what CHRO should be doing in 2018

Where to Next for the CHRO & Culture? 5 Things Every CHRO Should be Doing in 2018

Where to Next for the CHRO & Culture? 5 Things Every CHRO Should be Doing in 2018

what CHRO should be doing in 2018

The new year brings with it a time to reflect on what’s ahead and what we need to accomplish. For CHRO’s and other HR leaders, this will be a tough year. Not only is the external environment more competitive, dynamic, and complex, but inappropriate or disrespectful behavior and inequitable practices are less and less acceptable. On top of all of this, organizations need HR to support new business models, digital and business transformation, and creative ways of doing work.

At the center of this is the question of whether the organization’s culture has the right kinds of cultural DNA to support strategy and brand while protecting reputation.

So, what are five things every CHRO should be doing in 2018 to meet these challenges?

1) Re-Enroll Top Leaders in Their Role as Culture Architects

Another way to say this is: raise the bar. Some CEOs and their executive teams are already immersed in understanding their culture and intentionally shaping it based on a shared vision of the future culture needed for success.

Many, however, are saying that while top leaders pay attention to some aspects of culture (Compliance, Safety or Engagement), their perspective of the culture isn’t complete. It’s more like seeing parts of an airplane without understanding if the plane is ready to take-off and land in a new location. Most executives are ready for new approaches to developing culture and HR needs to be in the game.

In 2018, CHROs need to re-enroll CEOs and their executive teams in culture development. You need to ask:

  •     Is the executive team acting as culture architects, cohesively focusing on what needs to be different in the culture?
  •     Are they clear about culture priorities, opportunities, and risks?
  •     What are they doing about these priorities, opportunities, and risks?
  •     Do their own behaviors embody company values or are they inconsistent?
  •     Are they in this together, shaping culture for the future, or are some members opting out, clinging to outdated behaviors and practices?

Now is the time to have these conversations with the executive team, so they can raise the bar on their role as culture architects.

2) Take the Long View

Culture development is a journey that requires CHRO’s to continuously help the organization build its culture story and develop new kinds of culture muscle to meet long-term needs. It takes time, so CHROs need to be patient, persistent, and ready for intense periods of dialogue and learning. Kathleen Hogan, CHRO at Microsoft, has been part of its culture change. She says, “I also can’t over-emphasize the significance of perspective over time. It’s a journey that requires endurance, belief, and optimism for the future.”

taking the long view on company culture

Taking the long view means:

  1.    Creating Meaning – understanding what is happening inside and outside your company that requires change. This means connecting the dots between Mission, Strategy, Brand, Leadership, and Culture. It also means making sure communications and dialogue improves understanding of the desired future culture and how this connects everyone to Purpose and Strategy.
  2.    Activating – building desire and accountability for developing the future-state culture and making sure company leaders own culture change, not just HR. HR owns some of the levers for culture change and should, of course, continuously align these to the desired future state. Indeed, in 2018 CHROs should be critically examining organizational design and people systems to spot where traditional approaches are just not cutting it. Activating requires enrolling every leader and team in strengthening the culture muscles needed for the challenges ahead.
  3.    Learning and Iterating – when the future-state culture is defined and desired behaviors become clear, the time is right to experiment with new ways of working together. HR can play a key role in supporting pilots, gathering anecdotal evidence of culture change, and identifying systemic barriers. An important part of this is making sure leaders are supported as they learn. Leaders may want to go outside to find out more about agility or innovation or bring their teams together to develop culture action strategies. They may reach out for executive coaching or need support for team development. The CHRO needs to lobby the CEO to make sure that resources are available to support culture change.
  4. 3) Keep Holding Mirrors Up

    Given the leader behavior scandals of 2017, CEOs and Boards will be asking more questions about how to understand company culture and its risks. CHROs need to make sure they have a robust culture measurement system that can feed meaningful data to leaders for action. HR already has access to some terrific data and, when combined with other data points, insights can be unlocked about underlying beliefs, assumptions, norms of behavior, and practices that support success or create risk.

