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Company culture matters — and one strong indicator of this is the fact that corporate boards now expect updates from leaders about it.
It’s well understood that culture has a critical impact on everything from a company’s reputation to its financial performance and long-term growth prospects. Culture is a corporate asset. And for many boards, it now has an equal place in board meetings alongside topics like stakeholder relations and new investments.
Even if your board isn’t asking these questions yet, they likely will in the future, so the time is right for companies to start figuring out how to design and measure culture within their organizations.
Why Focus on Corporate Culture Now?
Why is it that corporate boards are zooming in on company culture? In many cases, it’s a company’s reputation on the line, according to Ingrid Wilson, HR consultant and board director at Humber River Health.
“You can no longer sit in board meetings and assume that the detrimental impact of people's behaviors is not gonna affect the brand and the organization that you have a fiduciary responsibility for, right?”
Moreover, she said, consumers themselves are paying more attention to the values and actions of the companies they buy from, and boards are starting to understand the power of brand democracy. Potential acquirers also want to know about the kind of people within the company they’re purchasing.
However, boards’ interest in culture isn’t just about avoiding a PR nightmare or other reputational risk — it also helps safeguard a company’s long-term prospects.
Melissa Goldner, corporate transformation expert and founder of consulting firm Fit for Future, noted as much: “We have much more access to data that showcases culture being a significant indicator of an organization's success, succession and external reputation. It reduces risk. It helps drive retention in an organization.”
Goldner also noted that strong company culture will be key in attracting Gen Z (and eventually, Gen Alpha) employees, who value working in organizations that align with their values.
Related Podcast: Melissa Daimler on How to Intentionally Design Corporate Culture
Walking the Culture Talk
The key to building a more intentional culture, one that can be safely showcased to a board of directors, is in authenticity, according to both Wilson and Goldner.
Wilson said that any initiatives should be tied to the values and priorities of the company’s employee population. What do they care about seeing in the workplace?
“If you’re only putting up a poster and you're not having conversations where senior leadership is involved and talking about impact, personal or otherwise, that's when you walk the line of being very performative as an organization,” Wilson said.
Goldner agreed that employees can “smell a lack of authenticity.” To truly have an authentic culture, she cited the importance of having leaders as ambassadors of it.
“Your values have to be lived out by every single layer of the organization. And if it's not, then you have a culture problem,” Goldner said. “Your culture equals how a company treats and rewards its assholes.”
While 360-degree feedback surveys can help organizations better understand how leaders are propping up culture at an organization, Goldner said that many organizations who implement them fail to ever act on the results.
Wilson said that it’s also important to align culture to key performance indicators that drive financial value, looking critically at how cultural assessments impact KPIs over time.
Related Article: How to Embed Continuous Improvement Into Your Culture
How Do You Measure Culture?
Part of building an intentional corporate culture is being able to measure it, according to Goldner: “We measure what we value.”
She suggested that organizations do so by pulling a number of different levers: “It's good to have different channels because not all information can be gathered from the same channel.”
Engagement and pulse surveys are a standard way to gauge culture, but organizations can also conduct focus groups with third parties in order to get more honest, anonymized feedback.
In addition, looking at employee behaviors, not just their statements, can help provide a better sense of how culture is playing out. This can be as simple as tracking turnover, absenteeism and other indicators, but Goldner also pointed to sentiment analysis tools that can leverage data from emails and other sources to track engagement — so long as they’re used thoughtfully.
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“I don't think it's perfect, but it comes up with at least a direction of where you are from a culture perspective,” she said.
Wilson said that in addition to looking at metrics that show what people are saying and how they’re acting, it’s also important to look at the value that employers are providing employees.
“That could include measuring total rewards, so looking at their compensation along with their benefits, education, and everything else you provide — got a monetary value to it, right?”
Below average compensation and benefits packages can be a powerful sign that a company isn’t putting real resources towards a positive culture.
Related Article: How Corporate Culture Feeds Into the Bottom Line
Getting the Full Picture
Numbers might talk, but that’s not the only information that leaders should convey to their board of directors. Many engagement surveys and cultural assessments are now asking deeper questions that go beyond yes or no, according to Wilson, and boards like to see these types of responses summarized.
“Some boards will ask for exit interview information,” Wilson said. “They will ask for maybe the top five reasons why people are leaving, not just the number of people leaving.”
Wilson said that making an effort to conduct stay interviews regularly, and even as early as three months into an employee’s tenure, can also generate helpful (and positive) feedback to share with board directors.
Goldner agreed that adding a qualitative lens brings a company’s culture to life. She pointed to her experience conducting focus groups where leaders were most moved by the direct quotes and anecdotes they heard from employees.
While it’s important to be judicious in the information you share with a board, storytelling is important, Goldner said.
“It brings the details to the forefront where it actually can create an emotional reaction,” she said.
