If there ever was a year when corporate leaders were made to feel how little control they have over events shaping their organizational future, it was 2020. The upheaval of the pandemic; the switch to remote work en masse; the protests for racial justice; political strife and growing tensions have created a challenging, tumultuous environment.
There may have been times over the past year that you’ve felt as though people expect you to have magical answers, inspiring ideas to guide the business through to success through all the confusion and disarray. But of course it’s not that simple. Even now, the unknowns are huge as we look to the year ahead.
But there is good news. The most important step you can take as a business leader actually is well within your control. Research by my company, Gapingvoid Culture Design Group, shows that doing this increases profits, customer satisfaction, share value, and employee engagement. It’s also proven to deliver longevity and positive attention to CEOs. The step: actively design your culture.
Culture ≠ happiness
Organizational culture is often thought of in nebulous terms, as something nice to have but hard to measure. It’s confused with employee happiness. Insights in behavioral science, however, show that culture runs much deeper.
At Gapingvoid, we define culture as “the beliefs, mindsets, mental models, principles, and world views that when taken together, inform behaviors of a population.” The key is to connect people in a deep, emotional way to the challenge the organization faces. Happiness is an outgrowth of this. In the workplace, it stems from having a sense of purpose, meaning and a connection to the community of fellow members of the culture.
That’s why the trappings of some Silicon Valley giants — giving people free food and other luxuries across a sprawling campus — don’t ultimately determine what the culture is, or even how happy they are. Those perks merely put people on a hedonic treadmill, seeking more, without establishing ways of thinking and behavioral norms. Often, those perks are counterproductive in the long run because they focus employees on extrinsic, instead of intrinsic, motivators.
The most successful businesses have “high-purpose cultures” — those that are at once employee-and customer-focused, well defined and make clear both internally and externally exactly what the organization stands for.
In a meta-analysis, my team looked at how these types of cultures affect businesses and CEOS themselves. We pieced through a great deal of research and checked financial records of various companies.
The result was a CEO Culture Study. We found that chief executives who oversee high-purpose cultures beat out their peers on all the most critical metrics. Their businesses see higher financial returns; greater customer satisfaction scores; increased employee retention, and greater rates of innovation. The CEOs themselves, meanwhile, receive higher compensation; a greater number of positive media mentions; much more praise from staff; and a much greater likelihood of making it onto lists of “most admired” business leaders.
A case in point is Satya Nadella, who took the helm at Microsoft, revolutionized the company’s culture and led a historic turnaround that spiked the company’s value by more than $1 trillion.
Instilling culture change
To build a high-purpose culture, you need to first get an honest assessment of your current culture and its challenges. Are people genuinely engaged emotionally around the organization’s goals? Are they confident speaking up and challenging norms? Do they believe the company has their best interests in mind, along with those of customers and shareholders? These are just some of the dozens of questions you need answered.
Then, you need to actively change the culture to make it into the one you seek. It doesn’t simply coalesce out of well-intentioned leadership making statements and promises. Instilling culture change requires treating culture as an operating system.
Use semiotics — signs and symbols — as constant reminders of what you strive to stand for. Reward behaviors that support your values and call out those that don’t. Make sure managers do the same.
For a powerful example of this in action, take the U.S. military for example. Such an old, established institution has deeply instilled ways of operating. But in recent years, we’ve worked with parts of the military to design a culture of agility and innovation. It takes active efforts on a daily basis — providing a “culture wall” as a management tool to reshape core ideas on a daily basis; openly recognizing and praising those who innovate; encouraging those who are reluctant to; speaking up when people are pressured to keep in line with outdated ways of operating, and much more.
People don’t learn culture change through instruction. They learn it socially, by watching those around them at all levels act on those beliefs, mindsets, etc. It spreads, transforming the way people operate. They align around it, building greater connection, collaboration and teamwork.
This is even true in virtual work environments. It can happen in any professional community as people come to recognize that decisions are being made every day that reflect a real commitment to a specific, well defined culture. They then make their own decisions the same way.
Culture delivers meaning
People are fueled by a sense of meaning in their work. They find that meaning in the culture. But there’s a long way to go on this front. Gallup reports that “only 23% of employees strongly agree that they can apply their organization’s values to their work every day.”
Now is the time to make this happen. As McKinsey noted this year, businesses can help give meaning to the current crisis, showing how their work helps. Doing so can help them “thrive” during this time.
The new year can usher in a new beginning. With culture design as the mission, forward-thinking executives have the chance to move their entire organizations in a powerful new direction — building a stronger future for their organizations, their staff and themselves.
Written by Jason Korman.
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