For leaders and managers, 2024 will be shaped by a decisive rethink of culture. For some, reimagining culture is as attractive as a cold bath. Nevertheless, recent financial and technological developments demand a shift in thinking. Now is the time to develop a future-focused approach to your business and your people.
In 2023, rapid AI developments, high inflation, low growth, and geopolitical tension deepened workplace uncertainty. So did hybrid, disengagement, and employee concerns about sustainable practices and ethical values. Between them, these issues contributed to anxiety and undermined retention.
Such challenges have an accumulative effect. Already, 40% of global CEOs think their organisation will no longer be economically viable in ten years’ time if it continues on its current course, according to 2023 research by PwC. The study found that “most of those CEOs feel it’s critically important for them to reinvent their businesses for the future.”
When asked about the forces most likely to impact their industry’s profitability over the next 10 years, CEOs cited a range of factors:
Similarly, McKinsey found that only half of 2,500 business leaders surveyed said their company was “well prepared to anticipate and react to external shocks, and two-thirds see their organisations as overly complex and inefficient.”
In 2024, leaders will need to strengthen business resilience in order to maintain morale, productivity, and competitive edge. The quickest and most cost-effective way to achieve this is through culture.
An assessment by the Boston Consulting Group (BCG) looked at companies going through a digital transformation. BCG found that “the proportion of companies reporting breakthrough or strong financial performance was five times greater (90%) among those that focused on culture than it was among those that neglected culture (17%).”
What is company culture?
Culture is defined as an organisation’s values and behaviours that shape the way that things are typically done. A healthy culture encourages emotional intelligence in the workplace and provides an overarching code of conduct, helping individuals to act instinctively in pursuing the organisation’s objectives.
Culture not only clarifies what is expected of people (ie, implementing strategy and goals), but also how things are done. For example, a collaborative culture supports effective teamwork. Alternatively, an unhealthy level of internal competition can make individuals feel isolated.
Working practices that make people feel isolated, mistrusted, and undervalued deepen disengagement to a level that is unsustainable. This fuels retention issues, in turn weakening collective experience, resilience, and the capacity to hold a market-leading position. This too is unsustainable.
How to measure company culture?
Sustainable working practices support an organisation’s long-term direction and reputation, in turn encouraging recruitment and investors. These issues tap into the so-called ‘triple bottom line’ which prioritises the planet and people, as well as profits.
The triple bottom line offers a different approach to viewing and measuring success. Traditionally, ‘success’ is often assessed via short-term indicators such as annual profits. Shareholders, for example, taking a short-term view on dividends, might prefer business practices to stay just as they are whether sustainable or not.
However, leaders – thinking about long-term planning – know that unsustainable working practices threaten efficiency and competitive position. They also know that neglecting the future of the natural environment will affect the supply and cost of resources. The PwC research cited above found what it described as “five broad megatrends – climate change, technological disruption, demographic shifts, a fracturing world, and social instability” that are “reshaping the business environment.”
Employees too are thinking about influential, long-term factors. The concerns of younger generations who will inherit the planet are particularly cutting through to leaders.
These thoughts are prompting a move away from isolation, silo mentalities, and short-term self-interest, in favour of constructive collaboration, teamwork, and better understanding of how individuals, businesses, communities, and countries are interconnected.
What are the challenges to culture?
Thoughts about the triple bottom line aren’t a leap into the unknown. Many companies are already thinking along these lines in their ESG strategy:
- Environmental priorities include waste management, energy use, and carbon emissions.
- Social challenges in the workplace are within the grasp of leaders, and are shaped by culture.
- Governance includes operations, leadership difficulties, and shareholder rights.
Environmental issues are significant but hard to influence in the short-term. Nor is governance an immediate worry – we are not in recession, profits are moving in the right direction. Given current levels of disengagement however, social issues are a short-term priority. These will be the main focus of cultural change in 2024.
At Working Voices, for the past three years we’ve been looking in detail at developing an effective solution to social challenges. We began by identifying three underlying causes of disengagement:
1) ‘Doing more with less’
The 2007/8 financial crash led to workforce cuts, and additional responsibilities for those still in work. These led to longer hours and tougher conditions – that remained long after the crash. After many years of this, people became fatigued – leading the World Health Organisation to formally recognise burnout.
2) The rise of tech
During the same timeframe, smartphones arrived, social media took off, and tech revolutionised the workplace. Technology enables a fast, ‘always-on’ mentality – great for business, less so for mental health. Tech is associated with decreasing attention spans and higher levels of isolation and loneliness. Ironically, humanity’s new connectivity has left many people feeling disconnected.
3) Less autonomy
The combined impact of 1 and 2, has led to a fast, tech-based, process-driven approach where people operate in a way that’s less human than is healthy. Hybrid hasn’t helped. Watercooler moments are down, virtual calls are functional, and process is prioritised over people. There’s less humanity at work, less autonomy in jobs, less chance to find support from colleagues.
How to develop company culture
Organisations are struggling with a rise in fatigue and a corresponding drop in engagement. But most have not had the opportunity to look into the underlying causes.
While organisations frequently offer wellbeing support such as mindfulness sessions or free gym membership, these are often presented as perks to enjoy rather than carefully tailored solutions to deep-seated causes. In many organisations less than 20% of people take advantage of them.
Culture however touches everyone, reaching the whole workforce with no need for sign-up.
In looking for a form of culture capable of tackling disengagement, we assessed peer-reviewed scientific research from psychologists and others, (for example, Baumeister and Leary, 1995; Edmondson, 1999; Woolley et al, 2010). We discovered that most of these papers shared similar sentiments:
- A sense of belonging
- Psychological safety
- Trust
- Respect
Based on these findings, we developed a concept of social wellbeing. The basis of effective culture, social wellbeing lies at the heart of The Sustainable Human – our strategic training programme that develops sustainable working practices, tackles the true causes of disengagement, and gives leaders a meaningful tool for 2024.
The Sustainable Human
The Sustainable Human programme contains five core modules:
- Leading Through Change
- Agile Thinking
- Working with AI
- Communicating with Data
- Social Wellbeing
Between them, these deliver significant benefits for business, from discovering the secret to working with AI, to
- Uplift in morale and motivation – regenerating engagement, productivity, and growth.
- Better clarity and cohesion, supporting retention and reputation.
- Stronger business resilience sufficient to withstand the turbulent 2020s.
An unsustainable way of working is not compatible with a viable future. By training ‘culture champions’ – employees capable of bringing change to their team – organisations will develop the sustainable practices that will help them thrive, regardless of what the future might bring.
