Successful companies are increasingly focusing on building cultural capital. They are creating vision-guided, values-driven organizations that focus on employee fulfillment, leadership development, and cultural health. Consequently, as you might expect, they attract and retain the best people and consistently outperform their competitors.
The culture of an organization can be defined as a reflection or the personality and behaviors of the current leadership. In older companies, the heritage of the personalities of past leaders may also still define the culture. Capital can be defined as the assets available to an organization that can be used for the creation of wealth. Cultural capital can be defined as the value attached to the collective values, beliefs, and behaviors of the organization that supports its relationships with its employees, customers, and society. To understand the real value of cultural capital, leaders must measure the level of dysfunction inherent in their existing culture. This measurement is precise and revealing but much more easily improved than many balance sheet assets. In fact, by systematically improving your corporate culture, your balance sheet will improve.
When we look at the best companies to work for in the USA, we see organizations that are better at attracting and retaining talent, are better at creating and maintaining financial viability, are better in the area of excellence such as innovation, teamwork, and creativity, and are the organizations that are putting corporate social responsibility into its thinking and becoming ethical in the way that it operates. We see that these types of organizations will be far more likely to have the capability to operate in a rapidly changing and interconnected world - a world where partnerships and strategic alliances need to be the norm. All of these critical areas are directly affected by your culture. That is why paying attention to your culture is so important. Values are what sits beneath culture and provide the fundamental building blocks to all other aspects of your organization.
When we look at the annualized returns over the past 10 years for the Top twenty companies to work for in the United States versus the S&P 500 and compare their returns, we can see that there is a vast difference if you invested in one rather than the other. These companies returned over 16% versus approximately 3% for the S&P 500 over the same 10 year period.
The problem in many organizations is not that they don't have a well thought out vision and mission, they simply don't exhibit the behaviors that support the realization of their vision and mission.
Behaviors are the manifestation of the values that exist in your culture. To achieve the outcomes designed in your vison and mission, it is imperative to address the cultural entropy existing in your organization and teams. The companies that have thoughtfully addressed and invested in creating sustainable and functional cultures, achieve better financial results. The facts speak for themselves.
It takes courageous leadership to admit they have a dysfunctional culture. Why? Because the culture directly reflects the behavior of your leadership team. The question is - are you willing to embark on the most important and impactful change management initiative you will ever undertake?
We can measure the level of dysfunction in your culture. You can decide if you need or want to embark on improving your most valuable asset.