In this video, Roundpegg co-founder Natalie Baumgartner, Ph.D. shares her expertise on the impact organizational culture can have on business performance and employee satisfaction.
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Scot Sessions: Let’s hear now from Natalie Baumgartner, co-founder RoundPegg.
Natalie: Thanks so much. I am Dr. Natalie Baumgartner and this is You Don’t Have a Talent Problem. It’s Your Culture. So really glad to be with you all today. I’ve had the great experience of making company culture the main focus of my work over the last half decade. It’s really been eating, sleeping, drinking company culture, so I’m really always excited to have an opportunity to talk about culture and about the relationship between talent and culture. And we know around that talent and culture are really closely related.
So just a little bit about my background. I am a clinical psychologist by training, but I’ve worked in the business arena for my whole career and the vast majority of that time, I worked as a consultant. Working primarily with C-suite executives and boards of directors on senior human capital issues. Senior level selection, high potential development, mergers and acquisitions work. But what became really clear to me early in my career was that organizational culture has tremendous impact on organizational performance, on employee performance and satisfaction. And so about six years ago when I had the opportunity to join my two co-founders to create a really well-informed, research-driven, technology-based platform that would allow organizations to be able to easily and robustly measure their culture and make really informed decisions about how to manage it and how to drive high organizational performance through culture, I jumped on board. So that much of the inception of RoundPegg and being willing to continue lifelong path around thinking about and working with organizational culture.
So you guys are business leaders and I know you love data. And when you step away from your desk today, when you finish with your time at the conference, I really wanted to be sure that you have a list of three ways, three nuggets around how to quantify and improve your organization’s culture. So, probably that is the question, why should you do these things? Why does it matter so much?
Well, we know both through anecdotal experience and through a lot of research that culture is the single biggest business driver. Culture line had predicted about 89% of how individuals and organizations perform. This is not just a warm and fuzzy concept. This is a leading business indicator. So culture is driving your bottom line, whether or not you have the resources or are taking the time to really understand and manage it. And during our time together here, I’m really going to encourage you to do just that, to really pause and think about your culture to think about ways that you can actively understand and manage your culture to drive your business’ performance. When you can quantify culture and evaluate and manage gaps that exist in your culture, you can make really informed changes in how to run your company.
So, let’s start from the beginning. What is culture? There about as many definitions of the concept of culture as there are individuals who’ve been willing to write books and blogs and journal articles about culture. And many of them are really heavy and really complex. So I wanted to begin with one thing that culture isn’t. Culture is not equal perks. Perks don’t equal culture. Culture isn’t beers on Friday or biking to work. Those are perks. Now perks are awesome. Perks are the output of your culture. So your culture focuses on being supportive, collaboration. You may have specific perks that really are well aligned with that. If your culture is really focused on innovation. For example, you probably have a bit amount of time focused on being able to really invent new technology on your own, individually. And so regardless of what culture you have, perks do not define your organization’s culture. Culture is the core of your company.
So if you have to manage something you need to understand it well. Part of our mission at RoundPegg is to then simplify about how we think about culture. We’ve already sort of clarified that perks are not culture, so what is culture? Simply put, culture is how you do things in your company. That’s it. It’s driven by how you communicate, how you make decisions, what you reward. It’s the core of your organization.
So, how do you measure this critically important piece of your business? So the historical approach to measuring culture is to ask people. What’s your company’s culture? That’s how consultants that I’ve work with, consultants for the past four or five decades or more, have really worked with the concepts of culture using really lengthy surveys or focus groups to ask organizations, employees, leadership, “What is your culture at your company?” We have a lot of evidence that that method, that approach to measuring culture is really fraught with error. Because the way that you answer that question can be so influenced by a large number of factors. Did you just start at the company or have you been here 20 years? Are you a founder or is this your first job out of school? Do you have a good relationship or a bad relationship with your manager? Frankly, are you having a good day or a bad day? We know that all of those factors influence how you might answer the question: “What is the culture at your company?”
So at RoundPegg, we wanted to bring robust measurement to culture. We wanted to provide metrics for organizations around culture similar to what they have around the financial performance of their organization. To figure out how to get to that data that really describes actual culture, we went to the personality psychology literature.
