Greg Besner, Vice Chairman & Founder of CultureIQ
Wednesday, December 16th, 2020 1-2PM PT
Sam Levine: Greg is the founder of CultureIQ, a consultancy and organization that does great work around culture around the world. He also has published a book with many insights, findings, best practices, and case studies around thriving cultures. He's also one of the initial investors at Zappos, and just comes to this conversation with so many great strategies and thoughts for us, also. Greg, really excited to have you here and excited to learn from you. And I'll turn it over to you.
Greg Besner: Wow, what a great introduction. I really appreciate it, Sam, and really excited to be here with this webinar hosted by Hone. It seems like you and the team were way out ahead of the curve, putting together leadership training online virtually, which of course, how all of us are learning now, including my self-teaching online at NYU. So congratulations to the Hone team for providing these incredible valuable tools. I'm going to share my screen today and jump into the topic that everyone has joined.
So as Sam mentioned, I recently published a book and am really excited about this. I started working on CultureIQ seven years ago, and fortunately, we've had over 1000 companies that have worked with CultureIQ, utilizing its methodology for understanding culture, for measuring culture, for strengthening culture. And I really felt compelled to take the learnings from these 1000 companies around the world and put it down in a format that anyone could learn from, from not just our customers, but really anyone that's interested in culture that is empowered at their organization, to be a leader around culture. And I would argue that everyone in a company is empowered to be a culture advocate.
So the book itself has three parts. So one is really taking the dimensions of culture and breaking it down to really understand what are the dimensions that make up a high performance company, a high performance organization, or a high performance culture? What does the data tell us? We have data from over 1000 companies. And then what are some case studies? What are people actually doing in practice to achieve a high performance culture? Then we will take all that and end each chapter with takeaways and tips. So today, the book obviously, is hundreds of pages, and you can read it at your leisure, and take from it hopefully many valuable insights. Today, we'll go through some highlights. I understand that the Hone team will be sending a signed copy of the book to anyone that wants to. they'll be asking you for your contact information, if you're interested to receive a copy. And it'd be my pleasure to sign it and make sure it's sent off. So if you like what you hear today, hopefully you'll enjoy my book even more.
So just a little bit more about me. I mentioned briefly my eight years teaching at New York University at Stern, my ninth year coming up. Unfortunately, it will be online. It's always wonderful to be in person. But it's still been a great experience. And then CultureIQ, which, of course is most relevant to what we'll be talking about today. Sam mentioned my involvement with Zappos. I was one of the original investors and a consultant there. So I had a really wonderful experience watching the organization grow from a handful of employees to 5000 employees. So that's a bit of my background.
Getting into the topic today, what is culture? The reason I have a photograph of a dictionary here is, when we first launched CultureIQ at the beginning of 2014, the word culture was the most looked up word in Webster dictionary online that year. So it was really a turning point for a few reasons. One, culture companies recognized that, all else being equal, culture could be the difference. We all have modern technologies, we all have modern leadership practices. But to really make a difference to outperform your peer class, to retain and recruit the best people in the world, leaders recognize that culture makes the difference. And every time you go to a leadership conference and industry conference, although it's not a culture conference, the conference has many tracks regarding culture. The other thing that changed during these past seven years is the millennial generation, which has become the largest cohort in the workplace. Culture has evolved for many reasons. So just for purposes of today, our simple definition is, how things get done in your organization.
