Investing in Corporate Culture — Where is the ROI?
There is no lack of articles by advisors and consultants as to the importance of culture. However, as shown in the above image, there is continued resistance to investing in it. Perhaps it is because limited empirical evidence exists, which makes it hard to measure. That doesn't mean it isn't important, that it doesn't matter, or that the ROI isn't there.
The wide gap between the value of culture and investment therein was reported in the paper Corporate Culture: Evidence from the Field, by the National Bureau of Economic Research.
The researchers concluded:
After interviewing CEOs and CFOs, we heard loudly and repeatedly how important culture is, notably from CFOs who are typically the numbers people and those one might expect to be suspicious of hard-to-quantify aspects of the business environment.
I am curious, as are the researchers, as to "why 92% of executives believe improving culture would increase firm value yet they also indicate that they significantly underinvest in culture."
I have my ideas on the subject and appreciate any thoughts you wish to share.
The Connection Gap
Culture has been described as values walking. If the norms and values don't align, this impacts employee morale and productivity.
I have consulted at several companies where leadership was disconnected from the culture. I would often hear employees offer up the suggestion that leadership didn’t care. In some cases that may be true. However, I like to think there are other reasons:
- Discomfort in knowing how to address the issues
- Being perceived as weak
- Disconnected from the emotions of the employees — belief that nothing is wrong
The emotional culture is how the workforce feels and behaves within the workplace. It is the collective feelings that greatly impact their attitudes, productivity, and connection to the organization. The emotional culture exists whether or not it is acknowledged.
Therein lies another gap — how employees feel and how they want to feel.
The Emotion Gap
“You don’t talk about emotions at work” was explained to me by a person who worked in HR at a NY-based company.
Emotions, or displaying emotions, in the workplace are historically attributed as a sign of weakness or taboo. In a recent Clubhouse room on leadership, one moderator commented that women executives have to be less emotional to gain acceptance in leadership positions. Emotions don’t earn respect.
It was big news when Kathyrn Graham became the CEO at The Washington Post in 1972. This is because for centuries men have held leadership positions. With that came the stigmas around emotions in the workplace. I am not man-bashing. I guess you could say I am parent-bashing because learning how to ignore emotions used to be the accepted way to raise sons, and some daughters, for a very long time.
"Be tough." "Suck it up." "Boys don't cry."
Not all workplace emotions get dissed. Typically, it is the “touchy-feely” ones that are avoided. It isn’t unusual to see people express anger, frustration, excitement, and stress at work with a level of acceptance.
Actually, you see more anger, frustration, and stress because the other emotions are suppressed.
Emotions are a fact of life — we each have all of them (even the squishy ones). What we do with them is the issue. An effective corporate culture can't ignore emotions.
Focus From the Bottom Up — Not Top Down
The pulse of the culture lies strongly in the hands of your managers. Leaders are managers, but not all managers are leaders. Yes, there has to be buy-in from the top as to the shape of the culture, but the hard work of cultivating it is in the hands of every manager.
The root of the word for culture comes from the Latin colere “to tend, guard; to till, cultivate.” Your managers directly affect the productivity of your company. Giving them the tools to effectively manage should include emotion regulation skills. This has a positive impact on those they manage and includes personal benefits.
According to SHRM research, 76% of employees polled believe that managers create the workplace culture, and 58% left because of their managers. If you look at the findings, you will read how strongly it relates to how people feel.
Actually, I advocate “Emotion regulation skills for all!”
Tending the Emotional Culture
Emotions drive the decisions and behaviors of every person in the workplace. Feelings determine the final decision, even in the most logical of thought processes.
Elevating workplace emotions is the perfect foundation for effective workplace culture. It creates connections and cohesion within the company.
As a Chief Emotions Officer, my sole focus within an organization is the emotional culture and destigmatization of workplace emotions by understanding the value that comes when you learn how to adjust the emotional dial.
How? I can demonstrate it with a cookie. Yes, a cookie or whatever recipe you choose.
Culture is linked to financial value.
Culture is linked to employee costs.
Culture is linked to ethics and innovation.
Culture is linked to success.
Culture is linked to people and people are driven by emotions.
Investment in culture creates value.
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