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How to Create a Culture That Performs

Less than a third of CHROs believe they have the organizational culture they need to support future business strategy; here's how to change that.

Organizational culture is not a new issue, but lately it has drawn an unprecedented level of attention and scrutiny. Frequent appearances of organizational cultures in headlines are also spurring more public discussions of culture’s importance to a firm’s reputation and, ultimately, its success.

Heads of HR have responded to this scrutiny by investing more time and resources in managing culture. Traditionally, companies have taken a people-focused approach to culture by promoting it among current employees and recruiting new employees who are good fits for the culture. Over 80% of organizations currently use this approach, which costs them an average of over USD 2,200 per employee per year, according to CEB, now Gartner, data.

Despite all this increased interest and investment, only 31% of CHROs think their organizations have the necessary culture to drive future business performance.

A solution to this is offered by a large 10-month study conducted by CEB, now Gartner, comprising over 100 HR leaders, 200 organizations, and 7,500 employees around the world. Our analysis revealed three key gaps around culture:

  • Knowledge Gap – Employees lack awareness of the culture the organization needs (69% of organizations)
  • Mind-Set Gap – Employees do not believe in the culture the organization needs (87% of organizations).
  • Behavior Gap – Employees do not incorporate behaviors related to the culture the organization needs (90% of organizations).

The combination of knowledge, mindset and behavior is termed workforce–culture alignment (WCA).

Organizations with high WCA achieve higher hiring/retention targets, increased employee performance and positive public reputations. For this, organizations have to take a broader approach focused on changing enterprise-wide systems that differ from the more people-focused approach companies have traditionally used.

Gain Culture Intelligence Through Employee-Led Diagnosis

To create a culture that performs, it’s not enough for organizations to know what culture they need—they must also clearly understand the current culture and whether it needs to change to support future growth. However, only 10% of HR leaders are confident that their organizations understand culture.

Organizations should shift to employee-led culture diagnosis by monitoring how employees experience and interpret workplace culture.

One organization making this shift is Unilever, which wanted to foster a spirit of collaboration and experimentation among its employees. Unilever created a movement called C4G, or Connected for Growth, that facilitated innovation by removing obstacles, highlighting wins and rewarding employees for demonstrating desirable qualities.

Expand Leader Role Modeling to Include Remodeling of Business Processes

While 78% of organizations rely on leaders to model their culture, few are confident that it’s having the desired impact. It’s not enough for leaders to espouse the culture; they must also create an environment that enables everyone to live the culture. But beyond providing tools and creating accountability, organizations must provide leaders sufficient resources to address systemic barriers to desired cultural norms.

For instance, RTI International, an independent, nonprofit institute that provides research, development and technical services to clients worldwide, created a “maximize impact” culture team tasked with identifying and removing process- and budget-related barriers to organizational culture. The team also included senior leaders across departments who brought their influence, credibility, and decision making authority to the pursuit of necessary budgeting and policy changes.

Equip Employees to Apply Culture in Their Day-to-Day Work

Finally, organizations must help employees live the culture day-to-day in their workplace. But employees find it difficult to fit culture into a specific role and address cultural tensions that they encounter during work.

Additionally, the number of employees who struggle with these barriers increases significantly in the lower levels of organizations. It is up to CHROs to help employees translate the culture into their day-to-day work.

Smart organizations remove these barriers by moving ownership of context-specific culture to employees themselves. The Bill & Melinda Gates Foundation, for example, provides a framework that individual teams can use to customize dos and don’ts for each of its four firm-wide values. This process allows employees to create their own vision of how their work is aligned to the organization’s overarching cultural priorities.

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