“No organization, small or large, can sustain success in the long run without energized employees who believe in the mission and understand how to achieve it. Sustainable success and reputation starts and ends with the Board!”
There are two kinds of Boards.
The unprepared are often caught napping, while prepared Boards are proactive and forward looking. The unprepared Board faces the task of finding a new CEO without a succession plan and must rely on a stream of executive recruiters pushing the same set of re-tread candidates. Early on the prepared board set in motion a development plan for internal candidates as well as linking their strategic plan with the leadership capabilities required for the next several years. The unprepared board is content with rear-view mirror data that is often 2 quarters old. The prepared board constantly looks forward for new insights into economic trends, strategic shifts, supply chain sustainability and the potential risks in their corporate culture.
And corporate culture oversight is now becoming part of the regulation regime in the UK. And in the US, several large institutional investors are also pressing for Board oversight of culture. Currently few companies bring culture oversight into their Board meetings, and even those few that do are let down by the traditional approaches to corporate culture metrics and oversight.
Culture metrics are almost all derived from Employee Engagement surveys, which offer a myriad of scores and industry norms on how employees feel about company benefits, working conditions, their supervisors and management, and of course the overall culture. The question of “would you recommend your friends and family to work here” is an anchor metric for many culture assessments. According to the consultants who conduct and analyse this data, there is a strong correlation between employee engagement and company performance.
But are Employee Engagement surveys a significant proxy for corporate culture? I’m not so sure. Employee engagement is important, but not sufficient to understand the impact of culture on business performance.
Start with Why
Employee engagement surveys capture how people feel about work, but not why? It does make good sense that if an employee is not happy with their work or supervisors or co-workers then they will probably give less than 100% effort, and certainly not go “the extra mile” to improve things. But why are they unproductive and not engaged?
Those who know why will always win over those who just know how!
I heard this statement many years ago and it has guided my thinking ever since about the way corporate culture really works. Most culture assessments and employee engagement surveys focus on employee behavior and actions, and even ask about their beliefs concerning work and the company. But in my assessment, these are outcomes of the culture, not the culture itself. In other words, employees may not be fully engaged, but what specifically in the culture is influencing this undesirable outcome? Our experience shows that it is not just one element, but a combination of several.
Corporate culture should be more accurately thought of as a system of organizational factors, or levers, that interact in a networked system to influence employee behavior and business results. In my recent book, Culture Rules, I define culture as a business system and identify the 10 core principles that govern corporate culture.
By identifying and using internal company data and information, as well as survey data from management, leadership and employees, it is possible to create a visual system map of the current culture drivers that can easily point out the weaknesses, risks and blockages to improved business performance. Yes, one of those is employee engagement, but there are often numerous other culture drivers, such as hiring profiles, on-boarding, recognition systems, quality of management, leadership engagement, compensation policies, meeting structure, peer pressure, cumbersome work processes, IT system outages and others. All of which can be measured and mapped.
Culture Risk Mapping and Board Oversight
Below is a visual culture map for the factors that drive an important business outcome and an important Board oversight; Safety Culture.
As you can see, there are multiple drivers in this safety culture system, some of which show up as enablers (green) and others as risks (red). While employee engagement is one of the factors, others such as Peer Pressure, Hiring Profiles and Safety Management Processes don’t normally show up in a traditional culture assessment or employee engagement survey. The data analytics used to generate such a culture system map comes from internal company event data as well as reviews of policies, emails and other unstructured data, all of which can be used to build culture metrics within the overall system. In addition, it is important to link the safety culture to safety business metrics, and not just track the overall culture score.
We have also developed other culture system maps for important business issues that are heavily impacted by corporate culture, such as cyber security, customer satisfaction, conduct risk, innovation, leadership, employee engagement and strategy execution.
Besides having a visual map, the Board should also have access to a Culture Oversight Dashboard that summarizes the overall trends, thus providing oversight on how company management is working to improve low performing elements in the culture and how those improvements are impacting business outcomes.
CulturSys, Inc, is pioneering this Culture-as-a-Business-SystemÔ approach using company data and analytics to provide Boards and management with better tools for understanding, oversight and proactively managing corporate culture to improve business performance. We believe board oversight of corporate culture should be proactive and a key part of the responsibility an effective Board of Directors.
Written and Posted by: John R. Childress