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Culture, which sets the standard for how employees and managers interact with each other, is an important factor affecting an organization’s financial performance.JackF/Getty Images/iStockphoto

Bill Howatt is the chief research and development officer of work force productivity with Morneau Shepell in Toronto.

What defines an organization's culture?

It's people.

Culture is shaped by the collective beliefs and behaviours of its work force. Culture is organic and lives and breathes each day. The aggregate of employees' daily thoughts, feelings and actions creates the culture, which is tangible and can be measured.

Culture sets the standard for how employees and managers interact with each other and their customers. Peter Drucker's famous quote, "Culture eats strategy for breakfast," can be observed today in an organization's financial performance.

Culture accounts for 20-30 per cent of the performance differential when evaluating why one organization is out-performing another. The failure rate for all mergers and acquisitions is estimated at 70-90 per cent. One key factor of those that work is culture.


When most of us get on the highway, we look for the speed limit set by government. In a 100 km/h zone, the culturally accepted limit is between 110 and 119. Those who choose to drive 124 km/h know the risk and if they get pulled over for speeding, they know the police officer is just doing their job.

Culture starts with senior leadership who, with their people, set the speed limits with respect to vision and values. Culture shapes the story for how people are expected to behave within a workplace. This impacts their workplace experience.


Having a speed limit with no one focused on managing it is of little value. Too many organizations have words on the wall that most of the work force do not know about or believe to be true. Putting words on the wall or in writing that are not congruent are nothing but artifacts that attract resentment and skeptics, and erode trust. Senior leaders who struggle to gain their employees' trust can make positive gains by focusing on shaping and managing the culture.


Actions leadership can take to shape culture:

1. Define the ideal state: What kind of culture do the senior leaders and work force want, and how will this benefit employees, management and customers? This is where senior leaders can publicly inject their expectations and standards, such as the kinds of behaviours they expect:

  • Setting expectations for after-hours electronic communications.
  • Defining employee rights around managing workload and when it’s time to say no.
  • Thoughtfully spelling out the core values and behaviours expected of all employees (e.g., facilitate a healthy, psychologically and physically safe workplace).
  • Ensuring the vision speaks to the importance and value of every employee’s contribution to the organization’s success.
  • Making a commitment to continually check whether the organization is honouring its commitments to employees that it has put in writing (e.g., employee value proposition, mission statement and values).

2. Regularly and objectively measure the culture: This does not need to be an ordeal. There are different tactics (e.g., surveys that measure culture perceptions, employees' stress) that can analyze the consequences on their health, engagement and productivity. Collecting objective data defines the culture baseline with respect to the average employee's experience and the impact of the culture on their total health and productivity. It's also important to be clear on why people who really like the culture do, and why others don't.

3. Culture shaping: The data unpacks the culture story. To have an impact, senior leaders need to mandate culture shaping as a core objective and put this measure on a corporate scorecard.

  • Cultural tone and attitude start from the top: Senior leaders and all managers are expected to role-model organizational values for cultures to flourish to their ideal state. The CEO is the cultural sheriff. They create the expectations and status reports, and demand that rule breakers get feedback, like police give (verbally or written) when a person breaks the speed limit. Continued breaches result in change. The employee-manager relationship is the most important relationship to shape a culture, as this is the spin of culture.
  • Employees’ perceptions shape culture: What senior leaders think and do matters, but in the end success is defined by what the masses believe. Leaders who behave with humility, empathy, persistence, integrity and drive are best positioned to shape culture by consistently focusing on what they say and do and their impact on employees’ thinking, feelings and results.
  • Define the key metrics, such as the percentage of employee turnover in the first 12, 24 and 36 months of service. Monitor employees’ attendance and presenteeism; measure number of conflicts, bullying and harassment claims, new applicants for posted positions, employees’ trust in leadership and percentage of positions filled by internal referrals; and link culture attitude to financial/budget performance.
  • Cultures are built one conversation at a time: Culture shaping promotes engaging employees in open and transparent conversation where the debate is not about right and wrong. It’s about what every employee is doing daily to honour the vision. Every employee has a role in facilitating and creating the target culture state. Culture is a living story shaped by every employee’s daily stories and communications. It takes practice and monitoring to build culture. Like a wood stove, it requires constant attention to keep the culture and passion burning.

Executives, educators and human resources experts contribute to the ongoing Leadership Lab series.

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