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Why must culture be a part of every company’s KPI?

Written by Thomas Davies on Monday, 26 November 2018. Posted in Engagement, People

Sure, key performance indicators are useful but most entrepreneurs miss out on one important component which is company culture

Why must culture be a part of every company’s KPI?

The business landscape is evolving and as new technological innovations continue to increase the pace of change, leaders are looking for new ways to improve outputs and stay competitive. Measuring success against key performance indicators (KPIs) is an extremely important gauge but there is a critical aspect of company performance that is evading measurement – culture. 

Most business leaders currently have limited knowledge of what culture really means for their organisation. Many consider it to be limited to the HR function. But as a core strategic lever for enabling sustainable growth, it should be an issue which sits at the top level of an organisation. Positioning culture as a strategy leads to an increase in performance and supports successful digital transformation.

Culture affects more than just staff engagement. It can impact every aspect of a company’s operation and at its worst can lead to bad processes being justified because “that’s just the way we do things here.”

Every organisation has a culture, whether it has been deliberately cultivated or has just developed organically. Truly successful company cultures require careful design and nurturing. Inevitably the leader’s ability to implement the right culture for their business will support the company’s value.

One of the biggest mistakes companies make is to invest in technology and expect that it alone will drive change within their organisation. Often this results in additional complexity and a failure to maximise any investment made. After all, technology is just a tool and it can be ineffective without the right team to use it.

Digital transformation is 10% technology and 90% about the people. Rather than depending purely on the former to effect cultural change, leaders should design cultures which utilises technology to create value, irrespective of what products or services they’re offering.

If leaders invest in their team and put people first during major business changes, the rest will follow. The right people with the right mindset can achieve great things – technology is just an enabler.

Culture cascades

As an accelerator of change, culture trumps strategy every time. But it’s important for leaders to understand the nuances between the two and how learning more about the underlying culture of a business can help to not only create but also implement a new strategy.

Change is difficult and it’s something organisations often resist. Ultimately, culture is driven by leaders but everyone needs to live and breathe it. Businesses can’t treat company culture as a mission statement or something to be discussed once or twice a year at reviews. It should be something that leaders and employees invest in every single day. Culture is the backbone of a business and can be either a headwind or a tailwind to growth.

Nearly a quarter of employees strongly believe their leadership is unaware of the impact their behaviour has on the company. Clearly, bosses’ own actions have a significant impact on the way the rest of the company behaves.

But this also means that leadership teams have a profound ability to effect positive cultural change. Corporate values are not enough unless they have cross-organisational buy-in and putting them into practice is led from the top down.

Behaviours are tested when engaging with other stakeholders such as clients, colleagues and suppliers. But making the right decisions is self-reinforcing – over time making good choices will create the desired culture, which in turn means those actions are easier for everyone to perform. Eventually, the right choices become second nature.

How the trailblazers tackle new targets

Historically, there have been no hard numbers behind culture. To date, policymakers and business owners have focused on other drivers of productivity such as innovation, education and training and investing in physical capital.

Businesses have often neglected culture because they consider it intangible and unquantifiable. This doesn’t make it any less important but it has been difficult to prove its exact value. Culture must be measurable to become a KPI. And now it is.

Technology makes it possible to calibrate culture against set categories and create an insightful overview of how a company operates. People, organisation, leadership and technology are four key attributes to hone in on. More granular changes can come from deeper analysis into micro attributes such as innovation, inclusion and adaptability. There are plenty of providers out there that can help with this.

Completing the KPI stack

Business leaders need to keep hitting their KPIs to ensure they’re achieving across the board. However, culture is the new benchmark and it can’t be ignored any longer.

Companies that invest in culture as a strategy for better performance are future-proofing their business. Diving into the hows and whys of company processes quickly gives leaders clarity on why some changes must be resisted, the key systems that need improvement and the strategic actions to prioritise.

Ultimately, culture completes the KPI stack because these insights lead to efficient processes, high-performance mindsets and continuous value growth. That is the killer step to delivering bottom-line results.

About the Author

Thomas Davies

Thomas Davies

The founder and CEO of Temporall, Thomas helps organisations develop culture as a strategic lever for transformation. An expert in the business use of machine learning, digital technologies, leadership and the complexities of operating in multiple markets in times of unprecedented change, he supports progressive business leaders in understanding how to capture quantitative, qualitative and network activity signals from employees. 

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