Employee Engagement/Corporate Culture

What are corporate culture and employee engagement, and what do they have to do with Practical Turnaround Management?

Corporate culture is an informal, shared way of perceiving membership in the organization.  It binds members together and influences what they think about themselves and their work.

It creates a social order (what is expected), continuity (perpetuates key values and norms), identity and commitment (binds members together), and a vision of the future (energizes forward movement).

It is a "pattern of basic assumptions – invented, discovered, or developed – that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems."

Unlike the other turnaround actions recommended herein, changing the culture is one of the last steps that turnaround mangers undertake with underperforming or distressed companies.  By necessity, the early steps have to focus on halting decline and implementing  solutions.  But in order to turn the performance positive again, the behaviors and values that allowed performance problems to take root and flourish, must be thrown out.

Employee engagement is defined as a "heightened emotional connection that employees feels for their organization, that influences them to exert greater discretionary effort to their work."  The employees’ relationship with their managers is the greatest determinant of engagement in all twelve research studies.  Some of the other dominant factors are managements’ integrity, and employees’ understanding of how their efforts contribute to the company’s results.

Culture and engagement are non-financial indicators, yet all of the empirical research proves that they matter a lot when it comes to financial results.  Engagement and financial performance are highly correlated and firms with a higher percentage of engaged employees deliver higher operating margins and earnings per share.  

Here’s the practical turnaround thinking: all organizations develop dominant cultures that, over time, must evolve in response to pressures.  Don’t wait for a precipitating financial crisis before creating a culture that fosters engagement.  The thing about striving for excellence is that the goal is never really completed.  As soon as one round of improvements seems to be finished, the environment changes sufficiently that it’s time to start this iterative process all over again.  

Corporate culture, employee engagement and performance measurement
It has been noted that many attempts to implement performance measurement systems fail because of the cultural opposition to change that afflicts all organizations. Successful implementers of performance measurement and value-based management have concluded that the effort has to be more about cultural change than it is about installing new accounting systems or other technology-based solutions.  

To truly change a corporate culture, management must undertake a formal process of 1) analyzing the current culture through behavioral instruments, 2) identifying where the culture needs to be for the firm to increase its market share, and then 3) mapping the discrete organizational changes to get there.  

The effort to change the corporate culture toward one of greater employee engagement is the ideal time to embed the move to performance-based compensation.
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Commitment to continual change is part of being vigilant and proactive. It is at the core of practical turnaround management. It is a process that returns far more than the extensive effort required.

• Cultural Assessment 
  - Diagnose
  - Interpret
  - Implement

• Management Skills Assessment