Forget Culture – Change Performance by Working on Climate and Habits

There are thousands of articles about corporate culture.

After reading and evaluating the most relevant research, one walks away stymied and realizing that there is no “one” accepted definition of culture. That makes it challenging to measure culture in a manner that numerous people find acceptable. The acceptability piece is important if a measure of culture is going to be used to drive changes in behavior.

Culture is sometimes “sacred”

The other concern with culture is that it tends to have the status of being “sacred” in some ways. In many times when interviewing organizational leaders, we find them say things like “our culture could never handle this,” or this is a “sacred cow” in our culture. Culture is a word that can be used as a barrier or a reason to say no to change.

Fortunately, there is another body of work that supplements the culture work and that may be more effective for measurement if the goal of the data strategy is to drive changes in performance.

There is a significant amount of research on climate, and compared to the science of culture, this body of work has advantages from a measurement perspective, if and when an organization wants data to quickly lead to action and results.

Climate discussions and habits that can be changed

Climate can be more easily broken down into habits, and changing habits is a discussion that people are more willing to have.

Culture is “big,” and due to the disagreement of definition and specificity, culture change initiatives often are extremely challenging and then unsuccessful. Habits are things people can see and alter, and changing habits, (part of climate) does not threaten identity as changes in culture can do. Less resistance means greater chance of fast success in changing behavior.

Having a high climate for something (such as safety) translates into people behaving in ways that show they value safety. The behavioral link associated with climate makes measurement more tangible and actions derived from metrics easier to enact. Employees can easily identify examples of safe vs. unsafe behaviors if asked.

Thus, diagnosing organization climate focuses one on the degree to which a company values something. In a number of studies, we have taken this concept on to also look at the degree to which firms value their people vis-à-vis other assets. This approach comes from early research on the determinants of firm performance, examining what predicts stock price and earnings growth in large samples of firms (see www.eepulse.com – research – IPOs). In multiple studies, research that I had conducted with initial public offerings (firms going public for the first time, IPOs) showed that people or employees are the only asset that brings a company long-term competitive advantage.

All other assets can be copied; thus, high value on people drives firm performance. The IPO research demonstrated that placing a high value on people have greater stock price growth, growth in earnings per share, and higher chances of survival (this research is published and available at www.eepulse.com).

From firm performance prediction to diagnostic tool

Using the research from the IPO studies, and the climate research, we developed a diagnostic tool to determine an organization’s climate for people vis-à-vis other assets.

The diagnostic tool measures climate by doing the following:

Asks leaders to rate the importance of a number of factors in terms of their effect on firm performance.
Those factors include technology, sales, the economic environment, culture, people, customer service, teamwork, the way you hire, the product, cost structure, and more. The original version of the instrument has 40 items, and we have a shorter version with 25 items.
The data are analyzed to determine what the management team thinks is driving the company’s performance.
We use the results to diagnose the importance of people vis-à-vis other assets or the ‘climate for people.’
We have data linking these survey results to stock price growth and growth in earnings per share. We can benchmark your results to the results in the overall research project.
We recommend that the entire employee population respond to the same climate instrument. This can be done after the management only data collection is completed. The comparison of the management data with employee results allows you to diagnose whether the management values are consistent with the values of different groups of employees (as the data can be broken down by department, location, occupation, etc.).

Roles at work matter

A second part of the analysis involves answering the question: what is it ABOUT people that drives firm performance?

Using role theory and identity theory, we offer a second diagnostic tool focused on five roles that exist in all organizations. Those roles are: job (doing the basic tasks associated with your job), team (being a team member), career (acquiring new skills and knowledge), entrepreneur (coming up with new ideas and supporting others who do so), and organization member (being a good citizen – helping across teams and helping out so the company is a better place).

The second part of the diagnostic tool asks managers to rate how important each of these roles is for an individual employee to be successful and for the company to be successful. For example, we often find managers reporting the job role as important for the individual to be successful but not so important for the company overall, while the team member is important for the company but not the individual.

This often means that the reward system (e.g. promotions, pay, etc.) does not support team efforts, even though the company will perform better with improved team behaviors. The analysis of these data identify gaps that exist in the company, and these gaps provide opportunity for action.

Employee energy drives the engine forward

The third part of our work involves the Energy Pulse.

Valuing people is not enough; organizations can value people, have very happy and satisfied employees, but still support a mediocre company. Valuing employees in a high-energy culture creates success. However, energy fluctuates, and optimal energy is different for various groups of employees.

As a result, we have found that a one-time measure of energy is insufficient. Organizations need to optimize energy, continue to measure it regularly, and work to keep employees in the right “zone.” When we run our Energy Pulse process with clients, we assess energy on a regular basis. The act of giving employees voice, responding to some of their comments, and feeding back communications makes them feel more valued and helps keep their energy levels optimized at work. The process also continues to build and sustain a climate for people.

Over 20 years of research on high-growth, high-change companies shows that when you value people in a high-energy work environment, the result is more non-job behaviors (e.g. entrepreneur, team, career, organization).

It is the non-job behaviors that lead to long-term company wins. This is because it is easy to copy simple job behaviors. Your competition can hire robots to do the “job.” However, they cannot replicate teamwork, synergy between people, and the new ideas that come from knowledge that only experienced people possess.

The frequent Pulse Dialogue process (which we recommend), provides you with three opportunities to improve firm performance.

Short-term tactical wins. On a frequent basis, you can easily see which groups within the company need help. Using the simple Energy Pulse metric, you can scan department reports and see who is outside of their productivity zone, which groups had significant changes from week to week, and where response rates have perhaps dropped off. In addition, the comments provide you with many opportunities for short-term wins. People write about things that are getting in their way. If you can remove an obstacle, you get a win. You are measuring energy, and by responding to people, you make them feel more valued.
Energize everyone. By responding to comments, by letting employees know that the data are being used, and by engaging workers more, energy levels will be optimized. When people feel valued, they perform at higher levels
Long-term business decisions are better. The senior management team needs good data to make good decisions. If decision makers have people data that are timely and valid, (the validity is higher with our process because we can track within-person data and provide reports focused on multiple sub-groups), they will make better decisions. Executives make decisions based on financial data, sales data, production data, and more. However, to date, they have not had timely and high quality people data. Our clients tell us they are using the Pulse reports in their management meetings, planning sessions, and to evaluate major decisions such as mergers.

The last part of the diagnostics is focused on how well people are engaging in the five roles. For this, we developed the 3-minute 360, which is a fast way to diagnose performance levels and gaps using the role-based research.

Break the bad habits; start new good habits

The habits word has considerable power in working with employees. People know how to break a pet’s bad habits; if you have children, you most likely have had to work to instill good habits.

Habits are not magic; an entire company’s population of people will not be against changing a habit like they will when you discuss altering culture. In today’s fast-paced business environment, biting off change in small chunks leads to success.

Pick a few habits, change them, celebrate, and keep moving forward one step at a time.

Editor’s Note: What are the Energy Files? Over 1 million data points on employee energy at work and open-ended comment data on what is making energy increase and decrease. The raw data, the research studies, and case studies make up the Energy Files. To learn more, keep reading From the Energy Files or go to www.leadershippulse.com or www.eepulse.com.