A vice president approached me a day after I finished giving a speech. The convention focused on organizational culture. He was friendly, but arrogant. The first line he told me was revealing. ” It’s taking too long,” he said. “Those compromise things that you talked about take too long to implement. I want to get results, not worry about people’s feelings. “
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It was a little strange to say the least. The reason he took the time to tell me I was wrong said more about his lack of emotional intelligence than it did about his lack of judgment. I asked him if he thought the way they treated their workers could have a negative effect on their company’s performance. “It doesn’t matter,” he replied, “because if they don’t play, they will be found out. ”
This exchange haunts me a bit. I’m partly grateful that he stepped forward. It was fair and just, demonstrating what may simply be a leadership style discovered in many organizations. What he didn’t pay attention to (or completely ignored) in the keynote is the irrefutable causality between culture and performance. As always, I presented a wealth of data, research, and examples that show that an engaged organizational culture translates into higher degrees of performance, not the other way around. I’m still tormented because I know he’s still there. (like so many other so-called leaders) wreaking havoc on the other people he is supposed to lead. We have a long way to go.
I recently stumbled upon another excellent piece of research and feel compelled enough to share it in this space. I suspect the aforementioned vice-president won’t care, but I hope you do.
The article is titled “What comes first: organizational culture or performance?” ”And in the April 2015 issue of the Journal of Organizational Behavior. The subtitle? “A longitudinal study of causal priority in automobile dealerships. “
The guilty researchers studied 95 other car dealerships over a six-year period, analyzing multiple dimensions of culture and knowledge of functionality in each of the dealership’s sales and service departments. Longitudinal studies like that are my favorite. They remove any statistical doubt while providing credible data over a longer period than a short-term snapshot.
In their study, the researchers looked at car dealerships that offered the same products. Additionally, the dealerships used the same functionality metrics, but each was independently owned and operated. At the end of the day? There was a point of coherence between multiple points and points of knowledge.
Their hypothesis was simple. Based on their review of various culture and performance literature (they looked at dozens of published papers) the researchers “expected that department culture would have an effect on both customer satisfaction and sales.” Furthermore, they predicted that the overall culture and engagement of a dealership would be a stronger predictor of subsequent performance rather than vice versa. That is, culture affects performance not the other way around.
The dealerships were spread across the United States. Culture and functionality were put into practice at the branch point (sales or service) within each dealership, i. e. , each site had the mandatory autonomy to manage its operation. Using the Denison Organizational Culture Survey (DOCS), the researchers evaluated 4 major cultural traits: involvement, coherence, adaptability, and mission. They did so quarterly in each of the 95 dealerships. Customer satisfaction scores are the result of a quarterly visitor survey. New car sales were also reported quarterly. The researchers also established several factors, adding their final research by separating the sales and service branches.
The results are stunning, and prove yet again that if culture comes first, performance levels will follow.
• Service Departments: It is the speculation that culture has causal precedence over visitor satisfaction.
• Business services: The effects are also speculation that culture has causal precedence over visitor satisfaction.
• The general effects of speculation that culture has causal precedence over vehicle sales.
• Global effects on visitor satisfaction as an integral mediator of the vehicle-culture commercial relationship.
The researchers write, “Overall, department culture was found to consistently predict higher subsequent levels of customer satisfaction ratings and vehicle sales, with no evidence obtained for a reciprocal performance-to-culture feedback loop. In addition, the positive effect of culture on vehicle sales was mediated by customer satisfaction.”
Put simply, an engaged culture marked by high levels of involvement, consistency, adaptability, and a transparent mission improves sales and customer satisfaction. More proof about the causality of culture and performance comes from Queen’s University Centre for Business Venturing. Using data over a ten-year period of employee engagement surveys and company results, it found the following for organizations that possessed an engaged culture:
• Increase in share capital by 65%.
• 26% less employee turnover
• 100% more unsolicited employment applications
• 20% absenteeism
• 15% higher worker productivity
• 30% higher degrees of visitor satisfaction.
The knock-on effect of any of the study sets is the current state of worker engagement. He remains anemic, aided and abetted by leaders who act like the vice president who reached out to me after my speech.
“Fewer and fewer workers are engaged, and we expect that trend to continue,” says Ken Oehler, director of global culture and engagement at Aon Hewitt, a company that has recently noted high levels of engagement. The overall commitment of workers plummets. Aon Hewitt has discovered that, more than ever, senior management holds the cards to improve organizational culture. They write: “Contrary to what many believe, a fast manager will likely not have influence or control over many of the key engagement opportunities. This would possibly imply that the manager is no longer as vital in the engagement equation as he once was. Employees will most likely look more to senior managers to lead the way and make decisions for the future. »
Another organization that has analyzed employee engagement for more than two decades, Gallup, also sees the relationship between culture and functionality. In its most recent engagement report, it found that “highly engaged businesses drive a 10% increase in visitor metrics and a 20% increase in sales. ” Gallup provides additional evidence that a culture of engagement improves functionality, not the other way around. They write: “The relationship between commitment and functionality at the company/work unit point is substantial. »
In short, it’s simple.
Should you create an engaged culture first, or are you more involved with performance?
I don’t want to tell you where I stand on this question. What frustrates me, however, is how many leaders believe that a myopic focus on functionality can have a positive effect on culture. This is a very rare scenario. The real answer lies in knowing that it is a compromised culture that definitely affects functionality.
My thanks to Anthony S. Boyce, Levi Nieminen, Michael A Gillespie, Ann Marie Ryan, and Daniel Denison for the post “Which Comes First, Organizational Culture or Performance?”
Dan Pontefract is an award-winning leadership strategist with over two decades of experience improving organizational functionality and culture. Based in Canada, he has been a Forbes contributor since 2015, covering leadership, office culture, and work experience.
Dan has authored five acclaimed books, including “Work-Life Bloom,” “Lead. Care. Win.,” “Open To Think,” “The Purpose Effect,” and “Flat Army.” His latest book received the 2024 Thinkers50 Best New Management Book award and the Axiom Business Book Awards Gold Medal.
He has presented at four TED events and has been identified through Thinkers50, one of HR Weekly’s One of HR Weekly’s One of HR’s Top Hundred Leadership Speakers.
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