    To do this, the CHRO needs to develop a plan to frequently bring key data to the executive team to unpack the story of the culture, its dynamics, risks, and opportunities. Next, the CHRO needs to persist in seeding data into the executive agenda. This may mean partnering with other departments such as Marketing, Safety, or Quality. These groups also have measures that reflect culture. Frequent snapshots of where progress toward the desired culture is being seen and where it has stalled will help top leaders understand the culture, what needs attention, and where they can intervene. Finally, the CHRO needs to present all of the data from a future-focus perspective. This will help top leaders understand the implications for delivery of strategic imperatives.

    Consider the following as part of a robust culture measurement system:

    •     Quantitative – statistical, trending

        Engagement survey – a targeted survey to understand employee loyalty

        Diversity and inclusion

        Customer service issues, trends, and risks

        Safety trends, issues, and risks

        Compliance trends, issues, and risks

    •     Qualitative – diagnostic, priority setting

        Culture survey – a broad and deep culture measurement to understand overall culture strengths, development needs, dynamics, and vulnerabilities

        Culture pulse – frequent checks on the employee experience

        Leadership assessments – strength of leadership capability to build a strong foundation, culture, and teams

    •     Observation – emergent, potential to learn and migrate successes

        Story gathering and analysis – changes to practices, behaviors, and beliefs that reflect the future-state culture and get results needed for strategy. It’s beneficial to look ore and post change to assess whether culture change is being sustained

        Anecdotes – seminal events unpacked, project or initiative post-mortems/retrospectives

    4) Focus on What is Experienced

    While focusing on engagement helps leaders understand employee loyalty and perceptions of the company, it is what employees, customers, suppliers, and contract/contingent workers are experiencing that reveals how healthy the foundation culture is and how the journey to the future culture is progressing.

    No “fast growth” company like Uber should be shocked to learn that a toxic culture is being experienced by staff and contractors. No large company with hundreds or thousands of contingent workers should discover in the press that its culture holds back the innovation pipeline or damages the customer experience. No organization should be surprised to be called out in #MeToo postings.

    creating a healthy workplace culture in 2018

    The CHRO in 2018 should be on a campaign to ‘Know Our Culture’ from different perspectives. These include:

    •     Top leaders – where misalignment to values is so damaging to reputation and culture development
    •     Talent – those under contract such as in Media, Entertainment
    •     Employees – by groups and demographics
    •     Contractor and contingent workers – how they experience the culture, how it influences their beliefs and behaviors

    This is a tall order, but can be staged as quarterly, annual, or every second year processes. For example, one animation company surveys it’s employees with a broad and deep culture survey every second year and with quarterly Culture Pulses. Their Talent gets their own custom survey annually. These provide deep insights for building unique competitive culture DNA that attracts the best Talent and performers in the industry.

    5) Keep the Board Apprised

    Given the toppling of so many leaders in Media, Entertainment and Politics at the end of 2017, the Board will likely ask the CEO and CHRO how they will be stewarding culture and managing its risk in 2018.  An annual presentation of Engagement Survey results or summary of the Compliance Audit are unlikely to be sufficient to build confidence that culture risk is being managed.

    Wise CHROs should consider how to help the Board understand the organization’s unique culture DNA, its strengths to be leveraged, and priority areas for attention. With the CEO, they need to talk to the Board about how culture is being developed and prepare them for hard choices ahead: organizational redesign, removal of culture violators, shifts in managing systems etc..

    In 2018, the CHRO has a huge role to play in culture development. The need for firefighting will not go away and neither will the need to upgrade HR processes and systems. Nevertheless, in 2018, CHROs need to carve out more time for culture, helping leaders and stakeholders understand the way it operates, building the future culture story, activating everyone, and then supporting learning and iteration.

    Culture-Strategy Fit shares its knowledge and tools through the Culture Resource Center, a hub of culture activities, tools and surveys to support organizations intent on shaping culture fit to strategy. Sherrill Burns, Co-Founder, writes frequently about how to leverage culture for competitive success.

Additional Problems with the Use of Benchmarks

Additional Problems with the Use of Benchmarks

This is the third and final part of our series about why companies should be careful with benchmarks.

Effective Cultures are Contextually Appropriate

An organization’s performance is affected by the extent its culture is contextually appropriate and aligned to strategy. A contextually appropriate culture acknowledges the importance of industry, but also reflects market dynamics, societal values, leadership, organization size, life cycle stage, governance structure, M&A history and other factors in determining norms, values and beliefs.

