Assessing and managing culture effectively means unpicking some assumptions which may feel at odds with traditional MBA learning, says Kirsty Bashforth, author the Culture Shift
How often do company failures or corporate disasters come down to culture? We can all cite the big examples and whether they are due to blind spots, engrained habits, or outright deliberately bad behaviour, it’s human beings and the way we perceive, behave, decide and act that create business success or failure.
Culture isn’t an add-on, a nice-to-have or the ‘soft stuff’. It doesn’t sit alongside business; it is business. Think of IBM in the early 1990s, Enron in 2001 and Uber in 2016/2017. Some recover, some don’t. In today’s world of the gig economy, the startup tsunami, plural careers and unicorn valuations, culture is an increasingly vital lens for those we choose to work with and for. And for investors, culture is now a lens in their analysis. For those of us who know culture as a core driver of business performance, its increasing mainstream recognition leaves us breathing a sigh of relief, mingled with cries of ‘at last’.
So if you’ve studied it at Business School, are you now equipped, both to assess it and to manage it? Well, possibly; but not without unpicking some assumptions which may feel at odds with traditional MBA learning. Think behavioural economics, not rational economics.
What is culture?
‘Culture’ is one of those words (like ‘performance’ was in the 1990s) that means different things to different people. This means that before we’ve even started, there is misalignment about the topic. Not a great start. Culture is the sum total of all behaviours, decisions, actions, perceptions in an organisation. It’s ‘the way we do things around here’, and the guiding compass.
Yet, when you ask someone the question ‘who’s got a great culture?’, how often does the answer involve one of the FAANG giants? How do people know? What is the question people are really answering here? Is it whether they think it looks fun and different, or whether they think the brand is cool, or that people seem happy, or whether there are decent benefits? It may be all of those, some, or none.
Some of these companies may indeed have great cultures, but let’s get some things straight:
- Culture isn’t the brand: it needs to support and enable a brand to come to life, but culture is about the character and norms of an organisation that are the foundations of how it interacts with all stakeholders inside and out.
- Culture isn’t simply happy employees: without purpose and direction, this is simply Brownian motion that can be ineffective or worse, become disruptive.
- Culture isn’t purely personal or moral values: while an organisation’s integrity and moral code are foundations, and organisations that don’t operate this way will ultimately be found out, a few words could never line up exactly with thousands of individuals’ unique value sets. If the value set doesn’t match up with your own, don’t choose to believe that you know better: choose to leave. This is about how the company operates, not about your own personal choice of how it should be. Sign up or sign out.
‘Culture eats strategy for breakfast’, in Peter Drucker’s famous phrase. Well, yes and no: in reality they are symbiotic partners, but that doesn’t sound quite so punchy. Like engines and fuel, when they fit, they can deliver wonderful performance, but when things aren’t well tuned, performance is weaker, and time is spent tweaking and fixing symptoms that may arise as a result. Put the wrong fuel in and the engine doesn’t work at all. Same with culture. It has to work together with strategy.
Fools rush in
Where to start with assessing and managing culture?
Take your time and do your research.
Firstly, take a look at whether the culture that is expected will help deliver the strategy, or is disconnected, or worse still, acts as a barrier.
Then assess what the culture really is today. Don’t simply assume that what’s inside is what it says on the tin. Lift the lid and take a good look from all angles – customers, suppliers, front-line, managers, new hires, long tenure, feedback sites like Glassdoor – and not forgetting the legacy of expectations that have been alive in the organisation till now (you’d be surprised how many old versions are still held as operational and were never retired or replaced formally). Be careful not to live in denial. You will hear and observe things you may not agree with. Perceptions matter in culture; they can impact our choices and behaviours as we second guess based on our expectations of how others may behave: disagreeing with someone’s perception by telling them it’s not real is not valid. It all adds up to the overall picture of what the culture is today.
And there will always be those who are completely negative and whose perceptions you would like to dismiss. Just because someone shouts louder doesn’t make their view more valid, but unless they are operating in an isolated bubble, their behaviour impacts on others, so it does count. It’s a judgement and you’ll come to your own assessment – but keep your eyes and ears fully open. Don’t take shortcuts simply to confirm your own views.
Now you can define the task ahead:
- Is it to redefine the desired culture to help deliver strategy?
- Is it to close the gap between today’s culture and what is expected?
- Or is it both?
Get really clear on this: simply jumping in to adjust the expectations may be the wrong task. And once you’re clear, who else in the key decision-making group is clear too? Never assume.
You can’t just ‘fix it’ – it’s not a project
Culture is about behavioural not rational economics. People don’t make the same choices even when faced with the same dataset and access to information. They have different ambitions, have long-engrained habits from their careers so far, and are motivated by different things (some more about money, some more about belonging, some about purpose). For the most part, they come to work as a choice (bounded by financial commitments, of course) – it isn’t prison or slavery – so they are exercising free will. And there is no ‘average’ that can be applied to people’s behaviour if you are trying to shift it. Only in the rear-view mirror. And then it’s too late.
In short, setting new expectations in themselves will not shift things on their own. This is all about the boundaries and space in which we behave, make decisions and act. The more space, the more we will do our own thing, unless the incentives are right. The more confusing the signals, the more confusing the response will be. Just telling people how to behave doesn’t work. You have to define the boundaries through a combination of policies, messaging, and leadership role modelling, all mixed with the carrot of recognition and the stick of hard-edged consequences for going outside those boundaries.
There are six dials that need lining up to ensure the system is shifting:
- A simple, unchanging message of what the expectations are
- Leaders who focus on that message and practice it
- Processes and policies that touch everyone (for example, hiring, appraisal and recognition) reflect the expectations
- Communications provide confidence through stories, symbolism and messaging
- Everyone’s in: this is not HR’s work, it’s everyone’s behaviours, build a community of torchbearers
- Decisions use the culture as a lens upfront, not just a backwards look
This cannot be led and done by those outside to those inside: it must be from within, by everyone, with an air traffic controller coordinating the air space and activity within it. The air traffic controller, of course, doesn’t fly the planes: the pilots are everyone inside the organisation. Some will play a bigger or smaller part, but given culture is the total sum of everyone’s behaviour and interactions, everyone plays a part. This means it’s not precise and it doesn’t follow a project timeline, or a standard project management and consultancy model with a tidy completion date. It’s an ongoing and underpinning business focus. It’s your modus operandi for how the business delivers, and with constant staff turnover, there are always those who need inducting.
But neither does that mean we throw our hands in the air and declare it ‘unmanageable’. It means there is a lot of EQ required, as well as IQ. This is about behaviours, not numbers. What you measure are signals that tell you those six dials are lining up as you need them. For example, you might measure the amount or number of:
- Cases where different expectations are still in operation
- Messaging about expectations in senior leaders’ speeches
- Decisions on the promotion of individuals who demonstrate the culture as well as delivering the numbers
- Feedback from new hires on what really matters to their boss
- The proportion of employees that believe culture matters to senior leadership
It’s not about measuring NPV (net present value) or ROI (return on investment) or everyone’s behaviours from day one. Focus on measuring progress on the leading indicators (the dials) and the lagging ones (behaviour) will follow.
It is doable, and it can be measured. It just takes a different approach: effort, practice, resolve and time – and sometimes some really hard choices. And it starts with a deep appreciation that this is about behavioural economics.
A former Group Head of Organisational Effectiveness with BP, Kirsty Bashforth is CEO of QuayFive Ltd, advising CEOs on change, organisational culture and leadership. She is the author of Culture Shift (Bloomsbury Business, 2019)
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