Why Measuring The ROI On Culture Is So Damn Hard

We live in KPI-driven world.

Perhaps, more accurately, a KPI-obsessed world.

Miss your quarterly forecasts – even by one or two cents – and watch how quickly investors pounce.

Don’t show a continuous upward tick in your fully-optimized marketing campaigns, boy oh boy…

Missing a credible and substantiated “adoption curve” in your investors deck – ideally one that looks like a hockey stick – then be prepared for the quickest VC meetings in history. 

KPI’s are good.

They give us something to strive for, a yardstick to meet and exceed. Heaven knows we’re swimming in enough data to generate a million KPI’s for each and every business. And just wait until my IoT friends get their hands on you.

Perhaps that’s why I remain so perplexed when I hear debates about the ROI of investing in Culture and how hard it is to quantify the impact of Culture-building (or Culture-changing) activities.

Truth is measuring a Culture ROI is relatively easy – and getting easier every day.

There are great organizations, like Globant and Microsoft, with amazing tools that can measure utilization rates (always a favourite in places who still label departments “Human Resources”) levels of collaboration, how “integrated” new teams and new members are within your company, average turnover, retention, tenure, absenteeism etc.

The ability, and the fantastic Saas-enabled, shiny Dashboard-rich technology, is there. Fantastic news for those of us who earnestly believe you measure what matters. And what matters more than Culture?

The issue, if I can try explain it from my observations, is not that measuring the ROI of Culture is impossible or even difficult these days.

The issue is that measuring the ROI of Culture is uncomfortable.

COMMITMENT - Uncomfortable because it requires a leadership commitment at the very highest levels of an organization. A commitment of time, a commitment of resources, a commitment of real dollars into defining, creating and nurturing a culture that promotes the care and growth of your people.

NEW EXPECTATIONS - Uncomfortable because it forces you to confront and address the classic refrain “why train our people if they’re only going to leave us” and actually build an organization that rewards curiosity, risk-taking and employee freedom. That means letting go…just a little..and letting the good people you’ve hired step up.

That’s hard if you’re accustomed to command-and-control operating principals, no matter how outdated those may be.

SPEED - Uncomfortable because, unlike tweaking our Tech Stack and our latest SaaS subscription, we can’t immediately and efficiently optimize our people in the same way.

With gleeful exuberance we’ll invest Trillions of dollars in Enterprise software, digital transformation consulting and elaborate Customer-Experience journey maps for the promise of immediate growth. Unfortunately changing how our people behave and how they make decisions takes longer – and FAST is the prevailing business mantra of the day.

AND HUMANITY - Uncomfortable because it requires confronting your values and your humanity head-on.

As Newsfeeds are populated by advances (or techno-porn) of machine-learning, AI and automation – and the huge gains to be made from deploying those – it can be hard to remember that business is still inherently human. That, until Robots have wallets, you’re still relying on other human beings to imagine, create and BUY your products.

To create a Culture that inspires and invigorates other human beings means YOU have to be able to inspire and invigorate others.

And you can’t mail that part in.

I get how uncomfortable it is.

But any more uncomfortable than these KPI’s?

Only 12% of American workers believe they get effectively on-boarded.

Only 35% of senior executives believe their Culture is effectively managed.

One in 5 employees are actively sabotaging their current company.

The $3 TRILLION lost because of the excessive bureaucracy of organizations stifling productivity and innovation 

I am a marketing person at my core. I’ve spent my career helping organizations find and communicate what makes them different and unique. With every passing year I’m more and more convinced that products can be copied – and commoditized. Flashy new technology can be acquired just as quickly by your competition.

But only your Culture is truly unique. No other company has it - or can copy it.

Only your Culture can inspire and invigorate your people to overcome and thwart the inevitable disruptions coming to every sector in the years ahead.

Only your Culture can attract the world-class talent you need to thrive in the future. Whether you like it or not, top talent doesn’t have to settle for mediocre Cultures.

In the end, your Culture really is the only true sustainable competitive advantage you have.

What’s the ROI on that?

I wanted to thank my friend Cybelle Srour for inspiring this post. She was the boss that personified a genuine mantra of caring for and growing her people. Thanks Cyb!!

How Do You Balance A Culture & Business Transformation?

My wife loves Mark Walhberg.

I mean she has a very serious crush on the former Markey Mark and his world-class abs. Which might explain why we were watching one of his movies – “Shooter” – for the 4th time recently. As added context, I wasn’t closing the gap on “Mr 8-pack abs” by slurping my way through a pint of Ben&Jerry’s either.