So the most simple definition is how things get done, but here's a more complicated view, which you might see if you read books about this topic. sort of what we see at the top of the tip of the iceberg. And of course, the iceberg being mostly underwater, what we say, is not necessarily what we see. But those are our values, and then what we believe are the underlying assumptions. So a lot of what is exhibited in the workplace, what we see, is really just the tip of the iceberg, when it comes to culture. It's really what we say, and what we believe. So I mentioned the seven years, the 1000 companies. We have data scientists at CultureIQ that evaluate this information, and then we meet with companies over all these years. And really what we have learned is that there are 10 dimensions of a high performance culture. And you could argue there are 15. And many of these are fungible, but you can see that it's not a surprise what these dimensions are. The tricky part is making sure that you have a high performance organization, and that all these things are clicking. Because we are limited on time today, Sam and I thought we would just focus on the first four. We pick these four for a reason. In my experience, mission, and value alignment is where it all starts. That's where we will start our conversation today. And then of course, communication, which seems so straightforward, like riding a bike, but you'll be shocked at how many organizations just don't get this right. Then, work environment and wellness, which we've really bundled together as critically important, especially since we're all working in an unprecedented work environment. So those are the topics we'll be covering today.
So for the first dimension, I want to ask everyone to do a brief exercise. Think about someone that you admire. And this person can be someone in your life, it could be anyone in the world. And this person doesn't have to be from the current day, they don't have to be alive. It can be someone that has already passed. But I'd like you to think about someone that you really admire. And then put down the three traits that you admire about this person. So you have honesty, hunger, or hungry, hard working, kind, perseverance, follow through, empathy, taking a step back when things are being rushed, true to beliefs, admits mistakes, believes in brotherhood and humanity, integrity, hard work. So I think you get the point. The point of this is mission and value alignment is when people understand and believe in your company's mission and values. I'm sure many of you have experienced this, where you work in an organization and maybe their core values are listed on the website, maybe they're in a conference room wall, maybe it comes up once in a while. When I go and meet with companies, I ask the leaders to tell me their core values. And it's always interesting to see the comfort or discomfort. Sometimes people will wiggle in their seat a little bit and then try to remember them and then rattle off a few of them. And the point of this is to have true mission and value alignment. These values need to be explicit. They need to be stated. People need to understand them. People need to understand that the company and the leaders make decisions, plan strategy, and take action based upon the values of the company. It's very challenging for an organization to get buy-in from everyone. So that exercise you just did, I did that exercise with the leadership team for my current company. I'll go through the case of how we came up with our values, but this method that we just went through, this brief exercise, Imagine doing this with 5, 6, 7, 10 people on your team, whether it's your leadership team, or whether you're a manager and you're managing a team within an organization. Imagine everyone on the team lists two or three people that they admire, and then what are the traits that they admire? What you end up with 20 or 30 values that you all care about. There's inevitably overlap, and if you circle the ones that are overlapped, what you come down to is five or six values that people on your team share in common. These are values that you all care about. That's the quickest and easiest way to come up with core values, especially in young companies. In a more tenured organization, of course, values and mission have been built over time. So this is not a static process. You may have your values in your organization when you have 10 or 20 people, but they may be very different when you have 200 people or 2000. Not that things aren't valuable anymore, but there may be other things that become very relevant.
