The ROI of Investing in Organizational Culture
Investing in organizational culture is a strategic and operational imperative for employee retention, scalable growth, and successful mergers and acquisitions. Organizational culture is not what you do as a leader or what employees do in their day-to-day. It is about how leadership and employees work independently, and collaboratively, internally and externally. Organizational culture is the set of values and beliefs that govern the accepted, rewarded, and encouraged behaviors across departments, levels, and geographies.
You may think of culture as a magical solution to immediate and long-term business challenges. You are not wrong. According to a PwC Global Culture Survey, 81% of the executives surveyed identified a strong organizational culture as a “competitive advantage.” Culture may work like magic, but it does not happen by magic. You build impactful organizational culture intentionally and strategically. And you build it in a way that sustains itself and supports the growth and development of your business. When done right, organizational culture leads employees and leadership well into the future, when you are no longer at the helm.
To do that, The Petrova Experience engages with leaders in three phases: culture creation, culture-driven office design and employee experience, and culture audits. That’s the How of Investing in Organizational Culture. Let’s take a quick look at the Why.
Not Investing in Corporate Culture is Equal to High Employee Turnover
This is obvious, but important to keep in mind. Employees who have a meaningful, positive connection to their place of employment are less likely to leave. The Great Resignation, Quiet Quitting, and spikes in attrition rates across industries make employee retention a strategic priority for all organizations.
According to a recent Gallup Poll on the State of the Global Workplace, 21% of employees say they are engaged at work. And a mere 33% state they are “thriving in their overall wellbeing.” Unhappy, disengaged employees do not perform well, and they do not stay and grow with your organization.
What is even more telling is the number of leaders who do not know that their employees are disengaged and unhappy. Leaders often assume they have an accurate read on employee happiness. Part of that is because internal employee happiness surveys often fail to assess mindset in a meaningful way. This puts leadership on the backfoot. They do not truly understand the problem they need to solve for – or that there is a problem at all!
So, how do you get to employee mindset? How do you keep your employees and make them engaged? Start with culture. Investing in organizational culture is a direct investment in employee retention. Create organizational culture that spurs the interest and dedication of productive employees who are aligned around your organizational values. Train employees on your robust corporate culture so they are empowered to express your culture and values through rituals and actions that connect employees to each other, to leadership, and to purpose. This improves employee happiness, and all the metrics that come with it, to better serve your organization and your customers.
Empower Sustainable Growth
Companies that are growing fast need to codify their system of values and beliefs in order to sustain momentum and retain the unique value of their organization. We see this all the time in founder-led organizations that are advancing beyond the startup phase. Founder Syndrome is a direct threat to scalability. This is a familiar situation. You have a charismatic founder whose personality defines the work environment. This functions well enough for early-stage startups. But as employee teams grow and geographies expand, hinging culture and operations on one individual is unsustainable. The limitations of an individual personality, no matter how dynamic, are too great to promote growth. Instead, they lead to disconnection and stagnation.
An aligned, activated organizational culture replaces the individual personality of a dynamic founder. This does not mean investment in organizational culture results in stripping away what is unique and motivational about a charismatic leader. In fact, it is just the opposite. Culture codifies the values that built the business. In turn, these codified values make it clear to leadership and employees at all levels what their purpose is, how to operate together as highly effective teams, and how to deliver exceptional customer experience.
Simply put, culture enables scalability. It is impossible to sustain growth without the foundational element of organizational culture. Investing in organizational culture sustains an organization. It is the building block that supports future growth.
Culture Failures Kill Mergers
Speaking of growth, culture also drives successful mergers and acquisitions. Conversely, not investing in organizational culture leads to failed mergers. Take DaimlerChrysler merger as a cautionary tale. In this case, there was a culture integration failure when two legacy businesses with existing corporate cultures merged.
When Daimler acquired Chrysler in 1998, their individual corporate cultures clashed, and that threatened the ultimate failed merger. By 2007, the companies split. So, how did the culture integration fail? The Daimler culture and the Chrysler culture were both working for their respective organizations when they were independent. They relied on local norms (American vs German approaches to operations, employee experience, and problem solving). And they built on their individual, unique legacies. These cultures were entrenched in the behaviors and attitudes of employees and leadership. This, of course, is how organizational culture should function.
