Only 31% of HR leaders say their organization has the culture it needs. Given that human resources is typically leading culture initiatives, and significant investments are being made in those initiatives ($2,000 per employee every year, on average), it’s time that CEOs and CHROs partner more effectively to drive a culture that performs.
CEOs should treat leaders’ responsibility to drive culture the same way they treat other business activities
“Culture is critical for any organization. Investors, regulators, and prospective and current employees all expect leaders to be responsible and accountable for their organization’s culture. And CEOs need the culture to actually drive business strategy and results. But culture initiatives don’t automatically return the investment,” says Bryan Kurey, Managing Vice President at Gartner.
To embed culture in the business in a way that drives performance, CEOs and HR leaders need to focus their conversations on three imperatives.
Culture as a set of tensions, not attributes
Cultural tensions are an inevitable part of everyday work — and are often integral to strategic execution. Organizations need to identify points of tension in the culture and, more importantly, help employees translate the culture into the context of their specific role.
Gartner research shows that 77% of employees encounter culture tensions in their work that they don’t know how to address. As employees struggle to prioritize competing mandates, they are unsure how to act, saying, “To compete we have to innovate, but I’m not sure how much room I have for failure when we also pride ourselves on rigor.”
To help employees correctly navigate cultural tensions, CEOs and CHROs must rethink how culture is defined:
- CHROs should consult with employees to understand the tensions they experience within the organization’s culture. CEOs should urge and enable business leaders to determine the tensions that are strategically necessary.
- Next, organizations should articulate the tensions to employees and create a framework that explicitly states what the cultural tensions are, outlines why they exist and shares how employees can manage the tension in their day-to-day work.
Gartner research found that workforce-culture alignment improved by 16% when organizations applied this approach.
Providing space for transparency
Few executives truly understand the effect culture has on their organization. And the information they gather to get a read on the culture is not helping. Measures of organizational culture typically focus largely on employee satisfaction (a measure that is often collected no more than once a year). To get an honest view of culture, leaders need transparent and actionable qualitative information that monitors how employees experience the culture.
“Removing the stigma associated with reporting the negative aspects of culture is critical to driving future business performance. CEOs need to create a space where employees are comfortable providing honest feedback. We found that organizations taking that approach saw 11% more confidence in cultural understanding,” says Kurey.
Questions CEOs should ask their HR leaders include:
- What measures are we using to understand the organization’s culture?
- How do we increase employee involvement in assessing and communicating the culture?
- What needs to be adjusted to encourage more employee feedback?
Creating a forum for employees to confidently share unfiltered feedback with leaders is crucial to getting an honest view of culture and enables employees to feel more comfortable raising their concerns — including the type of tensions they find hard to navigate.
Culture leadership as business leadership
Typically, when it comes to driving culture, leaders think the answer is role modeling. Gartner research shows that senior leaders rely on role modeling in four out of five organizations.
Effective role modeling behaviors possess three components:
- What you say: Effectively communicating the importance of culture
- How you behave: Acting in a way that is consistent with the culture
- How you operate: Successfully managing business processes — budgets, structures and policies — based on the culture
Ultimately, many leaders prioritize “say” and “behave,” but are least focused on the most important aspect of role modeling — the “operate” component.
Creating a cross-functional team to boost the impact of culture on performance is a good start, but that team must be empowered to build or change existing processes to support the culture. Just as important, this team must be able to surface existing processes that may need to be eliminated.
Getting leaders to prioritize culture takes more than just a mindset shift
“Leaders are asked to do a lot, and aligning business processes with culture is not quick or easy, so culture is often perceived as ‘extra’ work that is not essential to achieving business strategy,” says Kurey.
Getting leaders to prioritize culture takes more than just a mindset shift. To get leaders to focus on the “operate” component of cultural role modeling, CEOs should treat leaders’ responsibility to drive culture the same way they treat other business activities. This accountability ensures that culture doesn’t become a side-of-desk activity.
As the two executives most closely linked to culture, CEOs and heads of HR must ensure their organization’s culture contributes to financial, reputation and talent outcomes that will drive their transformations and competitive advantage.