Societal values, for instance, have a greater influence on culture than industry norms. This means there is no such thing as a global, industry-specific culture.

It also recognizes the critical role that culture plays in enabling strategy execution and in turn, the effect that strategy has on cultural norms and behaviors. While organizations in the same industry may have some cultural attributes in common, differing strategies mean their cultures are distinctive in other significant ways. For example, all companies in the regulated airline industry require a normative culture due to the importance of safety and reliability of operations.

However, companies such as Frontier Airlines and Spirit compete on price, which requires a culture that emphasizes consistency and efficiency of operations evident in a strong process and task orientation. At the same time, Emirates and Singapore Airlines have built their brand on the promise of a special, consumer experience. This is achieved, in large part, by providing a personal touch in every customer interaction, which requires a high engagement culture that is people-oriented, flexible and adaptive.

Similarly, an organization that strives to differentiate itself from competitors through product innovation requires a different culture than one that aims for excellence in the customer experience or reliability of its operations.

Culture Benchmarks Reinforce the Status Quo

Organizations that have the good fortune to operate in a stable environment don’t have to worry about changing their culture. As long as they continue to perform and achieve their goals, the culture can and will remain unchanged. For an organization to thrive, and even survive, in a dynamic environment, it must be adaptive; able to anticipate and respond effectively to change on a continual basis.

Emerging technologies, the entrance of new and/or non-traditional competitors, shifts in customer expectations and other evolving market dynamics demand new and different ways of thinking and operating.

In many cases, the assumptions and beliefs that once helped the organization succeed become barriers to progress and change. As a result, the culture an organization has today is unlikely to be what it needs for the future. In these environments, comparisons to others in the same industry add little if any value.

In fact, instead of helping to improve performance, benchmarks create the risk of perpetuating the status quo and in so doing undermine efforts to adapt and change. If evidence is needed, look no further than popular management books such as Bossidy, Charan and Burck’s (2002) Execution and Collins’ (2001) Good to Great. Many of the organizations cited as examples of the cultures that others should aspire to ended up struggling or outright failing.

Culture is Dynamic and Systemic

Organizations are living systems in that all of their elements are interconnected and work together to fulfill their purpose and mission. Culture affects and is affected by strategy, structure, policies, processes, physical space and so on. Cultural attributes cannot be viewed as separate components operating in isolation of each other or other elements of the broader system.  

It is the rich combination of all of the cultural attributes, and other elements of the system, working together in a dynamic and organic manner that makes each and every organization’s culture unique.

This is what makes culture so “sticky”. It is embedded in all aspects of the organization system. Yet, industry benchmarks by design treat cultural attributes as independent variables. This can lead to actions to close the gap on a specific attribute, without considering its connectedness to other aspects of the culture or the organization system as a whole. The result is unintended and potentially detrimental consequences impacting culture and performance.

Let’s say, for example, an organization discovers it is below the industry benchmark on process-orientation (emphasis on how work gets done). As a result, an action plan is developed to document core work processes, eliminate exceptions, simplify work and implement a disciplined approach to process change management.

However, for decades, employees have been taught that processes are bureaucratic encumbrances impeding delivery of the customer experience. This is firmly entrenched in the organization’s belief system and is evident in the way people work and interact. For the process improvement initiative to be successful, it must reconcile this conflict in an explicit way that is embraced by the organization.

This includes looking at the culture holistically and addressing competing norms such as tendencies for groups to work in isolation and to allow people to deviate from the standard process. If this does not happen, it is highly unlikely that change efforts will be successful or sustained.

Closing Thoughts

An assumption implicit in the use of industry benchmarks is the premise that organizations should strive to develop a culture that is similar to that of others within the industry. But what if an organization is striving to be different and standout from its competitors or there is a new entrant with a different paradigm about the way to do things? If culture is truly a potential source of differentiation, what is the value in being the same as every other organization in the industry? Does Uber desire to have the same culture as a traditional taxi or limousine company?

Instead of asking how our culture compares to others in our industry, there are two questions leaders should ask:

  • Do we have the culture we need to execute our strategy, achieve our goals and fulfill our purpose?
  • Do we have an adaptive culture that allows us to anticipate and respond effectively to change?

