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What makes an organisational culture great? by Blair Maxwell

10 Dec 2021

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Who cares about culture? Transformation is all about digital, right?

In the post-covid environment, it's easy to assume that the way to successful organisational transformation is through mastery of digital technology.   Organisational leaders passionately embrace digital transformation, understanding its power and imperative as a critical component of business, not just a source of cost efficiencies.  But as companies advance through their digital revolutions, they often experience an unexpected hurdle – culture clash. However digital your organisation may be, or need to be, transforming isn't about technology or tools – it's about people. People are at the heart of every organisation (to use the language of the balance sheet); they are its most valuable asset.  No matter how much technology you have or how excellent your services or your products are, it's humans who make things happen.  And the way that these humans feel, act,  behave and work together within the organisation define its culture.  A healthy culture provides the code of conduct that guides decision making and ultimately enable the organisation to achieve its strategic vision.

Culture's time has come

Culture is a hugely powerful force.  We can feel its existence in successful businesses, winning teams and productive groups, and we can feel when it's toxic or absent.  You only need to look at industry-leading brands to see that culture is taken seriously and is considered a serious investment.  And we can see culture's impact on the bottom line (a report by Forbes highlights a direct link between culture and financial profitability). But, most of all, it's about the people.  To attract and retain the best people, a healthy culture is critical.  Employees are leaving their jobs in hoards – the trauma of the last two years has left many seeking enhanced work-life balance and better opportunities.   People now expect much more from the employer value proposition, which attracts them and compels them to stay with an employer.  They want to be treated as humans rather than workers (Gartner, 2021), and if they don't get what they need, they'll find it elsewhere. Organisations now have to work so much harder to retain their talent, and creating a healthy culture is essential in this. It's widely accepted that employees consider culture to be more important than benefits or even remuneration (PWC, 2021).  In a 2019 Glassdoor survey, two-thirds of employees listed a healthy culture as their most important reason to stay with their employer or give up and move on.

So, what makes culture a great one?

This question is more difficult to answer than it first seems.   Organisational leaders generally concur that culture is important but disagree about which parts of the culture are most important.   However, the elements that leaders class as important very often diverge from those the people within the organisation value most. A recent study by MIT Sloan Management Review reveals that respect is the most significant single factor dictating whether an employee is happy with their work culture.  The inquiry analysed millions of reviews that employees wrote about their employers and found that organisations, where people felt respected, are far more likely to have a good culture. The inquiry detected common themes mentioned when people submitted a workplace review on Glassdoor.  The emergent themes were compared with the total culture rating that the organisation was given, allowing the researchers to quantify the theme's importance in determining good or bad culture. The results are stark – respect is almost 18 times as important as the average theme in determining good culture, followed by supportive leaders, and whether leaders live the core values in their words and actions.

Ten elements of culture that matter most to employees (MIT Sloan Management Review)

  1. Employees feel respected
Employees are treated with consideration, courtesy and dignity, and their perspectives are taken seriously.
  1. Supportive leaders
Leaders help employees do their work, respond to requests, accommodate employees' individual needs, offer encouragement and have their backs.
  1. Leaders live core values
Leaders' actions are consistent with the organisation's values.
  1. Toxic managers
Leaders create a poisonous work environment and are described in extremely negative terms.
  1. Unethical Behaviour
Managers and employees lack integrity and act in an unethical manner.
  1. Benefits
Employees' assessment of all employer-provided benefits.
  1. Perks
Employees' assessment of workplace amenities and perks.
  1. Learning and development
Employees' assessment of opportunities for formal and informal learning.
  1. Job security
Perceived job security, including fear of layoffs, offshoring, and automation.
  1. Reorganisations
How employees view reorganisations, including frequency and quality. Very interestingly, the study found that flexibility of working days and times, colleague friendliness and manageable workloads had little impact on the organisation's total culture score.

So, why is healthy company culture important?

An organisation's culture is unique; it is its DNA; it's the system of purpose, values, beliefs and behaviours that describe how things get done.  Culture can be a source of the organisation's competitive advantage if leaders understand how cultural elements support or impede change and take action to encourage the right behaviours that support strategic execution.  When the culture ensures that everyone is on the same page and knows what's most important, the organisation is more likely to succeed in its quest to achieve its ambitions. Organisational culture can attract or deter talent, can influence job satisfaction, employee happiness and overall organisational performance. It's not the 'fluffy stuff' – it's strategic business sense.