So here's why this is so important. I promised that I would share data and learnings over these 1000 organizations. This is called a regression analysis. There won't be any math on this call but just to explain, this is taking data, in this case, I think it's from about 287 companies. And the bottom axis where it says impact on ENPS, that is abbreviation for “employee net promoter score.” So what this is measuring is across these hundreds of organizations, the impact that each of these dimensions of culture has on employee satisfaction, on how employees feel about the organization. As you can see, mission value is to the far, far right on employee net promoter score. It's a very important dimension of culture. So mission and value alignment has a tremendous impact on employee Net Promoter Score. So I'm going to show two cases. So one, this is a young company. This is CultureIQ About nine months after we started. This is part of our leadership team. Actually, it was our entire leadership team with the exception of the person taking the photograph. We took a train to upstate New York and we went hiking. We found a place to build a fire and have lunch. And we, as a group, talked about what we felt would be important for the values organization for the next five years. And of course, it's not a static process, it can change. But what do we think will help us over the coming years, not for the next week, not for the next month, not to launch our first product, but things that we felt would be important for the long term? And this was us preparing for that process. These are some of the questions that guided our process, right? So as a group, what is important to us? What brought us together? What continues to hold us together? And what will guide us as we make these decisions? What are we proud of? Right? So we went through that process. And at the end of that process, we had six core values. And these values were, for the most part in place for the next five years, the organization grew from, from 10 people to 130 people over the next four years. And some of these values had to be reconsidered. For example, when we were first starting, as you see on the top right, it says great people over great resumes. When we were first starting, we thought everyone could be a generalist. Everyone was wearing a lot of hats. But once we got to 110 120 130, we started having much more specialized tasks, as opposed to just a handful of us doing everything. We recognize that we weren't going to make hiring decisions just because someone was great, even if their resume didn't have the right background. We actually needed to have both. So that value changed. So that was the process we went through. So you have to regularly reassess your values, right? CultureIQ merged with another organization two years ago, and we reached out to all employees, asking them not just from our existing organization, but from the organization that we acquired. Do these values resonate with you? Do you believe this is what CultureIQ stands for today? Not five years ago, but today. And what we ended up doing was changing two of the values, eliminating one changing one, and we ended up with four core values. And the great part about the process is that everyone in the organization had a chance to comment. We looked at all the comments, because if people in the organization don't understand and believe the values that you're stating, then what's the point? Then it's just values on the wall. Now, this doesn't have to happen just within your senior management. Evaluating values can happen at the team level. You as a leader can do this same exact exercise with your reports, you can do it for your division for your department, making sure that there's alignment with your mission and your values, and then making sure that people are making decisions and communicating around these topics. Even in the recruiting process. If someone reads your website and sees your values, that's very nice, but it's even better if you have a conversation with the candidate and find out what is this person's values as it pertains to work, what are the things that they value in an organization in a company's mission and a company's values. And obviously, if they've seen your values, don't let them just restate them back, ask them for examples. If you have mission and values right from the very beginning, during the interviewing process, and right through the lifecycle of your employees, then everyone will always recognize that you're shining a spotlight on that mission value alignment. Because that's our job as leaders to shine a spotlight on what's important. If we don't believe that mission values are an important part of where we're running an organization that no one will. So it's your job to shine the spotlight right from the beginning of the lifecycle when an employee is considering joining the organization, and right through their lifecycle of that employee.
The second one, communication, is always fun, right? Everyone assumes that their organization communicates well. So in communication, this isn't just you communicating to your team. This is also making sure that your employees know how to send information, how to escalate information, how to receive information, how to understand it, and making sure that they have the necessary information. Very often, as leaders, we have the full context, we have all the information. But if there's a void of information for our team, then it can be very challenging. As you can see, again, going back to this analysis, and again, this is from data from close to 1000 companies. It turns out that, although we all feel that we communicate well, communication across a very large set of companies is the poorest dimension of culture. It is the most challenging dimension of culture with the exception of wellness. But as you can see, communication has a higher impact on employee satisfaction. The further to the right, the more impact it has on employee Net Promoter Score. So communication is sort of tied with wellness as being the most challenging dimension of culture. But it has a slightly higher impact on how an employee is experiencing their company. This is consistently the most challenging dimension of culture, which is just amazing. But obviously something that we can all work on and focus upon. So we should focus on sharing the plan. You're a leadership team, you come up with an amazing strategy, and an amazing plan for execution. But sharing that plan with everyone means over-communicating, but over-communicating the most relevant facts.
So here's a second case study. And some of you may be familiar with this, maybe you're not. KPMG is one of the big four accounting and consulting organizations. It's the smallest of the Big Four, but in this particular case study, maybe the most innovative, at least at this point in time. KPMG had an exercise where they offered to the employees a prize, if 10,000 employees responded to this question. What they asked was for their employees to send in their specific interpretation of the organization's mission. So the goal was to have 10,000 employees respond. They had over 40,000 employees respond. And I just love this example on the left. So they imagined themselves as a champion for democracy, because they were helping to certify the first democratic election in South Africa. So this particular group that worked on this was so proud of the work they were doing. They weren't not just number crunching, they were helping to certify a democratic process. In this way, employees recognize that there's much more to what we're doing than just our day to day work.