 

A culture assessment can help leaders answer these questions by providing a common language and frame of reference to anchor discussions. It can also reveal culture strengths which can lead to insights regarding the organization’s deeply embedded belief system. It should not circumvent the dialogue required to build shared understanding and alignment that leads to meaningful action which is a very real danger inherent in the use of industry benchmarks.  

Culture-Strategy Fit can work with you. When you want to quantify your culture, contact us.

The Problem with Industry Benchmarks

The Problem with Industry Benchmarks

The bottom-line is benchmarks and benchmarking, while not necessary, can be helpful when used as a starting point for a deeper exploration of culture and its implications for strategy and performance.

Specifically, a framework of culture attributes provides a common language and structure. This allows people to share perspectives and make explicit the underlying beliefs, values and assumptions that are the foundation of culture.  

In doing so, they develop a shared understanding of why things are the way they are, which opens the door to explore the changes required to align culture and strategy and improve performance. It also enables groups and organizations to engage in meaningful dialogue about their similarities and differences. This leads to more effective working relationships, such as those required in mergers, acquisitions, joint ventures, and global operations.

The problem is that using benchmarks in this way runs contrary to common management practice. Common practice is to assume that a gap indicates a problem; the larger the gap, the greater the problem and higher the priority for action.

Unfortunately, this is not necessarily true when it comes to culture, which by its nature is complex and highly nuanced. There may actually be very good reasons for the gaps, such as competitive differentiation or deeply embedded values, that leaders would be well advised not to change.  

In fact, there are a lot of reasons not to use benchmarks, which although appealing are dangerous and should be avoided.

Leaders Are Biased Towards Action

More and more, leaders are under pressure to deliver results with fewer resources. Many, if not most, spend their entire day in meeting upon meeting with little time for thought or reflection. To make matters worse, culture and culture change is complex and not an area of expertise for most leaders. This means that related discussions take time and effort while competing with the myriad of other urgent matters requiring leaders’ attention.

A culture assessment that identifies gaps so decisions can be made in an expeditious manner provides a very appealing alternative. The problem is that, in so doing, leaders make significant assumptions about causality that can lead to wrong decisions and actions that harm, or at best, add no value. For this reason alone, leaders are better served to avoid comparisons to industry benchmarks and focus on culture alignment to strategy with the objective of competitive differentiation.

Organizational Cultures aren’t ‘Good’ or ‘Bad’

Cultures aren’t ‘good or bad’, contrary to what is inferred by industry benchmarks. They serve a purpose and ‘stick’ because they make sense and have helped the organization succeed. Cultures reflect the shared values, beliefs and assumptions of members regarding the correct and best way to do things in order to achieve an organization’s goals and fulfill its purpose.

The problem is that nothing stays the same. Changes in the internal and external environment require new and different strategies and ways of working that challenge existing belief systems. To remain competitive and produce results, an organization and its culture may need to change. This doesn’t mean the current culture is “bad”; it just needs to be different in some, specific ways. As a matter of fact, best practice studies indicate that building on existing culture strengths while at the same time questioning assumptions is the most effective approach to achieving sustained change.

Culture is Complex and Nuanced

Culture is complex with tonalities and nuances that make every organization wonderfully unique. At a macro level of measurable culture attributes, an organization may appear to be similar to others and yet be very different in terms of the lived experience.

It can also have characteristics in common with others in its industry yet differ on several attributes and in subtle ways that are critical to its identity and success. This is one reason why benchmarks, while informative, can be dangerous.

As a statistical measurement tool, they do not capture the subtleties of culture, the dynamic interplay between different aspects of culture and other elements of the organization system, or identify underlying beliefs and assumptions that are the foundation of culture.  

If you have any questions about creating a winning culture, contact us at Culture-Strategy Fit. We will discuss this topic further in the next post.

Culture Benchmarks: A Dangerous Practice

Culture Benchmarks- A Dangerous Practice

While many culture survey providers use industry benchmarks, this is a dangerous practice that can cause leaders to make decisions based on incomplete or misleading information. The premise behind benchmarks is that there is such a thing as the best or right culture (good versus bad) which simply is not true. A more appropriate and useful way of looking at culture is whether an organization has the culture it needs to execute its strategy, achieve its goals and fulfill its purpose.

