Researchers at Stanford University and the University of California–Berkeley found in a recent study that companies can increase their profitability and innovation outcomes by creating a workplace that balances cultural agreement and diversity in the company culture. The researchers used text analytics to analyze cultural differences based on Glassdoor employee reviews, then measured these differences against business outcomes. In their analysis, they identified two distinct forces at work:
- Compositional Diversity: When employees disagree with each other what makes up a company’s culture.
- Content-Based Diversity: When company culture is made up of a diverse set of topics, which may sometimes conflict with one another.
After considering how compositional and content-based diversity impact organizations’ business outcomes, the researchers found that organizations with higher levels of compositional diversity are associated with negative business outcomes, while organizations with higher levels of content-based diversity are associated with positive business outcomes. From what we uncovered at CEB, now Gartner, in our latest research on organizational culture, both of these findings make perfect sense.
Aligning the workforce to a common vision of culture drives business performance…
Our research finds that organizations have better business and talent outcomes when they have a high level of what we call Workforce-Culture Alignment or WCA for short. Organizations with high WCA have a common set of core cultural expectations that are consistent across the enterprise, ensuring a lower level of what the Stanford-UCB scholars refer to as compositional diversity. Congruent with the findings from their study, we find that without a shared understanding of the desired culture, it is impossible for the workforce to engage in a concerted effort to put that culture into practice. When WCA is low, progress toward the desired culture is slowed and both business and talent outcomes suffer as a result.