How Not to Fail at Corporate Culture Like Uber, Wells Fargo and VW

How Not to Fail at Corporate Culture
Leader after leader asks us how not to fail at corporate culture like Uber, or Wells Fargo or VW.  The questions usually stem from concerns regarding leadership changes, strategy shifts, mergers or acquisitions, unexpected downturns, high growth plans or talent issues.  Regardless of the reason, workplace culture matters.

The Definition of Corporate Culture
We define corporate culture as how things truly get done on a day-to-day basis.  Culture represents the way employees think, behave and work. While often invisible, culture becomes very visible when employees act against it.

Why Corporate Culture Matters

• A recent Harvard research report found culture can account for up to half of the performance difference between companies in the same industry.
• Watson Wyatt found culturally aligned organizations return as much as 286% more value to stakeholders.
• Our organizational alignment research found that corporate culture accounts for 40% of the difference between high and low performing organizations in terms of revenue, profitability, customer loyalty and employee engagement.

Most Leaders Believe Corporate Culture Matters
So, if you are one of the 8 out of 10 corporate leaders we surveyed who believe that a high performing culture is a prerequisite for success, you are in good company. However, a recent Forbes survey shows that fewer than 1 in 10 leaders actually succeed in creating the high performing work culture they dream of.

How Not to Fail at Corporate Culture in 4 Steps
What’s getting in the way? Here are 4 explanations for why leaders struggle at culture change and how not to fail at corporate culture:

1.  Failure to Walk the Talk
Employee feedback is crystal clear in this area.  Leaders may be good at talking about the company mission, setting out the corporate values, and describing the behaviors that matter, but if they don’t translate their words into consistent and visible actions, their speeches will fall on deaf ears.

Leaders who don’t act in a way that aligns with the cultural expectations they set for employees will lose trust. The gulf between what leaders say and what leaders do matters.   Smart leaders explicitly close the gap between the current culture and the aspired culture with their behaviors and actions.

2.  Equating Company Perks to Corporate Culture
Sure, everybody appreciates the extras that many innovative companies provide, like free meals in a top-notch cafeteria, a company car, an on-site gym, and dry cleaning; but company perks only temporarily mask a weak culture. The perks may help to initially attract employees, but perks alone don’t have the holding power to retain top employees.  The true corporate culture is represented by the way people actually think, behave and work.

Over the last ten years, corporate perks and benefits have shown to have the lowest relative correlation to employee engagement in terms of discretionary effort, advocacy and intent to stay.  So while a certain level of benefits is certainly expected to play the talent game, employee perks are not a potent leverage point to increase employee performance or engagement.

3.  Ignoring the Business Strategy
While this may seem strange, far too many HR leaders embark on cultural change efforts at a tactical level by only addressing values.  When you are looking at culture change, you need to understand the three levels of culture and be clear about what success looks like for each.  The three levels of culture are:

• Organizational Health
  Think of organizational health as the corporate values and behaviors that are consistently lived across an organization. In general, organizations strive to be healthy, and people want to work in a healthy environment.  An organization must be healthy enough to succeed; but health alone will not set you apart from your peers in terms of business results or talent management.
• High Performance
  The next ingredient in culture is your performance environment. We believe that people change when their environment changes. We also believe it is a leader’s job to create the circumstances to consistently get the most out of their people in a way that is consistent with the organization’s core values, behaviors, and strategies.
• Strategically Aligned
  The third, and often the least effectively used, ingredient required for high performance is the alignment of your culture with your strategy. Because strategy must go through culture to be implemented, the goal is to design a purposeful culture that is 100% aligned with moving your business forward.

Smart leaders know how not to fail at corporate culture.  They assess and align all three cultural levels and pay keen attention to ensuring that their workplace culture is a driving force that moves the strategy forward while rooting out cultural factors that inhibit strategic success.

4.  Thinking of Culture Change as an Event Rather than a Process
Many of those 9 out of 10 leaders who miss the mark in changing the way their employee work are too impatient. They expect short-term success and give up too easily. Re-shaping an organizational culture requires time, perseverance, learning and adjustments.

The Bottom Line
To not fail at corporate culture, first, make sure that you have a clear, believable and implementable business strategy. Without a strategic true north that stakeholders are committed to, culture initiatives are doomed to fail.  Second, ensure your organizational health is strong enough to withstand corporate culture change.  Third, explicitly define the culture required to execute your strategy and the associated gaps with your current culture.  And lastly, create, follow and monitor a targeted action plan to close the gaps between the current and desired workplace culture in a way makes sense.

To learn more about how not to fail at corporate culture, download How to Build a Purposeful and Aligned Corporate Culture.