The Seductive Appeal of Industry Benchmarks

There are numerous famous examples of companies learning from their competitors, such as Toyota adapting and improving on General Motor’s manufacturing processes. This is benchmarking at work. According to C.E. Bogan & M.J. English, Benchmarking For Best Practices: Winning Through Innovative Adaptation the objective is to identify “best practices that produce superior performance when adapted and implemented in one’s organization”.

This is accomplished by using “a continuous process of measuring products, services and practices against the toughest competitors or those competitors recognized as industry leaders”. It has diverse applications ranging from measures of human competence and capability (high versus low performers) to work processes (i.e., sales and manufacturing), and even organizational culture.

These measures, when used in quantitative studies, take the form of statistics commonly referred to as benchmarks. With respect to culture, benchmarks are used to compare an organization’s scores on a set of cultural attributes or characteristics to those of others within the same industry.

The argument is that organizations achieving scores at or above the industry benchmark can expect to achieve a higher level of performance than those below the benchmark. In reality, there are only three good reasons to use industry benchmarks and these have, at best, an indirect link to improved performance.

#1 Constraints on Culture Change

An organization’s culture is influenced by the assumptions and norms of its industry. This is due to the fact that organizations tend to emulate others with whom they have substantial contact and who they perceive as highly effective. Industry norms are also a product of basic market requirements which are influenced by competitive dynamics, customer and societal expectations.

This operates as a form of cultural control and constraint in that organizational survival depends on the ability to function in a manner that is consistent with these expectations. For example, organizations in a highly regulated sector such as financial services and pharmaceuticals must meet rigorous reporting and compliance requirements. This affects their culture and is evident in a strong orientation towards normative (emphasis on policies, procedures etc.) practices.

Any organization that does not have a sufficient emphasis on this in their culture is likely to experience consequences that negatively affect their performance.

It is important to note that ‘sufficient emphasis’ is not necessarily the same thing as achieving or exceeding an industry benchmark. One of the challenges with industry specific cultural characteristics is they can be overdeveloped and, due to the systemic nature of culture, impede other important attributes. For example, an organization with a ‘normative’ culture typically invests significant resources documenting, monitoring and reporting on compliance activities. When effective, these practices help the organization meet its regulatory, fiduciary and/or legislated obligations.

At the same time, they cannot interfere with the ability to execute strategy and achieve performance goals. This requires that the organization finds the right balance of cultural characteristics, such as pragmatism versus normative practices, people versus task orientation and high versus low risk orientation, to allow it to deliver on its strategy.

#2 Competitive Differentiation

Benchmarks can help leaders discover how similar or different the culture of their organization is vis-à-vis others in the industry. This is not, however, about identifying gaps so actions can be taken that would serve to make the culture the same as others in its industry. Instead, a benchmark gap analysis can be helpful in providing a starting point for a deeper exploration of an organization’s culture and its potential as a source of competitive advantage.

Meaningful insights that inform action can be gained by asking questions such as, why are we different from others in our industry? How is our culture supporting or getting in the way of strategy execution? How can we leverage our culture to stand out in the marketplace? What values, beliefs and assumptions are core to our culture?

#3 Learn New Cultural Practices

While benchmark metrics are not useful for this purpose, a third reason to use benchmarking practices is to learn from other organizations. This can reveal insights into the ways other organizations, within and outside the industry, intentionally shape and change culture.

An example of this includes learning about an admired (or not) organization’s strengths and specifically the network of behaviors, practices, structures (i.e., systems, processes, reporting relationships etc.), physical artefacts and so on that work together to bring its values and beliefs to life.

It can also include culture change strategies and techniques, which borrow from traditional change management but are different in important ways. Regardless, the objective is to learn and grow culture design and change capability by acquiring new insights and knowledge.

There is much more to culture and benchmarking than this. In our next post, we will discuss some more of the problems with industry benchmarks. If you have any questions about what Culture-Strategy Fit can do for you, contact us today.

3 Strategies for Shaping Culture

3 Strategies for Shaping Culture

Building on culture strengths and making the culture changes required to execute strategy and achieve an organization’s goals are complex tasks. This demands the ownership, action, and accountability of business leaders in partnership with Human Resources.

Culture is ‘sticky’ so focusing on one approach such as communication or leadership workshops is rarely sufficient to sustain culture change.

