In this blog TPC Leadership’s Andrea Cardillo discusses how organisational culture CAN and needs to be measured.
There is a long-held assumption in some industries that corporate culture cannot be measured. After all, there is no number that can be attributed to it, in the same way that you can attach a number to a first quarter’s profit.
On the one hand, culture seems like an invisible quality. Elusive. Not-quite-real. It can seem sensible to delegate the whole matter to HR. Let the executives focus on strategy.
It’s a fallacy, however. Because while culture cannot be measured in a single statistic, culture affects every statistic that can be measured in a business. Culture affects everything. And we can see its impact everywhere.
Otherwise we’re stuck with assumption
“There appears to be a significant discrepancy between what these board directors believe and what happens in practice. It is a gulf that needs to be bridged if they are to maintain, or restore, public trust in their businesses.” – Board Leadership in Corporate Culture, Mazars Report
When we don’t measure something, we cannot understand its importance, nor can we change it to make a better impact.
It is true that not every element of a culture is quantitative, but very often businesses that don’t actively measure culture may misdiagnose problems or their magnitude. When projects don’t succeed, we will blame the managers in charge, the state of the market, the approach of our marketing team, the lack of skills in our sales team. And while there could be an issue with any number of these aspects of business, we can often overlook the role that culture plays.
The Mazars survey, conducted among chief executives, chief finance officers, chairmen, directors, company secretaries, risk officers and investment managers, revealed that 17% of board leaders did not believe culture was measured in their company.
The more troubling figures are that 43% said the culture of the board itself is seldom discussed at board meetings, and a further 15% claim that culture is not an important issue for board members.
As the report said, “there is a saying that if something isn’t measured, it doesn’t get done”. If this is the case, then it becomes difficult to establish whether business culture is aligned with strategy and purpose. And also, how invisible elements of culture influence the shape – good or bad – of a company’s processes, systems and managerial decisions.
Inevitably, when we don’t measure culture, or value it, we assume all is well with it. And then when all is not well, we blame individuals, or our strategy – without questioning whether our culture supports that strategy. We misdiagnose, we fix peripheral issues, we stumble on, we inevitably fail again. Metaphorically speaking, we try sowing different seeds, hiring different planters, but we don’t pay attention to the soil.
In the end, it is the intangible that provides the tangible meaning. Even to interpret a set of hard data, you need to start from a certain set of undisputed beliefs, assumptions, and values: all these are an integral part of your culture.
How to measure organisational culture
“Steve Jobs saw this future with great clarity… The two of us learned a lot about smart creatives from working with and observing Steve, about how much personal style can influence company culture and how that culture is directly tied to success.” – Eric Schmidt and Jonathan Rosenberg, How Google Works
When it comes to quantitatively measuring culture, you can take three different roads.
- Culture traits
- Culture performance
- Culture development
Each one of these has specific advantages and downsides: understanding the questions you’re asking and their inherent logic will help you to make the most out of them.
The most common approach is measuring the main dimensions of organisational culture, similar to what we do when we assess individual personality traits.
Erin Meyer’s Culture Map or Geert Hofstede’s Multi-Focus Model are good examples of the application of this logic. While this approach provides an interesting description of the ‘cultural identity’ in relation to others in an organisation, by itself, it does not provide any insight about the gap between the ideal and the current culture; these are usually worked out through a consultative process. Nevertheless, this approach is extremely useful in mergers and acquisitions, or in assessing the similarities and differences of different regional cultures within the same business.
2. Culture performance
The second route consists of measuring the level of ‘effectiveness’ of a culture’s dynamics in relation to the dimensions that impact business performance the most.These models focus on presenting respondents with a set of statements that describe different aspects of an organisation’s culture and asking them to indicate the extent to which they agree or disagree with each of them.The underlying hypothesis is that, with this methodology, it is possible to identify directly the pain points of a culture’s effectiveness and promptly intervene with change and organisational development initiatives.While this approach is very effective in supporting business leaders in identifying areas for improvement, it does not tell you, by itself, anything about the different ‘qualities’ or traits that characterise the specific identity of a culture.
3. Culture development
The third kind of approach is what we would call the developmental one.
Developmental models aim to measure the values of your culture within an evolutionary spectrum, similar to what Maslow’s hierarchy of needs does with individual maturation: like a person is led by different needs and logics at different stages of their life – from pure survival and safety in our early stages, to esteem from others, self-actualization and transcendence in our latest stages -, similarly an organisation’s culture may be gravitating around some mainstage values that are most commonly held by people or driven by management.
This approach is extremely useful to provide you with a snapshot of the main cultural tensions in your organisation, mixing both qualitative and quantitative data that can help you identifying how your culture needs to evolve if you want to reduce cultural entropy and increase coherence between the underlying values and priorities your current systems reinforce and the ones your people hold most dear.
The assessment, by itself, does not tell you if your business culture is effectively positioned to deliver on your strategy, but it is easy to infer this if you engage senior management in meaningful conversations about the kind of competitive field you are playing within.
Changing the result
“The best leaders we have observed are fully aware of the multiple cultures within which they are embedded, can sense when change is required, and can deftly influence the process.” – Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng, HBR, The Leader’s Guide to Corporate Culture
No matter what kind of route you take, once you begin to measure your culture, you can begin to compare it with the culture that you need. The one that enables you to fulfil your vision.
In How Google Works, Eric Schmidt and Jonathan Rosenberg explain, “It is important not to simply criticise the existing culture, which will just insult people, but rather to draw a connection between business failures and how the culture may have played a hand in those situations.”
We need to begin aligning our culture with our strategic vision. Otherwise, our plans will fail. And if we don’t measure our culture, we won’t have the full picture of why our plans failed.
Start taking questionnaires. Ask questions of your teams, your managers, your employees. Keep paying attention to hard data, but understand that culture is influencing every result. Open up conversations at board level. Study change management. Begin closing the gap between the culture you have and the culture you need.
If you’re looking to instigate large culture change within your organisation, or need some outside perspective to help diagnose your own culture, check out our leadership consultancy services. Or contact your local TPCL office to begin the conversation.