As companies continue to change their return-to-office policies, it’s timely to issue an important reminder. If your organization is seeking better productivity, engagement, innovation, collaboration or countless other reasons I’ve seen used as a reason to end remote working, you should first focus on one surefire remedy: improve the health of your organizational culture.
In a new report i4cp will release this month, conducted in partnership with HR Executive, we found that respondents from high-performance organizations (as measured by revenue growth, market share, profitability and customer satisfaction) are five times more likely to report having very healthy cultures compared to those from low-performance organizations. Titled The Future-Ready Culture, the report also found that companies with healthy cultures enjoy numerous benefits over their toxic culture counterparts, such as:
- Increases in employee productivity (5x)
- Increases in employee engagement scores (4x)
- Improved employee experience (5x)
- Improved ability to attract and retain top talent (4.5x)
- Improved employee wellbeing (4x)
- Improved innovation (3.5x)
- Improved diversity of the employee population (2x)
Before moving to a remedy, however, it’s prudent to have a diagnosis. And this is where most companies miss the mark: They aren’t regularly measuring the health of their culture.
As I outlined in my book Culture Renovation®, only 15% of companies that try to change their culture succeed. But of those that succeeded, two-thirds set clear metrics for monitoring their progress and consistently measured how their culture was progressing. Ninety percent of those who failed to change their culture ignored this step.
Which typically brings up the next question:
There are a variety of ways to gather culture metrics. Several metrics are likely available in the company HRIS or other financial reporting systems. However, others will need to be gathered through focus groups, engagement surveys, pulse surveys, exit interviews and other forms of sentiment analysis.
While some culture metrics are single data points (such as attrition, employee referrals or hotline activity), many others are indexes made up of a variety of metrics. Indexes are an effective way to set up a measurement methodology to review aspects of the company culture, in addition to overall health. Depending on industry, organizations will take different approaches to measuring items such as innovation or inclusion, but the healthiest of companies will roll up indexes and other measures and report them in the form of a dashboard or scorecard.
More and more organizations are reporting regularly on company culture to varied audiences that include senior management, the organization overall and, increasingly, the board of directors. In fact, respondents indicating their organizations have very healthy cultures were 2.6x more likely (45% vs. 17%) than respondents indicating somewhat or very toxic cultures to say that they have defined sets of culture metrics they share with their boards.
Is your board asking about company culture? If not, they will
For several years, boards of directors have been taking a greater interest in the cultures of the companies they govern. Most of this stems from risk mitigation. Look no further than Boeing, FTX, WeWork and countless others to witness what can happen when a board ignores the warning signs of potential culture issues.
But it’s not all about mitigating risk. Top companies are paying more attention not just to uncovering culture problems but also because they understand the tight connection between culture health and financial performance.
Our research found that respondents from high-performance organizations were nearly twice as likely to indicate that their boards place very high importance on organizational culture and have a defined set of culture metrics that are shared regularly with the board. More eye-opening is that respondents indicating they were employed in a toxic culture were 11 times more likely to say that their boards place no importance on organizational culture.
Some boards have even established separate culture committees—or expanded existing committees (like the compensation committee)—to specifically review measures of corporate culture. The bottom line is that when boards pay attention to company culture, it sets the stage for other actions that support culture health and helps create a future-ready workforce.
If your board isn’t asking for culture metrics, they probably will at some point. If you haven’t done so, setting up a culture scorecard or dashboard now can avoid the future fire drill. And, by illuminating certain symptoms, it can help improve many elements of organizational health that a return-to-office edict will probably never cure.
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