You arrive at work and there is a noisy buzz around the office with weekend stories, some hearty laughter amidst the aroma of caffeine from the work coffee machine. The dress code is relaxed but smart. You are clear about what you need to achieve for the week and for that matter the rest of the year. You and others feel valued for what you do – in fact you know you make a difference and leave work each week…and year feeling that way. Customers have rated your organisation amongst the top five trusted companies in the country and they love your brands. Some great people are lining up to work for your organisation. For now though you have a meeting starting in 10 minutes with the CEO and a couple of members of the leadership team. You go to the so-called “milk room” for the meeting (not surprisingly the room is all white scribble-board). There is some great discussion about your new idea. Lots of laughter and encouragement and a feeling of “wow this could work”. You get the go-ahead with a couple of minor tweaks. Thank goodness you work for a workplace that allows freedom to explore new ideas...
Is this your work? If not, it could be – it should be. It is unnecessary that so many employees turn up to work with an experience anything less than this. Research implies that a large proportion of workers simply miss out on this type of workplace. Instead they grin and grind their way through a difficult workday. Hay Group research says that “on average, 66 percent of workers globally are engaged” and Aon Hewitt research shows that “40 percent of employees are passive or actively disengaged”. This equates to a large proportion of the workforce whose productivity is sub-optimal. Whilst survey results have trended up over time, the majority of organisations are falling short of where they want to be and where employees want to be in their career. For example, the new employee arrives with vigour and energy to be the difference-maker; to change the world. A few months later they are consumed with “corporate apathy” – you might have even been consumed yourself!
The natural world is moving from order to chaos. Without going into the full science, this process is called “entropy”. Think rust. Think weeds in the garden. Think bacteria. From a social or collective workplace perspective, this is no different. In this case the social system moves from order to chaos over time if left alone – the new, excited, and energetic employee becomes the apathetic, indifferent, and tired employee – it is called social entropy.
To respond to and stem the flow of the social entropy process required some kind of intervention. Employee engagement, coined by William Kahn in 1990 has become popularised and an automatic choice for senior leaders looking to breathe some life into indifferent and apathetic employees in order to achieve optimised business results. The outcomes of employee engagement don’t need a business case. Companies who have a highly engaged workforce perform better than those who do not. For example they achieve higher margins and profit, execute projects on time, satisfy customers, and have an outstanding reputation. Therefore it is a reasonable assumption that engaged employees contribute more to an organisation’s results than disengaged employees (all else being equal).
However with an aspiration to create an engaged workforce and the results being a large proportion of the workforce still disengaged, something is clearly not working. What appears to be at fault is the employee engagement process (i.e. engagement survey à reviewing results à action planning à carrying out actions). The process has continued to stick because it makes sense and is simple to follow. More pertinently, the process outcome provides a score relative to other teams or organisations. A score is enamoured by organisations. A score provides a tangible, visible and easily communicable story. A score is easy to track and provides a sense of proximity and clarity to the ethereal world of measuring people productivity. But in the end a score is just a number, and numbers do not change on their own.
So why is the process to employee engagement not working? Firstly the action plans focus on things that are not game changing e.g. “our team should get together socially more often”! Secondly, action plans are written and then not completed (which also breeds cynicism). Thirdly, and most importantly, the action plans do not focus enough on constructive behaviour change which is the biggest driver of employee engagement. So if the employee engagement process is not working, where do employers go to next? James L. Heskett wrote in his book The Culture Cycle that “effective culture can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors”. This is further supported in the ground-breaking study by John Kotter and James Heskett in their book Corporate Culture and Performance. They researched two hundred and seven large U.S. companies in twenty-two different industries over an eleven-year period. The study revealed that those organisations who actively promoted constructive cultures saw, amongst other results, revenue increases of 682% versus 166% for the companies that did not manage their cultures well. In summary, organisations which promote culture change outperform those who don’t. Furthermore, one of the outcomes of a constructive culture is high employee engagement. In other words, if the horse is a constructive culture, then the cart is a highly engaged workforce.
The significant difference between the respective culture change and the employee engagement process is that culture change emphasises behaviour change as its biggest lever, whereas employee engagement action plans tend to focus on levers which make little difference to those areas which motivate employees. One is deep lasting change; and the other is shallow, short-lived, and superfluous change.
It is challenging to change culture because culture change focuses primarily on behaviour change. For an individual to change behaviours established over years of life is hard enough, so to change the collective behaviours of an organisation is even harder. That is why many organisations steer away from it. However, the organisations that have been willing and bold enough to face into culture change as a core business lever and central focus are reaping results. Culture executes strategy. Culture breeds customer satisfaction. Culture delivers great financial results. Culture lifts community and public reputation of the organisation. Culture engages employees. Culture is the biggest competitive advantage any organisation can acquire. Effective culture change is nonetheless complex, takes time and requires ongoing commitment from senior leaders. When developing a culture change plan, there needs to be consideration of many different levers and components. However the following eight focus areas are the most critical of any culture change plan:
- Make sure that the organisation has a clear purpose; a deep understanding of its customers; an exciting and enticing vision for the future; and strategic objectives which help it reach the vision
- Develop a set of behaviours and values which help the organisation achieve its strategy AND provide the basic elements of human motivation (think Victor Vroom, Frederick Herzberg)
- Integrate the behaviours into everything including key processes e.g. performance management framework, recruitment process
- Role model the behaviours especially from senior leaders
- Promote and hire managers who value teamwork and consistently demonstrate the behaviours
- Make sure that teams and employees are clear how to demonstrate the behaviours in their interactions with internal and external customers
- Share stories of how the behaviours come to life and remove symbols that differentiate employees e.g. the CEOs carpark
- Make culture one of the key strategic goals supported by the board and the team at the top table.
Many years ago the management scholar and consultant Peter Drucker famously said that “culture eats strategy for breakfast”. It is not to say that strategy is unimportant; more so emphasising the importance of culture to deliver strategy and remarkable results. Quite simply, culture change is where organisations need to turn their attention. Long live culture change!