In every good deal one party loses a little, right? In the case of this infamous merger, everyone lost because no one prioritized or effectively managed the culture integration process. Clashing cultures cannot be combined without thorough, thoughtful approaches to values and purpose identification, and change management.
The DaimlerChrysler failure is not the only one. According to Harvard Business Review “failure rate of mergers and acquisitions is somewhere between 70% and 90%”! Just think about that statistic and the ROI of investing in a unified post-merger organizational culture should become pretty obvious.
How to Invest in Organizational Culture
Of course, understanding the why is only the first (though critical) step in building effective organizational culture. The next is building that culture the right way. And so, we come to the pressing question leaders often ask us: How do I invest in organizational culture?
We provide a 5-Step Path to Impactful Organizational Culture: Define Organizational Culture; Express Organizational Culture in the Day-to-Day; Train Employees to Live Out Organizational Culture; Reflect Organizational Beliefs in the Workplace; and Sustain Organizational Culture.
Define Organizational Culture
First, define what your organizational culture is. This is not an aspirational step. This is an essential strategic step. Defining your organizational culture means identifying a list of actionable values that connect with your mission and purpose. And resonate with everyone from the C-Suite to the frontline.
A clearly defined organizational culture enables you to create behaviors that align with values. And to incentivize those behaviors in a way that empowers employees to engage meaningfully in their day-to-day, and to deliver exceptional experiences to your customers.
Keep in mind, it is difficult to embark on defining organizational culture alone. As we noted, many leaders do not even have an accurate understanding of employee mindset. You are too close to the need – and to the problems – to find the design and deploy the most effective solutions on your own. That is when we come in to spearhead your Culture Creation projects.
Express Organization Culture in the Day-to-Day
At The Petrova Experience, we call “living out the values” of your organization. Culture exists in behaviors. Repeated, consistent, predictable values-driven actions define and sustain organizational culture. But those behaviors do not automatically spring into action once you have completed a few values session and leaders and employees across departments understand what the culture is “supposed to be.”
Rather, these behaviors develop over time. They are guided by core organizational values, And they are rewarded in visible ways that communicate meaning to employees and motivate continued commitment to putting your organizational values into practice in all internal and external encounters with all stakeholders: colleagues, leadership, customers, and partners.
Train Employees on the Meaning of Living Out Organizational Culture
Actions do not appear magically once you create a cultural framework for your organization. In fact, building the behaviors that connect to values and sustain organizational culture is the only way to develop a culture that serves as a competitive advantage.
Training employees on a set of culture-driven behaviors sustains culture, improves employee experience, and unifies your teams across departments and geographies. We put a tremendous amount of energy into organizational culture training, and we see results that transform organizations from the inside out.
Reflect Organizational Cultural Beliefs in the Workplace
In addition to trained behaviors that empower employees to live out your organizational culture, we help you develop a strategy for how to reflect your organization’s agreed upon culture beliefs across the workplace. Culture starts at the top, so we work directly with executives to create and maintain the framework that allows culture to be your competitive advantage.
This includes consulting on how to design the culture-driven office and how to create and maintain spaces and experiences for highly effective, purpose-driven teams. It also gets to the granular level of HR, where we work to integrate culture into hiring practices and compensation structures. The ROI on culture is greatest when your culture touches every piece of the organization. When it becomes part of the air you breathe. Our work with executives empowers you to integrate your culture for the greatest level of impact on employees, customers, and investments.
Sustain Organizational Culture
Impactful organizational culture sustains business through employee attrition crises, mergers and acquisitions, and growth periods. But that culture itself needs to be sustained. Organizational culture is not a one-off workshop, or an inspiring presentation. It is not a set of motivational words.
Culture is a way of being that you flex and test every day. It drives leaders to innovate, and employees to take ownership in their roles. Culture inspires customer loyalty. It is the pulse of your organization. And, as such, it must be nurtured. Sustaining organizational culture means reiterative work to confirm values, processes, and procedures are relevant, aligned, and actionable. It means communicating with and training new employees so they understand and can take ownership of their role in sustaining your unique organizational culture. It means revisiting and refining culture-driven behaviors, and even office spaces.
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