Key takeaways

  • There is a gap in perception between the board and C-suite level and their employees around how much importance the leadership team is placing on culture.
  • Eight in 10 employees surveyed say culture needs to change in the next five years for their company to thrive.
  • Closing the culture gap starts by identifying a ‘critical few’ behaviours to better align culture to strategy and spreading them via a network of authentic, informal leaders.

Many executives would agree that culture is a critical element to the success of an organisation. But there is comprehensive evidence to suggest that culture is often being tackled in the wrong way, is misunderstood, and leadership efforts that support it are not gaining traction with the rest of the organisation.

According to the Global Culture Survey 2018 conducted by the Katzenbach Centre at PwC Strategy&, 80% of the more than 2,000 respondents said that their workplace culture must evolve over the next five years to set the company up for growth, success and to keep its top talent. The number is rising, up from 51% five years ago. This is an encouraging sign that the importance of culture is now recognised and far better understood across many industries worldwide.

While culture may be high on the C-suite and board agenda, the people whom it affects aren’t seeing evidence of it: 71% of leaders agree that culture is an important leadership agenda item, compared with just 48% of employees.

Moreover, just 57% of employee-level respondents agreed they were proud of their workplace, compared with 87% of executive and board members.

Getting it right
matters

Understanding that this gap exists is the first step – but what practical steps can executives take to begin to close it? Culture is a complex and unwieldy construct, and companies embarking on digital, or indeed customer, innovation, data, or risk transformation projects are already navigating a whole new set of challenges that come with implementing new technologies, regulation and processes, not to mention reskilling or redeploying staff whose roles have been disrupted.

And efforts to deliver change aren’t always successful. Of those surveyed who responded that their culture hadn’t changed, 23% said they had tried but didn’t succeed, while 28% said it was because they were distracted by other priorities.

But the benefits to getting culture right are tangible. Research from PwC’s Consumer Intelligence Series has shown that getting the employee experience right in turn helps drive a better customer experience, where the real benefits lie. Indeed, customers are willing to pay up to 16% more for products or services that deliver exceptional experience.

Moreover, culture is an increasingly critical element of attracting top talent, those with the expertise to help turbocharge a company’s transformation efforts. The survey found 72% of C-suite and board respondents agreed culture was a strong reason for people to join the organisation.

Nevertheless, transformation of any kind is an unsettling time for employees, particularly those who face figuring out their own roles in an increasingly digitised world. That sense of trepidation, combined with the rate of change, not only in terms of technology but in customer expectations, mean the risks associated with not prioritising culture are high.

The critical
few

Fostering a cultural evolution – that is going to help a company not only survive but thrive – begins with identifying and addressing where its culture and strategy clash. Understanding what the culture is today, and what its ideal state is, will begin to illuminate the gaps, and what needs to change.

Next, leadership must identify a few of the organisation’s unique cultural traits. For example, as outlined in an article featured in strategy+business, The 10 principles of organisational culture, one of our clients, a European pharmaceutical company, identified a tendency to value the opinions of internal colleagues rather than external sources as a cultural trait. Rather than bemoaning this insularity, they worked with it, to the organisation’s advantage.

Leaders must then focus on developing a few behaviours that once habitual, will steer the company’s ways of working towards alignment with its strategic goals. They can be as simple as the way of starting meetings, or unique ways of dealing with customers. Simplifying these behaviours into daily steps employees can take will help embed them in the culture.

Maintaining a focus on these ‘critical few’ behaviours, as set out in the book The Critical Few: Energise Your Company’s Culture by Choosing What Really Matters by Jon Katzenbach and Gretchen Anderson, will have the most impact, as it allows momentum to build with this handful of behaviours having signalling and multiplying effects.

Championing
change

Leading by example, being visible, and consistently demonstrating these select behaviours, is more likely to convince employees that things are really going to change and culture-speak is not just rhetoric, putting the company on the path to sustainable cultural change.

However, a solely top-down approach to cultural change is often a blunt instrument – leaders must tap into the emotional energy within an employee base as a catalyst for bringing the whole company on board. Rather than simply listening, executives should engage with the authentic, informal leaders, many of whom have a ground-level view of the corporate culture, and who can become champions of the kind of behaviours needed to crystalise change.

Of course, in order to convince employees that the commitment really exists among the company’s decision makers (and close the aforementioned gap in this perception), it’s incumbent on leaders themselves to demonstrate these behaviours.

Modelling
perseverance

It’s important to remember that cultural change is difficult, and most initiatives fail. Employees however, as the survey results reveal, have given leadership a mandate to persist in pursuing this necessary change. Identifying and embodying just a few attributes and behaviours that will help align the company’s culture to its strategy, will help keep the executive level focused on its commitment to change – and will in turn allow employees to see that commitment, and hopefully, get on board for the journey.

A targeted approach matters. Success in ensuring the company emerges from this transition with a stronger culture – backed by its employees – will be enabled by a continual focus on just the critical few.


For further insights, visit the Strategy& Global Culture Survey 2018, or visit the Katzenbach Centre website.

 

Contributor

Michelle Kam

Michelle is a partner in Strategy&’s People practice. While she has a breadth of experience across sectors, she has specialised in service industries such as higher education and financial services but has also worked in media, utilities and retail.

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Contributor

Varya Davidson

Varya leads PwC’s People and Organisation business for Strategy& in Australia, Southeast Asia and New Zealand. She specialises in strategic transformation with a passion for the people and organisation dynamics, in particular using culture to accelerate organisational change.

More About Varya Davidson