We have about four decades of personality research that tells us that our personal core values, the few core values that really describe who you are as an individual are pretty well set by the time you hit adulthood and enter the work world. They tend not to fluctuate much throughout the course of your lifetime. Now that’s not to say that you can’t change. I always say, I’m a psychologist, if I thought people couldn’t change I would be out of work. But, statistically it’s true that we don’t tend to change very much. And even when we do change, overtime we tend to revert to our core values. And even more importantly, those core values that are important to each of us personally are the single biggest predictor of our daily behavior at work or home, early on our career or late in our career, if we’re having a good day or a bad day.
So to really understand what’s happening in an organization’s culture, we need to understand how people are wired. How the people who make up your organization are wired from a core value perspective. Now, I also want to take a moment here to speak to what we think of as aspirational culture. So we just talked about actual culture. Actual culture is: are the values that the people who are your company share in common as individuals. We know that that’s the best predictor of what’s happening in your company on daily basis, how you’re doing things.
Aspirational culture is the flag on top of the mountain. So these are the values that you probably have on your website, in your literature or collateral. We even have a client who has their aspirational culture etched into the side of the building that they operate from. Aspirational culture is really a critical piece of your company. It’s where you want to be in terms of how you do things. But it’s really important to understand the two pieces of information separately, actual and aspirational, so you can understand the gaps and how to fill them.
So, point number two. There is no single right culture. So we want to think about that when we move into how do you measure yours? There are a lot of folks in organizations that have created software or created workshops focused on creating a certain kind of culture in your organization, a collaboration culture and innovation culture. What we know, from research, is that there is no single right culture. There are no good or bad cultures. Now, there may be cultures that you don’t want to work with or that wouldn’t be really aligned with your personal values, but inherently there are no right or wrong cultures. What we know is that what predicts high organizational performance is not the type of culture you have, but it’s the extent to which you understand your organization’s culture and you ensure that everything that you do is aligned with your company’s culture.
So, let’s talk about how to figure out what your culture is. The first step, the most important step, really the main step is to identify your employees’ core values. And I can’t overemphasize enough that these are personal, right? Core values are very personal. So, your personal core values are again, what drives your culture or what drive your wiring. So there are a lot of different ways to get at this data, right? You can pull off the web just a list of core values. Core values are simple concepts. These are not personality attributes that are really complex and that have a lot of different facets and that tend to shift overtime. These are very simple core values. Are you detail-oriented? Are you risk taking? Do you like the big picture? Grab a body of core values and share them with your employees and ask them to identify the three, four, or five that are most important to them as an individual. Make sure they’re all positive, right? Nobody wants to choose a core value that everyone thinks of as a negative.
So, choose a body of values that everyone can really get their arms wrapped around, and let people choose the ones that are most important to them. Then you can delve in deeper once you have them in terms of, once you have that input around who your employees are. You can start to look at, well, what do they share in common? What are the values that you see more often? Have some focus groups. Get people to come together and have conversation around what’s important to them as an individual. Start to suss out what are the values that are sticking together? What’s the glue in your company, from a personal perspective?
Next, really the most, this very important step is aligning everything you do with that culture that you want to have in your organization. So we talked about actual culture, we talked about how to get to actual culture, how to measure those personal core values. You likely have aspirational culture, or some sense of where you want to be. Evaluate the gap between the two, and then determine where does that land you? What are the three to five values that really signify where you want to be as an organization? Probably most of those will be informed by who your people are. You may have one or two that aren’t really present in your employee population that you want more of. Keep it simple. We know that human beings can really hold about three to five concepts at once. And so, if you have more than three to five values, it’s likely that your organization can’t really, isn’t going to really be able to use them actively day in, day out. And that’s what we need your organization to do. That’s what we’re going to talk about next. The most critical aspect of how you manage culture so that it drives business performance, so that it drives your bottom line to align everything you do, all your business prophecies with your company culture.
So let’s start with step number one, hiring. So the first step, and frankly the lever that gives you the most bang for your bucks, is to ensure that you hire people that are aligned with your culture, that you ensure that the people that you hire, in terms of how they’re wired from a core value perspective, have some overlap with who you are as a company. Now remember, this isn’t going to be confused with your candidate’s aspirational values. Aspirational values are what they hope to have, what they’d like to have. Those are the values that you typically hear about in an interview, right? That people have a really solid work ethic, really detail-oriented all the time, workaholics. Those are what we think of most often as aspirational values.
So what you really want to get at is how are these candidates really wired from a deep perspective? Who are they? So you can use a lot of different mechanisms, in terms of how to get that information. You can use that same list that you use internally in your organization. Share that with your candidates. You can use Survey Monkey to send that out to your candidates, prior to interviewing them, so that you can evaluate who they are, how they’re wired, and really use that information to guide your interview.
