How to enable business performance by building a better culture
written by Gabrielle Harris, Interchange CEO
Traditionally, businesses have worked on their culture when something major has gone wrong. A workplace fatality, declining customer retention, or a royal commission that highlights dysfunction, have been the most common factors that force business leaders to recognise that they have a problem which is being driven by their organisational culture. However, after living through the height of the pandemic, followed by the great resignation, many business leaders are now starting to realise that culture is the cornerstone of business performance. It’s something that requires dedicated leader commitment, expertise and ongoing maintenance.
What is organisational culture?
Culture is often defined as the values of the organisation or as employee engagement, but it is so much more than either of those concepts. Having worked across hundreds of organisations, I’ve certainly been immersed in business that didn’t have a defined set of values and guess what, there certainly was an organisational culture. The same goes with employee engagement; I’ve been in businesses with high employee engagement and low business results. Culture and engagement are not interchangeable, rather they are loosely connected.
Put simply, culture can best be described as the way people interact with one another and how they operate. It is influenced by several factors, the main ones being the organisational system, observable behaviour of others, particularly leaders, and the broader ecosystem in which that organisation operates, i.e. stakeholders, market conditions and customer network.
Culture holds a lot of power. Stated or otherwise, it informs people about where to invest their time and energy. It tells employees what they will be rewarded and punished for. It defines if people feel included and valued. It either enables the success of the organisational strategy or actively works against it. Culture can also mobilise and attract people. Why? Because beyond earning an income, positive relationships and interactions motivate us to come to work every day. They’re what encourages people to stay or work harder when time gets tough.
Therefore, it is one of the primary levers that enterprise business leaders can pull in order to drive performance.
The role of culture in the battle for talent.
Due to the ongoing impact of the pandemic and the extended closure of international borders, one of the most pressing issues facing businesses today is the shortage of skills and labour. Covid-19 also changed how leaders, employees, and coworkers interact, sparking a major reset of the expectations of workplaces.
Job seekers aren’t just looking for larger salaries and more flexibility. They want to work for values-aligned businesses that are driven by a meaningful purpose.
In fact, recent research from Gartner revealed that the cultural markers of an organisation, including manager quality, respect, and people management have become the biggest factors in retaining staff in Australia. Manager quality is the top reason employees cite for leaving their organisation, while respect and people management have risen in importance for Australian workers, overtaking compensation and work life balance.
As a result, business leaders are realising that they can’t drive performance if they don’t have a culture that attracts and retains the right people.
Creating a high performance culture.
Strategy, purpose, and culture are all tightly intertwined and should constantly be aligned.
- Purpose is the spot on the wall that defines WHY an organisation does what it does.
- Strategy outlines the clearly defined goals of the organisation and how they will be achieved.
- Culture is the foundation of both purpose and strategy. The organisational culture permits or prevents the realisation of the strategy and builds belief or rejection of the organisational purpose.
So, if an organisation wants to maximise returns to shareholders and/or stakeholders, its purpose, strategy, and culture needs to be clearly articulated, aligned and felt across the business. The strategy and culture also needs to evolve in a way that’s aligned to changing market conditions and stakeholder requirements, because these elements in business are far from static.
Culture is undeniably leader-led however it requires everyone in the organisation to play their part. Leaders should be the most visible and influential people in an organisation, so their behaviour can have profound ripple effects on how employees express and respond to the culture.
Culture is also reliant on both tangible and intangible factors. There are the processes and policies that codify how people should go about their work. Then, there are the not so easy to define and dynamic elements, such as values, behaviours, social patterns and mindsets.
These unspoken and elusive factors have a major influence on how work gets done. They impact the degree to which employees will take risks, lean on each other for support, ask questions, or push each other to achieve more.
Many organisations try to lay out a blueprint of new policies and procedures to change their culture. However, they often don’t create the impact that they are looking for. That’s because there is no one size fits all approach to strategic cultural change.
In addition, the experiences that people have on the front line are often very different to the issues the senior leadership team believes they are facing. In order to solve the real problem, leaders need to have a strong understanding of their people, what drives them, and what enables them to deliver results.
Any management consultancy should empower this process and become a part of the business, not pick holes or to tell people what to do. Staff need to be given a voice and feel heard.
What really drives impactful change is empowering employees to collectively define the culture for themselves, then recognise their own role in building it. People are inherently curious and creative, so allowing them to explore helps them to attach to a meaningful reason to change.
Observe the impacts.
The impacts of a cultural transformation can be profound. Employees start to see their organisation and how they fit into it in a new light. Then, we hope that they will start testing out new ways of working and interacting that align to the successful execution of the strategy.
Culture isn’t soft. It’s actually very hard to get right. It is the key to creating profit, satisfying shareholders, and delivering value to stakeholders, while having a good time doing it. It’s an investment, but a worthwhile one as it is the primary factor influencing the organisation’s bottom line.