High-performing companies align culture with strategy
If you’re looking to build a healthy culture that leads to high performance, it may be time to ditch the beanbag chairs, get real about living your core values and focus on aligning your people and processes with your business objectives.
If you ask many company executives today, they’ll tell you they’re nailing corporate culture. And they’ve got the PowerPoints, vision statements and pool tables to prove it. But it turns out that when it comes to cooking up an effective organizational culture, one that leads to bottom-line business performance and achievement of strategic goals, today’s businesses are failing to stir up the secret sauce.
A new “Return on Culture” research study conducted by Grant Thornton and Oxford Economics found a significant disconnect between how today’s executives and employees view company culture. While 80% of executives believe a healthy organizational culture is critical to achieving core strategic goals, only 50% of employees agree. With less than half of executives reporting that they believe a healthy culture is important for employee engagement, it’s not surprising that only 10% of employees characterize themselves as highly engaged.
The fact is that few companies approach culture with the same rigor they do in identifying and mitigating financial, operational or market risk. They fail to take into account the risk resulting from the individual actions and decisions of an entire workforce who may or may not have bought into the company’s value system. And with a sense of urgency to differentiate in the marketplace, building an authentic, aligned organizational culture is critical.
“The state of corporate culture is at an interesting point right now,” explained Chris Smith, Grant Thornton’s Strategy & Transformation Practice Managing Principal. “Culture is what drives the affinity to your brand and your customer set actually identifies more authentically and more effectively with you when you have an authentic culture.”
How do you become an authentic brand? First, it’s imperative to be brutally honest about who you are and who you’re aspiring to be. An organization’s attitudes, beliefs and values must be completely aligned. “At its core, culture is about authentically knowing who you are and how you will evolve,” Smith said. “The reality is if you don’t subscribe to an authentic culture, you’ll lose customers, lose employees and your competitor will be there welcoming them with open arms.”
To be truly authentic, an organization must align all its behaviors and activities to its core values. One of Grant Thornton’s core values is to be not only client-focused but supportive of clients’ communities. Smith relayed one specific example: “We have a very large financial services client that is very focused on helping their community thrive. Grant Thornton’s advisory team spent a weekend with the client to help renovate a local town and assist the less fortunate. That is an example of how our authentic culture comes to life based on who Grant Thornton says we are.”
Demonstrating authenticity is equally important for an organization’s employees. “Employees today want to work for companies that are authentic,” said Erica O’Malley, Grant Thornton Partner, Organizational Strategy. “They want to understand how what they do contributes to the overall success of the company. And they want to make sure that what the organization portrays to be is actually how they are. And if they’re not, they will take the opportunity to find an organization that does.”
Companies should be able to identify its uniqueness and both communicate and demonstrate who they are to both employees and customers. Why does the company exist? What is its core purpose? Why is it unique? What are its core values? How does the organization deal with mistakes? How do teams make decisions?
Walk the talk
When it comes to culture, acting is important but acting visibly is even more important. Healthy cultures start with the commitment of the CEO. Although 85% of S&P companies show corporate culture and values on their website, their behaviors must match their words on the wall in order to impact engagement, trust and results. Bottom-line business performance is impacted when leaders ensure that values are supported by policies and strategies.
As Ann Rhoades, co-founder of JetBlue, former Chief People Officer of Southwest Airlines and Promus Hotel Company noted, “You have to show people what the values are, starting at the top, through your behavior. You cannot define behaviors for everyone but the CEO. Value supported behaviors have to be consistent throughout the organization. That is what creates a great culture. It will, in my opinion, guarantee higher performance.”
Engagement happens when employees feel like they are part of the core mission but it must be rooted in authentic leadership, business models and culture strategies. Consider the case of Netflix which has long been upfront about its policy of releasing employees they deem to be only “adequate”. In its official corporate culture statement, it expects staffers to give maximum effort even with the knowledge “you may not be on the team forever.”
In Netflix’s well-known “culture deck,” the company cites generous exit packages as a perk: “We generally offer a minimum of four months of full pay as a severance package, giving our ex-teammates time to find a new company.” The Netflix “keeper test” also is described in the document. “We focus on managers’ judgment through the ‘keeper test’ for each of their people: If one of the members of the team was thinking of leaving for another firm, would the manager try hard to keep them from leaving?”
The firm’s culture deck further reinforces the company’s values, communicating its core philosophy of treating employees like members of a sports team: “We model ourselves on being a team, not a family. A family is about unconditional love, despite your siblings’ unusual behavior. A dream team is about pushing yourself to be the best teammate you can be, caring intensely about your teammates, and knowing that you may not be on the team forever.”
