C-level executives are less likely to recognise a shortfall in their own company culture than other employees, according to a recent research report.
It found that boards and CEOs need a reality check around culture change and management, and in particular, there are five “hard truths” for companies around this:
- Culture problems are pervasive
- Culture problems are often immense
- Larger organisations have larger culture problems
- CEOs have trouble seeing culture problems
- Organisations need HR as a professional culture partner
“Despite the wake-up call delivered by the Hayne Royal Commission, it is alarming to see a clear disconnect still remains across Australian businesses between the CEO’s impression of company culture and what is being felt at the frontline,” said Lyn Goodear, CEO of the Australian HR Institute (AHRI), which conducted the report.
“They have to take accountability for their company culture, culture change, and to ensure that competent HR backed by industry certification guides cultural change.”
HR team members proved the hardest critics of company culture, according to the research report which was conducted in conjunction with Insync and took in almost 1000 professionals across Australia.
The research found that 90 per cent of respondents agree/strongly agree that their organisation’s culture is critical to the successful execution of strategy, while 95 per cent agree/strongly agree that CEO and executive leadership behaviours have a significant impact on their organisation’s culture.
A further 92 per cent agree/strongly agree that their organisation should make the best use of its human capital, but only 20 per cent agree/strongly agree that their company culture currently reflects this.
Survey respondents were asked to identify where their company culture was and where it should be in relation to many survey items measuring ethics and sustainability, and around 22 per cent thought there needed to be some change and 34 per cent thought that significant change was required.
“It is alarming to see a clear disconnect still remains across Australian businesses between the CEO’s impression of company culture and what is being felt at the frontline”
4 keys to driving real culture change
The report also provided four guidelines for organisations and HR professionals to improve outcomes around culture and culture change.
1. Ask penetrating questions. It’s crucial to obtain a realistic view of the current culture, have a firm idea of the desired culture and a commitment to achieving it, according to the report, which said the organisation should be asking itself a number of questions, such as:
- How self-aware are your organisation’s CEO and executives? Do they know that most employees see a greater need for cultural change than most CEOs and executives?
- Are your board and executives united in their description of the organisation’s vision, expected values and behaviours, and of the company culture it hopes to have (in say, three years)? Do you have a robust plan to get there?
- Do your leaders communicate, reward and role model expected values and behaviours? Do they hold each other accountable individually and as a team?
- Do the Board and CEO realise the significant impact they have on your organisation’s culture and do they take accountability for the organisation’s culture and for cultural change (or lack thereof)?
- Have your leaders fully engaged your HR team in a way that ensures all people, systems, incentives and communications are aligned with your vision?
- Do you ensure that your senior HR team are industry certified and committed to continuous education in the same way as, for example, your finance team?
2. Conduct an internal reality check. The next step is to get qualitative and quantitative data that will provide a clear description and measurements of the current state of culture.
- Employee surveys and digital tools that provide real-time or longitudinal feedback are useful, but in isolation, are not sufficient to get true visibility. The data should serve as the motivation for change and be used as an ongoing benchmark for measuring shifts in cultural change.
- Responsibility should be assigned to key stakeholders from all layers of the organisation, who can offer ongoing insights and champion change.
- Culture is about how employees behave. Digital tools can provide insight and evidence, but skilled people are needed to understand, assess and manage the change process.
- Don’t do lots of measurement unless you have the resources to deal with and are also committed to change. Less measurement and more change are preferable.
“Recognise great behaviours and demonstrate visible consequence management of poor behaviours”
3. Set a vision and commit to change. Regardless of whether you already have a vision, there are key things to keep in mind if change is to be sustainable:
- Customers should be at the centre of your thinking and decisions.
- Aim for a worthy purpose that provides meaning and fulfilment. Don’t take this for granted, find out if your staff think you have succeeded.
- Tell stories and set up signs and symbols that help reinforce your vision.
- Ensure all systems, processes and incentives support the vision and the behaviours you expect.
- Recognise great behaviours and demonstrate visible consequence management of poor behaviours.
- Company culture must be a Board priority (the Board can be provided with a cultural report alongside financial reports).
- Most people value sustainability over short-term goals, so organisational purpose has to be core to cultural change.
- Measuring and role-modelling are great first steps, but a continuous and sustained leadership commitment will be required to show all staff that an ethical culture matters.
4. Make sure you have the right team
- To achieve all of the above, culture partners with the right expertise are needed to work alongside organisational leaders.
- It’s not enough to just have an HR team, it needs to have up-to-date skills and training because company culture is complex.
- Certified HR practitioners provide employers with the confidence that their HR partner has a high-level HR expertise and proven capabilities to support them in driving positive cultural change.