Why 'culture' is becoming every business's biggest buzzword

If websites like LinkedIn, Glassdoor and Indeed don't say your company is a great place to work, you may be in trouble. Job-seekers are leveraging more bargaining power now that the economy has turned around, rendering companies' cultures as one of their most important features during recruitment, according to Forbes.

Josh Bersin, principal and founder of Bersin by Deloitte and Forbes contributor, said in a recent article companies lacking an attractive culture are struggling with a retention crisis, while companies that focus on culture — such as Google, NetFlix, Zappos, Wegman and Aetna — are becoming icons for job searchers.

"Culture" was the most popular word of 2014, according to Merriam Webster's dictionary. According to Mr. Bersin, many organizations define culture as what people do when no one is watching. More technically, Mr. Bersin defines culture as "the set of behaviors, values, artifacts, reward systems and rituals that make up your organization. You can 'feel' culture when you visit a company, because it is often evident in people's behavior, enthusiasm and the space itself."

Culture is becoming a critical term across businesses and boardrooms because of its systemic impact on organizations, from employee engagement to financial performance. According to Gallup, just 31 percent of employees are engaged at work, while 51 percent are disengaged and 17.5 percent are actively disengaged. There is a lot at stake when the majority of an organization's workforce has mentally resigned.

"As the saying goes, 'culture eats strategy for lunch.' And free lunch is now part of the culture," according to Mr. Bersin.

According to Mr. Bersin, there are five core elements that drive employee engagement.

1. Meaningful work

2. Hands-on management

3. Positive work environment

4. Growth opportunity

5. Trust in leadership

Culture is a unique aspect of every organization. It amounts over time and can be difficult to change, but culture is what allows employees to focus on the organization's purpose and mission, according to Mr. Bersin. If a company's culture is faltering, it is likely that its employees are ready to move on. Companies can identify how to improve their corporate culture by asking themselves the following questions.

1. Do we have the right leaders? Culture is driven by leadership through the way leaders behave and display their values. According to Mr. Bersin's analysis of the Glassdoor database, the factor most highly correlated with an individual's recommendation of their company as a place to work was "quality and trust in leadership." Organizations that focus on the selection and development of leaders across the organization — not just in the C-suite — are more equipped to instill positive values and a strong culture, and importantly, gain the trust of their employees.

2. Are we hiring the right candidates? Once culture is established, it is important to hire candidates who will fit in. Even if a candidate possesses the right skills and experience, he or she may not be successful at a company if he or she won't be compatible with the company's culture. Some companies have taken to using screening tools during interviews to determine if candidates are a good match. According to Mr. Bersin, Zappos assesses candidates' "wackiness," and Southwest Airlines asks candidates to tell a joke to see if they will fit in with its culture of fun.

3. Does our performance evaluation system drive empowerment? Many companies are moving away from "forced ranking" and "up or out" systems of performance evaluation, as these can induce anxiety and pressure on employees, which can be a significant detriment to both their attitudes and work performances. According to Mr. Bersin, more than 60 percent of companies indicated in a survey they are changing how they evaluate performance because they want to reinforce empowerment and innovation into their organizations, which adds to a culture of growth and motivation.

4. Are our values and culture too complex? "If you can't write down your values and culture down in a few words, it's probably too complex to understand," According to Mr. Bersin. Many companies have realized this and have taken steps toward "simplifying" their companies. This comes in the form of "decluttering" the workplace — or reducing the volume and activity of messages employees get at work — and simplifying processes to allow employees to spend more time doing what they are trained to do. According to Mr. Bersin, simplification can also help improve the culture of compliance. Citing research by Deloitte Australia, financial service firms that focus on a culture of compliance instead of compliance systems ultimately have better compliance.

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