Successful Cultures Strengthen Firms and Drive Financial Success
When Sarah Mears, our Chief Human Resources Officer, posed the question, “Why does culture matter?” to Liz Collins, a partner at EY, during a fireside chat at our recent Global Alternatives Summit in Miami, it was much more than a Socratic exercise.
During the next 40 minutes, Sarah and Liz described the importance of building effective, people-based cultures to drive employee engagement, clearly demonstrating the operational and financial performance benefits, and the ramifications when firms get it wrong.
“Culture happens whether we want it to or not,” Liz said during “The Art of Thriving: Fostering Culture & Purpose to Fuel Business Success.” “It can really enhance an organization and drive a strategy forward but it can also pull it down.”
In fact, “fostering a sense of trust, purpose and connectivity” is a deliberate choice, Sarah said. “It is not an abstract concept. Whether you choose to create the culture that you want or choose to ignore it, you will create a culture in your work force. As leaders we have a massive impact on that.”
Recalling how MUFG Investor Services began a “culture revolution journey,” Sarah said that a 2018 employee survey indicated 67 percent employee engagement. By increasing communication and surveys, creating a learning organization for development, and implementing career management pathways, engagement increased to 91 percent last quarter. Attrition, which was mid-20 percent in 2018, now is 8.5 percent, she said.
Industry data is clear that firms creating a stronger performance culture drive value and benefit financially. “92% of leaders that activate [that type of] culture see increase in financial performance,” Liz said. “And 62% of the executives have found that as they invest in their culture, they automatically see more innovation through that process.” In a rapidly changing industry, Liz said that “100 percent of transformations will go off course” and that alignment across leaders “is the predominant factors that gets them back on course.” The common element to successful transformations was “putting humans at the center,” she said. “Recognizing if we start with humans and build out to process and technology, you have a 2X chance of being more successful. Those are good odds.”
In the post-pandemic world, with four generations in the workforce for the first time, employees who do not feel supported or do not have a clear understanding of a firm’s vision, values and strategy are likely to underperform or leave an organization. Creating an inclusive culture based on trust that focuses on people, diversity, learning and development, wellness and a sense of belonging—with strong support from senior leaders—is critical for success.
“Employees are looking to engage and be able to bring their whole self to work,” Sarah said. As firms pursue DEI and ESG strategies, the people-focused components must address “how do you foster inclusivity, how do you create the environment where there is a safe psychological space?”
Building trust also means having sometimes difficult conversations with employees, Sarah said. “It comes from being very clear, being direct and being honest about not just the team’s performance but individual performance as well,” she said. “It takes a lot of courage to have those conversations.”