The Board and Organizational Culture

By Les Wallace, PhD

We are taught as board members to stay focused on policy and strategy governance and not stray below the line into managerial issues. For many board members the biggest challenge of this guidance surfaces around the issue of corporate culture and employee engagement. Every business desires to be a best place to work; many credit unions have that goal in their strategic plan. Yet, at what level does a board get involved? What sentinel metrics should a board reasonably track to assure the CEO is delivering on your expectation? What’s a board to do when the metrics don’t meet expectations? Let’s explore these questions to help point your board’s behavior in the right direction.

Can the board legitimately define the corporate culture its expects?

Yes it can, and should. Setting “values” for how the organization behaves is a typical part of setting a mission, vision and strategy. It is possible to define the values of a high performing and humane business culture without micromanaging the CEO. It’s also possible to have hard data and survey measures of how well the organization walks the talk on the values. The organizational performance research literature tells us that when customer performance starts to decline its likely employee engagement has been in decline for some time. A board can stay on top of this leading indicator—how’s your culture?

What and how should metrics be tracked?

The traditional industrial model is to conduct a climate survey, sometimes also known as an opinion survey, once a year. These surveys typically try to affirm there is a climate of trust, integrity, respect, valuing input, coaching and development, and open communication at work everyday.

As the concept of measuring “employee engagement” has overtaken the old “satisfaction” survey approach, high performance organizations expect to measure engagement as proof that the business associates see visible signs of the expected cultural values at work. National and international organizations such as Gallup and BlessingWhite have generated substantial research on the value of sustaining a culture of high employee engagement. For example, it’s widely proven a highly engaged workforce can outperform a less engaged organization by 20 percent–many studies say up to 40 percent.

The measures of employee engagement do not have to be overly burdensome. Gallup suggests they can get at your organization’s level of employee engagement with just twelve questions (the Q12) although they eagerly sell a much larger survey instrument. Many organizations, publicly competing for a “best place to work” award in their state must use a standard annual survey provided by the human resources organization giving the awards.

The critical point of any survey is to be able to focus in on the critical few differentiating metrics that summarize the climate. Gallup’s twelve key questions, for example, or an even smaller group that our research has indicated are also safe indicators (A Legacy of 21st Century Leadership, Wallace/Trinka, Chapter VI), e.g., valuing opinions, providing timely feedback, supporting career growth, appreciation.

Over than 30 years of surveying and working with surveys I’ve developed pretty distinct opinions on surveys—size and frequency. The larger once a year survey is good to get into the decimal points of why organizational associates feel certain ways and to break down data by organizational departments. However, once a year to check-in on culture is an industrial model in a virtual era. At least twice a year and possibly as much as four times a year a smaller, more focused survey can provide timely indicators of organizational climate and employee engagement. Your board should consider having your CEO and personnel team work toward that end. While an annual survey may include all employees and managers, the in-between short surveys can use smaller random samples as good indicators of how things are going. You’re welcome to see exactly what I recommend. I only ask that if you decide to use my models you ask permission—I’ll grant it.

There are some common questions that almost everyone agrees measure the type of climate most boards desire. For example: “I would recommend our credit union as a great place to work.” “I feel I can be successful and grow in this work environment.” “I feel supported in my effort to provide member service excellence.” “I clearly know what’s expected and get timely feedback on my performance.” These (less than five questions) and others make for great quarterly tests of how a climate of engagement is being sustained. Just as every CEO wants timely feedback on how “fiscal capital” is performing, so too should they be as interested in the “human capital” that drives performance.

What if metrics don’t meet board expectations for organizational climate?

First, make sure you’re very clear on the dynamics expected in your organizational climate. Maybe do some reading as a board or have some board development on this issue to inform you. Secondly, make sure the survey questions or other measures (e.g. turnover, exit interviews, grievances) you use are good indicators of how that climate is being sustained. Then, with confidence in your clarity and metrics a board can be more directive in specifying that the CEO re-double their organizational efforts around some of the values that get low marks.

CEOs are expected to lead an organization to reasonable excellence in fiscal performance, member value / satisfaction, AND organizational climate. It’s not meddling in management to indicate to the CEO that you expect efforts to improve measured performance around some critical metric of organizational climate. It is meddling to tell them how to do it.

Please understand that organizational climate can be impacted by lots of variables. Poor management skills, poor organizational communication, lack of appropriate training, and poor personnel selection skills can all drag down employee engagement. The answer to a lower employee engagement or organizational climate score is usually not “more rah rah.” Organizational climate and employee engagement is a complicated mix of variables—expect your CEO and human resources people to understand that mix, know how to regularly measure it to your satisfaction, and know what to do when scores drop below acceptable levels.

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