By Stephen De Kalb
We’ve all heard Peter Drucker’s line “Culture eats strategy for breakfast” but have you ever stopped to think just how much culture also drives recruitment, retention, motivation, leadership development and more - at the sub-atomic level, for better or worse - of every organisation?
The trouble is most HR professionals I know, and almost every CEO I’ve worked with, tend to see each of those elements separately, like individual pieces of a puzzle or box cars in a train, and culture is just another box car. Keeping with the train analogy, some may attach a bit more pre-eminence to culture, perhaps, say like the locomotive pulling all the other box cars along the track. But not many. Most would instead give the job of Thomas the Tank Engine to sales, customer service, product development, maybe even marketing.
Few, I think, see culture as I do: as the very energy or life force embodied by that train. A nerve running throughout from end to end, connecting top to bottom and linking everything in between. An organisation’s very chi.
But before we get too esoteric let’s define what I mean by organisational culture: it’s the core values, practices, process, behaviours and goals that mesh together to form a narrative about where the organisation came from, where it’s going, the environment its employees work in and the potential challenges and opportunities that exist for them. Or to put it more simply, Apple’s Steve Jobs got it right when he said a strong culture is happy, engaged employees who then make, sell and service great products.
However you define organisational culture, I believe it the solution that leaders and people professionals can use to overcome the four most challenging issues facing HR departments today.
Challenge #1: Finding talent - it’s war out there
Employers in both the public and private sector scramble to attract good people, using not only costly recruitment agencies and old fashioned job fairs but also social media and job sites. A recent online search for a Sydney marketing role, for example, generated advertisements placed by 1,600 organisations on the new job board Indeed, another 5,300 on Seek and nearly 200 on the home page of a leading marketing recruitment agency. That’s a heap of competition to stand out from if they are to attract the best-possible candidates. And while marketing may be a somewhat specialised role, search instead for a sales-related or customer service vacancy and the number of search results blows out to tens of thousands.
That’s why smart organisations use their company culture to not only stand out but also to attract the attention of job seekers who, increasingly, value corporate culture as much as pay and benefits. Look no further than organisations renowned for their great cultures like Salesforce, Twitter, Atlassian and Google, which says without any agency fees, job fairs or the like receives up to 75,000 job applications a week. I’d say that’s a very healthy problem for any organisation in any industry to have, and I call it “recruiting with a magnet.”
Challenge #2: Retention and motivation - people build businesses, not the other way around
Recent research by PricewaterhouseCoopers found Australia ranks rock bottom among 11 developed countries when it comes to keeping staff longer than one year. Nearly 1 in 4 employees in this country jump ship before their first work anniversary.
And that comes with a cost as we all know - over $12 billion a year in lost productivity and another $1 billion or more in “avoidable recruitment costs” according to PwC.
Add to that the expense of inducting and training new hires, and the cost climbs to numbers guaranteed to make a CEO break down in tears.
It’s true a lot of factors play into this, from recruiters who “over sell” the job and organisations that pigeon-hole applicants according to capacity not experience to the prevailing perception that “the grass is greener on the other side” of the CBD.
But culture plays a very large role too. Just ask David Rodriguez of hugely successful, and another member of the hot culture club, international hospitality conglomerate Marriott. When he thinks about the advantage of a workplace where employees want to stay, Rodriguez says “Your turnovers (are) lower, you don’t have as many people to train every year, you don’t have as many mistakes. A seasoned workforce does a better job - and they cost you less money.”
Challenge #3: Leadership development - icing on the cake or a necessary ingredient?
Wikipedia defines leadership development as activity that “expands the capacity of individuals to perform in leadership roles within organisations (and) that facilitate execution of a company's strategy through building alignment and growing the capabilities of others.” Sounds like a great recipe for sustainable organisational success, doesn’t it?
Trouble is, less than half of HR leaders who participated in a recent USA Workplace Trends survey felt they have enough talent to fill existing roles in their organisations, much less future roles. Worse still, only 4 of 10 respondents considered “leadership” a strength in their organisations, and 2 out of 3 felt that development of managers was not even encouraged!
Plus, more and more managers are disengaged - 65 percent of them according to a recent Gallup State of the American Manager report that analysed responses from 2,564 managers.
Then there’s what Gallup calls the “cascade effect” whereby an employee’s level of engagement is directly impacted by their manager’s level of engagement, which in turn is affected by their manager’s engagement. And so it goes.
Organisations, like fish, really can rot from the head.
To be sure it’s true that “organisational culture” and “leadership” are not simple concepts to understand, and even harder to implement successfully across an enterprise. However, organisations that have strong, robust cultures - comprising a compelling vision, commitment to developing employees and leaders at all levels, effective communications, clear line-of-line sight to new opportunities, shared values and behaviours etc - invariably out-perform their competitors.
If you’re still not convinced, think for a moment how a toxic culture will sabotage how an organisation attracts, retains and motivates employees, its ability to innovate and the strength of its reputation.
An example is Greg Smith, Goldman Sachs executive director and head of its US equity derivatives business in Europe, Middle East and Africa, and how that organisation’s culture became a downright liability. His very public departure via an editorial piece in the March 14, 2012 edition of the New York Times, says it all:
“I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity…The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.”
Quite simply, culture pops up practically everywhere you look at how an organisation succeeds, or fails.
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As we enter 2017 and HR continues to struggle with Challenge #4, yet another of its great goals, that of obtaining a seat at the corporate decision-making table, it neglects the strategic implications - no, make that the commercial impacts - of its basic remit, corporate culture, at its peril.
May the force of your organisation’s culture be with you!
If your organisation’s chi is flagging, check out TP3’s “BUILDING HIGH-PERFORMING TEAMS COURSE”, a must-attend two-day course for every leader who needs to develop effective, positive team cultures in their workplace.
Chi [chœ] noun
(In traditional Chinese medicine and philosophy) the vital life force that flows through the organism