Does Culture Matter?

Organization Culture is having a bad day.

Organization Culture seems to be having a bad day.

Leadership statements that declare love for employees are falling flat. Claims that companies are ‘families’ are being met with cringe. ‘Most admired’ companies are laying off talent.

Are the glory days of ‘culture-building’ over?

Is the new infatuation with ‘employee experience’ at odds with the new practice of ‘laying off’ by emails and zoom calls?

With widespread preference for hybrid work, are the ‘venues’ for culture-building deserted?

Is ‘culture’ a relevant factor for organization performance anymore?

Does ‘culture’ matter?

It would be hard to ignore that recent lay-offs from the most admired employer brands (and all other lay-offs around the world) have shifted employees’ perspectives on organization culture. This is not new. Years ago, after the peak days of re-engineering, a similar zeitgeist had developed. While the reality check on organization culture is recent, there has been no fundamental change in the relationship between an employee and a company.

And this is where the current problem finds its roots.

For far too long, senior leaders of companies papered over the fundamental nature of an employer-employee relationship. The fundamental point – that a company is a profit-seeking entity - was ignored.

Lofty alternative narratives, built on the idea of some higher-level relationship with the employees were created, invested in, and perpetuated. Some of these were driven by a genuine intent to create a sense of purpose, but many were driven by hubris of leaders, aided by HR teams and consultants with no real consideration for the economics of a business.

The social side of a workplace overtook the commercial reality of work.

A serious re-calibration on the notion of organization culture is required.

Let’s start with the admission that building an organization culture has economic benefits for a company. Culture is as much a factor for creating economic surplus as pricing, cost-reduction, or employee productivity. Once we understand and acknowledge this fact, our culture-building efforts become as straightforward as creating a marketing plan for a brand. More importantly, these efforts stay authentic and credible: They do not profess the hypocrisy of making employees believe they are unconditionally loved, forever: Or expect employees to profess unconditional loyalty to the company.

How do you plan for a culture that is commercially focused and authentic at the same time?

Culture-building results in two main economic benefits:

• Discretionary effort: A company’s economic surplus is created when the value generated by an employee is higher than the cost of the employee. The more an employee ‘volunteers’ to add value, higher is the profit for the company. Recent trends on ‘Quiet Quitting’ are rooted in employees dialing down discretionary effort to match the price they are paid to the value they create.

• Scaling up: Culture is a super-effective instrument for scale. Employees working in a trusting culture take on more initiative. Bigger opportunities are realized at lower levels of hierarchy. This enables a company to achieve more with less resources.

Recognizing these two points, to build a culture that is commercially effective for a company and authentic for employees, try the PATH™ formula.

Purpose:

Most companies play a role in making the world a better place. Many companies even make the world a more joyful place. Some even have a great brand. All these companies should recognize that purpose and brand are commercial assets that can be amplified to employees. Some companies struggle to nail their purpose and others find it a wasteful exercise to define or amplify one.

Accretive Value:

Employees welcome the opportunity to know the economic value they are adding. Some even would like to compete and be the best. All love to be rewarded for the economic value they create. Be clear and open about this communication. More importantly, propagate the link between value creation for an employee and the value created by the company.

Trust:

Trust is the most valuable platform for culture. Can I trust my boss? Does my boss trust me? Do company processes reflect trust or control? Answers to these crucial questions are enough to build a culture that can scale results for a company and be authentic for an employee.

Health:

Recent emphasis on mental health could not have come sooner. Efforts on health, beyond being intrinsically human and self-evident, communicate the recognition that we are all vulnerable and that we all need to live lives beyond our economic roles and responsibilities.

An authentic and commercially effective culture does not need to get any more complicated than a clear focus on these four elements.

Everything else is advertisement, and is subject to the ‘Skip Ads’ button by employees.

The PATH formula can be expressed as:

P x A x T x H = 1 x 1 x 1 x 1

Your PATH Score™ needs to equal 1.

If any one of the four elements is 0.5 (half), your entire culture is half as effective. If all or some elements are .05 or .25 or any other fraction, you have a lot of work to do.

Follow the PATH to make Organization Culture a strategic asset and not a mesmerizing cult of over-promise and under-delivery.

Do you need to go deeper and determine your PATH Score™?

Do you need any help with the PATH forward™?

Connect with me or watch this space.