How Leaders Can Shape the Workplace of the Future Through Culture
The Covid-19 pandemic. The rise of AI. Mother Nature’s climate rebellion. These are some of the events that have been shaping culture around the world in recent years. The human responses to them have transformed communities around the world. Change, as they say, is the only constant.
It is no different in the workplace. The human response to world, regional or even local events is also reflected in work culture, which Katherine Risley, managing partner of KBRS, defines as the “environment created in which we all participate during our day-to-day jobs. It’s the feeling we have when we go to work, the way we think about our employer, the way we get to express ourselves at work, how connected we are to the job. Culture is tied to how an organization will tell its story and can often be a byproduct of how that story and those values are lived out.”
Understanding the cultural shifts happening now will help corporate leaders, candidates and talent and leadership consultants plan for and lead in the future — from how to attract top talent to improving employee retention and the bottom line.
Executive Talent spoke with top global consultants about the culture and the future of the workplace. They identified the following five areas of concern for corporate leaders.
Intentionality and Role Modeling
“To take ownership of the culture and the culture evolution, leaders need to be in the driver’s seat to take ownership of the culture and the culture evolution,” says Jennifer Flock, leader of DE&I capability in Europe for Russell Reynolds Associates. “This means they have to listen carefully to people’s lived experiences and understand what’s required to change mindsets and behaviors. They need to be able to role model these behaviors and lead by example.”
Indeed, as a recent Heidrick & Struggles survey showed, when it comes to financial performance, most CEOs aren’t particularly intentional in their pursuit of culture. But in those companies that are, particularly companies led by “culture-accelerator CEOs,” financial performance (assessed by a three-year revenue CAGR) was more than double that of other companies surveyed: 9.1% for this group, compared with 4.4% for the others. Coupled with other notable differences described in this report, the data suggest that these CEOs are far more intentional about culture than other leaders.
Understanding the cultural shifts happening now will help corporate leaders, candidates and talent and leadership consultants plan for and lead in the future.
Bottom line figures are but one performance measure. If leaders are people-centric and align their decisions with culture, they will attract and retain talent. “Culture should pervade the whole organization. It’s something that everyone believes in; it’s a reason that people join and a reason that people stay,” says Shami Iqbal, managing partner of Spencer Stuart’s London office. As AESC research shows, two of the top five reasons candidates accept a new job is because of an organization's purpose, values and mission and culture.
Spencer Stuart developed a Culture Alignment Framework diagnostic tool that identifies eight styles — purpose, caring, order, safety, authority, results, enjoyment and learning — that distinguish culture and can be measured. Iqbal points out that culture is part of each element of the talent journey — recruitment, retention and advancement. “If you’re on a campus, how do you show up to recruit? What do people think of your organization? What is the culture of promotion advancement? How inclusive are you? Is there a track record of moving up through the ranks from a DEI perspective?”
As Risley notes, in the absence of a framework and intentionality set by leaders, a culture will still be created. “That’s where things can go awry.”
The widely acknowledged talent shortage, a situation not likely to change soon, is shifting the balance of power from employers toward employees. And job seekers are looking for companies whose culture and values align with their own. “The bee goes to the flower; the flower doesn’t go to the bee,” says Jason Murray, president and managing partner of Toronto-based BIPOC Executive Search. “An organization must be fragrant and desirable so people on the outside can say, ’Based on what I’m seeing, that’s an organization I want to fly to and be part of.’”
What do candidates want? “Future talent, future leaders really want to lead with purpose. They want to join organizations that fit their agenda,” says Clare Beresford, CEO of Laurence Simons, a leader in legal search. Flock agrees, adding that she sees this same desire for purposeful work “across the different generations.”
Candidates also want to feel a true sense of belonging and that firms will support their lives overall, outside of work. “Technology has made it possible for work to follow us and, as a result, our work lives can end up permeating our personal worlds. It has become the norm for many of us to use the same devices to connect with family and work, for example,” Murray points out. “Because work and life are so intertwined, employers need to ask themselves, ‘What policies, processes and even boundaries can we introduce to ensure employees have time to pursue personal interests while deepening their personal relationships?’” In addition, job candidates ask about flexibility, hybrid work policies and workplaces that make them feel engaged and respected.
