Successful leaders and organisations know that culture is the unseen advantage of world-class teams. But can it be influenced? And what role do managers play in building and shaping it? Author and expert in leader communication, Shane Michael Hatton, says the research suggests it can be influenced and that the people leader plays a crucial role but it all starts with effective communication.
Based on extensive research with people leaders on the ground, Let’s Talk Culture reveals the five practical conversations people leaders need to have to design a world-class team culture within their organisation. Read an extract from it below!
Shane Michael Hatton
Chapter 2 – The Unseen Advantage
Culture is your unseen competitive advantage.
Imagine leading a team so well respected that new positions are inundated with applications from the market’s top talent, or leading a team so engaged that your best people never want to leave. Think about what could be achieved if your team could collaborate better, make decisions more easily and adapt or respond to change faster. What would it mean to you and those you lead to show up each day to an environment that allows each person to be fully seen, heard and valued? How would you like your team to be known for its creativity, innovation and results that deliver tangible value to the business and impact your organisation’s bottom line?
It’s aspirational but entirely achievable. Culture is the key.
Almost all of the people leaders in our research (99 per cent) told us they believed that culture ‘definitely’ or ‘somewhat’ played an integral role in the overall success of an organisation, with a large proportion (74 per cent) of those responding with ‘yes definitely’.
While culture in many ways is an abstract or intangible concept, the results it delivers to you – the leader – your team and the organisation are very real and observable. Much like water to the goldfish, just because you are immersed in it doesn’t mean the impact can’t be felt in both subtle and significant ways.
With very little argument among leaders about the link between strong culture and organisational success, forgive me if it feels like I’m preaching to the choir. It’s important to hold up the benefits clearly in front of you so that you’ll know why culture is worth all the effort (and it is effort) you’re going to invest.
The impact of culture
In our research we asked leaders where they believe culture has the largest impact on organisational success. Here’s what we learned.
Culture can build a team that everybody wants to join
Eighty per cent of people leaders believe that culture has a massive or substantial impact on employee attraction and retention.
Gallup is a research company that has been studying organisations and teams across the world for more than 80 years. With data collected from over a million teams globally, they’ve learned a thing or two about organisational performance. Drawing on this research, the article ‘Culture Wins by Attracting the Top 20% of Candidates’ by Nate Dvorak and Ryan Pendell point out two compelling reasons why culture is your best attraction strategy.
The first is that strong culture is how we create ‘employees that become brand advocates’, with 71 per cent of employees saying that the way they learn about job opportunities is a referral from current employees of an organisation. Your team culture may not have a LinkedIn profile, it’s not at barbecues on the weekend talking with prospective employees and it doesn’t speak at conferences about how great it is to work in your team – but your people are, and they are talking about your culture. It’s why you should never underestimate the reach and influence of a raving fan or the damage that can come from a disgruntled employee.
Their second insight is that talented people proactively seek out organisations with exceptional culture. That is, the top 20 per cent of talent are more likely to ask questions relating to your culture. Dvorak and Pendell found that the most talented candidates ask questions like ‘Who will my manager be?’, ‘How will I learn and grow here?’ and ‘What does this company stand for?’ In contrast, they found that less talented prospects will ask transactional questions relating to issues like pay, perks and hours.
When culture is strong, people have a unified, honest and convincing language to describe to prospective employees what it’s like to work on your team. When culture is strong, it has a gravitational pull that attracts high calibre people into your orbit.
Culture can build a team that nobody wants to leave
Of all the areas people leaders believe culture has the greatest impact on, employee engagement is at the top of the list, with 83 per cent saying it has a massive or substantial impact.
With global engagement scores as low as 20 per cent, according to Gallup’s study of 2.7 million employees, every leader needs a strategy to ensure they retain their best people. Not only is the investment of your time and money to train a new employee costly, you also lose valuable corporate knowledge when a person exits the business. While culture is not simply the results of your engagement score, this score will influence it. Culture can be difficult to quantify, but engagement data can tell a valuable story about what it’s like to work in your team or organisation.
From a study of nearly 4000 skilled employees, the Hays Salary Guide FY21/22 revealed the top reasons employees are looking for another job. Alongside a lack of promotional opportunities and a competitive salary, it was ‘poor management and workplace culture’ that made it into the top three for more than a third of respondents. Culture isn’t just your best attraction strategy, it’s also your most valuable retention strategy, because it’s a driving factor in employee engagement. A Columbia University study showed that the likelihood of job turnover at an organisation where culture was strong sat at just 13.9 per cent, in contrast to organisations with weak company culture where turnover was as high as 48.4 per cent.
When culture is strong, you keep the right people, which goes a long way in moving the needle of engagement.
Culture can build a team that moves forward faster
Eighty per cent of people leaders believe that culture has a massive or substantial impact on the achievement of organisational goals.
Whether it’s rapidly shifting organisational priorities or simply responding to the unforeseen challenges that derail our best-laid plans (such as a global pandemic), the only thing leaders can be certain about is change. When you’re staring down the barrel of disruption, you need a team that can reduce the friction of decision-making in order to move quickly and flexibly. You want people who can collaborate just as effectively while dispersed and connecting through a computer screen as when seated across from each other in the boardroom. You need ‘can-do’ people who aren’t thrown by the requirements of a new path forward.
In 2021, PwC released the findings of their global culture survey exploring the link between culture and competitive advantage, and they found that it’s these three aspects of adaptability, collaboration and decision-making that set apart organisations with a distinctive culture. Of the people and organisations they surveyed, 81 per cent of respondents who strongly believed their organisation was able to adapt during the 12 months before the survey (during a global pandemic) also said their culture has been a source of competitive advantage. Seventy-three per cent of participants said that making decisions quickly became easier or stayed the same during the pandemic when there was a distinctive culture, compared with 57 per cent when there was not. Collaboration stayed the same or improved for 64 per cent of participants in organisations with a distinctive culture, in contrast to 49 per cent without a distinctive culture.
