Does a good workplace culture really drive financial performance?

by John Hilton30 Nov 2016
HC chats to Marcus Crow, co-founder of 10,000 Hours, about how workplace culture needs more than ping-pong and pizza. Crow argues that the banking inquiry has put the culture of banks into the spotlight and that bad culture drives financial performance down.

Moreover, he believes fines, sanctions, enforceable undertakings and many more financial penalties and reputational losses, which take money and business away from these organisations, finally provides the proof linking culture to financial performance.

HC: How do you think culture drives financial performance?

MC: I think the banking inquiry has shown us that there is finally a causal link. When we use the word “drive” we are implying that if we improve culture then we will get financial performance. And the discussion for a long time has been thar if we have a good culture then we will get good financial performance. But the data really hasn’t been conclusive on that front. What the banking inquiry is showing us is that we absolutely have a causal link now between bad culture causing bad financial performance. So the link is now being shown to certainly exist on the downside even though we are not sure yet whether the link is there on the upside.

HC: Do you think there is a place for things like ping pong tables, pizza day or height adjustable desks in organisations?

MC: Of course. There isn’t harm with these items. They are very popular and they can do wonderful jobs at allowing teams to connect and build community and social capital between them. I guess the concern would be if the ping pong table, to use it as an example, is a proxy for collaboration rather than genuine collaboration between, say, the finance team and the sales team. Then that would be a concern, if we are papering over the real issues of how we work together with a ping pong competition on a Thursday afternoon.

HC: Why is better training and coaching on how to deal with complexity and uncertainty important?

MC: Because when we are having the so- called hard conversations what we have discovered in our research is that dealing with the uncertainty that’s in a complex challenge produces discomfort, especially in leaders. So people who are uncomfortable tend to act to minimise the discomfort which is rarely the optimal response to the challenge. Consequently, traditional leadership training doesn’t equip leaders to work productively when they are uncomfortable or nor to work productively in an environment where uncertainty is characteristic of the challenge.

HC: How can organisations build in leaders the strength and stamina to raise the heat on prickly issues that might save you a ban, a fine or a nasty front page story?

MC: The first thing we need to do is that the leaders require a cognitive understanding as to why complex challenges are different. They need to then have first hand experience of what happens to them when they are in uncertainty and discomfort. And they need to develop an approach to moving forwards when they can’t be quite certain of what’s going to evolve in the conversation they are beginning to have.

HC: Is there anything else you would like to add?

MC: I think it’s worth mentioning that the regulatory scrutiny of corporate culture is a chance I think for HR’s finest hour as a profession. It’s an exciting time to be in HR and to mount a genuine robust business case for cultural programs. But the opportunity is to resist the seductive path of just doing the nice fun good things as a cultural program. It must also include the development of building the interpersonal muscle in the individuals in the team to surface the uncomfortable conversations that are inside the organisation before they become much more uncomfortable outside the organisation.
 
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