the top and does not hesitate to make difficult, values-based, people-centric choices,” said Daniel Forrester, founder and chief growth officer of THRUUE. “We have never seen a culture outperform the norms, values, and behaviors of those with the greatest influence. Second, there must be a clear and focused strategy that is understood across the organization. Without this, confusion reigns, top talent is uninspired and unchallenged, and customer experience quickly slides. Finally, great cultures are maintained when leaders act on culture data as seriously as they act company’s growth.”
Mr. Forrester says there are two reasons that choosing who leads is the ultimate cultural decision: 1) Different stages in a company’s growth call for different strategies, and 2) different strategies can call for different cultures. “Because culture is set from the top leadership of an organization, helping organizations select leaders whose values match the desired future values and culture of the organization is essential to success,” he said. “Search firms can help prospective CEO hires ask the right questions about the culture of the company before day one: what is working, what is broken, and where is there culture risk? The existing culture will vote early and often on every CEO’s tenure. Hiding culture issues or risk only reduces the chances of a successful leadership transition and impact. Lastly, search firms and their partners should work closely with new CEOs to de-risk the earliest months of their tenure as they build their leadership teams and rapidly align around a strategy. Even a perfect placement disrupts alignment and creates new cultural tensions. New CEOs never inherit an existing strategy at face value—they rightly ask tough questions and bring their points of view.”
Related: Five Things to Consider When Creating a Company Culture
The first critical step in creating a great company culture is understanding what culture is, according to Henry Nothhaft, president and COO of Alioth. “Organizational culture is not filling snack drawers or throwing happy hours,” he said. “Those are perks, and sure, those items might be fun and indicative of a certain type of workplace environment. But they aren’t a company’s culture. Rather, culture is the sum of the unspoken behaviors, mindsets, and social patterns that dictate how an organization operates. It includes the unwritten rules that establish what is encouraged, discouraged, accepted, or rejected within a company. It offers a toolkit that employees can use to interact and thrive in a company.”
No One-Size-Fits-All Approach
“There is no one-size-fits-all approach to culture,” Mr. Nothhaft said. “What works at one company may not work at another, so trying to emulate another corporate culture is a fool’s errand. Instead, companies need to look inwards and ask how they can help their employees do their best work. The past few years have been challenging for companies of all sizes. As we’ve worked with companies to understand and benchmark their cultures, we’ve noticed a few trends.”
Connecting Leaders With Purpose
“Culture is all about behavior – an organization’s collective behavior,” said Kelli Vukelic, CEO of N2Growth. “Organizations need to look beyond their culture to seek alignment for employee performance.” Mark Twain said, “The two most important days in your life are the day you are born, and the day you find out why.” When your employees are engaged around the why of your organization they can drive it towards its goal, according to Ms. Vukelic. “Connecting leaders with purpose will make employees connect with it too and will lead to innovation, cooperation, and success of the organization,” she said. “Organizations with a strong sense of purpose talk about it all the time and everywhere. They post it on their websites and printed materials, on the office walls, and speak about it in advertisements and at all levels of the organization. Sometimes that is why it feels like the definition of culture. Purpose is about emotion and how employees connect to the work being done. This alignment creates superior performance.”
Transforming Corporate Culture and Driving Performance in the New Workplace
As organizations begin to look at the matter of if, when and how they will transition back to traditional workplaces, leaders are fielding a number of questions: What will the office look like? Will it be safe? Will it ever be the same again? Can we have a high-performance culture with so many people working remotely?
“We know that some team members will happily return to offices, while others will choose to visit the office as needed, and yet others will continue to use their home office as a base of operations,” Marty Parker, president and CEO of Waterstone Human Capital, said in a new report. “The impact of these changes on corporate culture cannot be overlooked; nor can the fact that now more than ever, organizational culture will be the driver of competitive advantage and performance. Your culture will differentiate your organization more than anything.”
“For years, the concept of hiring for culture fit has been a misused term by search firms,” said Ms. Vukelic. “It some instances it has been used as a reason to reject candidates, but if used in a candidate presentation you can be assured that their thinking it is out of date and does not promote growth for the organization. A search firm that uses this phrase to support your search process is narrow in their thinking and will never be able to assist you in challenging candidates’ alignment to purpose. A search firm should instill organizational purpose in the candidate pipeline from the beginning of the process, ensuring that it is present and alive in the organization when a candidate is hired. During their candidate presentations, you’ll know they are different if they use ‘culture add’ to describe a candidate.”
With the Great Resignation upon us, organizations can keep their teams together by connecting to purpose, staying true to their core mission and values, lead with empathy, and see their employees as humans first, Ms. Vukelic said. “Going forward, shift your thinking this way: culture is how an organization operates, purpose is what an organization stands for, and engagement is how employees feel about their culture and purpose.”
No Secret Recipe
There is no secret recipe for great company culture, but there are several traits that companies with great culture tend to share, according to Sasha Jensen, founder and CEO of Jensen Partners. “For one, they value diversity – not just in principle, but based on the belief that a workforce comprised of different backgrounds and experiences yields a rich diversity of perspectives that can be leveraged to gain a competitive advantage,” she said. “A growing body of research supports that belief.” In fact, the World Economic Forum has proclaimed that the business case for diversity in the workplace is now overwhelming.
“Another trait companies with great culture share is inclusiveness,” Ms. Jensen said. “We often encounter companies that fall short in this area because they assume that top-down mandates centered on diverse hiring will automatically translate into a groundswell of belonging and community among rank-and-file staff. However, inclusivity is a function of thousands of day-to-day interactions between employees, so building an inclusive workplace requires more than just mandates from the C-suite,” she said. “The final commonality among companies with great culture is that they take a systematic, data-driven approach to managing their workforce. They set empirical goals, they measure qualitative and quantitative metrics, they regularly analyze and refine their approach based on data, and they continually stive to be better. The most sophisticated companies are utilizing technology and analytics to better understand the effectiveness of their own initiatives, benchmark KPIs vs. their competitors and report progress to stakeholders,” she said.
“We believe great culture is an outcome, not an objective. Companies with great culture usually don’t dwell on culture,” said Ms. Jensen. “They dwell on improving DEI, employee well-being and satisfaction, and employee retention. These attributes sometimes get labeled as ‘culture,’ but the distinction is important because focusing on culture frames the issue as systemic and intrinsic, when in reality, performance is contingent on the satisfaction and well-being of each employee. Quite simply, unhappy, alienated employees are generally less likely to regularly go above and beyond. Hence, improving performance is more about making sure each employee feels valued and less about establishing a sense of shared values or beliefs,” she said.
“We are increasingly hearing candidates demand better DEI, culture, and work-life balance from potential employers,” Ms. Jensen said. “These demands are often harder for our clients to meet because they take time to develop. Given our ability to help clients take a data-driven approach, our most sophisticated clients are beginning to offer data and analytics to current and prospective employees to empirically demonstrate their commitment to DEI and company culture. We see this practice becoming the norm as firms continue to seek new and innovative ways to increase retention and secure top talent.”
Related: Why Total Well-Being is the Biggest Culture Shift to Happen in Decades
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
