CHICAGO, July 15, 2021 According to a new report from Heidrick and the struggles (Nasdaq: HSII), the world’s leading provider of on-demand leadership consulting and talent solutions, serving the high-level talent and consulting needs of the world’s largest organizations.
The Global CEO Survey found that 82% said they had made culture a key priority over the past three years, often to bolster financial performance – but nearly three in four chose strategy, leadership or policies and processes, rather than corporate culture, as being most important in driving financial performance. The study also identified a group of CEOs, or “culture accelerators,” who focused on shaping culture, ranked culture among the top three drivers of their organization’s financial performance, and estimated that it was important to link culture to strategy. These cultural leaders outperformed their peers in the study by generating more than double the three-year compound annual growth rate (CAGR) of revenue, 9.1% versus 4.4%.
“The pandemic has been a real test of corporate cultures globally,” said Rose Galey, Partner and Global Head of Accelerating Organizations and Shaping Culture for Heidrick Consulting at Heidrick & Struggles. “It has become clear that thriving cultures will be a keystone of business success in the future – but what we found most surprising about our results was how few CEOs we interviewed who acknowledged the critical role that culture can play in supporting business performance, especially if they create the right metrics to assess their progress on an ongoing basis.”
Aligning Culture with Results: How Companies Can Accelerate Progress reports the results of a survey of 500 CEOs in nine countries around the world and examines how culture propels organizational performance as more companies begin to return to the office and navigate new work dynamics such as hybrid work environments and remote workforces.
In their focus on culture, CEOs list various goals guided by financial progress
CEOs listed a variety of reasons why culture was a priority over the past three years, with 31% ranking “improving financial performance” as the top goal. Other top goals were to increase employee engagement (26%), improve diversity and inclusion (24%), strengthen strategy or change direction (21%), and improve customer service (20%).
Yet, marked variations among CEOs emerged in achieving their organizations’ cultural goals. More than half achieved their goals, such as increasing employee engagement, strengthening diversity and inclusion, and improving financial performance. But it has proven more difficult to achieve the goals of strengthening a change in strategy and addressing ethics or compliance issues. Regardless of success in achieving a specific outcome, 74% of CEOs said their employees are mostly or fully engaged in living their cultural values every day. This percentage did not vary much depending on whether their workforce worked primarily in-person or a combination of in-person and remote work.
“Culture can play a critical role in helping businesses adapt and succeed in today’s rapidly changing environment and uncertain world,” Gailey said. “The most effective cohort of culture leaders in this survey aligned culture with strategy and operating models, and our report reveals lessons that apply to the hybrid work challenges that all leaders now face.”
What “Culture Accelerators” Do Differently
Companies often recognize that they need to align their strategy, operating models, and culture, but many don’t know where to start. Not so with the 54 CEOs identified in the study as “culture accelerators” who explore culture with strategic intent and focus on their people:
- Forty-eight percent focus on culture to reinforce a change in strategy or direction compared to 22% of others. These results and the stronger financial results they are generating suggest that starting with culture may be the right first step.
- More often, they identify the cultural elements that impact financial performance as people-related, and they focus on customer and quality, as well as collaboration and trust.
- Forty-eight percent put diversity and inclusion efforts first, compared to 30% of other CEOs.
- Two-thirds fully met or exceeded their cultural goals, with 15% exceeding those goals compared to 5% of other CEOs.
“The survey results strengthen the business case for linking company culture to strategy and creating broad engagement with culture,” Gailey said. “A thriving culture is among a CEO’s best options for accelerating performance in today’s marketplace.”
Some sets of “crop connectors” are even more effective
Within culture accelerators, the study identified 30 CEOs qualified as “culture connectors”. These CEOs live the culture by focusing more on clear and effective communication internally and externally and engaging all of their employees.
- Four in five selected “personal commitment to focus on culture” compared to 66% of culture accelerators and 45% of other CEOs.
- Nearly two-thirds of culture connectors who think appreciation and recognition support financial performance said these characteristics are prevalent in their culture, nearly double the share of other companies.
- These CEOs hold more two-way dialogues with employees about the importance of culture and more large-scale dialogue discussions to build culture than other CEOs.
Principles for building a thriving culture
The results of the Heidrick & Struggles survey reinforce the benefits companies get when they link culture to strategy and create broad engagement with culture. The four principles of firm culture shaping can help any leader embark on realizing these benefits:
- Determined leadership: leading with purpose, inclusively and with influence and adapting leadership approaches to the way people work.
- Personal change: live the culture, make connections between culture and financial performance, and challenge others to do the same.
- Broad commitment: build momentum for the culture shaping process with employees at all levels of the organization through energetic and communicative leadership.
- Systemic alignment: ensure talent processes, onboarding and training include ways to develop and reinforce key aspects of the culture and regularly measure progress.
About Heidrick & Struggles
Heidrick & Struggles (Nasdaq: HSII) is a leading provider of on-demand global leadership consulting and talent management solutions, serving the high-level talent and consulting needs of the world’s largest organizations. In our role as trusted leadership advisors, we partner with our clients to develop future-ready leaders and organizations, bringing together our services and offerings in executive search, diversity and inclusion, leadership assessment and development, organization and team acceleration, culture training and on-demand, independent talent solutions. Heidrick & Struggles pioneered the executive search profession over 65 years ago. Today, the company provides integrated talent and human capital solutions to help our clients change the world, one leadership team at a time.® www.heidrick.com
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