Measuring and tracking the link between culture and performance may seem to you like a quest for the Holy Grail. Especially now, as many companies are undergoing culture transformations, the need to assess your culture is critical – but remains elusive to most.
At high and aggregate levels, the link between organizational culture and performance has been proven:
- McKinsey researchers found that CEOs who insist on rigorously measuring and managing all cultural elements that drive performance more than double the odds that their strategies will be executed — and over the long term, they deliver triple the total return to shareholders.
- Gartner reports that companies where employees know what the culture should be, believe that it is the right culture, and can engage in the behaviors that are most effective at supporting that culture, grow 9% faster year over year than companies that don’t operate like this.
- Research by Gallup has shown that work units in the top quartile in employee engagement (i.e., with effective cultures) outperformed bottom-quartile units by 10% on customer ratings, 22% in profitability, and 21% in productivity — and they experienced lower employee turnover, absenteeism, and safety incidents.
These results are impressive but merely inspiration for managers tasked with measuring and tracking company culture, right?! Whether you’re trying to make the business case for culture change, looking for specific ways to connect culture and company objectives, or needing to report on the progress of your culture-building efforts, you need metrics you can implement at your company to illuminate the link between culture and performance.
I bear good news: In its new report, The Big Reset Playbook: Organizational Culture and Performance, The Josh Bersin Company outlines several tools and frameworks for culture measurement that provide the granularity and actionability that you’re looking for.
The report begins by affirming the need for the link between culture and performance. It conveys findings from a McKinsey study that showed the importance of different disciplines in the way of doing business to ensuring successful business transformation. “Business objective/target setting” was found to be the top discipline at successful organizations.
The report also lists three categories of culture measures:
1. Leading measures – to identify the VOC (“voice of customer) of your employees and opportunities:
- Annual and pulse surveys
- Polls
- Digital health platform engagement numbers
- Wellbeing scores
- Online conversations
- Wearables
- Biometrics
2. Descriptive measures – to describe specifically what your culture should look like:
- Culture diagnostics (e.g., competing values framework)
- Cultural assessments
- Organizational network analysis (measuring connectivity)
3. Outcome measures – to define the expected outcomes of culture transformation:
- Employee health
- Engagement
- Retention
- Business transformation
- Innovation measures
- Customer satisfaction
- Financial performance
Then, the report shows how three companies have implemented these types of metrics:
– FairHQ, a company that developed a DEI tech platform, uses behavioral interview questions to evaluate job candidates against its company core values. For example, to evaluate someone for FairHQ’s value “Back it up,” the interviewer is prompted to assess, “Did they include strong sources to back up their thinking? Did they consider alternative solutions?”. And for its “Make it simple” value, candidates are measured on factors such as “Did they break the project down into logical steps? Are they trying to find an MVP solution are they overcomplicating it?”.
– At the travel company Sabre, managers have elevated the transparency and clarity of company objectives and how they translate to how their teams really work. Teams in all areas of the company create a monthly one-pager to share information about how the company objectives are implemented in their work. The company has also created simple questions to help teams create objectives that align with the company objectives. For example, to foster a culture of collaboration across the company and beyond functional boundaries, teams are asked, “What other teams need to be involved?”.
– MasterCard seems to be the most comprehensive in its approach to culture measurement. Its “Culture Health Index” integrates measures from a range of areas – including innovation (Product Pipeline KPIs, Acquisition Retention Rate, etc.) inclusion, (Diverse Retention Rate, Pay Equity, etc.) employer brand, and succession planning – into a single “Culture Index.” It reports on the Index quarterly in a single, simple, visual dashboard, and uses it to prioritize resources, allocate funds, and course correct if/when culture gets misaligned with business priorities and strategies.
When it comes to the link between culture and performance, the well-known adage from management guru Peter Drucker seems to apply: “If you can’t measure it, you can’t manage it.” Thanks to Josh Bersin and his team for providing the frameworks, tools, and examples to help us measure — and manage – this critical link.
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This article first appeared in https://www.linkedin.com
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