Human Resources’ Role in Driving Culture Change
By Jeanne Kerr, Director of OD and Assessments
is an organizational initiative.
Companies may have great products, outstanding service, or phenomenal, disruptive technology, but it is people who make all those things happen. Culture and talent are the only true differentiators, and there is no doubt that HR has a huge impact on both.
Keep in mind, culture change is an organizational initiative, and not just an HR initiative. While HR certainly plays a significant role in the development and management of policies and decisions that can help or hurt culture, it’s the responsibility of everyone inside the organization to create and maintain a thriving culture. It’s not down to one individual or one department.
That does not mean HR plays a minor role, for as talent leaders, HR professionals have the ability and the mission to lead change and improve their workplace for every employee.
Competition for top talent will continue to grow, meaning HR can only become more and more important. HR continues to evolve in the way other “support” roles are making this critical transition. Finance has evolved from accounting to leading and guiding better business decision-making. IT has evolved from providing tools to leading digital transformation.
If your organization is struggling to attract and retain top talent, look to your culture. If culture is part of the problem, and it often is, find ways to drive needed change. Analyze your talent gaps and the reasons people are leaving. Look for ways to articulate the financial impact of these talent issues: in this way you speak in the language of the business and can better drive appropriate actions. Here are just a few examples on how you can quantify the cost of a poor culture.
First some general data:
A ten-year study by Queen’s Centre for Business Venturing provided some hard statistics: Organizations with an engaged culture had a 65 percent greater share price increase, 26 percent less turnover, 100 percent more unsolicited employment applications, 20 percent less absenteeism, 15 percent greater employee productivity, and 30 percent greater customer satisfaction levels.
A study conducted by John Kotter and James Heskett, Harvard, found “strong corporate cultures that facilitate adaptation to a changing world are associated with strong financial results. Over an eleven-year period, the researchers noted average increases for twelve firms with performance-enhancing cultures including revenue growth: 682%; employment growth: 282%; stock price growth: 901%, and net income growth: 756%.
And some data on the impact poor culture could be having on your talent and therefore your bottom line:
Turnover: According to the Society for Human Resources Management (SHRM), to replace someone holding a frontline, lower-paying job costs 16 percent of their annual salary. For example, it would take $3,328 to replace a $10.00 per hour full-time retail employee. To replace a midrange position such as a frontline supervisor whose annual salary is $40,000, the cost is 20 percent of that salary, or $8,000. For an executive, you’re looking at up to 213 percent, so replacing a $200,000 leader would cost more than $400,000. Surprisingly, many executives are not aware of the hard numbers and the perspective they provide. Conduct an analysis of your turnover and present these figures.
Poor hiring decisions: According to SHRM, the cost of a poor hire ranges from $300,000 to $500,000 when you consider the errors such hires might make, the impact they have on their team and customers, and the time the manager must spend addressing poor performance.
Poor engagement: even world class organizations tend to lose 7 percent of productivity every day due to meetings, email, and a general lack of engagement. The impact for middle-of-the-road organizations is double: 15 percent. And for underperforming organizations, it is as much as 21 to 40 percent.
HR professionals are constantly seeking ways to add value, and more importantly, to PROVE they add value. Driving positive culture change is a great place to start!