There’s no confusion about what Netflix values or the behaviors it expects of its employees. The company, in fact, remains a coveted place to work and moved ahead of heavy hitters like Google, Apple, Amazon, Hulu, Disney and Facebook to nab the No. 1 spot on Hired’s 2018 survey of tech workers ranking the companies for which they most want to work.
Workplace culture: Align or die
Living and breathing an authentic culture requires aligning employees around shared behavioral expectations. The best compass for employee behavior is a clearly articulated set of core values and behaviors that are modeled, reinforced and rewarded. Yet, many of today’s organizations have work to do in this area. Grant Thornton’s research found that while 76% of executives report their organization has a defined value system that is understood and well communicated, less than 33% of employees believe this to be true. Further, only half of employees indicate they understand the vision and goals of their organization.
Salesforce is one company that is committed to aligning the organization around a shared set of expectations, a process that starts at the top with co-CEOs Marc Benioff and Keith Block. The two leaders defined their “V2MOMs”, a framework that allows them to record their vision, values, methods, obstacles and measures for the year to come. Employees follow suit, completing their own V2MOMs and ensure that what they do aligns with the company’s values.
Other leaders clearly define their company’s values as well. For Zappos, the values are all around enjoyment and fun. CEO Tony Hsieh explained the company’s mission this way: “Have fun. The game is a lot more enjoyable when you’re trying to do more than make money.” And Whole Foods is all about purpose. “Most of the greatest companies in the world also have great purposes,” explained founder and CEO John Mackey. “Having a deeper, transcendent purpose is highly energizing for all of the various interdependent stakeholders.”
Whatever an organization’s values are, they should be specific to their unique purpose and not merely to look appealing to customers or splashed on walls in reception areas. Yet, 55% of Fortune 100 companies claim integrity as a core value, 49% customer satisfaction and 40% teamwork. If half of the companies use the exact same adjectives to describe their values, they become generic and cliché and difficult to tie to actual business objectives.
O’Malley explained, “What I think happens is during the process of creating the description of a value we get too theoretical versus practical and the people who are actually delivering on those values would describe them very differently.”
Defining organizational values that build an authentic brand is not just a feel-good, check-the-box activity. They are critical to meeting business goals and differentiating in an increasingly competitive marketplace. As Axcient CEO Justin Moore once noted, “This is not about fuzzy, holding hands around a campfire, Kumbaya stuff. That’s not what values and culture and mission is about. This is about building an organization for success. This is about winning. This is about doing the tactical things to make sure your organization and your people are aligned around the same thing.”
It’s one thing to define core values as the basis of an authentic brand; quite another to make sure employees are fully engaged and aligned with them. As Kevin Rose, Founder of Digg and Partner at Google, once said: “A team aligned behind a vision will move mountains. Sell them on your roadmap and don’t compromise—care about the details, the fit and finish.”
Today’s executives are finding that employee engagement and obtaining their commitment to defined values can be a difficult nut to crack. Grant Thornton’s research study found that only 59% of employees believe their voice is heard in the organization. And while two-thirds of executives think a strong culture is critical to business performance, only 56% of employees agree. Yet, an organization’s culture is very important to employees, nearly half of which indicated they would be willing to take a lower-paying job in exchange for a better culture.
Grant Thornton’s O’Malley stressed that “Every organization has a culture and leaders think they’re getting it right but our study indicates there’s actually a 30 percentage point gap between how engaged executives feel their employees are how engaged employees actually feel they are. This perception gap indicates that executives are out of touch with their employees.”
She added, “Executive teams invest in strategy development, mission and vision and yet only 50% of employees in our survey could even note what their mission or vision was. If the employee never knows how what they’re contributing ties to the overall organizational results, they’re not going to find meaning in the nature of that work. So it’s really important to create a culture where employees can understand what they’re doing, why they’re doing it and how it contributes to the overall success of the organization. If an employee doesn’t see alignment within the organization or they’re not experiencing the brand promise, they’ll just get up and go somewhere else.”
O’Malley added that organizations need to be intentional in the language they speak. “They need to tie their comments back to the mission and vision so employees understand the connection—they can’t assume they’ll make the connection,” she said.
Recruiting for culture
It’s not enough to have the right culture and the appropriate values to build an authentic brand. You have to have the right workforce in place to carry out the organization’s mission. Talent recruitment and organizational culture must be aligned with corporate strategy.
