Less than a third of CHROs believe they have the organizational culture they need to support their future business strategy. Here’s how they can change company culture.
Culture has always been a tricky concept. If you ask 100 HR leaders for a definition of organizational culture, you’ll come back with 100 different answers. Given the uncertainty around it, it’s no wonder many heads of HR are apprehensive about discussing culture with their CEO or other senior leaders. Often seen as a soft topic, culture is easily swept aside in favor of “real” priorities. In fact, HR leaders usually have to disguise culture management as some other initiative to get the resources they need.
Only 31% of HR leaders agree their organizations have the necessary culture to drive future business performance
But most HR leaders do agree on the importance of culture — and it’s getting even more important. Organizations’ cultures have become more transparent to prospective employees, more actively discussed in the press and among the general public, and, based on data from earnings calls since 2010, mentions of culture among senior leaders have increased by 12% annually.
Read more: Gartner Top 3 HR Insights for 2018
“Despite all this increased interest and investment, only 31% of HR leaders agree their organizations have the necessary culture to drive future business performance,” says Brian Kropp, HR practice leader at Gartner.
CEB, now Gartner, undertook a large 10-month study on organizational culture comprising over 100 HR leaders, 200 organizations, and 7,500 employees around the world.
“One of the biggest highlights in our analysis is that cultural performance is less about choosing a particular culture but more about getting employees to demonstrate the culture organizations need, whatever that might be,” Kropp said.
But before CHROs create a culture strategy, they need to be aware of three key employee gaps:
- Knowledge gap: Employees lack awareness of the culture the organization needs (69% of responding organizations)
- Mindset gap: Employees do not believe in the culture the organization needs (87% of responding organizations)
- Behavior gap: Employees do not incorporate behaviors related to the culture the organization needs (90% of responding organizations)
Create a culture that performs
The combination of knowledge, mindset and behavior is termed workforce–culture alignment (WCA). Organizations with high WCA achieve higher hiring/retention targets, increased employee performance and positive public reputations.
For instance, Leena Nair, CHRO at Unilever, a British-Dutch transnational consumer goods company, realized that current trends were set to disrupt the workplace completely and organizations would have to redefine their relationship with employees to prepare for the future.
Unilever wanted to foster a spirit of collaboration and experimentation among its employees. This was important, as the company risked losing market share to local players unless employees were able to experiment and understand local trends quickly. Unilever created a movement called C4G, or Connected for Growth, that facilitated innovation by removing obstacles, highlighting wins and rewarding employees for demonstrating desirable qualities.
It’s not enough for organizations to know what culture they need — they must also clearly understand the current culture and whether it needs to change
While it was clear that elements of culture needed to change, Unilever was able to do it fairly quickly without damaging the core fabric of the organization. The company took a broad approach focused on changing enterprisewide systems that differ from the more people-focused approach companies have traditionally used.
Understand culture through employee-led diagnosis
To create a culture that performs, it’s not enough for organizations to know what culture they need — they must also clearly understand the current culture and whether it needs to change to support future growth. However, our survey found that only 10% of HR leaders are confident that their organizations understand their culture.
Organizations should shift to employee-led culture diagnosis by monitoring how employees experience and interpret workplace culture. ING, a Dutch multinational banking and financial services corporation, has done this successfully by making the change fun and interactive. Instead of a select group of people identifying a list of valuable traits and then having it trickle down, ING included the entire workforce in the discussion, created a new culture code and rewarded employees for embracing new behaviors.
Maximize leader impact
Although 78% of organizations rely on leaders to model their culture, few are confident that this is having the desired impact. Leaders must do more than espouse the culture; they must also create an environment that enables all employees to live the culture. Leaders can do this by conducting business operations (e.g., budgets, processes, policies) according to company culture.
What CHROs must do is treat culture as a concrete business challenge
But more often than not, out-of-date processes create barriers. Beyond providing tools and creating accountability, organizations must provide leaders sufficient resources to address systemic obstacles to desired cultural norms.
For example, RTI International, an independent, nonprofit institute that provides research, development and technical services to clients worldwide, created a “maximize impact” culture team, which was tasked with identifying and removing process- and budget-related barriers to organizational culture. The team also included senior leaders across departments who brought their influence, credibility and decision-making authority to the pursuit of necessary budgeting and policy changes.
Translate culture into day-to-day work
Many employees find it difficult to fit culture into a specific role or address cultural tensions encountered at work. However, the number of employees who struggle with these barriers increases significantly in the lower levels of organizations. It is up to CHROs to help employees translate the culture into their day-to-day work.
Tackling organizational culture can be intimidating, but it doesn’t have to be confusing
Smart organizations remove these barriers by moving ownership of context-specific culture to employees themselves. The Bill & Melinda Gates Foundation, for example, provides a framework that individual teams can use to customize dos and don’ts for each of its four firmwide values. This process enables employees to create their own vision of how their work is aligned to the organization’s overarching cultural priorities.
Tackling organizational culture can be intimidating, but it doesn’t have to be confusing. What CHROs must do is treat culture as a concrete business challenge so senior leaders view it less as something soft and peripheral and more as a foundation for the organization’s HR strategy.
Gartner for HR Leaders clients can read more in the CHRO Quarterly: Q4 2017.