Secret Ingredients

The Pitfalls of Underestimating Company Culture and the Challenges of Measuring It to Drive Long-Term Success

Culture is at the center of how companies operate. It provides the identity, drive, and certain je ne sais quoi to organizational operations and is the foundation of so much meaning and success. Despite this importance, culture is often underestimated and sometimes ignored by companies for a variety of reasons, not least of which are challenges in measuring its impact. We will take a look at these issues in more detail, and also discuss ways to measure culture to keep this important aspect of organizational life at the forefront of not just the leaders’ minds, but also for everyone working in the organization.

The Foundation of Company Culture

Culture is often regarded as the ‘secret sauce’ of an organization. Some define it as the way employees act when the leader is not in the room. Ultimately, company culture is the shared values, beliefs, and attitudes that characterize an organization. Like your own values, such as believing in laughter being the best medicine or putting family before all else, these values are seldom seen but are very much there.

Company culture goes beyond team dynamics; when clearly communicated and embraced by employees, it can unite a whole organization, encourage discretionary effort, and propel everything that matters, from how a new employee is welcomed, general decision-making, and creating long-term strategies aligned with vision and purpose. Take Google, for example. Their flat organizational structures are famous internally and externally for driving innovation and landmark projects referred to as ‘moonshots’. Their emphasis on great food and coffee for their Googlers is referred to as “fueling moonshots”. Everything links together and drives success.

Why Is Culture So Often Underestimated?

With effective company culture bringing so much to the table, why is it commonly ignored or at least sidelined by organizations?

Culture as a secret sauce can be exactly that… a little too secret. Culture is often perceived as intangible or, worse still, invisible, felt by only core employees who have created or are most closely attuned to it. Connected to this is a feeling that culture is geared towards management, who might feel the culture is cohesive – sometimes misguidedly so – thereby creating a misalignment between leadership and the ground troops.

Uncertainty in any element of a company’s purpose can lead to that aspect being sidelined or removed from top-table discussion, stopping it from seeping through the organization. Culture is frequently a casualty of this, losing gravitas with leaders in favor of short-term goals, especially those that are directly connected to the bottom line.

All this being said, the main challenge, even for leaders fully invested in creating and sustaining an incredible company culture, is that it’s wrongly dismissed as an unquantifiable aspect of the organization. Whereas culture can very much be measured and therefore managed, it’s hard for leaders to see the immediate results of doing so, and so all too often, this vital aspect of company life is left by the wayside.

The Challenges in Measuring Company Culture

It’s worth delving into why culture is so challenging to measure. A great company culture can generate trust and employee satisfaction, among other things. It’s notoriously hard to quantify these attributes; after all, one employee’s idea of high levels of trust, as an example, might be different from another’s. As for employee satisfaction, every employee is driven by something different—it might be money, or it might be development. Even different employees in the same team might experience wildly different cultures. Where to begin?

Engagement surveys, often regarded as one of the more accurate and widely used barometers of company culture, can miss the true essence of culture due to fear of retribution or biases such as:

• Confirmation bias: Giving feedback that affirms pre-existing beliefs and opinions;

• Leniency bias: Giving positive feedback to garner favor or avoid conflict;

• Recency bias: The tendency to emphasize recent events over longer-term opinions.

Ultimately, whereas engagement surveys are useful, it’s best not to rely on them as the only way to gauge the impact of your company culture. View the challenge of measuring it as a worthy one, a task that you, as an incredible leader of people, can rise to. Your organization and employees depend on this.

Why Focus on Measuring Culture?

Measuring company culture is the first step in ensuring that the culture you have in place in your organization is healthy, inclusive, and driving your business forward. Not measuring culture, or taking a passive approach to its development, can have several disadvantages:

• Low engagement and high turnover: A passive culture can lead to employees quiet quitting in search of a company that can provide a closer cultural fit. Worse still, a toxic culture can cause significant disengagement and turnover issues.

• Impacts on productivity and financial performance: Poor culture will impact collaboration, trust, innovation, and overall business performance. The impacts on your organization’s bottom line will be directly affected through talent flight, losses in efficiency or quality, or knock-on effects such as lawsuits.

• Damaged reputation and employer brand: Customers and clients are arguably one of the easiest ways to measure a company’s culture; if they spot or perceive something a little off about your culture, they might not return. Similarly, your employer brand will be impacted by a poor culture. Candidates will simply not want to apply for roles with you, causing a fight for talent.

BrewDog is an example of a company that got it wrong. The Scottish brewery, famous for its edgy and rebellious brand image, saw this carry over into cultural behaviors behind the scenes, with current and former employees calling out leadership in 2021 on a toxic work environment and aggressive management practices.

How Culture Can Be Measured

How exactly can culture be measured? Yes, there are engagement surveys, but as we have discussed, it pays to look a little further than this. Keep in mind that the use of AI and sentiment analysis tools can bring your cultural analysis to life and take it to new heights.

• 360-degree feedback systems are a great way to bring cultural measurement into your appraisal process. These systems gather input from peers, managers, and subordinates, and sometimes even clients.

• Qualitative data: Setting up roundtables, focus groups, and stay interviews can help you gauge the impact of your culture and cross-check against other tools and resources.

• Walking around: As a leader, one of the best ways to see how your culture is shaping up is to walk the floor and experience it for yourself. Culture isn’t static, so take note of how the team is acting and what’s moving and changing at the heart of the action.

• Cultural audits are purpose-built tools designed to offer a detailed assessment of a company’s practices, values, and employee investment. Our very own Cultural Compass is one such example.

Thinking forward

Measuring culture is not easy, but after you’ve looked at this is when the real fun begins. Leaders must act on the data and feedback they have gathered through their hard work quantifying culture. You might encounter resistance to change, lack of management buy-in, challenges in aligning diverse teams, or sustaining cultural change in the long run, but the rewards are great if you succeed.

To improve company culture over time, get your leadership involved and drive the culture from the top. Bring employees into the mix by communicating the culture and allowing them to have a say in what it is and how it’s championed. Finally, bring it all together by celebrating successes, documenting the journey, and using training and inclusion programs to demonstrate its importance. This way, you will get your secret sauce tasting just right.