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How business leaders play a pivotal role in changing their company culture

January 10, 2023 Andrea Warmington

Does your company’s culture need to change? Whether your goal is to improve your bottom line, increase employee engagement, or reduce attrition, you might need to look at your culture first. Ninety per cent of CEOs and CFOs believe improving their corporate culture would boost financial performance, according to research by MIT Sloan, yet 80% also acknowledged that their organisation’s culture was not as healthy as it should be. “In thriving organizations, culture looks like (and often is) the hidden “secret sauce,” notes BetterUp. “On the flip side, in failing organizations, culture is often blamed.” Leaders play a crucial role in enacting real cultural change. The executives I have known in successful cases of major change learn to “walk the talk,” writes John P. Kotter for HBR. “They consciously attempt to become a living symbol of the new corporate culture.”

 

Why leaders should foster a positive company culture

A positive company culture where employees are truly engaged in their work can have far-reaching impacts on your business’s success. Research from Queen's University Centre for Business Venturing analysing a ten-year period of employee engagement surveys and company results found that organisations with an engaged company culture boasted:

  • 65% greater share-price increase

  • 26% less employee turnover

  • 100% more unsolicited employment applications

  • 20% less absenteeism

  • 15% greater employee productivity

  • 30% greater customer satisfaction levels.

 

Leaders must develop a change story to communicate their vision

McKinsey & Co recommends that leaders develop a change story that helps all of their employees understand where the company is headed, why it is changing, and why this change is important. “Building in a feedback loop to sense how the story is being received is also useful,” the consultancy writes. “These change stories not only help get out the message but also, recent research finds, serve as an effective influencing tool.” Companies with a strong company culture often have a strong feedback loop, writes BetterUp. “Employees understand clear expectations and feel comfortable communicating concerns with their managers.” McKinsey & Co found that executives who took the time understand and address employee mindsets were four times more likely to rate their change programs as at least “successful.

 

Build transparency by sharing your challenges

Transparency from leadership teams is key to the most successful transformation efforts.  “Leaders operating under the mistaken idea that if they share the challenges facing the organisation, they'll be seen as negative or pessimistic,” writes Mark Murphy for Forbes. “But that's patently untrue. Candidly sharing challenges isn't negative; it's simply being honest and forthright. And that's a quality that employees overwhelmingly admire.”

 

Actively measure the progress of change management

It’s important to create mechanisms for objectively measuring and monitoring success. The resulting data and insights can then be used to continuously calibrate the change management plan to the reality on the ground,” according to Deloitte. ​​Data is crucial to the success of change management programmes and enacting real cultural change, says Julie Chakraverty, Founder of Rungway, and leaders must have tools in place to set benchmarks, measure sentiment changes, and identify issues that arise in real-time “Leaders must be relentless about surfacing honest, unfiltered data.”