There was a key finding in a recent global culture survey conducted by Korn Ferry. The majority of the 500 business leaders surveyed (72%) said that culture was extremely important to organisational performance, yet just 32% said their organisational culture aligns to a great extent with their business strategy. This means that two-thirds of executives believe in culture as a driver of performance, yet just a third believe it should closely align to strategy. The gap between these contradictory findings should concern chief executives, board directors, and executive teams. It is where risk and ambiguity thrive and where small cracks in culture widen, until something, somewhere, falls through.
Last year, Korn Ferry spoke to CEOs and board directors about the key factors that strengthen culture. The report explored the relationship between strategy and culture and how fault lines can form in organisations that allow toxic sub cultures to flourish.
Almost all interviewees nominated leadership from the CEO in their top three factors that strengthen culture and most nominated engagement from the board as critical. It is clear that the CEO is regarded as the most powerful driver of culture and that the appointment of the CEO should include a deep interrogation of cultural values of potential CEOs by the board.
The process of cultural transformation starts with recognising the type of culture needed to achieve the business strategy. This involves first identifying the current and desired culture, followed by further work to bridge the gap between the two. The process starts with three deceptively simple questions:
- What culture do we need to support our strategy?
- What culture do we have today?
- How do we move toward the desired culture?
The questions appear easy, but surprisingly the topic is not always explored at any real depth and is often transplanted to conversations on values. This cultural work is important, because if people don’t know ‘the way things are done around here’ or how things should be done, how can they be expected to live the organisation’s values?
Identifying systemic behaviour and transforming culture is deep work that is led by the CEO, strengthened by the executive team, with oversight responsibility and accountability held by the board.
Business leaders need to move from thinking about their organisation’s success solely in terms of their financial performance to thinking culturally about organisations and all the elements that contribute to performance.
Culture must lose its ‘soft’ status and be treated as a ‘hard’ issue, because its strength and sustainability is reflected in every performance measure. The journey toward cultural transformation involves culture and strategy — interdependent ways of working that are always stronger together.