A vice president approached me a day after I finished giving a speech. The convention focused on organizational culture. He was friendly, but arrogant. The first line he told me was revealing. ” It’s taking too long,” he said. These engagement things that you talked about are taking too long to implement. I have to get results, not worry about people’s feelings. “
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It was a bit strange to say the least. The reason he took the time to tell me I was wrong said more about his lack of emotional intelligence than his lack of judgment. I asked him if he thought the way they treated their workers could have a negative effect on their company’s performance. “It doesn’t matter,” he replied, “because if they don’t play, they’ll be discovered. “
This exchange haunts me a bit. I’m partly grateful that he stepped up. It was fair and fair, demonstrating what may simply be a leadership style discovered in many organizations. What he ignored (or completely ignored) in the keynote is the irrefutable causality between culture and performance. As always, I presented a wealth of data, research, and examples that show that an engaged organizational culture translates into higher degrees of performance, not the other way around. I’m still tormented because I know he’s still there. (like so many others, the so-called leaders) wreaking havoc on the other people they are supposed to lead. We have a long way to go.
I recently came across a wonderful study and feel compelled enough to share it in this space. I suspect the aforementioned vice president won’t care, but I hope you do.
The article is titled “What comes first: organizational culture or performance?” ”And in the April 2015 issue of the Journal of Organizational Behavior. The subtitle? “A longitudinal study of causal priority in automobile dealerships. “
The guilty researchers studied 95 other car dealerships over a six-year period, analyzing multiple dimensions of culture and knowledge of functionality in each of the dealership’s sales and service departments. Longitudinal studies like these are my favorites. They eliminate any statistical doubt and at the same time offer credible information. data over a longer period of time than a short-term snapshot.
In their study, the researchers looked at car dealerships that offered the same products. In addition, the dealerships used the same functionality metrics, but each of them was independently owned and operated. At the end of the day? There was a point of coherence between multiple points and points of knowledge.
His speculation was simple. Based on their review of publications on culture and functionality (they reviewed dozens of published articles), the researchers “expected that the department’s culture would have an effect on visitor satisfaction and sales. “In addition, they predicted that a dealership’s overall culture and engagement would be a greater indicator of upcoming functionality than the other way around. In other words, it is culture that affects functionality and not the other way around.
Dealerships were spread across the United States. Both culture and performance were operationalized at the department level — sales or service — within each dealership, which is to say each location possessed the autonomy to manage how it operated. Using the Denison Organizational Culture Survey (DOCS), researchers assessed four primary cultural traits: involvement, consistency, adaptability, and mission. They did so quarterly with each of the 95 dealerships. Customer satisfaction scores were the result of a quarterly customer survey. New vehicle sales also were reported quarterly. The researchers instituted various control factors as well, which included their final analysis having separated out sales and services departments.
The effects are amazing and, looking back, it turns out that if culture comes first, degrees of functionality will follow.
• Service Departments: Speculation results that culture has causal precedence over visitor satisfaction.
• Business services: The effects are also the speculation that culture has causal precedence over visitor satisfaction.
• The general effects of speculation that culture has causal precedence over vehicle sales.
• Global effects on visitor satisfaction as an integral mediator of the commercial relationship between vehicle and culture.
The researchers write: “Overall, branch culture was found to consistently expect higher degrees of visitor satisfaction and vehicle sales, with no evidence of any reciprocal feedback loop between functionality and culture. Sales were mediated by visitor satisfaction.
Simply put, an engaged culture characterized by high degrees of engagement, consistency, adaptability, and a transparent project improves sales and visitor satisfaction. More evidence of the causal link between culture and functionality comes from Queen’s University’s Centre for Business Venturing. During a ten-year era of surveys on employee engagement and corporate functionality, they found the following for organizations with an engaged culture:
• Increase in share capital by 65%.
• 26% less employee turnover
• 100% more unsolicited employment applications
• 20% absenteeism
• 15% higher worker productivity
• 30% higher levels of visitor satisfaction.
The counter punch to both sets of research is the current state of employee engagement. It remains anemic, aided and abetted by leaders who act like the vice-president that approached me after my keynote.
“Fewer employees are engaged and we expect this trend to continue,” says Ken Oehler, Global Culture and Engagement Practice leader at Aon Hewitt, a firm that has witnessed global employee engagement levels recently drop. Aon Hewitt discovered that, more than ever, senior leadership holds the cards to improving organizational culture. They write, “Contrary to what many believe, the immediate manager may not impact or have control over many of the top engagement opportunities. This may be an indication that the manager is not as important in the engagement equation as they once were. It is likely that employees are looking to senior leaders to point the way and make decisions for the future much more closely than before.”
Another organization that has been analyzing employee engagement for over two decades, Gallup, also sees the relationship between culture and performance. In its most recent engagement report it found that, “Highly engaged business units achieve a 10% increase in customer metrics and a 20% increase in sales.” Gallup provides further evidence that an engaged culture improves performance, not the other way around. They write, ” The relationship between engagement and performance at the business/work unit level is substantial. “
In summary, the question is simple.
Should you create an engaged culture first or are you more involved with performance?
I do not want to tell you where I stand on this question. What frustrates me, however, is the number of leaders who believe that a myopic focus on functionality can have a positive effect on culture. This is a very rare situation. The real answer lies in knowing that it’s an engaged culture that definitely affects functionality.
My thanks to Anthony S. Boyce, Levi Nieminen, Michael A Gillespie, Ann Marie Ryan, and Daniel Denison for the post “What Comes First, Organizational Culture or Performance?”
Dan Pontefract is a leadership strategist and award-winning author with over two decades of experience in enhancing organizational performance and culture. Based in Canada, he has been a Forbes contributor since 2015, covering leadership, workplace culture, and employee experience.
Dan is the author of five acclaimed e-books, including “Work-Life Bloom,” “Lead. Soins. Win. ,” “Open To Think,” “The Purpose Effect,” and “Flat Army. “His most recent eBook won the Thinkers50 Best New Award. Management Book 2024 and Gold Medal of the Axiom Business Book Awards.
He has presented at four TED events and has been identified through Thinkers50, one of HR Weekly’s One of HR Weekly’s One of HR Magazine’s Top One Hundred Leadership Speakers.
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