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.
…as does empowering employees to translate the culture independently.
Arriving at that shared understanding is one key driver of WCA, but successful culture management also requires ensuring that employees are able to live the culture in their day-to-day work. In this case, we found, the best approach is to ensure that cultural norms are flexible enough to be translated into each employee’s specific context. Different teams working in diverse geographies and parts of the business will need to apply the organization’s cultural principles in different ways, so even with a common understanding of the desired culture, how employees live the culture in their day-to-day work can (and should) vary.
The Bill & Melinda Gates Foundation accomplishes this by having teams conduct an exercise to understand how the organization’s broader culture fits into the work they do. The exercise requires teams to create a set of “do’s and don’ts,” defining specific behaviors that either reflect or conflict with the culture. Creating this kind of employee-driven ownership of ideas both ensures a diversity of employee insight into what the culture means for their team, as well ensuring the culture is relevant to their specific context. CEB Corporate Leadership Council members can read the full case study here.
Empowering employees to translate the culture is how organizations capitalize on “content-based diversity,” yet it is not without its challenges. In any employee’s work, tensions will inevitably arise between cultural values, such as when employees are instructed to be both innovative and efficient; sometimes they will find they can’t do both, so in those cases, how do they decide what to do? To help empower employees navigate these tensions, organizations should provide employees with a decision-making framework that explicitly acknowledges them and clearly communicates how to manage the inevitable tradeoffs employees will occasionally have to make.
By getting employees a common set of cultural norms and giving them the tools to act out those norms in their day-to-day jobs, employers can maximize their Workforce-Culture Alignment and drive growth. To learn more about creating a culture that enhances business performance, CEB Corporate Leadership Council members can replay our recent webinar and access a range of other resources at our organizational culture content hub.