With UK companies being pressed to report on company culture, Limeade CEO Henry Albrecht shares his advice on the best place to start.
As part of the 2018 UK Corporate Governance Code, the country’s Financial Reporting Council (FRC) is pressing companies to report business metrics not only on growth and customer satisfaction, but also on company culture. This includes how a company is addressing such key issues as diversity and climate change, for example.
However, many early adopters of the code have struggled to define their company’s purpose, using slogans and marketing language to explain their culture, according to the FRC. “There is insufficient consideration of the importance of culture and strategy, or the views of stakeholders,” the regulator said last month.
Culture has become a popular term for companies around the world, whether they’re trying to recruit new employees or hold on to their current staff. But what a company actually does in relation to its culture – instead of what it says – is critical.
There is plenty that businesses can do if they want to talk the talk and walk the walk, according to Henry Albrecht, CEO of employee experience company Limeade.
“The truly great companies out there are talking to their board about growth, customer satisfaction and culture,” he said. “Things like culture and making sure your employees feel cared for are critical factors for success. It’s reassuring to see this concept of more holistic measurement is starting to be acknowledged globally. But we still have a long way to go.”
According to Albrecht, companies taking the new UK code seriously will benefit from it. “I am sure a lot of companies will brush this off and do the bare minimum to meet the FRC guidelines,” he said.
“However, a small strategic group will seize this as an opportunity to prove what their annual reports all say – that culture matters. This latter group will win in the long term.”
Seeing culture as part of ‘the bottom line’
The most challenging part of this, Albrecht said, will be getting the most senior members of staff on board.
“The hardest part is getting corporate boards and executives to see the measurement of morale, engagement, inclusion, stress and overall culture as important to the bottom line,” he said. “Once you do that, then it’s easy to roll out a cost-effective governance to get started.”
Just like safety and cybersecurity, he continued, having metrics around culture can be another proxy for “discipline and performance”.
“Many of the most widely publicised stock price drops were failures not of technology or strategy – but of culture.
“For this reason, companies will look at employee sentiment, manager effectiveness, social connections, inclusion and the ability of leaders to align and inspire as indicators of future stakeholder value.”
‘Treat it like operations or finance’
Albrecht said that the Corporate Governance Code should be viewed as an opportunity. “Mandates like this drive transparency,” he explained. “Companies with credible scores and trustworthy cultures will market themselves as such.
“In the war for talent, work wellbeing matters. And every company wants to stay off the ‘worst places to work’ lists.”
— Limeade (@Limeade) November 26, 2019
One of the first steps towards making sure that doesn’t happen, he added, is treating your company culture “like operations or finance”. “Get a dashboard for it, start measuring it – at least annually to start – and invest in shoring up areas of weakness and risk.”
Albrecht said that it’s often the high-performing companies that are intentional about connecting strategy and culture. “But the best companies are also great at communicating this to every employee in every part of the world, listening and adapting,” he added.
“It’s up to the newest or most remote employees to answer: is this company living the values you agreed upon? Do we do the right things here? The board needs to know this and hold us CEOs accountable to it.”