Culture- Why you can’t afford not to invest!!

It would be fair to say that Culture is one of those terms that everyone uses but if you scratch below the surface as to the level of understanding, it is generally limited to an overused phrase such as ‘the way we do things around here’, ‘what we do when nobody is watching’ or ‘in order for me to fit in I am expected to…’.

Ask the supplementary question of what does that actually mean and you will either get a blank look or a repetition of the former statement.

As a starting point, let’s firstly understand what organisational Culture actually is?

The above offerings are actually correct, but understanding Culture requires you to dig deeper to fully understand  the sum of all the moving parts and what contributes to it.

Organisational Culture is about the organisational personality. It is the signs, symbols, structures, processes, values and behaviours that defines, determines and dictates how people within an organisation interact with each other as well as with customers and stakeholders.

Pretty significant? Yes

One of the most important things to get right in any organisation? Absolutely

Particularly when you consider how vital Culture is to all aspects of a business and how it can impact significantly on the financial performance of the organisation.

Organisations with ‘Great Cultures’ will generally have enthusiastic and engaged staff who rarely think about leaving because it is a great place to work. Customers will remain loyal and are avid advocates of your business and what it does.

Organisations with ‘Poor Cultures’ don’t always struggle but fail to realise their full potential. They may be performing poorly, ok, well or fantastically well, but as a result of their poor Culture there will be unintended consequences be it for the organisations performance, staff experience or customer experience.

And therein lies part of the problem. Organisations with poor Cultures can financially  be performing relatively well. But how I hear you ask is that possible?  Doesn’t poor Culture lead to poor performance?  Generally yes, however as in life there are exceptions to every rule.

An organisation may be in the fantastic position of operating in a Monopoly or Oligopoly, provide an essential service or have a business that is so successful that it is successful in spite of its Culture. But worth noting those organisations are fairly rare.

In the main if the Culture of an organisation is poor the costs in the people space will be significant.  If the staff experience is poor, they will generally pay it forwards to customers and without customers you don’t have a business.

So, given how important Organisational Culture is, why is there a lack of investment?

Lack of understanding- as mentioned previously there is generally a lack of understanding of what organisational Culture actually is, let alone whether an organisation has a good one or a bad one. Additionally if  organisations did have a level of interest, how or what you would need to do to find out either way?  Which essentially leads to if I don’t understand it,or know what it is or how it could be beneficial or detrimental to my business, why would I spend money on it?

And accompanying the lack of understanding of what Culture is or does is the lack of understanding of the financial benefit of a good Culture versus the financial downside of a poor one.

Individual decision makers don’t understand or don’t know, with ignorance being bliss so the status quo remains.

Affordability- for some organisations it will relate to an affordability issue, in that they simply cannot afford the investment. Notice I am deliberately referring to Culture as an investment rather than a cost. For if you are managing your Culture, it is an investment in the future success of the organisation and should be viewed as such.

And yes Culture change programs can be expensive and take a significant amount of time to realise results, not to mention the significant amount of effort and resources, taken away from BAU. But they don’t have to be that way and there are cost effective solutions out there, you just need to know what you are looking for and where.

Additionally most organisations will embark on a Culture program, for a specific period of time due to cost pressures.This may be a 3 year program or an intervention that may provide some early changes and benefits. But worth noting that Culture is a thing that lives, breathes and changes daily and therefore if someone isn’t attending to it or managing it, it can morph very quickly into something different.

And similar to behavioural change,Culture change can  be like an elastic band, in that whilst we focus on it and stretch it we start to see change. Lose that focus or attention and things just snap back to the way they were..

Competing priorities- many organisations will tell you that they have other competing priorities, a full schedule of projects to deliver or other initiatives considered more important.

We would contend however that there is very little organisationally that is more important than Culture and in fact the Culture of the organisation in most cases will determine the success or otherwise of the competing priorities an organisation has

If you have a poor Culture, you will struggle to attract and retain resources. If you don’t have resources you can’t deliver, and if you can’t deliver you lose the lifeblood of your business.

If you believe you can’t focus on Culture because of competing priorities we would advise to review who and how priorities are being set and by whom.

Our Culture is good already- if you have a lack of understanding of what Culture is, including the individual parts that contribute to it, how do you know HOW you got to have a GOOD Culture? And if you haven’t been managing your Culture, fairly difficult to take any credit for it if it just happened and hasn’t been due to something being consciously done.

And whilst today you have a good Culture, worth remembering your Culture is a living thing. So you are only ever one bad hire, a bad decision, a complaint or a poor customer experience away from this potentially being challenged.

Organisations with good Cultures will generally understand Culture, know what it is, measure it, know the myriad of moving parts that contribute and continue to invest in it for they know both the benefits it provides, but also the potential for problems if they take their eye off the ball.

Perceived lack of value- in many organisations, if there is a lack of understanding of what Culture is and they can’t see it or touch it, the question is why should I spend money on it? And the challenge is unless you can provide me  with specifics on what the ROI is or where it appears in the P&L, there are a number of competing priorities that I will invest in  that CAN demonstrate value.

And if an initiative can demonstrate value and a return on my ROI, it is likely I will fund that in favour of something that I can’t see or touch that doesn’t.

But what is the cost?

In almost all cases an organisation with a poor Culture will be failing to realise their full potential. The challenge in many cases is Management and Executive are unaware of where that potential is being lost.

We often talk about the hidden costs of a poor Culture being staff turnover, lack of engagement, loss of productivity, wastage, ineffective communications and decision making or loss of customers amongst other things. Additionally we would challenge any CFO or any part of your Accounting and Finance team to find a line item where these costs are specified. Why? Because there isn’t a specific line item. These hidden costs are sprinkled in various places throughout the P&L.

You just need to know what you are looking for and where to look!!

In summary, organisations may feel that they can’t afford to invest in their Culture for a myriad of reasons. All of which seem to make imminent sense to them. But as we often say people don’t know what they don’t know and they can’t be expected to be experts in every field.

As experts in the field we would contend that organisations cannot afford not to invest in their organisations’ Culture, for the reasons outlined above. For just because you can’t see or touch it, does not mean that it isn’t real or exists or costing you in a myriad of ways