Most efforts to change culture ultimately fail. With the best of intentions, companies launch new values, deploy leadership road shows and craft clever reinforcing communications. But these initiatives lack two key elements. First, a view of culture that goes beyond generic notions of "high performance" and focuses on those aspects of culture uniquely relevant to a company's particular strategic goals. And second, a focus on the underlying systems, processes and behaviors to support long-term culture change. These critical aspects form the basis of our approach, which is the focus of this issue of Sustainably Engaged.

Culture is a word used often, but not always clearly understood. We define it as the shared beliefs (either explicit or implicit) that exist within a company and drive behaviors. The first question involves determining whether the culture generally supports the company's top goals, or gets in the way.

For example, suppose Company XYZ has a strategy focused on innovation, that is, a plan to differentiate itself from competitors by having unique and novel products and services that others don't offer. What would a culture look like that supports this strategy? We might imagine one that emphasizes diversity of thought and opinion, where risk taking is supported and where a bias for action exists. In contrast, a culture where there is an unwillingness to take risks and where new ideas are adopted slowly if at all would seem to be misaligned with a strategy focused on innovation.

This example demonstrates the concept of strategy/culture alignment. To flesh out this concept further, Towers Watson reviewed the strategy literature and talked with clients with the goal of identifying the primary ways that companies compete. We then analyzed decades of employee survey results, and cross-matched with each company's area of strategic focus and financial performance to identify the cultural profiles that best support success against each of these five core strategies. A summary of the results of this work is depicted below. As you can see, a culture that supports competing on efficiency is very different from one that supports competing on customer service.

Strategic business priorities
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How do you measure strategy/culture alignment?

With this framework in place, companies can measure how closely their strategy and culture are aligned. There are many ways to do this, one of which is to use Towers Watson's Culture Alignment Tool, or CAT. Through an online card-sorting task, the CAT measures how closely the current culture and, separately, the ideal future state, line up with each of the profiles above. It then identifies gaps between current and future state. So, for example, an organization might realize it wants to maintain its current strong emphasis on customers while also building a much stronger culture of innovation. However, the big question is: How do you do that?

Culture Alignment Tool (CAT) sample results
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Closing the gaps: The role of talent management

Talent management vision statement by strategic priority
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This is the fun part. Having identified the ways in which we'd like the culture to change in order to better support our strategic goals, we're now faced with the issue of how to create that change. Here one can consider how a full range of people practices and programs can be changed to bring about the desired future state. To support this, Towers Watson has aggregated the views of dozens of internal and external subject matter experts, combined with insight from empirical studies, to create an overall talent management vision for each of the five strategic priorities, as well as specific guidance on how fundamental talent management programs should vary by strategic priority. (See graphs below. Of course, these are only generic templates that would need to be tailored before being implemented for any given company.) So, in short, the answer to "how to influence culture" is to strategically design your organization's broader talent strategy to reinforce the right behaviors and beliefs.

Talent management strategy in an efficiency organization
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Putting it all together

Culture is an organization's DNA: the beliefs and behaviors that reflect how the business functions, and how work gets designed and executed. Empirical research shows that companies that succeed financially by competing in different ways have different cultures, each aligned with their unique strategic goals. By comparing a company's culture with the research-based ideal profiles, it is possible to measure the degree to which a company's culture supports its strategy, i.e., the degree of strategy/culture alignment. Once gaps have been identified, they can be addressed with a thoughtful and targeted talent management vision and strategy.

Want to hear from us on a specific topic? Please contact:

Adam Zuckerman
adam.zuckerman@towerswatson.com

Lesley Brown (Asia Pacific region)
lesley.brown@towerswatson.com

Stephen Young (EMEA region)
stephen.young@towerswatson.com

Dan McCauley (Americas region)
dan.mccauley@towerswatson.com