Whether it is held as the culprit in cases of corporate wrongdoing, or described as the magic ingredient to drive business success, business culture is definitely a “trending” business topic.
Yet, despite the growing sentiment that culture may be the root of all good and evil in the corporate world, why do so few organisations currently manage their culture in a coherent or integrated way? Why such a discrepancy between the business magazines’ headlines saying that culture drives performance, and the rather low level of managerial attention given to it?
For many business leaders, culture is such an all-encompassing, intangible and elusive subject that they do not know what to do about it.
The first step to have a healthy debate about culture is to demystify it. Culture is simply “the way we do things around here”.
What is the ‘right’ culture?
Whenever a group of people is brought together, a particular culture emerges. To ensure this culture is right for the organisation, one should consider two critical questions:
1. Is there a broad alignment between what the organisation says and what it does?
Organisations often have clear messages on the role they fulfil in society—their “purpose”; on their ambition as a business—their “vision”; and on the principles that guide their actions—their “values”.
However, these messages are not always compatible with the way the organisation is run, which is expressed in business models, strategies, rewards, and governance structures.
2. Is the culture aligned with the needs and expectations of external stakeholders?
Cultures do not exist in a vacuum. What is accepted internally may not be acceptable externally. This is why it matters to assess culture regularly from the outside. Does it reflect the interests of customers, providers of capital, and other stakeholders such as communities or business partners?
On the right road
Building the right culture starts with a clear articulation of the different value creation components: purpose, vision, values, business model, strategy, rewards, and governance. Only clear and concise language defining each of these components allows organisations to build a “culture aspiration”—a common understanding of what behaviours should be and what will drive them.
However, boards and CEOs rarely have the luxury of starting from a blank sheet of paper when it comes to culture. They inherit a pre-existing culture with some elements that enable performance and others that hinder it. It is therefore essential to audit the existing culture to identify gaps between aspiration and reality experienced by employees.
Similarly, organisations should regularly consult stakeholders to ensure external expectations are reflected in employee behaviours. A recent Black Sun survey of European communicators shows that this is far from common. More than half of respondents declared that stakeholder expectations were not taken into account to define their company’s culture.
Once gaps between aspiration and reality have been clearly identified, business leaders should ask themselves: how can we deliver a message that actually gets people to change behaviour? Never underestimate the power of good communications when it comes to embedding culture. Good communications start from the very top.
Organisations embarking on a culture programme should get their CEO to not only visibly express his/her commitment to it, but also to lead by example. The same goes for middle managers.
The cultural traits that the organisation wants to embed need to be reinforced with all employees at every opportunity: in recruitment ads, induction sessions, performance reviews, through day-to-day management and communications, and even be visible in the way the office space is arranged.
As nothing happens without clear accountability, boards and CEOs should take the necessary steps to measure the culture of their organisation through a set of KPIs and, where possible, make this information available to stakeholders by reporting on it. Again, this is far from typical: according to a recent Black Sun report, only 11% of FTSE 100 companies show KPIs related to culture, values, integrity or desired behaviours.
In many regards, the culture debate looks like the sustainability debate 20 years ago: still in its infancy, but not going away. It is therefore more important than ever that boards and CEOs address the issue of culture by taking visible steps to achieve a necessary “double alignment”—between what organisations do and say, as well as between internal behaviours and external expectations.
And perhaps, most importantly, we should constantly remind ourselves that building culture is not a daunting task. It is a business opportunity.
Jérémie Guillerme is lead corporate reputation consultant at Black Sun.
This article has been prepared in collaboration with Black Sun, a supporter of Board Agenda.