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The culture gap: putting culture at the heart of business performance

It is now widely accepted that culture is the foundation on which exceptional financial performance is built. Historically, boards didn’t spend much time on culture, but increasingly there is a recognition that culture is incredibly strategic and the real source of competitive advantage.

Another reason culture is increasingly on the agenda is that there is a huge downside when you get it wrong – many great organisations have stumbled and even collapsed because they have deep cultural issues.

Now is the time for HR leaders to take their rightful place at the table as a strategic partner for the business, driving value creation through culture.

In today’s world, strategy is relatively easy to replicate and capital is relatively easy to access – what gives you a real source of competitive advantage is your talent and your culture. 

The importance of culture:

Why culture is critical in the post-COVID world

Creating a sense of belonging at work

Creating a high-performance workplace by tapping into discretionary effort

So how do HR and people leaders drive that value creation through culture? It’s first important to understand what culture actually is.

The term is used excessively and everyone agrees that it is important, but what does culture actually look like, and how can we make culture change actionable? 

While many organisations talk about their culture in high-level, narrative terms (or cultural ‘archetypes’), we believe that to measure culture and to effect change, you must drill down to the level of observable, collective, practical human behaviours and how people interact.

Fundamentally, culture is about how work gets done, by people.

At its heart are human behaviours (and all organisations are human enterprises), and these behaviours are influenced and reinforced by the systems and processes, environment and structures within the organisation as well as leadership behaviours.

Organisational culture is created in the moment, every second of every day, by every human action and interaction. 

In too many organisations, activity is mistaken for progress, culture is seen as an initiative that falls squarely on the shoulders of HR, or culture never makes it ‘off the walls’ and into the (home) office.

In the same way that sustainability can fall prey to green-washing, so can culture washing exist, with well-meaning statements about culture (often found on mouse-mats, posters and mugs) not being reflected in how people actually behave, nor reflected in the organisation’s policies and processes and reward/recognition structures.

When an organisation says it has a certain culture and certain values, but if the actual employee experience – the behaviours witnessed and structures in place – do not reflect these espoused values, then trust quickly evaporates and talent retention is at risk. 

Culture is also not an end in itself – human behaviours and culture are the foundation of enabling an organisation to deliver on its strategy.

To ensure that your culture accelerates execution, rather than acting as a break, it must be actively managed as a central part of your strategic narrative.

To do this, you must understand your ‘culture gap’ – the differential between the culture you need/desire for optimum organisational performance and strategy execution, and the culture you actually have today.

You must define the culture you need and diagnose the culture you have – only then can you track progress towards closing the culture gap and accelerating performance.

Sustainable cultural change requires rigour, governance, resources, and most importantly, measurement – after all, to quote the cliché, ‘what gets measured gets done’.

There is a reason why so many well-intentioned and expensive culture change programmes fail to deliver a return on investment (or simply fail). Effective, quantitative and qualitative measurement of human behaviours is essential to determine whether the actions you are taking are closing the ‘culture gap’ – the delta between your target culture and the culture you have today. 

It’s important to note also that there is no universal ‘good’ culture that every organisation should seek to create.

An organisation’s ideal culture depends on its unique strategy, context and priorities so it’s even more important that you define your unique ‘culture gap’ – this is something that cannot be achieved without measurement.

You must define the culture you need and diagnose the culture you have using the same behavioural framework so you can identify the culture gap.

Claire Holmes is founder of Culture15