Last year Merriam Webster’s dictionary stated that ”culture” was the most popular word of the year. Well, it has now become one of the most important words in corporate board rooms, and for good reason.
We have a retention crisis. New Deloitte research shows that culture, engagement, and employee retention are now the top talent challenges facing business leaders. More than half business leaders rate this issue “urgent” – up from only around 20% last year.
What’s going on? It’s very simple: as the economy picks up steam (unemployment now below 5.5%), employees have more bargaining power than ever before. Thanks to social websites like LinkedIn LNKD -0.40%, Glassdoor, and Indeed, a company’s employment brand is now public information so if you’re not a great place to work, people find out fast. This shifts power into the hands of job-seekers.
And many companies have work to do. Gallup’s latest research shows that only 31% of employees are engaged at work (51% are disengaged and 17.5% actively disengaged). Analysis of the Glassdoor database shows that the average employee gives their company a C+ (3.1 out of 5) when asked whether they would recommend their company to a friend (Bersin by Deloitte research with Glassdoor).
We have arrived in a world of “haves” and “have-nots” when it comes to attracting and engaging top talent.
Let me cite some examples:
Companies that focus on culture are becoming icons for job seekers:
Look at how office space is now part of building a great culture. Fortune’s new “25 coolest offices of the 100 Best Companies” shows how most of these great places to work are actually great PLACES to work. Flexibility, entertainment, and bright colorful offices and art make these companies a fun place to work.
People now believe that culture has a direct impact on financial performance. I just talked with two industry analysts who read Glassdoor comments before they publish analyst reports. Both told me they use this data to understand employee sentiment read comments about the CEO as part of their core research. It also helps them compare competitors.
As the saying goes, “Culture eats Strategy for Lunch.” (And free lunch is now part of the culture.)
Ok it’s a popular topic. What is culture anyway?
Culture is a big and somewhat vague term. Some define it as “what happens when nobody is looking.”
In reality, it’s much more complex. Culture is the set of behaviors, values, artifacts, reward systems, and rituals that make up your organization. You can “feel” culture when you visit a company, because it is often evident in people’s behavior, enthusiasm, and the space itself.
I visit a lot of companies and I can often sense the culture in a few minutes. Are people busy and working with customers? Or are they quietly working alone? Do they get in early and leave late? Or does the parking lot empty at 4:30? Is the office beautiful and inspiring with values and icons around, or is it messy and busy? Is there a sense of order or a sense of family? All these clues help diagnose culture.
The Competing Values Framework, by Kim Cameron and Robert Quinn, is a terrific textbook on organizational culture. After years of research the authors grouped organizational cultures into four types and their research shows that most teams fall into one of these four types. You can diagnose your culture using tools like theirs (and others) and it will help you align your values and hiring to the culture you want to build. There are three issues to consider: type (what is your culture), strength (how strong is it), and congruence (how consistent is it).
Our research shows that culture and employee engagement are tightly linked (“culture” vs. “climate”), but not the same thing. Culture is slow to build, pervasive, and hard to change. Climate can be changed quickly.
When you communicate and honor culture, people know what to expect and feel comfortable. And the climate must support it. For example, a CEO I interviewed told me that “calling people back the same day” was part of his culture – so he monitors this behavior because to him, customer service is cultural bedrock.
As a company grows or acquires another company, the culture will often shift. IBM has been through many culture changes over the years, and one can trace them to major transitions in the business. When I worked there in the 1980s, IBM was a technology pioneer, but then later slowly but deliberately changed its culture to that of a consulting organization. Now it seems to be headed back.
Sometimes an acquisition will damage a well-honed culture, so watch out here. (When HP acquired Compaq, for example, a culture of engineering quality was mixed with a culture of low-cost production, causing a historic challenge.)
Many HR and management practices will drive or support culture. Do you value employee development? Are people empowered to take charge or do they follow the rules? How are people promoted and why? The Simply Irresistible model describes many of the factors. If you’re focused on culture, we encourage managers and HR teams to think about the “total employee experience”: everything from the coffee in the coffee machine to the quality of management plays a role.