Why is culture such a hot issue for business and HR leaders?

There are three key factors HR leaders should work on to help improve employee engagement, according to Jim Clifton, chairman and CEO of Gallup

Culture can be one of the most powerful tools for business success, writes Josh Bersin

Based on a spike in lookups on the Merriam-Webster dictionary website, “culture” emerged as the most popular word of 2014. Now it is popping up in corporate boardrooms globally – alongside employee engagement and retention – as a top issue for business leaders.

In fact, 87 per cent of organisations cite culture and engagement as one of their top challenges, and 50 per cent call the problem “very important”, according to the Deloitte Global Human Capital Trends 2015  report. The survey on which the report is based was conducted among more than 3300 HR and business leaders in 106 countries, and is one of the largest global studies of talent, leadership and HR challenges.

Why is culture so hot now? As the economy picks up steam, employees have more bargaining power than ever before. Thanks to social websites that share information about jobs, careers and organisations, a company’s employment brand is now public information. The power has shifted into the hands of job seekers.

“Companies with strong positive cultures are now the most in-demand and are winning big by attracting more talent”

Many companies have work to do. Gallup’s latest research on employee engagement shows that only 31 per cent of employees are engaged at work (51 per cent are disengaged and 17.5 per cent actively disengaged). And analysis of the Glassdoor database shows that the average employee gives their company a C+ (3.1 out of 5) when asked whether they would recommend their company to a friend.

Companies that focus on culture are becoming icons for job seekers:

  • Fortune’s Best Companies happen to be many of the same companies listed in Glassdoor’s Best Places to Work. This suggests that companies with strong positive cultures are now the most in-demand and are winning big by attracting more talent.
  • Younger companies that focus on culture are reaping the benefits of that focus. A growing New England tech firm focused on its culture, provides employees with free books and education and so strongly supports corporate transparency that it posts its board meeting notes and culture manifesto online.
  • Culture-driven companies put their people first. One large grocery retailer reset business goals to create the jobs and career growth they want for their people. “Take care of your people and they will take care of your customers”, as the saying goes.
  • Even many traditional companies are now heavily focused on culture. Recently, the CEO of a large insurance organisation raised wages, improved health benefits, and introduced yoga and mindfulness training to his entire company to improve retention and culture in the call centres.

Many now believe that culture has a direct impact on financial performance. I just talked with two industry analysts who, as part of their core research, read comments on social media job and career websites before they publish analyst reports.

“Taking a critical look at your organisation may even help you align your values and hiring to the culture you want to build”

Your culture, like your strategy, is unique to your organisation. It builds over time and is often hard to change. And when things don’t seem to be going well, turn back the clock. Sometimes the culture is what changed: remember what made your company great in the first place.

No matter whether you are a CEO, HR executive, manager or a team leader – culture is one of your most powerful tools for business success. People are not intrinsically motivated by profit or market share – it is purpose and values that bring us to work every day.

What is organisational culture anyway?
Culture is a big and somewhat vague term. Some define it as “what happens when nobody is looking”. In reality, it’s much more complex. Culture is the set of behaviours, values, artifacts, reward systems and rituals that make up your organisation.

You can “feel” culture when you visit a company, because it is often evident in people’s behaviour, enthusiasm and the space itself. Are people busy and working with customers? Or are they quietly working alone? Do they get in early and leave late? Or does the parking lot empty at 4:30? Is there a sense of order or a sense of family? All these clues help diagnose culture.

You can diagnose your culture by asking such questions about your own organisation. Taking a critical look at your organisation may even help you align your values and hiring to the culture you want to build.

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