On the right is the case study around communication. So what these two charts are showing us is when leaders are communicating the organization's purpose. Communicating purpose is the chart on the left. Notice the engagement levels for an organization that is communicating its purpose. The right side, where the purpose is not communicated, has half the level of engagement. So this is saying that when the purpose of the organization is articulated, and communicated well, the engagement levels almost double, from this group of employees. As we all know, and over the past five years, the duration, or the tenure for employees has dropped from almost three years, on average, to less than two years. It's very expensive to recruit and train people. So, by simply communicating your purpose, articulating it, and restating it, an employee is twice as likely to stay at your organization. So I really love that particular case study.
This is a list of takeaways. And again, if anyone's interested in this, in a complimentary book, I have a longer list of takeaways and a lot more case studies, I just want to make sure that I share some highlights here. So I've added a few extra takeaways here for you. Some of them may seem very intuitive, and some of them maybe not. But just as this entire section of the presentation talked about, I'm not going to take it for granted that these are data points that you already have. So I'm articulating them. I'm defaulting to over-communicating. And as the third bullet point notes, we often forget that the people on our team don't have the same context and information. They may trust you, but in the absence of information, people sometimes get anxious. People sometimes jump to the wrong conclusion. So over-communicating is very important. As we're distributed, 59% of us are working remotely. I think it was probably closer to These numbers will continue to be high, where people are working remotely. But it's even more important now to communicate on all topics, right? Not just a blog or newsletter, but really having those weekly meetings, because you cannot just grab someone, tap them on the shoulder, catch them in the cafe, meet them by the coffee or tea bar, you have to actually be intentional and proactive to have these weekly meetings, and to make sure that you're spending time with your team to communicate.
And then of course, channels. Lots of people using Slack and Microsoft Teams and other tools find that some employees actually can get a bit frustrate. Communication, again, is knowing where to find information, know where to send information. So sometimes people will become frustrated, do I go to slack? Do I go to teams? Do I go to my email? Am I doing this over chat? Is this something I should be doing in person? So this is where it's very important to not only have all of these tools and to communicate, and even over-communicate, but also making sure that as your culture evolves, that people understand where they should be finding information, and where they should be sending information. If slack is where you put your clubs and your common interests, and your celebrations, great. Let people make sure people know that. If email is where you are communicating pertinent business topics, great, let your people know.
For the third topic, we've bundled work environment and wellness together. And just to give a working definition as we talk through this topic, the company with a great work environment is a comfortable workplace where people have the resources to be effective. And then wellness. Spending the majority of our waking hours in the workplace has a tremendous impact on our physical and mental health. And a company that values your wellness has resources available to help you with this important part of your experience. So here's the really interesting dichotomy you see here in this analysis, right? So you saw that work environment, as mentioned earlier, is the number one impact on how an employee experiences its culture. Fortunately, it's very high rating across these organizations. That's a good thing, because it has the highest correlation with how employees are experienced in their company. The thing that I find interesting is that wellness is in the opposite corner of this chart.
So to interpret this for you, employees are saying that wellness isn't necessarily having a high correlation on how they experience their company. And I find in my learnings, as I talked to many organizations and many employees, employees don't necessarily recognize that a company can have an impact on their wellness. However the highest performing cultures are being proactive to make sure that there are resources for mental and physical health. They’re not letting employees fend for themselves because it is, from the data, a critical part. The other reason why it's important here is notice where it falls on this chart, it has the lowest score. So employees, when they describe how they feel about it, or how they perceive the culture of an organization, wellness is even lower than communication. So to interpret this, employees don't necessarily feel it's a company's responsibility. But they rate it, the lowest dimension of culture across these 10 dimensions. So I've put them together, because I do believe that they are interrelated, especially today, considering social distancing.
