A bad culture causes damage but can we measure it?

Toxic environmentA recent report by the Economist Intelligence Unit and the CFA Institute described the Financial Services industry as having a “Crisis of Culture” . This echoes much of the narrative around corporate failures that has arisen in recent years, particularly since the GFC.  Many experts cite BP as having a toxic culture, which led to disaster in the Gulf. GSK CEO Andrew Witty has explained their cultural problem and how he is trying to change it within ‘Big Pharma’. And of course, in the UK today, we have a very high profile court case arising from cultural issues at News International.

By focusing on a ‘bad’ culture, people are often prompted to ask questions such as: how do we know if a culture is bad, or, if we are trying to fix one, where do we start and how do we know when a culture becomes ‘good’? I have been asked these kinds of questions several times in the last few weeks and they have always been put in the context of how I would measure (and change) organizational culture.

In this respect, and with a focus on greed as a source of cultural problems, much is being made of creating broader ‘values’ led businesses , i.e. values that convey that an organization has moved beyond profit and short term thinking into something more societal in its focus. This is very laudable and may indeed help an organization on a journey towards a healthier culture, if such values can become truly embedded and reflect the genuine identity of the organization. We may also be able to measure values in some way to provide us with an indicator of cultural health.

 But if we do measure a firm against its stated values in the usual way (often done through employee surveys or appraisal), we may only be looking at a small part of a much bigger whole, and if this measure cannot connect an organization with evidence of value creation (or destruction), then its use is limited and may become misleading. For example, the UK NHS has a clearly defined set of values and principles and Standard Chartered Bank has a strong values led ethos – but even if both organizations measure their values in some way, how does this relate to value? Both organizations have seen high profile corporate scandals in recent times. So do we know what exactly went wrong?

When looking at culture, firstly, we shouldn’t try to measure culture as such. It’s a highly problematic term to define let alone seek to measure. What we should be measuring is a set of very good indicators that give us insight into the culture of an organization. And more importantly, we should be measuring indicators of cultural characteristics that can actually be linked to value outcomes (e.g. quality, productivity, efficiency etc.).  Such indicators must be broad ranging and evidence around them is likely to come from a large variety of sources to provide useful and credible insights.

Within a Maturity context, IHRM has a meaningful set of indicators that connect to value and each one sheds significant light upon organizational culture. In fact, each of IHRM’s ten pillars carries critical information about an organization’s culture and its effect on value or risk within a business context.

The ten pillars are also interlinked and work as a whole system. It is vitally important for example, to understand whether an organizations value motive is authentic or to what extent it may be undermined by reward and performance systems that incentivize something different. Or whether purported human capital value is truly experienced by people within the organization such that it is genuine. When we examine Learning, Whole System thinking or Never Ending Improvement, both in isolation and in terms of how they interact, we get to understand key cultural dynamics that drive organizational success (or indeed, failure).

Maturity assessment and rating (www.omratings.com ) therefore helps organizations better understand the culture question posed – where is the organization from a culture perspective, how does this affect value, and what can be done to help improve it?

This entry was posted in 10 Pillars of Maturity, Organizational culture, Whole system thinking. Bookmark the permalink.

Comments are closed.