To create a good organizational culture when many people work remotely, organizations will need to delineate clear and consistent policies that straddle leadership’s desire to get more people back to the office and employees’ desire to work from home.
Culture is among the top questions candidates ask about organizations, says Bill Sakellaris, managing director, Australia, TRANSEARCH, a global executive search firm operating in 40 countries. “What are their values? What's their purpose? Why do they do what they do? How do they treat the environment? How do they treat their people? How do they engage with their community? A decade ago, these questions were not being asked to the same extent. With more millennials in the workplace now than other generations, this will only increase in the future.” He says that an environment of teamwork and connection, a sense of purpose and belonging, and psychological safety will be even more important.
“Job seekers will vote with their feet if the culture isn’t what they’re looking for,” Risley says. A recent Qualtrics survey bears this out, finding that “more than half of US employees (54%) would be willing to take a pay cut to work at a company with better values, and even more – 56% – wouldn’t even consider a job at a company that has values they disagree with.”
Search consultants can play a large role in putting the right candidates into the right settings. Job candidates ask, “I know what I see, but what’s it really like?” Iqbal says. “We [search consultants] have to be able to confidently say that we know the senior players as individuals, we've discussed culture with them and this is what their culture is about.”
Need for New Leadership Skills
Some organizations are known for cutthroat performance review systems in which they rout out the bottom 5% to 10% of employees. For some candidates that’s a toxic work culture; for others, it offers roll-up-the-sleeves-nose-to-the-grindstone-come-out-a-winner appeal.
While this style of leadership isn’t widespread today, going forward “leaders will need to operate from a place of empathy,” Murray says. “When I speak with clients as well as candidates, I listen out for things that tell me the extent to which they care about the people they’re working with. Someone can say ‘I care,’ and that’s always great for someone to express, but it is more important for me to hear instances where someone has been ‘caring,’ essentially manifesting the noun as an action. And employees can tell, or rather, ‘feel’ the difference.”
Risley adds that leaders should have a high level of emotional intelligence. “This requires a good feedback loop; if leaders can see and understand what’s happening then they can make changes and adapt their approach. Command-and-control leadership no longer suits the world we live in.”
The 2023 AESC “Optimism as a Competitive Advantage” report found “emotional intelligence” to be the top leadership competency for the current business environment. The list also includes results-oriented, resilient, customer-centric, value creator and collaborative. In addition to these competencies, leaders also must learn new skills to contend with automation and rapidly shifting technology including artificial intelligence, which will have an impact on work culture.
More Collaboration with HR
Often, work culture and its response to things that might be considered trend shifts such as diversity or sustainability have been sidelined in human resources departments. Going forward, it will be even more important “to see your HR department as more of a strategic partner in building culture. There’s a direct correlation between increases in employee engagement and increases in productivity,” Risley says. “If businesses don’t do this it will be to their detriment.”
Greater collaboration between top leaders and HR will help companies develop more people-first decision making. “For companies that are putting their people as number one always, even when it's really hard to do, that feeds into that culture piece as well as into retention and the bottom line,” Beresford says. “What human beings respond to are often not grand gestures but the daily small things, a shout out by a colleague, somebody remembering that your elderly aunt was doing poorly. It isn't HR, or your chief people officer saying, ‘This is what it is.’ They may be the department that's created it, or that has responsibility for it, but it's their job alongside all senior leaders to ensure that every other department has it in their DNA.”
New Lenses to Look Through
In recent years, the world has opened itself up to different ways of thinking in response to new knowledge and understanding of history as well as the effects of modern technologies and government policies on culture. Think diversity, equity, inclusion and belonging (DEIB); environmental, social and corporate governance (ESG); artificial intelligence (AI); sustainability; remote and hybrid work. There seems to be a barrage of alternative cultural lenses that shape corporate policy.
