Why “Culture Management”?
Peter Drucker famously said “culture eats strategy for breakfast,” meaning that the values and beliefs of the work and file, and the myriad individual decisions made every day in business, count for more than the high-level direction setting in the C suite.
There’s strong evidence that companies with “strong” organizational culture do better. An analysis by Alex Edmans found that companies on Fortune’s annual “100 best Companies to Work for in America” list returned 14% per year on their stock compared to 6% for the average company. There’s a great value in paying attention to culture, and so companies have strong incentives to improve it. The Workplace Fund, managed by Parnassus Investments, is a mutual fund investing only in companies that have outstanding workplaces. It’s had a 9.63% return since its inception in April 2005, compared with the S&P 5.58% over the same period.
Worker engagement is a reasonable proxy for the health of an organization’s culture.
Worker engagement is a reasonable proxy for the health of an organization’s culture. There is mounting evidence of worker disengagement, like the widely-reported Gallup research showing that only 13% of employees are engaged at work worldwide, with 63 not engaged. And 24% of workers are actively disengaged, meaning that they unhappy and unproductive, and likely to spread negative feelings about their companies. The real costs are high, and companies have incentives to find out causes of disengagement and to work to counter them, as soon as possible.
While social tools cannot shape a sound and strong culture by themselves, they can play a central role in the prosaic side of assessing conditions, surfacing issues that might negatively influence worker engagement, tracking the impact of cultural initiatives, and distributing metrics.
Various vendors are developing tools to support culture management — by surveying the workforce, or allowing employees to ask questions, or other techniques — and to enable insight and strategic correction. These tools include CultureIQ, TINYpulse, 15five, RoundPegg, Speakup, and Waggl. In this research note I overview their general functionality, and make some projections about where “culture management” might be headed.
Asking the right questions, frequently
One principle that seems to be at the heart of culture management is the need to poll staff on a regular basis — weekly or twice monthly, for example — and to aggregate the results into a snapshot of the current state of the company.
In a recent study, RoundPegg found that 82% of companies think their workforce doesn’t feel their engagement efforts are effective. The reason is that companies’ surveys are too infrequent: Only 20% conduct surveys more than once a year, and there is a strong decline in effectiveness when there is a delay in taking action on findings in the surveys.
Switching to a very quick cycle counters these problems. 15five, for example, is based on a technique that Yves Chouinard used to manage Patagonia, the sporting goods company. Chouinard asked his staff to take 15 minutes each week to write positive and negative feedback on their work, in a format that could be read in 5 minutes. Which is what 15five takes its name from.
The first and most obvious benefit of culture management solutions is making it feasible to transition to a new cadence for cultural feedback loops, and leaving behind the antediluvian annual survey.
Even as little as one question per week — as espoused by Officevibe — and with as little as five minutes of effort per person per month can have a measurable impact.
Some vendors, like Speakup, use a forum approach, where users can post problems and ideas, and others can vote on them or offer support and solutions. The intent being to surface issues and resolve them in an open forum. However, so long as the company administrator hasn’t disabled it, users can post problems, solutions, ideas and comments anonymously.
Note that these tools also take control of culture management out of the hands of the HR staff, who have historically managed employee surveys and the like. While HR may be involved in the selection of these tools, once they are up and running they are more likely to be viewed like email or other social software. In a real sense, the tools embody the management objective of managing culture as a part of everyday work, and not as the province of HR.
Anonymity versus Publicy
There is a major divergence in culture management approaches. Some tools — such as TINYpulse, BetterCompany, and CultureIQ — rely on anonymity so that workers can freely express what might be negative feedback about the workplace or management. Others — like 15five and BetterWorks — are based on a more public approach, where the feedback is not anonymous, and is more in the form of a status update.
Unlike the direct report approach that Chouinard employed, 15five now supports more of a 360º approach, so that others in a working group can see the updates of coworkers, and managers can ‘pass up’ information and recommendations to others in the organization to act on. This is a public approach, where people’s identities are always used.
