Chief Behavioural Scientist iPsychTec
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Company culture: the single issue at the heart of organisational failure

If you’re wondering what’s at the heart of all the high profile (and not so high profile) corporate failures, it’s always the same thing: company culture. Get this key element wrong, and the rest of the puzzle will not fall into place.

2nd Sep 2019
Chief Behavioural Scientist iPsychTec
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Almost every organisational failing – from Oxfam to Barings Bank, from Arcadia to Boeing – can be linked to a single issue: toxic company culture.

Despite this, most businesses don’t understand how to accurately measure culture, let alone change it.

It is now possible to measure the genuine behaviours within a business and establish the leading indicators of culture that can then be effectively addressed.

It is universally recognised that corporate culture is one of the most critical levers for creating shareholder value. Using this, you can align strategy with culture and talent, thereby driving performance and minimising risk.

Unfortunately, culture is the one element that most organisations fail to empirically measure and track, and therefore they under-utilise this important lever.

The 'unwritten rules'

Culture has a powerful effect on organisational performance, helping to make or break even the most articulate business strategy or the most experienced leadership teams.

A healthy culture can encourage customer satisfaction, growth, market leadership, digital transformation and innovation.

On the other hand, a misaligned or toxic culture can weaken organisational performance, diminish customer loyalty, deflate employee satisfaction, increase risk and, in the worst case, even destroy the organisation.

Culture represents the ‘unwritten rules’ for how things really work in the organisation.

It is the manifestation of the shared values, beliefs and hidden assumptions that shape how individuals and the organisation behave.

It is, in essence, the human glue that makes the company unique.

Cracking the culture code

Changing corporate culture is daunting for any organisation, although the ability to drive transformational change is a key source of competitive advantage.

Achieving a significant shift in performance and organisational health requires businesses to move beyond structures, processes and systems to address individual and organisational behaviours.

If organisations are unable to see, describe or measure behaviours, it is hard to know if the culture is helping or harming the organisation.

What if we were to use quantitative behavioural diagnostics and take a more predictive, insightful and actionable approach?

Truly understanding the culture and identifying the behaviours that do or do not support the strategic priorities can unlock the full potential of an organisation and its impact on the wider community.

Unfortunately, until now culture has been extremely difficult to measure and transform, as the underlying drivers are invisible.

Recent developments in behavioural and people analytics now offer a way to decode organisational culture, drive superior performance and minimise risk and thereby achieve sustainable competitive advantage.

The limitations of lagging qualitative measures

Organisations have long been reliant on lagging qualitative measures (engagement surveys, sentiment surveys, individual interviews) assessing current sentiments or opinions.

Whilst improving employee engagement can be a powerful force for driving organisational performance, engagement tends to rise and fall quickly in response to transient business choices, which affect employee feeling.

The resulting information only gives a partial view on what is really happening in the business.

What if we were to use quantitative behavioural diagnostics and take a more predictive, insightful and actionable approach?

It is critical to measure an organisation’s culture through individual and organisational behaviours (and not feelings/sentiments).

Establishing a cultural framework to measure and understand core organisational behaviours is vital to provide data-driven insights and action plans that deliver positive change.

These behaviours (leading indicators) can then be linked to business outcomes (lagging indicators) to generate predictive analytics and provide actionable insights to senior HR professionals and the CEO and senior executive team.

The predictive analytics work in both directions: behaviours to outcomes and outcomes to behaviours.

These insights, combined with the business strategy and KPIs help improve business performance, reduce risk and generate sustainable value.

For CEOs to provide effective leadership and direction to the business, it is vital that they understand the cultural gap between their present and desired organisational culture.

They also need to have the insights to understand, change and then embed an organisation’s desired culture to achieve sustainable competitive advantage.

Using this approach gives CEOs the ability to unlock the full potential of their organisation by measuring and understanding the hidden drivers underpinning their culture, ensuring a true alignment with the business strategy and talent.

Data-driven insights and action plans

Establishing a cultural framework to measure and understand core organisational behaviours is vital to provide data-driven insights and action plans that deliver positive change.

This kind of approach can provide boards, CEOs and leadership teams with insights to the following critical questions in order to drive superior performance:

  • What is the current culture of the organisation and how aligned is it with our strategy?
  • What are the behavioural changes required to drive culture change to achieve our strategy?
  • How do we consider culture in our talent management strategy in order to attract, develop and retain talent?
  • What is the gap between our current and desired culture?
  • How well do our organisational structure and practices support our ideal culture and minimise risk?
  • How can boards and CEOs enhance performance by placing culture on the board and top management agenda?

Ultimately, until organisations start taking corporate culture seriously as a force for change, we're likely to continue seeing these failures because, as the saying goes, 'if you do what you've always done, you'll get what you've always got'. 

Interested in this topic? Explore more articles on culture in our company culture hub.

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