Failures of culture—from big bank Wells Fargo to Volkswagen—have been the single biggest destroyers of value in the last five years, writes Humu Chief Executive Laszlo Bock
Every CEO and HR professional knows (or at least says) that culture is a priority, but for far too long management has had only a blunt set of instruments to deal with cultural issues: fire the offensive engineer, swap in new leaders, overhaul the board and hope for the best.
Today, we are offered finely tuned instruments, systems, and processes that get to the root of cultural issues, and can make real, quantifiable change at scale. And while this is an investment, it’s a worthwhile one.
Because culture matters, and it matters now more than ever. Here are the three reasons why:
1. The internal is now external
In the 1980s, management scholars coined the term “corporate culture,” noting that companies tended to be more alike in beliefs, values and behavioral patterns than society in general. Corporate culture came to mean how the organization achieves its goals, from the ethos of the corner office to the treatment of individual employees.
But that “culture” lived exclusively inside the company’s walls.
Those days are over. Now, Glassdoor lets any employee publicly rate their CEO, LinkedIn allows your competitors to ransack and pillage your top talent, and news outlets regularly publish stories exposing the internal workings of corporations.
Consumers have always followed the brands they love. But, as the successful boycott of Ivanka Trump’s fashion line shows (Macy’s and Nordstrom both dropped the line as a result of the boycott), they are increasingly making financial statements with their buying behavior.
2. The data on culture show a real economic impact
At Humu, we see a clear financial return to investing in a healthy culture. To make organizational change easier, we send people small, scientifically-backed suggestions and reminders called nudges. When we’ve nudged employees about how to build a better culture, we’ve seen employee retention intention, happiness, and the belief that leadership is taking action on good feedback all go up.
And we’re not the only ones. At companies with great cultures, employees understand the broader impact of their work. Long before he became an advisor to Humu, Wharton professor Adam Grant demonstrated that by helping people find meaning in work, you can improve productivity by more than 20%.
Culture done right can improve productivity by 10%, 20%, maybe even more. One tangible example: at Google we designed a nudge to help new hires get settled. That single intervention was worth 2% productivity—or about $400 million per year at the time. Not a bad ROI on a cultural intervention.
3. People technology has advanced enough to help
For the first time, leaders can know what’s going on in a way that’s not filtered by perception, but by data that they can trust. And we can finally stop trusting our guts on people issues; bias-riddled gut decisions are to blame for so many markers of an unhealthy culture: discrimination, bad bosses, and ineffective workers.
The union of computer science, people science, and a strong foundation in ethics and privacy, can help leaders make measurably better, more fair decisions. And organizations that leverage these advances are seeing the kinds that we’ve all hoped for for decades.
So what should we do now? What can you do today to set your team on a path of more innovation, more trust, and more meaning? Actions starts here:
- Invest in culture. The most successful cultures are based on what researchers call companionate love. That means treating people with respect. It means including individuals whose backgrounds may be wildly different than your own. It means hearing out an idea that you hadn’t thought of—or might buck the status quo that you so carefully built.
- Invest differently. Poorly executed engagement surveys and training sessions are ineffective—and even detrimental. Scrap programs if you don’t have evidence that they work, and invest in new technologies that promise transformation. But dump those too if they don’t deliver! Keep going until you find tools and processes that you can prove work.
- Finally, say thank you. Consider this a nudge from me to you: tell someone how grateful you are that they took something annoying off of your plate, stepped up when you needed them, or just made work a little better. Whatever it is, be as specific as possible. It might feel small, but this tiny nudge towards gratitude is incredibly powerful. It will ripple throughout your organization. And it will make work better for you and for the people around you.
Because that’s what it’s all about.