We are excited to share a 4 part blog post series called “High Impact Strategies for Shaping Culture.” We’ll share a total of 11 high-impact strategies for proactively developing your culture that work. In this first part, we’ll share 3 strategies for significantly shaping your culture.

Culture Development Strategies from Ford:

When Alan Mulally joined Ford in 2006 it was close to bankruptcy. It had lost 25% of its market share from 1990. It had a wide portfolio of vehicles but few made sufficient margins, brands were not performing well and the need for capital infusions was continuous.

Development time lagged, labor costs were exceptional and operating margins were uncompetitive. At his retirement in 2014, Mulally was lauded not just for the financial constraints that he brought to the company but for the culture change which led Ford back to market leadership.

Alan Mulally was a master at culture change. First, he drafted and widely articulated his vision of One Ford where everyone in the enterprise and its partners were One Team, leveraging knowledge across groups, focusing on what customers needed and bringing financial excellence to all aspects of the business.

He immediately started to created conditions to propel new thinking and behaviors. For example, when he arrived meetings were described as mortal combat where leaders fought for self-preservation. Mulally quickly introduced new meeting norms to create a safe environment where data could be explored without blame.

He focused everyone on what the customer needed and valued and made sure behaviors supporting collaboration and innovation were encouraged and rewarded. He introduced new meeting, planning and innovation practices and strengthened trust and candor. He redesigned structure and systems.

Over time he let go talent that did not display One Team behaviors. The result is a vibrant innovation culture balanced on trusting relationships and financial discipline. Mulally did what prior leaders failed to do – he built on culture strengths and shaped new ones.

Here are the first 3 culture change strategies to this blog series.

1. CREATE A FUTURE FOCUS – Link strategy, brand and culture

Unite around the purpose for strengthening culture. Paint a picture of future culture needs based on purpose, strategy and business outcomes. Communicate the future state culture needed for longer term success broadly and consistently so that employees hear the same thing from all leaders. Be clear and concise.

2. ASSESS YOUR CULTURE – Know how it operates to support strategy

Identify culture strengths and development needs. Conduct a culture assessment so that leaders understand the organization’s and their unit’s culture strengths and the way they operate to support and impede future success. Help them understand and prioritize culture development needs related to strategies and goals. Look beyond engagement to areas of culture needed to support high performance and strategic imperatives. Look beyond the past. With disruptive external change and new kinds of competitors, the culture that was sufficient in the past may not be sufficient for tomorrow. Pay attention to how your organization is supporting innovation, collaboration, agility, productivity, and customer experience.

Provide data for action. While it’s important to look at enterprise culture strengths and development needs, sub-cultures also play a role in strategy and goal execution. Provide meaningful current culture data to top executives and their leadership teams so that they can see how aligned their group and/or functional results are with enterprise results and if an additional culture strength is important for their area of responsibility.

Frame the need for culture work. When the current culture brought past success, it’s hard to feel safe about embracing a ‘culture change’. Use positive, future focused language such as ‘leveraging current strengths’, ‘evolving to deliver new kinds of strategies’ and ‘building new kinds of culture muscle’.

3. SET CULTURE PRIORITIES – Focus on one or two only

Focus, focus, focus. Culture is sticky. Identify 1-2 priority areas and focus on these for one year to get a substantial change that sticks. Build cohesion across the executive team, first that these priorities are the areas that will be acted on, resourced and measured. For large organizations, each group or function with specific needs may need to identify another culture priority. For example, a new acquisition may need to focus on Process Discipline in addition to the Cross-Boundary Collaboration priority established for the enterprise.

Drive attention to what’s most important. Complete a quick audit all of the changes to the organizational system underway. Root out those that are misaligned or will consume resources that should be directed to supporting the culture change. For example, if the priority is strengthening cross-boundary collaboration, halt the new bonus scheme that does not reward this and examine every ‘all managers’ meeting for where and how collaboration can become part of the agenda.

Be clear. Describe a small set of key behaviors to illustrate what beliefs and behaviors will be valued. Have conversations about what to ‘stop, start, continue’. For example, Alan Mulally focused on rational, ‘no blame’ behaviors when reviewing data and results.

Don’t miss out on Part 2 of this series where we will discuss: Creating Your Culture Playbook, Amplifying Effect Of Leader Behaviors, Aligning The Organization ‘System’ and Making it Personal.