So here is another reason why this is very important. This is another data set. But notice the work/life balance. Again, I mentioned how wellness is a critically important dimension of culture, and that companies should be intentional and provide resources. Notice, excluding salary, a good work life balance is the highest level of importance. And then the third thing on this list is flexibility, remote working, flexible hours. This study was done before the pandemic, and as you can see, it was already a top three item. And the fact that it could let work/life balance and flexibility, remote working flexible hours, our top three. So you see why I bundle them together. Now the second item is opportunities to progress and be leaders. This is why Hone is so important, right? Because this is why you're on this call, because we all want to progress as leaders and we find it to be one of the three most important things in our in what we're experiencing work. So I think Sam, you were going to do a quick poll
Sam Levine: Yeah, sure. In light of a poll I would love to use a chat for one through 10 rating here. Perhaps for folks, Greg, I think you mentioned wanting folks to take a look at these factors and which ones are particularly high at work right now and which ones feel low, either on your team or at at the organizational level? So perhaps in the chat if you would just throw out, as you look at these factors and the relative importance, where do you feel what are some of the strengths of your organization or what is one area for improvement?
Greg Besner: Here's some more data, these are some sort of future of work statistics that I think are really important. And remember, this is long term data, and not pandemic data, pandemic data has dramatically changed these numbers. So for one, before the pandemic, 60% of us needed to coordinate or collaborate with 10 or more people to get our work done. That's amazing. And that hasn't changed. That's pre-pandemic and post-pandemic. The middle number 43% of Americans spend part of their time working remotely. The fact is, before the pandemic, 5% of the workforce were considered remote workers. That number went from 5% remote to 95% remote in a snap of the fingers. And the reason it's important as it pertains to culture is that there's such a small percentage of employees working remotely, organizations were typically accommodating a one off request. They were accommodating. There wasn't a company wide policy, there wasn't company wide infrastructure. And think about the processes that needed to be put in place, onboarding employees remotely, recruiting remotely, having an employee leave an organization, doing all that in a remote experience. So it's really amazing the future work, I like to say, the future work has arrived. Because I do believe there's going to be a significant change. This trend from working remotely was 3% 20 years ago and climbed up to 5%. I think many of us recognize that we can be very effective working remotely. And a lot of the tools, things like Hone, where a lot of the training can be done remotely is here. The future is here. So I just wanted to share this.
Now, some of the challenges, of course, I mentioned in a prior slide, inability to read nonverbal cues. It's cited as the most challenging thing about working in a distributed team. That's why it's just so important to communicate, to be explicit, to have these intentional weekly meetings. And of course, we all get zoom fatigue, but being able to see the person you're speaking to, and speaking with is very important. Some other trends I mentioned at the beginning of this, is that the millennial generation is now the largest cohort in the workplace. And three years from now, four years from now will be 75% of the workforce. It's just a staggering number. I remember seven years ago, I would go and talk to leaders, and most of them were not millennials. And they asked me, what are we going to do about this group? And I said to them, I said in the next few years, the millennials would be the majority of the workforce or the largest cohort, and they will be the managers. And they're going to be saying in this same type of meeting, what are we going to do about you? What are we going to do about the baby boom generation that is now not the majority? So we have multiple generations that are working together. It's unprecedented. And as you know, the average tenure in an organization has gone down. It is expensive to recruit and train. So all these things, flexibility, overpay and life/work balance. All these things are under the spotlight right now, especially as we're in this pandemic. People are rethinking what's important to them, where they live, how they live, where they work, how they work. So as leaders, it's just such an important thing. And again, I would argue that the workplace and wellness are completely linked because if you think about what people are considering their work/life balance right now it is a balance of their wellness and the workplace.
