How can HR managers make the case for investing in culture?
Successful businesses have strong cultures that underpin their performance. So, why are some professionals still resistant to investing in this aspect of a business?
Great organisations take culture seriously – or are eventually forced to.
Companies such as Apple, P&G, Walt Disney and McDonalds have achieved enduring success by investing properly in workplace cultures defined by clear values and behaviours. Conversely, high-profile organisations such as VW, FIFA and Kids Company have been left counting the financial and reputational costs of cultural failure.
Culture is crucial to business performance and reputation. Despite this, however, many HR directors still find it challenging to convince the rest of the C-Suite to commit significant investment to building a healthy, values-led culture.
Overcoming common objections
In a way, this is unsurprising.
Culture is crucial to business performance and reputation.
To colleagues from other business disciplines, building a values-led culture may feel like a less tangible project than, say, creating a new product line or making a major capital investment. It may also seem much more difficult to forecast and measure the potential risks and returns arising from a company’s culture.
More generally, workplace culture and corporate values may be considered by some to be “soft” or “conceptual” parts of the business – fine for the HR department to grapple with, but of limited concern to other departments and functions.
Help is at hand. Based on our experience of helping organisations define and implement healthy workplace cultures, we believe that there are three key steps HR directors and managers can take to win over colleagues and secure appropriate levels of investment in values-led culture.
1. Find a tool to measure values and culture
Culture is not a ‘soft science’ – it can and must be measured.
For example, we typically use the Barrett Values Centre’s Cultural Values Assessment (CVA) tool, which measures “cultural entropy” – the amount of time (and therefore money) a company loses through dysfunction. Entropy leads to higher employee turnover, wasted time and poor morale, all of which hit the bottom line.
The CVA tool asks three simple questions of employees. From this data, CVA practitioners are able to create a full and frank picture of the strengths and weaknesses of a company’s culture.
Crucially, the CVA will measure the amount of time and energy that is being wasted because of those weaknesses (i.e. the level of cultural entropy).
Culture is not a ‘soft science’ – it can and must be measured.
There are many other cultural assessment tools available, but we have found that this concept of cultural entropy has been extremely effective in focusing business leaders’ minds on the real financial cost of cultural problems.
Whichever tool you choose, a small investment in research and assessment will create a solid platform for sparking a board-level discussion about how well the company’s values are being manifested throughout the business. Where possible, we recommend seeking a mix of quantitative and qualitative evidence.
Remember also that different colleagues prefer to absorb information in different ways: we have found that using visual representations, such as the scorecards and diagrams offered by the CVA tool, have been effective in the past.
2. Make a “carrot and stick” case for investing in culture
Once you have clear data on the costs of not investing, you can start to build a case for devoting more resources to developing your organisation’s values and culture.
However, remember that investing in culture is not just about avoiding the risk of Worldcom-style scandals. By all means highlight the threat to the bottom line, but give your colleagues positive ‘reasons to believe’ as well.
Show them the evidence that values-led cultures lead to higher revenues and productivity by unlocking the full potential of employees. Explain that employees contribute more in terms of discretionary energy, creativity, innovation and problem solving when they feel aligned to the company culture.
Remember that investing in culture is not just about avoiding risk.
A healthy culture built around a strong sense of common purpose can also help to make your company more flexible and adaptable by giving it a firmer basis from which to respond to changing circumstances and market disruption.
Finally, a clear set of values can also act as a purchase trigger for customers, making culture a source of competitive advantage.
By this, I’m not necessarily referring to a company’s external ethical, social or environmental values, but to the internal cultural values that allow for more authentic relationships between employees and customers.
3. Demonstrate that culture is everyone’s problem – and everyone’s opportunity
Once you’ve collected the evidence and outlined both a risk-focused and inspirational case for investing in culture, you will be able to take the final step: convincing your colleagues that culture demands and deserves the attention of the entire C-Suite.
Persuade the CEO or managing director to take culture seriously by showing how a company’s lived values are integral to the big picture. It’s through such values-led cultures that a firm’s underlying purpose and mission get translated into reality.
The CFO or financial director will likely be most easily convinced by the potential threat to the bottom line (as will a chief risk officer or risk management committee), but will also see the potential for increasing productivity and driving top-line revenues.
A clear set of values can also act as a purchase trigger for customers.
Persuade the chief marketing officer by showing how investment in values and culture will create a more authentic brand. After all, brands only ring true with consumers when they are lived inside and out by employees. And of course, when a failure in culture leads to a public scandal like the VW emissions controversy, years of hard work and investment in building a trusted brand can be undone overnight.
While values should be the responsibility of the entire senior leadership team, it will often be the HR director who must go to bat for greater investment in building workplace culture. HR directors can equip themselves for this challenge by making a modest upfront investment in measurement and assessment and outlining both a defensive and positive case for the importance of culture to a company’s performance.
From there, you can seek to frame the argument in such a way that every member of the senior leadership team understands how culture can benefit his or her part of the business.
The end result is that your organisation will invest appropriately in defining its values and desired behaviours and bringing them to life across every part of the business.
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Graham Massey is co-founder and Business Head of The House, a brand agency that exists to make business and brand a force for good. His passion is getting to heart of organisations to create values-led cultures that are deeply rooted in purpose.
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