How do you measure culture?

09 July 2014

 

A couple of weeks ago on this blog my colleague Duncan Wardley asked if “in a world where the regulator did not exist, would you still be trying to change your culture?” It’s a really interesting debate – businesses should want to do more than just keep the regulator at bay. We’ve all seen the spotlight turn on culture – regulators pointing out the cultural issues in financial services that can drive poor behaviour and lead to things going wrong.

But the leading businesses I’m working with see beyond the regulatory demands. They ask how their culture impacts performance - they want to cultivate an environment that produces the best possible results. They know that culture is the one unique thing that their competitors can’t copy. And they want to actively measure culture on an ongoing basis.

So can you measure culture?

You have to start by defining culture before you can measure it. I describe culture as ‘the assumptions or beliefs common in an organisation that predict how its people will behave and what it will achieve’.

You can’t measure assumptions or beliefs. But you can measure the behaviours and outcomes they produce. I approach this by looking at three different areas:

  • intended behaviours – the behaviours that the organisation expects in order for its vision and values to be achieved. If you want a strong culture you need to set out a common purpose which is inspiring, relevant to all stakeholders, linked to your strategy and values, and embraced by leaders and their teams. 
  • espoused behaviours - the processes, policies and controls that the organisation creates to influence people’s behaviours. For example, how pay processes reward certain behaviours, or how leadership communications emphasise expected behaviour. Our ‘thinking’ brain will find ways to game the system if HR, business processes, systems and measures don’t reinforce basic cultural traits.
  • actual behaviours – what are people doing? What decisions are they making? How are they acting? What are they prioritising? The behaviour of leaders is especially important to the messages people receive about what is valued, but it is also important to understand the broader working practices and routines in the organisation. By identifying scenarios which highlight trade-offs with disproportionate impact on outcomes and culture will ensure the assessment has focus. 

Aligning the three behaviours is the key to success.  Even clearly articulated values do not mean the right behaviour on the ground.   If there is a mismatch between the intended, espoused and actual behaviours, the consequences for your organisation can be serious.

This framework illustrates one approach that I use for measuring culture:

A recommended framework for measuring culture

 PwC_framework_culture

It might seem impossible – trying to measure something as intangible as culture. But there are proven approaches that will reassure the regulator, and more importantly, show your cultural strengths, areas for improvement and the actions you need to take.  Culture is the glue that binds the business together so it’s essential for success. And as Einstein said, only those who attempt the absurd can achieve the impossible.