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Why Culture Matters More Than Ever

I am thrilled that someone like Travis Kalanick can’t continue to run Uber and that James Damore was held to account by Google for his views on the companies’ diversity initiatives. These events are victories for employees and of great interest to consumers. And they are likely to continue because of the social networks within and outside of businesses. It's getting harder and harder to hide a dysfunctional culture from the outside world.

Indeed, one of the most profound shifts facing business leaders worldwide, is the shift away from a focus solely on financial metrics towards an assessment based on relationships with workers, customers and communities. We are seeing leading companies taking on increasingly social stances, even when there might be potential economic consequences. From the 70 or more companies that are loudly supporting transgender rights to the Merck CEO, Kenneth Frazier resigning from the president’s manufacturing council. Locally, we have Magda Wierzycka, who not only fired KPMG, but has openly taken them on for their alleged role in state capture.

Bill George, the former CEO of Medtronic said:

“Today’s CEOs are public figures, with responsibility to uphold their company’s mission and values. When these values are violated, even by someone as powerful as the president of the United States, they are obliged to take a clear stand. In this era of instant global communications and social media, it is no longer possible to hide in the shadows.”

So, culture has become a primary business asset. The link between culture and engagement is clear. Culture is how organisations engage employees. Culture is how organisations engage customers. Culture is what organisational leaders envision, create and foster to elicit the investments of employees and customers for mutual benefit. If your culture is well identified and articulated, and by that I do not mean a set of vague, fluffy values stuck up in reception or on your website, then there is an opportunity to understand these values and align both your internal and external strategies and communications.

If, however, you find that there are mutated sub-cultures everywhere and a distinct lack of awareness of the core business values, do not feel alone. Recent research conducted by Deloitte, surveying over 7000 businesses in more than 130 countries, ranked the biggest worries for the C-suite. 86% of respondents cited culture and engagement as a major concern with top executives increasingly recognizing the need for a conscious strategy to shape their corporate culture. This focus has its origins in the slew of data that indicates that organizations with strong cultures greatly outperform their competitors. Unfortunately, only one in three executives claim to understand their own culture and 54% feel unprepared to tackle the challenge.

If you are in this position, I encourage you to grasp the opportunity and engage at a senior leadership level about the benefits of developing a set of shared values across your business. Not only do strong cultures consistently predict subsequent ratings of customer satisfaction and sales, as shown in this study in the Journal of Organisational Behaviour, but they also provide a sustainable competitive differentiation as they are not easy to copy.

Again, let me be clear that when I talk about culture, I am not referring to perks, flexitime and snacks in the workplace, I am talking about a comprehensive process that explores the purpose and behaviours that staff most value and then working that back up to management and down again through the organisation in ways that create meaning and believability. Without a strong process, it’s just corporate propaganda and this will have a negligible impact on how customers view your organisational brand.

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