There is a long held assumption in some industries that corporate culture cannot be measured. After all, there is no number that can be attributed to it, in the same way that you can attach a number to a first quarter’s profit.
On the one hand, culture seems like an invisible quality. Elusive. Not-quite-real. It can seem sensible to delegate the whole matter to HR. Let the executives focus on strategy.
It’s a fallacy, however. Because while culture cannot be measured in a single statistic, culture affects every statistic that can be measured in a business. Culture affects everything. And we can see its impact everywhere.
Otherwise we’re stuck with assumption
“There appears to be a significant discrepancy between what these board directors believe and what happens in practice. It is a gulf that needs to be bridged if they are to maintain, or restore, public trust in their businesses.” – Board Leadership in Corporate Culture, Mazars Report
When we don’t measure something, we cannot understand its importance, nor can we change it to make a better impact.
Businesses that don’t actively measure culture will misdiagnose problems that arise. When projects don’t succeed, we will blame the managers in charge, the state of the market, the approach of our marketing team, the lack of skills in our sales team. And while there could be an issue with any number of these aspects of business, we can often overlook the role that culture plays.
The Mazars survey, conducted among chief executives, chief finance officers, chairmen, directors, company secretaries, risk officers and investment managers, revealed that 17% of board leaders did not believe culture was measured in their company.
The more troubling figures are that 43% said the culture of the board itself is seldom discussed at board meetings, and a further 15% claim that culture is not an important issue for board members.
As the report said, “there is a saying that if something isn’t measured, it doesn’t get done. And if this is the case, then it becomes difficult to establish whether business culture is aligned with strategy and purpose.
Inevitably, when we don’t measure culture, or value it, we assume all is well with it. And then when all is not well, we blame individuals, or our strategy – without questioning whether our culture supports that strategy. We misdiagnose, we fix peripheral issues, we stumble on, we inevitably fail again. Metaphorically speaking, we try sowing different seeds, hiring different planters, but we don’t pay attention to the soil.
We believe we are working with hard data, when we are actually misinterpreting what the hard data is showing us.
How to measure organisational culture
“Steve Jobs saw this future with great clarity… The two of us learned a lot about smart creatives from working with and observing Steve, about how much personal style can influence company culture and how that culture is directly tied to success.” – Eric Schmidt and Jonathan Rosenberg, How Google Works
You can measure culture by paying attention to statistics, but asking different questions. Is absenteeism on the rise? Is the company innovating new systems of working? Are teams in different departments collaborating effectively? How many nationalities are represented at leadership level? Are problems voiced by the lowest-paid workers reaching the ears of the highest paid executives? Is everyone saying “all is well,” or are people identifying problems and inventing solutions?
And then there’s one of the most important questions. Are your employees happy? Their level of motivation and fulfilment will affect everything from the retention rate, the number of new ideas proposed, to the end of year profit margin.
Changing the result
“The best leaders we have observed are fully aware of the multiple cultures within which they are embedded, can sense when change is required, and can deftly influence the process.” – Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng, HBR, The Leader’s Guide to Corporate Culture
Once you begin to measure your culture, you can begin to compare it with the culture that you need. The one that enables you to fulfil your vision.
In How Google Works, Eric Schmidt and Jonathan Rosenberg explain, “It is important not to simply criticise the existing culture, which will just insult people, but rather to draw a connection between business failures and how the culture may have played a hand in those situations.”
We need to begin aligning our culture with our strategic vision. Otherwise our plans will fail. And if we don’t measure our culture, we won’t have the full picture of why our plans failed.
Start taking questionnaires. Ask questions of your teams, your managers, your employees. Keep paying attention to hard data, but understand that culture is influencing every result. Open up conversations at board level. Study change management. Begin closing the gap between the culture you have and the culture you need.
For more information, or to discuss your own development, please get in touch.