Sponsored by Culture Amp
Creating a business case for culture is a priority for senior HR leaders, CHROs, and CPOs. It’s especially true in these uncertain economic times, where investment in employee experience can feel like a soft strategy and a hard sell.
The reality is that culture underpins performance and is directly linked to productivity.
We want to elevate HR on the executive agenda and build a business case for investment in people, places and culture. So, we need to be prepared to take our executive team on the journey with us. This means spelling out the value of culture, its impact on performance, and how it intersects with every aspect of an organization.
The good news is that we now have concrete data that shows the impact of investment in culture. This can help build a strong business case for internal budget-holders. We recently commissioned a Total Economic Impact™ study into culture conducted by Forrester Consulting, which provided clarity on the true ROI of investing in culture.
The study analyzed the cost savings and business benefits of four anonymous customers who used Culture Amp to calculate the financial impact over a three-year period. It found that a composite organization with revenue of $500 million per year and 3,000 employees using Culture Amp achieved a three-year 311% ROI and a net present value of $2.3 million.
As a software engineer by training, and lifelong data fanatic, having this kind of robust research to support the culture business case is a dream come true. So how can we use this knowledge to get leaders on board in 2024 (and beyond)?
Here are the five steps to building a business case for culture:
Step 1: Share what culture is – and why it matters
A lack of investment in culture doesn’t mean culture doesn’t exist. It means it exists without you having any input or control of it. If you’re not intentionally nurturing a culture where people feel valued, engaged, and loyal, you’ll probably end up with an unpredictable culture. This feeds employee disconnection, disenchantment, and disengagement.
One of the biggest barriers to investment in culture-building is a lack of understanding around what we mean by culture.
Culture isn’t built by one-off events, tokenistic “team building,” or free yoga on a Friday. It’s created intentionally, informed by data, and impacted by every person at every level of the organization.
Additionally, A strong culture influences performance. At the same time, performance helps build culture. Neither of these elements exists in isolation. Begin by spelling out the importance of culture to your leaders. Some may already recognize culture’s value. Others may need more details.
Step 2: Address the “so what?” factor
Building a business case for culture starts with telling the right stories.
First, as the CHRO or CPO, you might report to the board or senior leadership team with data that doesn’t really tell the full cultural story. For example, if you’re working in a template that only asks you to report on workforce “health check” data such as attrition, hiring, and headcount, the feeling in the room might be, “So what?”
So, leaders don’t necessarily associate these numbers with overall engagement, productivity, and performance — but this is the story you need to tell.
We now know that people and culture management data can make a real impact — if we can create the right data story. It can boost profitability, reduce attrition, and improve productivity. For example, even a 5% reduction in the attrition rate in a large company could reduce attrition costs by more than $1 million, mitigating unnecessary costs, including offboarding, recruitment, staffing fees, and lost productivity.
Your “so what” might be a chance to reflect on past attrition rates and spell out the growing costs of attrition within your organization.
Or it might mean telling the story of the status quo. For instance, what is the potential cost to productivity and people if we change nothing, and ignore an opportunity to proactively shape a performance-focused culture?
Step 3: Provide actionable insights.
Never before has data on people and culture been so readily available. At Culture Amp, we have billions of data points, collected from thousands of companies worldwide.
But, there is such a thing as drowning in data. Senior leadership doesn’t need to see every piece of data relating to culture. They need to understand the numbers that matter. Equally, how can they be turned into actionable insights?
So, if you’re starting to gather data, look for insights that could convince your leadership team of a need to invest further. What actionable insights could you share that would show a need for further investment so that you can analyze data at scale? Whether around skills gaps and development requirements, employee engagement, or retention, the more data you have, the better-informed your decisions will be.
For example, we recently shared data showing that high performing women in engineering were at a high risk of attrition. The data could quantify the risk, the anticipated turnover, and most importantly one of the biggest drivers of the attrition risk — so the company could fix it.
Step 4: Start small.
Starting with a small experiment is a great way to show the value of a cultural investment.
For instance, could you stretch your existing budget to a small trial of a culture tool? A tool that you can gather data from your employees and share the insights to your senior team? Or could your initial ask be for enough budget to roll out a tool with just one team or department? At least as a test case before you commit to company-wide implementation?
This kind of experimentation is less risky and means a smaller initial investment, which might make it easier to get buy-in.
Managing expectations is also important. Rather than promising to 10x productivity by building a positive culture with new resources, aim for smaller incremental growth. Even a 1% improvement in productivity or drop in attrition could translate into a serious ROI. In any new investment, it pays to underpromise and over-deliver. Don’t set yourself up to fail with an unproven stretch goal that will make further investment less likely.
Step 5: Close the loop.
Creating a positive culture of performance is an ongoing process. It requires continued effort, investment, and adaptation as the business landscape changes.
Close the loop with your leadership team. Take them with you on the journey. Once you secure investment – no matter how big or small – show them the impact it’s having on your people. Whether it’s through sharing data-driven insights, anecdotal feedback, or “health check” figures that have improved year-on-year thanks to your commitment to culture.
All that to say, do it often. The more metronomic and predictable this rhythm is, the more it’s ingrained into the way your company operates.
This isn’t a short-term project. The more buy-in and commitment you have from every level of your organization, the greater the benefits to your business.
Ready to build your own business case?
Begin by quantifying the value of culture in your own organization with our ROI calculator. It’s designed to predict the impact of a tool like Culture Amp on your business, using modeling informed by the Forrester Consulting research.
Find out more at: https://www.cultureamp.com/roi-calculator
Read more about company work culture in the TalentCulture article archives.
Post Views: 12,947
