Brett Knowles, pm2 Consulting
Brett is a long-time thought leader in the Strategy Execution space for high-tech organizations, beginning in the late 80’s while teaching at Harvard and being involved in the initial Balanced Scorecard research and books. His client work has been published in Harvard Business Review, Forbes, Fortune and countless other business publications.
Pub: June 10 2021
Upd: November 17 2021
Culture is one of the key drivers of organization success - yet it is considered a nebulous mix of ideas, actions, and events. On the surface, culture appears to be unmeasurable and therefore unmanageable, but in fact, there are a few well-defined inputs/influencers and a number of ways to measure it and its inputs.
THE ORGANIZATION'S CULTURE SYSTEM
Values and Culture
I think of Core Values as the defined beliefs of an organization (Note 1) and ultimately form part of the foundation of the business. Values guide decision-making and a sense of what’s important and what’s right.
Company Culture is the manifestation of values. Company Culture is one of the things which is built on the foundation-layer of values. Company Culture is formed by how people think and act on a day-to-day basis. Company Culture is the collection of business practices, processes, and interactions that make up the work environment.
A company’s culture is formed by its people and therefore subject to variation and gradual change. For instance, different departments may have their own unique cultures, shaped by factors like number of employees, location, job discipline and working practices. Great culture is something that develops organically on the back of strong, clearly defined company values (Note 2).
Drivers of Company Culture
In the ideal world, your company's culture is built on the foundation of your values. The values do not change over time, so this is a one-way flow.
The culture is also formed by your co-workers - and in particular, the decisions made by management and day-to-day activities of the other employees. If one of your co-workers does something that is inconsistent with the company values, let's say acting unethically, and gets away with it, the culture shifts in a way that endorses unethical behaviors. Culture should inform how your co-workers behave and how they behave informs the culture, so this is a two-way flow.
Likewise, the company's choice of customers impacts the culture - if the company does business with a customer that does not reflect the company's culture, again, let's say acting unethically, and the company continues to do more and more business with them, your company's culture shifts in a way that endorses unethical behaviors. Customers impact your culture, and your culture impacts your customers based on how you deal with them. This is also a two-way flow.
Finally, the company's choice of suppliers (and sub-contractors) impacts the culture - if the company does business with a supplier that does not reflect the company's culture, again, let's say acting unethically, and the company continues to do more and more business with that supplier, the culture shifts in a way that endorses unethical behaviors. Suppliers impact your culture, and your culture impacts your suppliers based on how you deal with them. This is also a two-way flow.
Now that we have defined the "culture system" in your organization, let’s move on to how to measure this system.
MAKING THE INVISIBLE, VISIBLE
Culture is measurable – portions of it through “scoreable” measures – looking at the measurable outcomes of culture-related decisions, and “observable” actions – polling employees around what culture-related behaviors they have observed. The scope of measuring includes the organization, its suppliers (including sub-contractors) and customers.
The easiest way to explain the concepts behind measuring company culture is through an example. I’ll use the common value of “Integrity”
Let’s define Integrity as:
“We work with everyone – customers, prospects, suppliers, co-workers, stakeholders - openly, honestly and sincerely. When we say we will do something, we will do it. If we cannot do what they’d like, we tell them so. If we try to do something but fail, we let them know early and do our best to make up for our short-coming.”
From the definition, we can list measurable outcomes from our day-to-day activities. We could measure things like:
- The number of ‘promised ship dates’ that were changed from the original agreement.
- Number of on-time deliveries, on-time payments, etc.
- Number of days between order acceptance and date change.
These sorts of measures form the ‘measurable’ portion of your “Culture” scorecard/report. Every month you will be able to track the activities that are indicative of that value / cultural attribute, see the trend and manage accordingly.
As people go about their daily activities, you will see them doing things that indicate whether they are using that value as they do their work. Your company can list things that might be seen, for example, with respect to our example value of “integrity”:
- Commitments are clearly defined.
- We ensure our promises are well-understood by the person we are making that promise to.
- We do not lie, stretch the truth, or withhold information from a peer, customer, or stakeholder
- In the unlikely event that we are unable to keep a commitment, we inform all people who will be impacted immediately.
In fact, we can even provide a scoring scale:
I see people:
- willingly making promises and commitments,
- proactively keeping people informed of our progress,
- letting others know if, despite our best efforts, a deadline will be missed,
- rarely missing promised deliveries.
I see people:
- making promises and commitments in the present,
- keenly aware that we are guaranteeing my performance on that promise,
- We consistently deliver what we promise.
I see people:
- being hesitant to make promises or commitments,
- Not keeping people informed about our progress,
- Our ‘word’ isn’t highly trusted among our peers,
- Delivery of expected results are inconsistent
Note that each valued behavior requires a separate set of measures. Ensure that each measure truly gauges only one behavior (not multiple behaviors).
Now comes the easy part, using a tool like TinyPulse.com or OfficeVibe, on a monthly basis you can randomly poll a small portion of your co-workers to get a reading on what they are observing.
In this way, every month, you will get a scorecard indicating how your organization is doing with respect to each value, with both measurable and observable metrics.
The Broader “Culture” System
As you know, your organization’s culture is strongly influenced by your customers and suppliers. You should be able to use the same approach to see if your customers and suppliers exhibit the same values as your organization. Do they make and stick to commitments? Etc. If your organization is constantly doing business with organizations that exhibit behaviors that are in conflict with your values, you will see a gradual degradation in your culture, as your employees see that you are “just kidding” around that value.
So – it is easy to measure these cultural attributes… and what gets measured gets done… so we can be proactive in ensuring our culture evolves as we would like.
Note 1 - A lot has been written about values and it is not my intention to repeat it here. In my mind, the values of an organization emerge during its early years. At some point in time, they need to be captured and documented in order for them to be incorporated into the organization for the rest of time. They become criteria for selecting future employees, selecting customers, etc. etc.
Note 2 - from Alex Bard, CEO of Campaign Monitor