When culture is strong, you create an environment that enables people to adapt quicker, collaborate better and decide faster, which every team needs to do to accelerate progress and achieve goals.
Culture can build a team that is physically and psychologically safe
Eighty per cent of people leaders believe that culture has a massive or substantial impact on psychological safety and 73 per cent share that belief about physical safety.
In 1999, Amy Edmondson published her influential paper ‘Psychological Safety and Learning Behavior in Work Teams’, which became the catalyst for much discussion around the role of psychological safety in high performing teams. Her research into medical team errors between departments in the same hospital sought to understand whether the most cohesive teams made fewer errors. Surprisingly, she learned that the most cohesive teams actually reported making the most mistakes. What became apparent was that these cohesive teams were more able and willing to talk about their mistakes. In an inter- view with HBR IdeaCast, she explains why this kind of psychological safety is so rare: ‘It is an instinct to want to look good in front of others. It’s an instinct to divert blame, you know, it’s an instinct to agree with the boss. And hierarchies are places where these instincts are even more exaggerated.’
Psychological safety enables the people on your team to show up fully at work without fear of humiliation or punishment. Your team’s culture around failure, disagreement, feedback and recognition will determine the extent to which this is possible.
Psychological safety can determine whether a person brings their whole self to work. It means little if that person is not physically safe when they do. Physical safety can mean the difference between a person going home to those they love at the end of the day or not. Culture helps us determine what is acceptable here and what is not, and that plays a crucial role in reducing the number of decisions that could be harmful or fatal.
When culture is strong, you can create an environment that keeps people safe – in every sense of the word.
Culture can build a team that helps people to belong
Eighty per cent of the people leaders in our study told us that culture has a massive or substantial impact on inclusion and diversity.
Fiona Robertson is my good friend, a culture expert and a fellow Major Street author. Fiona was a guest on my podcast Phone Calls With Clever People, where we ask great questions of talented leaders to help people become more effective leaders. She shared her definition of culture, which is also the title of her brilliant book: Rules of Belonging. She likened these rules to the popular 1990s movie The Matrix in that, when you begin to see them at play at work, it will be near impossible to unsee them. She encourages us to ask, ‘What does it take for people to belong on this team?’ Through culture, we learn what is tolerated and what is not in our quest for human connection and belonging.
When culture is strong, it is clear what it takes to belong. We’ve already established that the goal of culture is not to eradicate differ- ence. The focus isn’t even on agreement: you don’t need to agree with everything in the organisation to have alignment in your team. Culture is the strategy that enables us to make these differences work at work.
Culture can build a team that thinks differently
Seventy-eight per cent of people leaders believe that culture has a massive or substantial impact on creativity and innovation.
You might be familiar with TED Talks or may have even had the privilege of attending a local TEDx event, which take place all over the globe. In 2015, Head of TED Chris Anderson ran an experiment at TED’s headquarters. Each staff member was given a day off per fortnight to study something. They called it ‘Learning Wednesdays’, and it was a chance for people to explore and learn something they were passionate about. As an organisation they had a culture of lifelong learning, and Chris believed this was practising what they preached. To avoid it becoming another day off in front of the TV, the condition was that everyone had to commit at some point in the year to delivering a TED Talk to the rest of the staff about what they had learned. As a result, the rest of the business was able to benefit from the learning.
When was the last time your people were given the time, resources and permission to play or learn? How does your team respond to failure or risk? Is it encouraged or punished? Would you describe your team as curious or judgmental when ideas are shared? The answers can reveal a lot about your team’s culture and, in turn, tell an interest- ing story about your team’s ability to innovate and be creative.
When the culture is strong, people know what freedom they have to create and innovate.
Culture can build a team that delivers results
Seventy-four per cent of people leaders believe that culture has a massive or substantial impact on revenue and profit.
While revenue and profit sit at the bottom of the list of areas impacted by culture, they are in no way less valuable. Put simply, strong culture shows up in the bottom line in business. The research from PwC mentioned earlier found that organisations that have a distinctive culture were 48 per cent more likely to have reported an increase in revenue during the global pandemic. Research from McKinsey of over 1000 organisations made up of more than three million individuals found that those with top quartile cultures posted a return to shareholders 60 per cent higher than median companies and 200 per cent higher than those in the bottom quartile.
In each of the areas we’ve discussed, there is not only an outcome benefit, such as innovation or inclusion, but each outcome has a financial implication. When the right employees connect with your culture, they’re more likely to be engaged and less likely to leave, which has a financial consequence.
The right people don’t stay in the wrong culture, and the right culture will quickly weed out the wrong people. When you can keep the right people, the top 20 per cent, Gallup says that organisations realise:
- 41 per cent less absenteeism
- 70 per cent fewer safety incidents
- 59 per cent less turnover
- 17 per cent higher productivity
- 21 per cent higher profitability.
Culture might be unseen, but its impact is certainly not.
—Let’s Talk Culture by Shane Michael Hatton (Major Street) is out now.
Let's Talk Culture
The conversations you need to create the team you want
Packed with research-based insights from Australia s leading workplaces, Let's Talk Culture is the how-to guide for people leaders who want to shape a world-class team culture by design.
Successful leaders and organisations know that culture is the unseen advantage of world-class teams. But can it be influenced? And what role do managers play in building and shaping it? Author and expert in leader communication...
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