We know that the only constant is change. What we didn’t know was that we would experience a global pandemic that would be devastating to organizations and the people within them. We also didn’t realize the political environment would become so volatile or anticipate how the resulting policies would impact organizations. Such forces have fractured many organizational cultures as leaders try to address the issues facing them.
Layoffs have been prevalent and employee turnover is high. LHH global research reports that 43 percent of organizations lost half their leadership team in 2024. A metaphor for culture is it is the “glue” that holds employees together or the “invisible tapestry” that weaves the organization together. Since culture trickles down from leaders, losing members of your leadership team makes it hard to maintain the culture.
McKinsey research indicates when companies prioritize organizational culture, they outperform those that don’t. They deliver three times higher total shareholder returns than unhealthy peer organizations. They achieve 18 percent higher EBITDA within a year and 2.5 times the ROIC of unhealthy organizations.
CREATING A HEALTHY CULTURE
Kelly Byrnes, founder and CEO of Voyage Consulting Group, is a long-time company culture advisor. I interviewed her for advice on this topic. She shared that culture goes far beyond the slogan on the wall. It consists of the norms, principles, and values a company lives, and it is passed on from employee to employee.
Since COVID, the importance of creating a healthy culture has increased. When Google was first created, culture was a primary tool in recruiting. The corporate office had ping pong tables, bean bags, and free lunches. But Byrnes stressed how culture is much more than amenities.
When the global pandemic lockdown occurred, people had time to pause and evaluate their lives. Working from home became the norm, and employees liked the flexibility and agency. Now many organizations are requiring employees to return to the workplace, and Byrnes noted they are not executing this in ways that create an environment where people want to work.
“Culture is created whether you’re intentional about it or not. And that culture may not be positive,” Byrnes warned. “Culture will become the worst behavior you tolerate.”
My next online Leading Edge column will share some of the culture mistakes leaders are making and suggestions on how leaders can address the culture challenges they face.