TINYpulse is anonymous at its core, so the results are aggregated into data like this:
Managers and the workforce, if that is enabled, can see these stats and compare the results with historic results and benchmarks provided by TINYpulse. This is similar to the approach taken by CultureIQ, although that tool goes a step further and aggregates various numbers into a single metric: the CultureIQ:
RoundPegg’s “Company Alignment” is another synthesized metric of a company’s well-being:
VoloMetrix takes a different route to help managers and the workforce gain more insight into what’s going on in the business. Rather than relying on surveys or social updates, VeloMetrix reads the headers and to: and cc: lines of company email, and from that develops a complex body of data about the social interactions and relationships across the business (see Culture-management tool VoloMetrix raises $12M in Series B). Here’s a visualization of one company’s social network for a month’s communications:
Obviously, a manager interested in the relationship between the company’s sales force and channel partners would be interested in the degree of communication between those two groups, and how it is changing over time.
Taking Action: Hiring and Retention, Initiatives, Coaching
The notion of cultural “fit” is intuitive, but is also a potential problem. On one hand, it’s hard to argue that people with certain sorts of personalities and skills are more likely to succeed in a specific job. For example, candidates that have reliable transportation and are creative — but not overly inquisitive — tend to be better call center agents and less likely to quit. So, it makes business sense to test for those characteristics, and to weed out those that don’t match (see All watched over by machines of loving grace). However, there are potential pitfalls. We know from many studies that the best decision making comes from diverse groups, so companies can perform less well when everyone has the same mindset. Also, there are potential legal issues associated with excluding candidates for jobs based on psychological characteristics. The jury is out on that one, for now, and the results of recruitment platforms like Cornerstone and Gild are impressive.
Good.co provides a psychometric approach to helping to determine the ‘fit’ between a company and a possible employee (see Good.co says I am a Dreamer, and GigaOM is a Mountaineering Expedition). The individual answers a series of questions that determines what they’re like. I turned out to be a Dreamer, and a good fit for Gigaom Research, which — based on the answers I filled in for the company profile — is a Mountaineering Expedition. The service include profiles of leading companies, and a ‘FitScore’ with potential or actual coworkers and bosses. Obviously, services like this can be extremely helpful for evaluating fit on all sides.
The degree of time that workers spend with their managers is a good predictor of engagement: the less time spent with a manager, the more likely a worker is to leave. VoloMetrix has built that metric into its performance dashboard, along with other stats that — if they decline — could indicate a worker is becoming uninvolved in the company: a warning sign of possible plans to depart.
RoundPegg provides a cultural fit for every individual, and goes further: coaching for managers on how to best give feedback to different reports, or how to resolve disagreements between people with different personalities.
Some tools are focused on managing and measuring the impact of corporate cultural initiatives. Pinipa, for example, is a change management system, oriented toward carrying forward change initiatives, and operates like a social collaboration system, with projects that can be publicly tracked. Betterworks is a goal-oriented tool, where corporate goals are articulated and tracked, with constituent subgoals can be assigned to individuals. These tools and others like them start to overlap with more conventional social collaboration or task management tools.
CultureIQ goes a step beyond other survey-oriented feedback solutions, recommending cultural initiatives to counter different sorts of cultural shortcomings. For example, if the company’s core values aren’t well understood, a Core Values program can be kicked off and managed with an eye to raising that sort of awareness. Or if employees are concerned about lack of advancement opportunities a Mentoring program might help.
We can expect to see a great degree of innovation in these elements of culture management.
Basically, we’re in a shift from “talent management” — HR-managed workforce-focused tool suites — to culture management — operations-managed culture-focused point solutions.
In 2015, culture management will become more mainstream as the benefits become more well understood, and the tools mature.
Basically, we’re in a shift from “talent management” — HR-managed workforce-focused tool suites — to culture management — operations-managed culture-focused point solutions. This will accelerate, and many traditional talent management/ERP companies — like Workday, SAP, and Oracle — will be buying up the fastest growing culture management vendors.
There is a possible overlap and conflict with the services offered by recruitment companies like Cornerstone (formerly Evolv), that uses personality testing to recommend the best job candidates for specific jobs (like call center staff), or Gild, that sources hiring of programmers based on quantifiable metrics. In the next few years, one or more companies will provide a broad spectrum of tools to cover the entire spectrum of culture management, both within and across company boundaries.
Many companies will opt for both transparent social communications tools and anonymous social feedback to tap into both public and anonymous spheres of company culture. Mobile solutions will become a must have.
As culture management becomes more widely adopted, they will begin to gather cross company data and package that into valuable data offerings, like TINYpulse’s benchmarks and RoundPegg’s psychological profiles.