There is no denying that the current business landscape looks very different to what it did, even a couple of years ago. From the cost of living and rising business costs to the evolution of working arrangements such as hybrid and remote working; business leaders are facing many new challenges.
The ability to foster collaboration, instil a business ethos and culture, and effectively communicate these values throughout the organisation presents a significant challenge, particularly in remote and hybrid settings.
In fact, according to the Arbinger Institute, 46% of all decision-makers and leaders reported that culture drives improvements in areas critical to growth such as employee productivity, retention, and engagement. Furthermore, research from recruitment agency, Robert Walters, noted that almost three-quarters [73%] of 
professionals had left a job because they disliked the company culture.
Here, Charlie Coode, Founder of Culture15, delves deeper into the growing importance and complexities of company culture in 2024:
How do you define organisational culture, and what role do you think it plays in shaping business outcomes?
Organisational culture is best defined as how work gets done – its the collective behaviours in a business that are often an unwritten set of expectations and assumptions. They exist, of course, to allow groups of people to achieve tasks that require cooperation in a repeatable and efficient way, avoiding confusion or lengthy discussions about how a task is completed.
Framed this way, culture is the primary determinant of business outcomes. Except in processes or decisions that are automated, behaviours determine outcomes. As one of our clients eloquently put it, “No one experiences your values, they experience your behaviours”, and it is these behaviours that will shape your customer experience, focus, efficiency, level of innovation and many other desired business outcomes.
Can you elaborate on why you believe culture is more important than focusing on employee engagement?
If we understand employee engagement as how people are feeling, then it is important to know and track, but it does not give you a good read on behaviours and only gives you a partial view of what’s going on in the organisation.
In our view, engagement (how people are feeling) is an output of how well your behaviours are aligned with your target culture. Where behaviours are inconsistent or not aligned with the declared culture, then people will tend to be unhappy, as they either won’t know where they stand or see the gap between the espoused and actual behaviours to be lacking credibility, eroding trust. Fixing a situation like this doesn’t involve trying to make people happy, it can only be solved by focusing on aligning behaviours with culture.
It’s better, therefore, to focus on behaviours as the primary lens and track engagement, trust and business results as the outcomes of how effective an organisation is at creating a clear and aligned culture.
In your experience, what are the common challenges that organisations face when trying to align culture with strategy, values, and goals, and how can they overcome these challenges?
There are five main challenges when it comes to aligning culture with strategy:
- Culture needs to be a key aspect of strategy execution, not a stand-alone initiative led by HR.
- Vague descriptions of culture, such as ‘trust’ or ‘innovative,’ are unhelpful. Instead, culture should be described as consistent behaviours that can be measured and used for constructive coaching interventions.
- Culture must be measurable to avoid subjectivity and anecdotal evidence, otherwise, it will have no chance of creating a consistent set of behaviours between teams and across the broader organisation. The principal challenge here is that most senior leaders think that it’s not possible to measure culture, when in fact it is not only possible but essential.
- Line managers need to be equipped with the skills and data to take accountability for culture effectively in their area of the organisation.
- Regular measurement of culture is essential for success.
As an entrepreneur, what advice would you give to business leaders who are just starting their journey in prioritising and improving their company culture?
An organisation’s culture focus should match the stage of the business. The three main stages are:
- Start-up – Culture is implicit and observed at this stage, however, cultural expectations should be clear, and founders should model the desired culture.
- Scale-up – At this stage, the organisation needs to have more structure and process to scale and active management comes to the foreground. Culture needs to be more explicit and measured, with more time spent aligning on it.
- Established business – here an organisation is typically larger and more organisationally complex, therefore culture needs to be in the fabric of the organisation. To do this, line leaders need to be clear on their responsibility to lead on culture and the business must prioritise measuring culture.
Can you discuss the important role leadership plays in shaping culture within an organisation?
Leadership and in particular, the chief executive and the senior leadership team, need to live and breathe the desired culture. As the primary authors, in how they behave, coach and guide the rest of the organisation in adopting the target culture – they are the drivers of cultural change. The importance of this cannot be overstated.
If the leadership team are not seen to model the desired culture, then the rest of the organisation will not feel safe to change their behaviours (and worse – they will see the gap between what the leadership team says and what it does, seriously eroding trust).
Finally, what do you see as the future of organisational culture, and how should business leaders prepare for it?
The workforce profile is changing rapidly, as Gen Z join the workforce in particular, bringing new expectations including the rise in acceptance of remote or hybrid working. In addition, advancements in technology and AI allow for a more nuanced and real-time understanding of culture. Properly trained AI LLMs already allow much richer and more actionable information from large datasets of qualitative comments (in the past these required countless hours of reading and manual interpretation) and more targeted recommendations for actions to take. This provides a greater capability around listening, and the integration of systems and data feeds, also provides opportunities for consolidated views, allowing true culture ‘cockpits’ for organisations. The possibilities are almost endless.
Therefore, leaders will need to get a lot more comfortable with leading culture as a core competence and expectations of their position. The world of work has changed from where culture could be absorbed and passed on passively, by observation. With workforces physically together much less often and such a range of expectations between generations, it is not only more important that culture is an explicit focus for organisations, the demands on leaders to be experts in modelling their own behaviour and in shaping the culture around them are unavoidable.