Culture challenges on the digital agenda for 2019

Profile picture for user catheverett By Cath Everett January 1, 2019
Summary:
A challenge for 2019 - taking culture out of the realm of the fluffy and into the world of performance metrics.

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Company ‘culture’ is having a moment. Not only is it now being talked about at boardroom level as a tangible issue, but more and more consultancies are also springing up to advise leaders on how to get it right.

According to Jo Geraghty, co-founder of one such organisation, Culture Consultancy, the subject first started coming to prominence after the financial crash in 2008 when talk of the ‘banking culture’ that had led to the debacle in the first place became rife. Following the collapse of a number of companies and various scandals over staff mistreatment, where the focus was predominantly on ‘bad’ culture, Tony Hsieh, founder of Zappos, burst into the headlines with his attempt at holacracy and other creative approaches to making the online shoe retailer a positive place to work. Geraghty says:

“It was unheard of and it shifted the dynamics, although some of it is also generational. So because the expectations that Millennials and Generation Z have of work are different to those of other generations, it’s thrust the issue of ‘culture’ into the limelight.

Another impetus, according to Thomas Davis, chief executive of culture analytics platform provider Temporall, has been the “business disruption” of the last decade, brought about by digital start-ups shaking up established industries. He explains:

What we’re hearing more and more is a desire to understand how to develop and sustain a high-performance culture, so that organisations can move from survival mode to thriving. But it’s not about a single digital transformation project with an end-date any more – it’s about being in a state of continual transformation and to do that, it has to be driven by culture.

A key problem though, according to McKinsey, is that as many as 70% of digital transformation initiatives fail to meet expectations . Davis believes this situation is less to do with technology, “which kind of works now”, or lack of data quality, the value of which is more understood today. Instead he says:

Many senior tech leaders have put a lot of effort into helping change how the business is run, which then leads everyone to wonder why things haven’t moved as far as they should. But one of the biggest barriers to digital transformation is culture, so there’s something about culture and people that organisations have simply not been getting.

What is culture anyway?

All of this raises the question of what exactly culture is anyway, not least as it seems to mean different things to different people. Geraghty sums it up in this way:

It’s about attitude, behaviour and mind-set and the way that work happens. It’s also about the way decisions are made, management styles and how the mission and purpose behind why the business exists, is communicated. Then it’s about vision ie what it is you’re trying to achieve, and what you need to do in the next few years to get there. And finally, it’s about values, so how you’re going to do it. These are the foundation stones of a positive culture, but it won’t come about without a strong, cohesive leadership team that presents itself with one voice.

Ultimately, she adds, the aim is ensure that everyone in the organisation is working towards the same goals and understands their role within the wider context. And such considerations would appear to be important as, according to a study undertaken among 400 UK leaders and managers by Coleman Parkes Research on behalf of Temporall, there is a clear correlation between business growth and an established, clearly-communicated, positive corporate culture.

The report entitled ‘Culture is a Strategy’ found that the highest-performing 27 organisations - the equivalent of 7% of the sample - generated average year-on-year revenue growth of 46%. About 70% of them had a strong mission and purpose that was communicated clearly and regularly by the leadership team, with two thirds of staff reporting high levels of engagement and 78% feeling able to take the initiative and drive change. More than half also indicated that their leaders were proactive in shaping the organisational culture or behaved in a way that reflected it.

But culture, not least a high-performing one, is a notoriously difficult thing to measure as it is seen as nebulous, fluffy and intangible, being linked to attitudes, mind-sets and whether people are happy or not. According to Geraghty, it does not have to be this way though. She explains:

“It’s about understanding the return on investment on culture – in other words, taking it out of the realm of the fluffy and into the world of performance metrics.

One organisation that is attempting to do just that is Rakuten Marketing. The affiliate marketing firm is now about one year into a transformation initiative that is expected to take 18 months to two years to implement and take root.

The rationale behind the move is that not only does the company operate in a fast-moving sector and so need to respond rapidly to change, but it has also made a number of acquisitions over the course of several years. This, according to chief executive Stuart Simms, had led to a “fragmented culture”. As a result, he decided to proactively do something about it:

It made sense to ensure that the company culture was consistent across all of the different entities. The idea was for employees to engage with one mission and direction, and to gain clarity on how the whole is greater than the sum of the parts. The thing is that if you can’t create clarity, you can’t create engagement, and you don’t bring people on the journey as they’re more resistant to change.

Supporting cultural change

The first step in the process involved bringing together the leadership team to define the firm’s mission, purpose, values and communications strategy. It then used Temporall’s Culture Workbench platform as a tool to obtain feedback from employees in four key areas: People, leadership, organisation and technology. Simms explains:

It was very important for us to obtain a rich and consistent data set from our people. The aim was to ensure they felt we understood their feedback as this enabled us to put a framework in place to respond to it.

Interestingly though, he and his team avoiding using the term ‘culture’ during these discussions. As he says:

The term means so many things to so many different people and has certain connotations, but if you break it down into things like your mission, purpose, values, employee engagement, and technology to support the growth of the company, people find it easier to understand.

Another important consideration was asking staff the right questions in order to receive the right answers. Simms explains:

Historically, we didn’t ask enough questions, or the right questions, and they weren’t underpinned by behavioural analytics or psychometric work. It was more of a NPS [Net Promoter Score third party?’ But if you want to create a meaningful index, it’s important that the questions are right - and you also need to undertake the right analysis using the right tools to understand the data, so you can make more informed decisions.

The Culture Workbench, which is based on machine learning technology, can even analyse free text and spot common themes within it, he adds. All of the gathered data, which also includes “culturally-embedded KPI scorecards to understand the performance of the business”, is then displayed in a dashboard format to make it easier to understand and react to as required. Simms concludes:

The aim in 2019 is to keep a constant eye on the dashboard in order to evolve the company in the right direction and ensure we bring our employees with us. We also aim to do more regular communications. We’ll take bite-sized questions and move from an annualised feedback programme to a quarterly or monthly one. Because ultimately our ambition is to move from dealing with annual change based on the budget to constant change as the business grows and evolves.

My take

Measuring culture has to date always been considered notoriously difficult, but taking a consistent performance metric-based approach to the issue has the potential to make a big difference.