What leaders get wrong when creating a new corporate culture

March 1, 2023, 1:12 PM UTC
Businesspeople making handshakes, while standing on painted pattern on asphalt
Only 15% of companies that set out to change their culture are successful.
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Good morning!

Want to get a group of HR leaders to collectively roll their eyes? Tell them you want to change an organization’s culture without sharing a concrete roadmap. Shifting a company’s culture can often be opaque and difficult to measure. But new research from the human capital research firm Institute for Corporate Productivity (i4CP) finds that leaders who successfully create a “fit” workplace culture can improve their bottom line, employee engagement, and productivity. Though, there can be many pitfalls along the way. 

Let’s start with the benefits. Organizations that reported top cultural health also reported high market performance—better revenue growth, market share, profitability, and customer satisfaction than their competition, says Kevin Oakes, i4CP’s CEO. And employees at companies with “fit” cultures were almost five times more likely to report higher engagement scores and two times more likely to report increased productivity. 

Despite the clear benefits of a fit culture—defined as being employee-focused, inclusive, innovative, and collaborative—most employers still struggle to achieve such organizational change. According to Oakes, leaders veer off track from the start, with just 15% of surveyed companies that set out to change their corporate culture proving successful. Oakes says this is because C-suite leaders tend to jump straight into building a new culture—or at least trying to—and skip the critical planning and internal fact-finding. 

“[Deploying] a comprehensive listening strategy is often ignored because the senior team thinks they know all the issues,” Oakes says. “Things are significantly filtered by the time it reaches them.” 

Leaders also gloss over two of the most important steps in shifting corporate culture: conducting a network analysis to identify internal influencers who could help usher in cultural change and determining how progress will be measured, monitored, and reported. “Our research showed that 90% of companies that were unsuccessful at renovating culture ignored this step,” says Oakes.

On the flip side, executive teams that are most successful in creating a new corporate culture truly empower their CHROs. 

“It’s crystal clear in organizations that have successfully renovated their culture that the CHRO played a leading role in the effort,” Oakes notes. “I can almost always immediately spot a healthy culture; it’s one where the CEO views the CHRO as one of the top strategic roles in the company and views that position as overseeing their most valuable asset.”

Amber Burton

Reporter's Notebook

The most compelling data, quotes, and insights from the field.

Despite some known benefits, workplace wellness experts warn that working from home can hurt a person’s mind and body. 

“While we still don’t know much about the long-term implications of remote work, researchers agree that working outside of a traditional office setting can negatively impact our brains and our bodies with everything from eye strain to back pain,” writes Fortune’s L’Oreal Thompson Payton.

Around the Table

A round-up of the most important HR headlines, studies, podcasts, and long-reads.

- Some tech employees hightailed it out of the industry before layoffs began. Washington Post

- More than 850,000 people were employed part-time by choice in December and January, according to labor department data. Wall Street Journal

- Amazon is facing multiple investigations from state and federal agencies into the safety conditions of its warehouses. Seattle Times

- After oil companies reduced headcount, many ex-employees went to work in the renewable energy industry. New York Times

- Corporate climbers, meet the unexciting achievers who make better managers despite being boring. Economist


Everything you need to know from Fortune.

WFH: pros and cons. Hybrid work deprives people of connection and the feeling of mastering a skill, argues a London Business School management professor. —Jane Thier

Work friends. Early career friendships are hugely impactful in the corporate leadership journey, but they're tough for remote employees to form. —Orianna Rosa Royle

Wellness vs. productivity.leaked document from Salesforce CEO Marc Benioff reveals the tension between wellness and productivity at the company. “Wellness culture overpowered high performance culture during pandemic," the internal document reads. —Jane Thier

New labor secretary. President Joe Biden will appoint Julie Su as the next labor secretary after her role in negotiating last year’s railroad union contracts. —Seung Min Kim, Zeke Miller

This is the web version of CHRO Daily, a newsletter focusing on helping HR executives navigate the needs of the workplace. Today’s edition was curated by Paolo Confino. Sign up to get it delivered free to your inbox.

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