In one pivotal scene Walhberg is coaching Michael Pena on the discipline and focus needed to be a sniper when he utters the immortal Zen sniper line:

“Slow is smooth and smooth is fast”

I’ve always loved the weird mental hurdles and conflicts inherent in that saying because it perfectly articulates what I’ve seen and heard repeatedly in the Culture and Digital Transformation interviews I’ve conducted.

An organizational imperative – nay impatience – to transform at the speed of the market. Or at the speed of a market driven by 90-day analyst calls and leadership tenure of less than 3 years.

Balanced with a reality that Culture – the People part, not the Pixels part – doesn’t change with nearly that speed or with that certainty.

This reality can be a source of significant frustration for many executives and may explain why many would prefer to ignore the Culture piece entirely or seek quick cosmetic fixes that do more to impact “climate” than they do to actually transform Culture. This excellent piece from Culture University on Climate is a great read.

Addressing climate is not the same as transforming Culture.

Among many of the excellent sayings Culture expert Edgar Schein posits is this one – “Culture arises through shared experiences of success” – with the words I’ve underlined a critical component.

Shared experiences is important because it highlights that more than one individual, one team, one division must be involved if it can be considered a cultural transformation. Sure it must start somewhere and blossom but it can only be considered a transformation if it spreads and takes root across an organization.

Success is critical too. And, as any Change Management expert will attest, that often means false starts and mis-steps occur before success genuinely happens. Success means you need to have a clear definition of what success means for your Transformation. It also requires the acuity to measure and track success. Finally success needs to be sustained – particularly because many Culture Transformations go through the very real employee skepticism of “here we go again…” and “Oh boy, another Management bright shiny fad is working its way down the pipe…” Moving from your current Culture to your desired Culture requires your colleagues to see that the behaviours that epitomize “success” are actually consistent and not just episodic or a flash in the pan.

So what can impatient executive do to transform their Culture at something approaching the velocity of their Digital Transformation?

#1, acknowledge that you’ll need to address your Culture at some point and that human beings do adapt and change slower than the speed with which you can upgrade your servers or switch to a cloud-based SAAS model.

Brian Fetherstonhaugh summed it up beautifully in one interview when he said “Culture is a deliberate, relentless, often expensive and painful set of choices you make every single day.”

#2, do some type of Culture Audit or Culture diagnostic to truly understand what Culture you currently have. That isn’t an Employee Engagement Survey (sorry guys) but a genuine Audit that has both qualitative and quantitative components. Your CIO isn’t going to transform your IT infrastructure and vendors without comprehensively auditing your current systems, why would you try to transform your people without knowing exactly where your Culture is today.

#3, accept that Leadership carries a disproportionate responsibility for the efficacy and velocity with which any change occurs. That means YOU are a key determinant. Saying one thing and doing another will doom a Culture Transformation faster than a lack of funding or a poor definition of success. Leadership style – are you building trust, transparency, openness? – and Leadership commitment – are you in in for the long haul? Are you prepared to make the tough calls? – are critical and those can’t be delegated.  

#4, have a realistic expectation of the speed that a full Culture Transformation will take. Factors like size, geographic spread, societal culture, industry vertical are all factors which can’t be dismissed – see #2 above – but even taking those into consideration, studies suggest it takes at least one organizational generation for Transformation to go from identification to implementation to adoption.

I was intrigued by this article by Barry Phegan on CompanyCulture.com where he suggests an exponential relationship between the number of employees and the time required - all other factors being equal. 10 employees = 1 Year, 100 Employees = 2 Years, 1,000 employees = 3 Years...and so on. If you've got any evidence to support or refute Barry's assertion, I'd love to hear about it.

That time scale shouldn’t curtail your desire in the slightest and shouldn’t prevent you from starting either.

Perhaps the most important step to ask yourself is one that Edgar Schein raises in many of his books – Why do you believe you need to transform your existing Culture in the first place?

While Digital Transformation is the business imperative de jour, I sometimes question how many organizations are doing it because it is genuinely critical to their survival or because everybody else seems to be doing it and they can’t be seen not to. 

Knowing the complexities of a Culture Transformation, and the potential margin for error, perhaps the best start is to repeat after me…

Slow is smooth, smooth is fast

Then, in time you can graduate to

It's such a good vibration

 It's such a sweet sensation

 It's such a good vibration

 It's such a sweet sensation**