As business leaders, we have a lot to manage with everything from budgets, revenue, marketing, product, talent and culture falling on our desks. But when you look at this list, which area gets the least amount of time and attention from you? My guess is you probably picked culture.
Like most companies, you have an HR department that handles your hiring needs and they probably manage your culture. But do they own it? Where are they getting direction and support? If it’s not coming from the executive level, there can be some serious consequences and it can get very expensive to fix.
Failing to manage culture has a lot of consequences which Uber is dealing with right now. Their culture issues have been splashed across every business and tech publication for the past six months and have now reached a boiling point that their founder and CEO was asked to resign. While the company was focused on growth, their leaders seemed to de-prioritize the two things that make or break a business: culture and people.
Ask yourself, how many times a week do you think about your company culture? How many times a week do you meet with a new hire or a tenured employee and ask them about their experience? If you are one of the few who make it a point to manage culture like you manage other key business functions, that’s great. If not, there’s a lot of room to grow.
Balancing your two capitals
Businesses have two main forms of capital: human and financial. Approximately 70 percent of a company’s operating expenses are spent on human capital, yet when looking at corporate hierarchy, the company’s CFO is typically the second in command while the CPO or CHRO are further down the chain. While many leadership teams put more weight on financial capital, I would challenge you to bring balance to the seesaw of money versus people.
In a recent keynote, serial entrepreneur Gary Vaynerchuk emphasized how “investing in and caring about people and culture is financially viable, yet CFOs are too stuck in their spreadsheets to see the forest through the trees.”
While CFOs should not bear the blame, Vaynerchuk has a great point and one executives seem to overlook. Where does human capital fit when companies are so focused on financial capital? As a people leader and a CEO, board meetings for me focus on the health of the team as much as they do the financial results of the business and the forecast plan for next year. One doesn’t happen without the other.
I believe human capital isn’t prioritized enough in executive leadership meetings even though reporting on talent and culture to the board helps companies better see issues and solve problems before they spin out of control. It’s always less costly to address smoke before there’s a full blown fire.
In the case of Uber, external reports show a company that was aggressively focused on growth that they lost track of their people and let toxic culture go unchecked. Because they siloed culture and people from the overall growth of their company, Uber is now having to take a step back and invest — money and time — in an area they previously deemed secondary to their business objectives. Uber is having to redefine the employee experience and it may be a make or break moment for them.
Focusing on the employee experience
The 2017 Deloitte Global Human Capital Trends notes that nearly 80 percent of executives rated employee experience very important or important, but only 22 percent reported that their companies were excellent at building a differentiated employee experience. So why does the employee experience matter? Today’s competitive talent market means your business has to differentiate from competitors, and those companies that explicitly put people first, will have a greater ability to attract and retain the best talent.
Putting people first means prioritizing their engagement. Yep… I said it. I included the nebulous term engagement that most people are sick of hearing, but it matters as long as it’s well-defined. Engaged employees have a deep and strong sense of connection to people across the company; they work for a greater purpose and want to find meaning in their work; they have a desire to make an impact on the team, the business, their colleagues and even the community where they live and work; and they are appreciated in a meaningful way.
As we approach the start of the second half of the year, many of us will be headed into board meetings to discuss the first six months and share how performance and business metrics are looking for the second half. I encourage you to find a way to incorporate the health of your people and your culture into these meetings and conversations and see what arises from the leaders you have around you. If no one agrees with you about the importance of cultivating the human and cultural component of your capital for the future success of your organization, it may be time to make other changes.