“You can't take somebody else's playbook and utilize it. You really have to know what organizational components create your culture and understand who you want to be before starting to pull levers on culture change.”
Dr. Tiffany Yates, Grant Thornton senior manager, Organizational Strategy, explained that it is critical to align culture to business performance in a way that is customized to organizational goals. “You can’t take somebody else’s playbook and utilize it,” she said. “You really have to know what organizational components create your culture and understand who you want to be before starting to pull levers on culture change.”
When it comes to measuring the ROI of culture, Yates said there is no such thing as a one-size-fits-all metrics strategy. Rather, metrics must be distinct to the type of culture the organization is seeking to create. “For example, if you’re trying to drive a highly innovative culture, your key performance metrics might include levels of risk taking, R&D and speed to market,” Yates explained.
Historical metrics for culture might be culled from traditional employee engagement surveys, job satisfaction and employee net promoter scores or retention rates. However, Yates suggested that organizations should look beyond these traditional metrics and consider an “outside-in” perspective of culture performance. “Organizations should make sure who they say they are and how they’re perceived in the marketplace is the same,” she said. “Most organizations have more assets of data pools on customer centricity topics. So how do you connect the dotted line between the customer perception of your culture and what your culture really is? The answer is to create new data sets instead of relying on the same employee survey.”
Traditional assessment tools like engagement surveys can help reflect key characteristics of the organization’s culture, but they don’t really gauge the effectiveness of high-level culture change efforts. Instead, culture metrics must map to business imperatives in order to offer real value. Understanding whether your organizational components are aligned to your desired culture is critical to measure the effectiveness of your culture. For example, organizations need to evaluate key components including: environment, customer, technology, leadership, performance management, training and development, rewards and recognition, financial investments and financial results.
Making culture measurement count
Best-in-class organizations understand that effectively measuring the impact of culture on business performance requires more than building a dashboard. The process itself requires adopting a data-driven mindset. Consider these guidelines when building your culture measurement strategy:
- Align culture and behavior
At all levels of the organization, do individual behaviors support the defined culture? High-performing companies take into account standard measures everyone deploys but also gain a deeper understanding of how these measures connect to the day-to-day working behaviors of employees. Consider the case of Walmart, a company that was founded on a “Culture First” mentality with a focus on frugality. Employees are expected to own expense control for anything within their authority, as though it was their own money. Expected behaviors include reusing and recycling paper clips, envelopes and rubber bands.
- Adopt a long view approach to cultural measurement
Organizations with strong cultures understand that culture measurement is an ongoing process, not a short-term project. There was a time when companies would conduct a check-the-box measurement activity once or twice a year via employee surveys which often took months to generate and report results. Instead, companies today are embedding the way they measure and improve culture throughout the regular cadence of the organization. This might mean discussing people and culture quarterly to map to budgeting and sales planning sessions.
Grant Thornton CEO Mike McGuire noted that the firm began its new culture journey a few years ago with the objective of increasing employee engagement in order to deliver premium client service. “We started seeing results in about two years,” he explained. “In 2016, our retention improved by 500 basis points year over year—something that’s unprecedented in our industry. I think that got people’s attention.”
With significant improvements in retention and employee engagement, McGuire acknowledged that the firm’s long-view approach to culture has netted high ROI. He advised other organizations to approach their culture journey with a long-term mindset. “It is a journey, not a project,” he said. “If it just becomes a project or an initiative, people will start wondering when it is going to be done.”
- Cultivate employee commitment
Best-in-class companies recognize the importance of gaining the commitment of employees to their business and values. In so doing, they measure the day-to-day work behaviors of employees and evaluate those behaviors to determine how to drive business success. Adopting “Culture First” behaviors requires effort, commitment and patience.
Dina Gray noted in her book, Measurement Madness that too often measures end up driving the wrong behaviors. Employees might focus on the measure rather than the true objective of the organization. “The resulting behavior varies from gaming the measure to downright unethical behaviors to ‘hit targets’”, she stated. “Measurement becomes not about learning and improving business results but about judgment of people.”
Organizational culture is about core values—and valuing the right things could mean a significant positive impact on business performance. Grant Thornton defines five distinct culture types that enhance or detract from an organization’s strategic execution:
- Innovative (defining the future)
An innovative culture strives to create transformational products and services. A company with an innovative culture can change the world and accepts failure as part of doing business.
- Customer (creating customer value)
Every decision is made with the customer in mind and everyone in the organization knows how they impact the overarching customer service strategy, as well as the entire customer experience.
- Employee (building the best workplace)
Even as technology advances and capital shifts, it is the leadership and personal contributions of the individual employees who comprise an organization’s workforce that ultimately set it apart from competitors.
- Continuous improvement (better every day)
Creating a culture of continuous improvement is an exercise in demonstrating continuous improvement—you need serious commitment and sustained energy.
- Risk and quality (quality is our existence)
A culture of quality is one in which everybody in the organization, not just the quality controllers, is responsible for quality.
Building a sustainable, aligned culture of performance requires measurable and demonstrable behavior. Yet, while every organization’s culture journey is unique, all companies share the same reality—investing in culture pays dividends for years to come.
Do you know the ROI of your organization’s culture? Measurement matters. Learn how we help clients align culture to strategy and deliver compelling business performance. Reach out to our organizational strategy professionals below.