How do you put a dollar value on culture?

Reader question: How do you put a dollar value on culture?

Culture is an emergent property, just like wetness is an emergent property of water. You can’t program culture, it emerges from the collective thinking and behavior of the people, which is shaped by the rules, systems, structures and processes of the organization. Culture is a reflection of the organization and in return reinforces the thinking and behavior.

Culture is, “the way we do things around here”.

Culture reflects the health of the organization. A healthy organization creates value. There have been studies that have put a dollar value on improving an organization’s health. Adam Grant, Professor at the Wharton School, demonstrated improved results by connecting customer outcomes to the employee’s purpose in a study of university fundraisers;

I invited one scholarship recipient to visit a group of fundraisers who worked in an office filled only with telephones and fellow callers. The student spent five minutes describing how the callers’ work had funded his scholarship, how it had made a difference in his life, and how much he appreciated their effort. One month after this visit, the callers showed average increases of 142% in weekly time spent on the phone and 171% in money raised. Callers in two control groups, who did not meet the scholarship student, showed no significant changes in performance. In a second study of callers contacting alumni who donated more frequently to the university, the performance effects following a visit from a scholarship recipient were even more striking: A month later, the callers had on average more than doubled their calls per hour and had achieved average weekly revenue increases of more than 400%, from $411.74 to $2,083.52.”

In the ‘90s Sears commissioned a study which showed increased revenue created by increased employee satisfaction;

The evaluation demonstrated that a 5 percent improvement in employee satisfaction caused a 1.3 percent improvement in customer satisfaction. This, in turn, correlated strongly with customer retention and volume and resulted in a 0.5 percent increase in store revenue.” Surfing the Edge of Chaos”, Pascale, Millemann and Gioja.

Another study from the ‘90’s showed that less errors were made in telecom bills (something we all welcome) when the leadership style allowed for more autonomous employees;

A GTE survey in the mid 1990s, for example, revealed that the performance of its different billing operations, as measured by the accuracy of bills sent out, was closely tied to leadership style of the unit managers. Units whose managers exercised a relatively high degree of control made more mistakes than units with more autonomous workforces. By encouraging changes in leadership style through training sessions, discussion groups and videos, GTE was able to improve overall billing accuracy by 22% in the year following that survey and another 24% the year after.” Palmer Morrel-Samuels, HBR February 2002

These and other studies have shown that you can put a dollar value on having a healthy culture within your organization.

Therefore, the question becomes what’s a healthy culture?

Marcus Buckingham and Curt Coffman, while working for the Gallup organization, analyzed thousands of employee opinion surveys. They found that there were 12 questions that were the best indicators of an engaged, motivating culture which are indicators of a healthy culture. They were;

1.     I have the materials and equipment I need to do my work right

2.     At work, I have the opportunity to do what I do best every day

3.     In the last seven days, I have received recognition or praise for doing good work

4.     My supervisor, or someone at work, seem to care about me as a person

5.     There is someone at work who encourages my development

6.     At work, my opinions seem to count

7.     The mission / purpose of my company make me feel my job is important

8.     My co-workers are committed to doing quality work

9.     I have a best friend at work

10.  In the last six months, someone at work has talked to me about my progress

11.  This last year, I have had opportunities at work to learn and grow 

Notice that none of the 12 questions was, “I am well paid”.

Just by thinking about these questions provides our own view of the health of our organization’s culture.

Our digital footprint is providing new ways of determining the health of our organization. New technologies are being used to measure proxies of a healthy culture. MIT Media Labs have developed a tool called Immersion. Immersion allows people to simply enter their email address and within seconds it produces an interactive “collaboration” dashboard. Used across an organization this can show where collaborations exist, inside and outside an organization. Kapiche, a business analytics company focused on Human Capital Management, provides data analysis of text. They have developed sentiment analysis which can be used with emails. Having a dashboard of how people feel based on what they write in their emails creates a powerful feedback loop. Especially when the CEO has kicked off the latest change program.

Bringing this all together we can use the Integral Organization Model. Below is a simple visual to help assess the health of an organization’s culture. The three colored circles placed on Ken Wilber’s Integral Map shows the different views and linkages of thinking, behavior, structures and culture of an organization.

The colored circles represent the levels of development of how an organization is operating.

Red Circle: When organizations become dysfunctional they descend into a culture of everyone one for themselves. Internal politics, turf wars and high levels of self interest tell us that we are in the red circle. Low responses on the 12 questions above are clear indicators that the organization is in the red circle.

Blue Circle: This is the circle where we find the employees of the first two layers of an organization. The blue circle provides the structure, processes and expected behaviors that align to the level of capability/development of the roles in these layers. It is aligned to Maslow’s levels of Safety and Love/Belonging. People don’t start life at Maslow’s Self Actualization level we need a path to guide us there. The blue circle is the first section of that path. For more information on the need for this type of vertical structure please see Vertical Leverage.

Green Circle: When we think of leadership we relate this to the thinking and behaviour that we find in the green circle. The executive team of an organization needs to operate within the green circle. It is about self sacrifice for the greater good. Leaders that operate from the green circle know the value of culture. They know they need a healthy culture to deliver successful results. They understand the connection between thinking, behavior, structures that create culture and that culture in return reinforces structure, behaviour and thinking.

Which circle is your organization in?

Which circle is your leadership team in?

It is hard to put a dollar value directly on culture. But by taking the Integral Map perspectives of thinking, behavior, structure and culture we can see that without a healthy culture you can forget the dollars!