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Three External Factors Driving Corporate Cultural Change Today

March 30, 2017
Changes in technology and demographics are focusing increasing attention on the relationship between company culture and performance.

“There is no magic formula for great company culture. The key is just treat your staff how you would like to be treated.”  - Richard Branson, Founder, Virgin Group

In the drive for success, corporate culture – that is, the implied workplace value system and behavioral environment that permeate a business – has become more and more of a focal point for leaders over the past few decades. As Richard Branson’s “Golden Rule” philosophy above suggests, most leaders today view a strong culture as one that encourages policies that breed employee commitment and contentment. This reflects a significant evolution in the business world over the past century, in that it elevates the importance of the employees’ role within the strategic plan – in fact, it places their motivation at the very heart of the discussion.

Why have CEOs become more interested in culture in recent years? First, they understand that corporate culture and performance are linked. As Anne Mulcahy, former CEO at Xerox, observed, “Satisfied employees means satisfied customers, which leads to profitability.” In his book The Culture Cycle, James Haskett affirmed this by estimating that an effective culture can account for upwards of 30% of the differential in corporate performance compared to less culturally vibrant competitors. 

Beyond profitability, though, CEOs know they must pay attention to culture because in recent years a confluence of external factors has applied pressure on corporations to become more agile. They are doing this, according to Suzanne Burns of SpencerStuart, by “creating an environment where the purpose is clear, people know their role in executing the plan, and they are encouraged to collaborate on a cross-functional basis, stay flexible and take risks.”

Among the most significant drivers of cultural change today:

Impact of New Technologies. Advancements in technology have long been a subtle driving force for corporate cultural change. The spread of personal computers in the 1980s led to an evolutionary shift in workload from clerical staff to management, altering the traditional office relationship between bosses and admins. Today’s rapid pace of technological change is creating even more dramatic cultural adaptations. For instance, interconnectivity has liberated workers from their desks, allowing them the freedom to work from multiple locations. The impact on culture: a more flexible system of office relationships between supervisors and direct reports.

For the newest generations of workers, corporate culture is viewed as the most important job benefit.

—Stephen Gold

Also, communications innovations of the last two decades, from email to cell-phone texting to online instant messaging, have led to a more informal organizational culture.  Half-a-century ago, the only way to interact with top management was to walk into their offices. These newer tools foster increased interactivity among co-workers today. Hierarchies still exist, but communications are more informal and management is more accessible than ever before.

Impact of the Skilled Worker Gap. Manufacturers are all too familiar with the gap between their engineering and technology job openings and the availability of individuals with the education and skills necessary to fill those positions. One solution: cast a wider net for talent, beyond the manufacturing demographics of the past. Hence, a recent survey by MAPI shows that two-thirds of manufacturers have begun focusing on recruiting and retaining more women and minorities in recent years. In a sector that has long been predominately white and male, both on the shopfloor and in the C-suite, a transition towards more diversity requires a greater emphasis on team- and community-building to break down habitual social barriers. In effect, companies are attempting to create a workplace environment where respect and non-violent communications is the standard, and where different genders, ethnic groups, and religious persuasions can work harmoniously to further the company’s goals.

Impact of the Rise of Millennials and Exponentials. The vast majority of millennials (born 1982-2000) are now in the workforce, and the oldest members of the next generation – I call them Exponentials (2001-2020) – will enter the labor force in the next two years. While prior generations still hold most corporate leadership posts, it’s the newest generations that now make up the bulk of American workers. That requires changes in attitude at the top; after all, as former NAACP leader Benjamin Hooks once declared, “If you think you are leading and you turn around and see no one following, then you are just taking a walk.” For the newest generations of workers, corporate culture is viewed as the most important job benefit. And while they want good jobs with regular paychecks like their older colleagues, they’re also looking for more emotional engagement at work, better work-life balance and a “purposeful” life. Corporate cultures that emphasize personal growth as much as career growth will be more attractive to these newest generations.

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