So often interviewing is really a lot like feeling around in the dark. So you have very little information about your candidates, you have a suite of questions to ask them in terms of their background and their skills and their abilities. And you may have an interview process in your organization where you have multiple people interviewing. So you get a lot of different data points. But what we know, again from research about hiring, is that most of us out there have about a 50% chance of making a good hire. So we know that the 49% of employees fail within 18 months, and that’s a big churn number. And we know a lot of that has to do with fit. In fact most of that, about 89% back to that same statistic, we know from the research literature that about 89% of employees who fail fail for culture fit reasons. And yet most of our hiring time is really spent of field ability, background experience, and aspirational values. The values that your candidate wants to have, or thinks that you want them to have.
So it’s really important to as much as it’s possible, try to get to who your candidates are. Then, the next step is to where you see misalignment or a gap between how this candidate is wired and what you aspire to, what you want to see in your organization from a cultural perspective, to delve in deep. Use behavioral interviewing questions, meaning understand what the gap is and then ask them about times when they’ve been in an environment like yours and it hasn’t gone well for them. Those are the questions that really pull out the rich information you need about what’s the risk in bringing on this candidate if they have a difference in culture fit from your organization.
Look at three levels. You want to be looking always at company. How is this individual is going to fit the company, in terms of the cultural wiring there? How is the individual likely to fit with the team that they would be a part of, in terms of the cultural alignment there? Where are the gaps? And then third, how is this individual likely to fit or be misaligned with the cultural wiring of the manager? There’s a lot of good evidence that people don’t leave organizations, they leave managers. So we look at all three pieces of data, and we really highly recommend that you do the same. Honing in on what the specific differences are, and what you need to focus on most. Then dive deep, try to really push for real information from the candidate, real examples of times when they’ve worked in a situation like the one you’re concerned about, and ask them how they managed it. That will give you information that you can use to evaluate the risk of bringing on this particular candidate.
Okay. So you’ve got the candidates in-housed. You’ve made hopefully some great hiring decisions. We know that’s the single best way to influence your culture, since we don’t tend to fluctuate much in terms of how we’re wired and thus how we behave. So, once you got your folks on board, how do you develop, manage, reward them? So that’s the next step of the process. It’s really critically important that all of the pieces that go into human capital management. How do you mentor your folks? How you develop them. The one on ones you’re having, that you use that culture value information to drive that process.
All of us as individuals can probably sit and think and pause for a moment about a situation where we were employed within an organization and the strategies that our managers use to help focus us, help guide us, help steer us in the right direction and support us, were really not aligned with how we’re wired. And we know it doesn’t work, right? The ROI on changing people is abysmal. So we are finally coming to the party in the organizational development where all the world that I really come from, around the fact that trying to change your talent is really a non-starter. And that’s because at that point we talked about very early on, people are pretty hard wired. They cannot change very much the course of their adult lifetime. And so the more you can understand who your people are and use that as a guide for how you support them in your organization, the better results you’ll have. The more your employees will be likely to desire coming to work and to enjoy the work that they do. And to really advance in their career and be more productive, which again, goes to the bottom line around business profitability.
This brings us to really the last lever. So, hire the right people, develop them from a culture perspective, and ensure your employees are engaged. Engaged in general, engaged around your culture.
There’s about a decade of research that’s developed now that has aggregated that tells us that the way we’ve been thinking about engagement as a business community is really challenged. And what I mean by that is that ROI on the engagement surveys that we’ve been using historically is really poor. And we think there’s a couple of good reasons for that. One is that engagement is fluid. So engagement of an employee, which means how well you feel supported. Do you have the resources to do your job? Do you understand how your role is connected to the larger mission? Do you trust your leadership? All of those are factors that play into whether you feel engaged as an employee. That fluctuates wildly throughout the year. That fluctuates dramatically throughout a month. How engaged I am today may have little or no relationship to how engaged I was six months ago, or how I will be engaged next week. So, having engagement measured using the snap shot in time, a once a year survey, does not get us to information that’s really usable, because by the time we start to access that data and work with it, it’s far outdated.
