Changing Culture, Improving Performance

New research from the Hay Group division of Korn Ferry describes culture as “the invisible glue that holds an organization together.”

HR leaders have been singing a similar tune for years, but the Los Angeles-based executive recruitment firm’s Real World Leadership study seems to suggest that the rest of the C-suite is joining the chorus.

In polling more than 7,500 executives representing organizations in 107 countries, the survey found that “driving culture change” ranks among the top three global leadership development priorities among respondents.

Culture “is no longer an afterthought when considering the business focus of an organization,” says Noah Rabinowitz, senior partner and global head of Hay Group’s leadership development practice, in a press release highlighting a few of the findings.

Culture, says Rabinowitz, “is the X-factor … and ultimately makes the difference between whether an organization is able to succeed in the market or not.”

The survey also “affirms the critical role that leaders play in steering culture,” according to Korn Ferry, with executives citing “communications” as the most widely used strategy to improve culture, as well as “leadership development” and “embedding culture change in management objectives.”

And why are executives focused on improving their organizations’ culture? Primarily to “improv[e] organizational alignment and collaboration,” followed by “improving organizational performance,” the poll finds.

That said, organizations that are able to align strategy and culture are “more often the exception than the rule,” according to Korn Ferry. The firm cites its own 2014 research that found 72 percent of more than 500 executives saying that culture is “extremely important” to organizational performance. Just 32 percent of those same respondents, however, said their culture aligns with their business strategy.

Culture doesn’t necessarily align with strategy, per se, but “with the identity of the firm in the minds of key customers,” says David Ulrich, the Rensis Likert professor of business at the University of Michigan and a partner at the RBL Group.

In turn, “the firm’s brand with customers becomes the culture identity among employees,” he says. “As such, culture is a major form of competitive advantage, beyond talent.”

To gain such an advantage, Rabinowitz suggests that more organizations make culture change a bigger part of their leadership programs and overall leadership agendas.

“Culture change occurs, ultimately, when a critical mass of individuals adopt new behaviors consistent with their organization’s strategic direction,” he says. “Leadership development can be the most effective tool to change behaviors. And when leaders change their behaviors, others do so, too.”