For example, Grant Thornton’s recruitment process includes an enhanced interview approach whereby each interviewer is focused on a key area of assessing talent. “Culture and organizational fit is weighted just as heavily as other factors in the process,” explained Nicole Blythe, national managing partner, People Experience for Grant Thornton.
Recruiting candidates who can help move the organization’s culture forward not only increases employee satisfaction but helps the organization adapt to business changes. To attract and retain this kind of talent requires that organizations deliver on the culture they have promised. This means everything from the willingness to hire and fire based on defined core values to ensuring that, on a daily basis, they are walking the walk when it comes to living their brand’s culture.
VMware is one company that deliberately hires not just for skills and capabilities but for culture fit as well. Betsy Sutter, Chief People Officer at VMware explained, “We’re deliberate about when we want to bring a change agent in and why, and we’re deliberate about what works in the culture and what doesn’t. Because we can articulate that, it lends itself to more success.”
Success through storytelling
While getting the right people on the organizational bus is critical, employee engagement is not a once and done activity. Regular and frequent communication that reinforces the company’s core values and culture is essential. Simply put, growing a culture requires a good storyteller. Yet, communication and collaboration are two areas in which most organizations need improvement. According to results of Grant Thornton’s Return on Culture survey, only a third of employees rate collaboration within their team as effective or highly effective while less than half rate management’s ability to capture ideas across the organization as effective. Moreover, only 52% rate the quality of feedback from management as effective or highly effective.
It’s important to have a systematic way to communicate, to tell the stories that matter. “Storytelling in great organizations is rampant, and they are always telling stories around the right behaviors,” noted Rhoades. “You can’t just say ‘Thank you for being so great with our customers.’ “What did I do that was so great?”
Consider the example of Juniper Networks which sent a daily email to all of its employees in 32 countries. The communication included a photo of an employee that accompanies a story from a customer about someone living their values. It was a systemized communication to reinforce the right behaviors.
JetBlue is another company that is committed to telling stories. Employees can submit stories of colleagues doing a great job via their smartphone which is linked to the employee’s manager who can leverage them for additional storytelling within the company. It’s called LIFT.
“You can send it to anyone,” Rhoades explained. “Our CEO’s cell phone number and email were available to all. It often could be sent directly to him. And he shared them with many of the board.”
In addition, on the first day of work, employees meet with the airline’s CEO and CFO to learn what values and behaviors are acceptable at the company and how performance metrics are calculated. “So the minute they come to work for us, they’re engaged in achieving our goals,” Rhoades said. “They know what the expectation is and they learn how they can help us deliver on our numbers!”
Communicating to employees in the way they prefer to be engaged is also important. Emails and texts may be preferable for Gen Z and Millennials. Google’s learned that because of the volume of emails, they post information in office bathrooms when it’s something important for employees to know. In other cases, in-person meetings work best. Whatever the method, the culture message can’t be static. It has to continuously evolve.
Culture out of alignment? Adopt these guidelines
Building an authentic, aligned culture that nets bottom-line performance is a journey, not a destination. Whether looking to improve your current culture or engage in a culture transformation, keep these guidelines in mind:
- Define who you are and who you want to be.
Start with a list of behaviors and values which support your mission-critical business objectives.
- Keep it real.
In daily behaviors, actions and decisions, be authentic and true to your defined values and mission. Live your values through internal communications, performance evaluation and employee programs.
- Walk the talk.
Start at the top. Urge leaders to serve as examples of the desired culture, visibly demonstrating its values through consistent word and deed.
- Integrate desired behaviors into your hiring model.
Hire the right people for your defined culture based on shared behaviors. Define the criteria that will attract the right talent to build the culture you desire.
- Make everyone accountable.
Culture is everyone’s job so be sure to build accountability systems and goals into the mix so employees are aligned with expectations. Begin by clearly defining success metrics and make sure everyone understands their role in meeting the defined metrics.
- Let employees shape it.
Provide opportunities for employees to co-create your organizational culture by gathering feedback, empowering culture ambassadors and letting them drive programming.
- Communicate frequently.
Engage in regular storytelling to reinforce the company’s culture message. Encourage employees to collaborate and communicate openly to promote the sharing of ideas. Make two-way dialogue a foundation of your culture.
- Put people first.
Remind employees that they are ambassadors or your brand and that they matter. Emphasize employee programming, development and engagement.
Is your company culture out of alignment?
Take Grant Thornton’s culture benchmarking survey to determine your company’s current areas of strengths and weaknesses. Designed to accommodate any given company’s unique profile, the benchmarking tool tests current performance against five key drivers that lead to healthier cultures including: workplace environment; direct investment in employees, diversity, sense of community and value systems.
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