The other piece that we’ve learned about engagement in the research and literature world is that engagement is highly personal. And this brings us to the point about culture and culture values. Engagement is highly personal. We know that what engages one individual is really different from one engages another. So if you have a particular team that is disengaged around rewards, you find out this team feels like they’re really not being rewarded. It is impossible to make an assumption about what they need to be more engaged. Perhaps they really place a lot of value on high pay for good performance. In which case, throwing down a Visa gift card on the table could be a great solution. But, it’s also possible – and we see this many instances – that what really drives this team, what they really value is a real focus on opportunities for professional growth. They want opportunities to learn new things, to be mentored, to go to conferences, and that’s what rewards them. So you can’t make assumptions. You need to understand how your people are wired from a cultural value perspective, and use that information to engage them.
Similarly, if you’re trying to grow your organization and culture in a particular direction, you need to keep your finger on the pulse of that. If you say, “We want a more of an innovation culture in our organization,” you can’t just do things that you’d think would drive innovation. You have to check back in and ask your employees, “Are you engaged around this? Are we making it easy for you to engage around innovation? Are we making it easy for you to take risks?” So engagement is personal, and it’s fluid. You need to have a way to measure it on an ongoing basis and make sure that the way that you look at engaging and re-engaging your employees is really driven by who they are, not what they value.
So, now you understand your people through the lens of culture. You really have this incredible opportunity to help them bring their personal best to the table. We know that as individuals, when we are more engaged in our job, when we feel like we can bring who we are to work each day, we thrive. We’re more engaged, we’re more active, we’re more productive, and that leads to high organizational performance and productivity and profitability. So, again, it doesn’t matter what your culture is. It matters that you understand the core values that are unique to your company, who your people are and how they’re wired, and ensure that everything that you do, how you hire, how you develop, how you engage your folks is really consistent with the organizational culture that you want to have. Culture is not just a nice, warm, fuzzy concept. It is the single biggest business driver you have and it has a profound impact on your organization’s profitability. You can do something about this. It’s attainable and it’s in your hands.
So I want to leave you with this. These little three things I hope you remember as you get off this particular segment of the conference today. Do you have to quantify your company’s culture? You have to understand what the core values are that really make up your company. The core values that your people share in common.
Next, if there’s a gap between what your actual culture is and where you want to be, understand that gap. Remember, it’s not enough to know what you want. You have to understand where you are. Do you imagine looking at a map, there’s no way to get from point A to B without knowing both of the pieces of information. So the very most important thing you can do, off to that, is to understand those two pieces, however you get at that data. Those two pieces of information is critical.
And then, align everything you do around the culture you want to have. Ensure your hiring processes are set up so that you can really delve into how your candidates are wired, where gaps exist between them and the culture of your company, of a team they would operate on, of the manager they would report to, and dive in. Those are your biggest risk factors. They explain about 89% of whether that employee is going to make it in your company, in that role. Use behavioral interviewing questions. Really get deep and understand the risks. Align your development. Make sure that you are really rewarding and mentoring and supporting your employee, based on how they’re wired. This doesn’t have to be complicated. Understand their top three to five core values and make sure that all of what you do, in terms of your employee development, is as focused on that as possible.
And ensure that your employees are engaged around the culture that you’re driving. And, that you are supporting them in terms of their engagement, based on who they are and how they’re wired. We are so complex as individuals. It’s a deal-killer to make assumptions about who your people are. Keep it simple, understand it at a high level, and then find easy ways to actively manage your culture.
So I’m going to give you some tools. If you’re going to screenshot any slide, screenshot this. Number one cracking culture, the culture code. This is the book that we co-authored with Libby Sartain. She is the former, Chief People Officer of Yahoo! and Southwest Airlines, and she’s on our board of directors. She knows the importance of aligning culture, managing culture from the inside out. And so we paired up her insight from a business perspective, with our culture research and literature, and we’ve provided you with a really easy to use guide, for how to actively manage your culture. So let us know if you’re interested. We’re happy to throw one your way.
Again, we’re talking about the relationship between culture, talent, and business performance here, so hop on and use our ROI calculator. You can see first-hand, in your business, how culture management can ensure that you’re not leaving money on the table. And last and certainly not the least, tag your own culture. Hop on RoundPegg.com, take our free RoundPegg culture survey and see what your culture archetype is. See how you’re wired. Link to friends, colleagues, family members, and start to understand more about how highly impactful it is to understand your cultural wiring and that of those around you, and how you can use that insight and information to work more effectively in every aspect of your life.
If you have any questions, please feel free to tweet it out to us at @RoundPegg. We love to talk culture anytime. So don’t hesitate to reach out and remember, culture is the core of your organization. Manage it and you manage the performance of your business. Thanks so much.