Take hybrid and remote work, one of the most visible work culture shifts coming out of the pandemic. How we work and where we work has changed forever.
“What we once knew about culture creation was based on an in-office reality. Leaders now need to reflect on ‘How do we build a great culture if our team is a mixture of in-office and hybrid or remote?’” Risley asks.
If leaders are people-centric and align their decisions with culture, they will attract and retain talent.
Building this newer culture brings a certain amount of tension to a company, Beresford says. “Organizations need to ask themselves important questions. ‘What is our value system? How do we have those water cooler moments if there's nobody at the water cooler?’ And on a practical level, a lot of companies have very expensive real estate that might be at 30% occupancy. This tension between full-time working in the office, hybrid and fully remote continues to bring challenges, not only because of talent retention but also because of what impact that is having on culture, particularly when new hires have been made, post-pandemic — meaning they never knew their company when everyone was in the office full-time.”
“A good culture will allow for flexibility and make sure that people remain connected to the business, regardless of the structure of the hybrid work arrangement,” Sakellaris says. Furthermore, a strong culture enables the organizational strategy to land and if a change in strategy is required, culture is the enabler. He points out that the hybrid work model has yet to find its balance and one of the concerns as it relates to culture is that it’s possible that those who are “present in the office will be collaborating, learning and sharing. They are likely to be learning more and learning faster. Speed of learning is the only sustainable competitive advantage for individuals and organizations. We are also seeing those organizations whose culture embraces learning and a bolder use of technology, have also embraced the use of AI, again providing a competitive advantage if used wisely.” But will everyone’s opportunity be equally as strong as every other employee’s? That’s where a good culture is important.
To create a good organizational culture when many people work remotely, organizations will need to delineate clear and consistent policies that straddle leadership’s desire to get more people back to the office and employees’ desire to work from home. The same is true for the other perspectives being navigated.
And when it comes to sustainability and environmental practices, federal laws (in every country) may force the hand of corporate policies as organizations comply. In a good corporate culture, it won’t be “goals as statements that are not lived out,” Risley says. “You’ll need leaders who actively think about what programs will support the company’s goals and how [the leaders] can set the stage for employees at all levels to work toward those goals and engage in the conversation.”
Paying attention to these new lenses pushes search consultants to tap into a broader pool of talent. Murray, whose firm helps to amplify underrepresented voices, says that working to “increase those voices around the decision-making table should excite all of us as search consultants. Plurality brings innovations. It brings possibilities. A variety of different voices working on a strategy or a particular problem keeps everyone’s brain working and actively engaged.”
And Flock points out that these explorations will “help us to challenge ourselves on some of the biases and preconceived notions that we might bring to the table. We are expanding our thinking and elevating the way we think about recruitment and alignment with best practices.”
Culture as a Competitive Edge
Culture is constantly shifting; it’s a moving target. In the future, there will be more environmental crises, more global challenges and more political upheavals that will affect daily life and corporate culture. Leaders who want to succeed in a rapidly changing business climate are “realizing that culture is as important as anything else they do in their business. If you get the right people operating the right way together, they will outperform businesses that don’t have that,” Iqbal says.
Indeed, as the Heidrick & Struggles survey found, many executives were seeing that a thriving culture could “provide a competitive edge in innovation, employee attraction and retention, and agility, among other areas. Eighty-two percent of CEOs surveyed said they had focused on culture as a key priority over the past three years. They did so for a variety of reasons, with improving financial performance being the most frequent response, followed by increasing employee engagement.”
During COVID, companies that were best able to “come out the other side were the ones that were able to create a sense of connection and belonging,” Flocks says. “Companies that create healthy, high performing, inclusive, sustainable cultures will be better positioned to navigate the complex challenges in the years ahead. When people feel disconnected from an organization or are operating in toxic cultures, they will find it difficult to lean in when it really matters.”