Here's another interesting case study. This was a three year study. It's a retail, fast casual restaurant group. And what we did was we took all their culture data over three years. And we also took their revenue data, their operating profit, their total KPI, their total metric score, and their employee engagement score. And we took the culture dimensions and their operating metrics and overlapped them to see the correlation. It turned out that the work environment was the primary driver to employee satisfaction. So this matches the chart that you saw earlier where work environment was in the top right corner. Well, this was a three year study, it showed that the work environment was indeed the top driver for employee satisfaction. But the thing I also point out, is that revenue, operating profit total score, these other business metrics, were also highly correlated, as noted by the green dot. Notice, again, during this three year study, that that was a primary driver of employee satisfaction. These people are working in a restaurant, they're cooking food, they're cleaning tables, they're working at the cash register, and mission and value alignment is the primary driver of their employee satisfaction. And that's an industry with 120% annual turnover. You can see it's important in every industry, then, which we're not talking about today, accountability, responsibility, but I would just point out a just a little teaser.
Notice that the primary driver of their business metrics was employees feeling empowered, and that over the three year study, we found that the way these employees felt empowered, the more frequently they had conversations with their leader, the more empowered they felt to take action. So your leadership, and you having those conversations with your employees, in this case, was a number one driver for this organization accomplishing its business metrics. And just some takeaways, that are probably pretty obvious. 95% of employees did not know the protocols. Just make sure that people aren't guessing, you know, what's appropriate? What are the policies? What are the procedures? Just put it all down, and if you need to collaborate with your employees, even better. Get buy in from everyone. Review the tools. Do you need a VPN? Are you in an industry where data is really sensitive, and people now feel they can't access data to accomplish their roles? Create virtual ways for people to communicate and whether that's through Slack, through Microsoft Teams, through Zoom, through your intranet, just making sure that people can connect and make that a priority as well.
The wellness takeaways, maybe some of these things you already have at your organization. Again, amazing how employees just feel that their company really cares when these programs are available. And the irony is many of these programs are available through your PEO if you use a professional employment organization, or if you have some other human resources platform that you use, but often people aren't even aware of them. So just making sure that you have that information available because now more than ever, people's flow, people's lifestyle, people's work/life balance, where they work, how they work has changed so dramatically. It's really important that you think about people's well-being and make sure to do those check ins and make sure people have resources that are available.
Sam Levine: Thanks Greg, thanks for so many really thoughtful insights and data and the research behind how to build a thriving culture. If you have questions, feel free to put them in the chat. I want to ask you one follow up, Greg. Do you have any thoughts as folks think about the next few weeks moving into 2021? What are some 10% shifts that folks can make now to help improve culture at their organizations? As we look towards the end of the year? Does anything come to mind?
Greg Besner: Yeah, I've had so many people reach out to me and reporters as well, asking, are companies going to be downsizing their offices, are companies going to be changing compensation for employees that have moved from a major metropolitan area to a suburban location that may be less expensive? Employees don't know. There are many examples of employees that have moved during the pandemic and haven't even told their company. They're just assuming there'll be flexibility. So I would say get out in front of this. Are you going to decrease your footprint? Are you going to encourage people to live and work where they want to work? Are you going to have new policies? Because people are guessing right now. They're wondering, do I need to find a new employer because my company's never allowed me to live in Colorado, they always needed me to be in Manhattan. Be proactive. Because if we're all just guessing, then we're going to make decisions without proper information.
Greg Besner is the founder of CultureIQ, a company that helps organizations around the world create high-performance cultures. He is also a highly rated adjunct professor at New York University Stern School of Business, and he was one of the original investors in Zappos.com. Besner was recently ranked in USA Today as the eighth best CEO in the United States among a pool of fifty thousand companies. He also was named the EY Entrepreneur Of The Year® in New Jersey. His most recent book, “The Culture Quotient: Ten Dimensions of a High Performance Culture” focuses on insights from 1,000 organizations and millions of employees, and reveals the ten essential culture qualities that can help any organization prepare for, and thrive in a constantly changing future.