You would be hard-pressed to find a leader today who is unaware that culture matters. Yet here we are, almost two decades after Peter Drucker first set the stage for a corporate culture movement, still trying to figure out how to do it.
What CEOs continue to struggle with is what a good culture is for their business and how to operationalize it. They are running out of time to figure it out, too. Digital disruption has brought sweeping change to the way we work, forcing businesses across industries to rethink their business models. Failure to align culture to strategic objectives is delaying and in some cases completely derailing progress. And we don’t tolerate inappropriate and unethical behavior anymore (rightfully so). The #Metoo movement helped expose what happens in companies when the lights are out. When the spotlight shows the dark side of culture, employees, customers and investors leave. People get hurt and lose their jobs. This is the age of transparency, and we are not likely to go back to old ways.
The Coalition for Inclusive Capitalism and EY recently reported that intangible assets, such as culture, on average make up 52% of a company’s market value. And for some companies, that makeup is as high as 90%. Today, we are less defined by our physical assets and more by our people than at any other period in modern-day business history. We cannot afford to get culture wrong any longer.
Aware of the serious risks associated with bad cultures, the world’s largest institutional investors have pledged their commitment to reviewing purpose and corporate culture, and regulators have begun to mandate oversight from boards. So, a reckoning is afoot. The time has come to finally figure this culture thing out – what needs to change and how to bring that change about.
What culture is and what it is not
In the mid-2000s, startups made headlines for the generous perks they offered employees in exchange for their long hours. Corporations, fearful of losing top talent to these more relaxed offices, took note and adopted similar amenities.
It turned out not to be the quick fix many hoped, however, because – reality check – culture is built on a number of intangibles, not office perks, that promote a feeling of belonging and safety at work. By way of example:
• A good culture is more than unlimited vacation time; it’s actually unplugging when you are out of the office without repercussions.
• A good culture is more than company parties; it’s enjoying spending time with your colleagues during these events, without fear of sexual harassment.
• A good culture is more than the flexibility to work from home; it’s managers who don’t count the days you do so because they don’t trust you to do your work.
In essence, culture is grounded in trust and psychological safety in the workplace, and that can never be purchased or produced in haste. Yes, superficial perks can help loosen things up, but if you’re setting up ping-pong tables without doing deep work in tandem to change the undertone, the investment appears artificial and feels disingenuous to employees – a detriment to building trust.
Although we often recognize small or tech companies as best able to drive modern cultures, size and age are not barriers to a healthy, differentiated culture. Heritage, history and purpose are huge advantages if you tap into and celebrate them well. And they can be as inspirational as any progressive mantra of a tech company. This point needs emphasis: Being large and having a rich history are advantages, not disadvantages. There is no shortcut to instilling legacy and wisdom in your culture. If you have those, even if they are shrouded in current challenges, you have something great to build on. But build you must – every organization of any size, shape and age must shepherd its culture to stay fit over time.
Operationalizing the intangible
Instilling and maintaining a healthy culture takes a lot of time and dedication. Senior leadership is accountable for its success, but boards must also establish that the execution of culture modernization is an ongoing priority, and that management has adequate resources to operationalize it.
Operationalizing culture includes three key parts:
1. Regularly reading the pulse of the organization to keep the good and improve the not-so-good
2. Social mapping to know the culture carriers and influencers
3. Top-down and bottom-up intentional shifts over time
Any culture work should be done collaboratively, not punted to Human Resources with limited resources. Culture is a lot about making work simpler over the long term, but to do it right, you will probably have to free up time for people to take on additional work in the near term. Transformative culture work is never achieved by people who are already overextended and exhausted. It takes a team that is incentivized to collaborate and do things differently.