Why culture is still king when it comes to HR challenges

As the world of work continues to emerge from the COVID-19 pandemic, the spotlight the crisis shone on company culture has not faded—and may even be growing, as employers increasingly recognise the influential role culture can play on the business, particularly when it comes to employee engagement and retention.

In HRE’s recent What’s Keeping HR Up at Night? survey of more than 350 HR leaders, respondents named improving company culture as their second-greatest challenge, only after recruiting and retaining top talent. This marks the second consecutive year culture claimed the second spot after it ranked fourth in 2021. In the 2022 survey, 18% of HR leaders cited culture as a top challenge, a figure that rose slightly to 19% in the latest research.

Other top concerns include employee engagement and employee experience. Experts say that, by investing in a stronger company culture, leaders can also fuel improvements in these areas—and, ultimately, in recruiting and retention.

“If people are sold an opportunity about what their future might look like with a company during the recruiting process and then there’s an incongruency when they come in, they’re going to understand right away, ‘Wait, this isn’t for me,’” says Mimi Turner, Vice-President of the Executive Search practice at the Institute for Corporate Productivity. “Organisations that really understand their culture and not only talk about it but actually live it in their values will see recruiting become easier; they’ll have a great brand and folks knocking on their door. And they’re also not going to have that leaky bucket of more people leaving than you can recruit.”

Company culture’s multifaceted influence

“Company culture permeates everything in HR and the organisation,” wrote one respondent to the What’s Keeping HR Up at Night? survey. “[When it is] not developed or harnessed, [it] can impact long-term sustainability.”

That notion was supported by a recent survey of 1,100 full-time employees by HCM provider isolved. While the research found that work satisfaction is generally high, of those who reported being dissatisfied with their job, nearly 40% blamed company culture—with only pay and lack of recognition and growth opportunities ranking as more important.

Culture has a particular impact on employee experience, researchers wrote. “While culture provides the foundational values of the organisation, EX focuses on the employee’s journey within that culture,” they say. “In short—good EX can’t exist without positive culture.”

And employees are increasingly recognising the role of a strong culture in their work experience: isolved’s report found that a staggering 88% of employees surveyed are more interested than ever in a work experience that they find fulfilling.

“Today, employees want more from work than just a paycheck; they want a fulfilling experience,” says isolved Chief People Officer Amy Mosher.

And, adds Kevin Oakes, CEO of i4cp, organisations are largely understanding the elevated role of culture.

“Companies recognise how critical a healthy culture is to improving workforce productivity and generating high market performance,” he says. “But, unfortunately, maintaining a healthy culture is proving more challenging than ever.”

In particular, HR leaders in 2024 are going to have to contend with a range of external factors that could disrupt efforts to strengthen company culture: from debates over return-to-office and the incorporation of AI into the workplace to perspectives on global conflicts and the upcoming American presidential election, he says.

“Companies worldwide,” Oakes says, “will be grappling with internal debates that can cause severe divisiveness internally.”

While HR may find it harder to build culture given these stressors, such circumstances underscore just how vital culture will be in 2024, says Mark Stelzner, Founder and Principal Manager of IA.

“We live in a very complicated world and are entering a year with both tremendous promise and uncertainty,” he says. “Organisations are recognising the need to create an emotional, physical, financial and social connection with their workforces while further recognising that everyone’s wants and needs are truly unique.”

Stelzner is chair of HRE’s upcoming EPIC Conference, which will be held April 24-26 in Las Vegas. The inaugural event will arm HR leaders with the tools needed to build a people-centric culture. The conference will feature more than 65 workshops, breakout sessions and keynotes, including from workplace belonging expert Adam “Smiley” Poswolsky, Weight Watchers Chief People Officer Tiffany Stevenson and members of the leadership team of Cherokee Nation.

No matter where organisations are on their culture journey, Stelzner says, “there is a need for all leaders—including the HR function—to declare what they stand for and believe in, and then back it up with demonstrable action.”

Bringing company culture to life

What actions can HR take to strengthen culture and positively influence employee engagement and experience?

According to employees surveyed by isolved, they are most interested in seeing leadership build culture by improving internal communications. That effort, says Mosher, can include clear communication of the organisation’s mission, values and social responsibility efforts.

“By emphasising a company’s role and contribution to society, their industry and/or under-represented demographics, employees can reflect on how their individual efforts contribute to the organisation’s impact on society,” she says.

Key to that communication, however, is listening. Mosher says leadership needs to continually keep a pulse on employee sentiment—particularly gauging what drives employees to feel fulfilled—and build a strategic communication plan to tie company vision with individual contribution.

This can involve one-on-one meetings with employees to discuss pain points as well as training to help middle managers better assess potential engagement issues.

“One of the most culture-influential questions managers can ask their employees is, ‘What motivates you to feel valued and encouraged to do your best work?’ “Mosher suggests. “Teaching managers how to engage in meaningful and informational discussions regarding motivation and engagement can be an incredibly powerful exercise.”

Stelzner notes that IA held some “very challenging workshops” toward the end of last year that emphasised that sustainable culture-building requires “reestablishment, explicit focus, funding and C-suite stewardship.”

When those elements are in place, he says, leaders will be empowered to bring culture to life, a goal best accomplished through storytelling.

READ MORE: Is “purpose-driven culture” still relevant for 2024?

“We want to listen to and follow leaders who show they are human; we want to hear how people like us not only survived but thrived within the organisational construct,” he says. “And we want to point to a North Star that shows the organisation has the wherewithal to navigate through even the most difficult storms with honesty, transparency and people-centricity.”

Key to that effort will be data, adds Oakes. A recent i4cp report predicted that boards and seniors leaders are going to increasingly expect HR to provide “hard measures” of organisational culture.

“It will be HR’s responsibility to define and produce core human capital and business metrics that are regularly tracked, such as unwanted attrition, employee net promoter score, referrals, hotline activity, productivity, inclusion, diversity, engagement and strength of employer brand,” he says. “Expect to see an increase in companies who launch a culture renovation to not only improve their cultural health today but create future-proof cultures that can sustain health for many years.”

About the author: Jen Colletta is Managing Editor at Human Resource Executive, where this article was first published.