Boards Take Note: Culture Oversight Should Be More Than Employee Engagement Metrics

“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.

https://cultursys.com/

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

e: john@johnrchildress.com
Twitter @bizjrchildress

About johnrchildress

John Childress is a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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