WHY CULTURE, NOT ENGAGEMENT, IS THE NEXT HORIZON FOR BUSINESS EXCELLENCE

The jury is in, and the verdict is clear – Employee Engagement is not the wonder metric we hoped it was. In fact, market leading organisations have discovered that much more emphasis on culture is needed to drive the performance outcomes required to execute strategy AND to generate sustainable employee engagement. Many organisations grapple with the decision of focusing on either culture or employee engagement, and whilst these measures are often spoken about interchangeably, their differences are critical. 

WHAT’S THE DIFFERENCE? 

At its simplest, culture measures how an organisation works, whilst engagement measures how employees feel about an organisation. Culture describes the priorities, behaviours and collective work practices used to get work done, and is a strong predictor of organisational performance and individual performance. Employee engagement measures personal reactions and experiences of the workplace and is a useful predictor of individual performance. 

Despite these critical differences, it is common practice for boards and executive teams to use engagement as a proxy for culture and in doing so, fail to gather critical data on the workings and health of their organisation.

WHAT’S THE IMPACT? 

Years of organisational data, as well as some high profile organisational failures, have brought to attention some critical challenges with employee engagement. At the top of this list is the recognition that it is entirely possible for employees to feel content and ‘engaged’, even if they are working within an environment that has critical weaknesses in work practices and behaviours. Using engagement as a measure of organisational health can, paradoxically serve to ‘dial up’ behaviours that are counterproductive to organisational health and performance. 

The confusion between engagement and culture was highlighted through the Royal Commission into the Financial Services Industry in Australia, where high engagement was common in organisations of focus, despite the prevalence of significant cultural issues.

Siloed work practices, information not being shared freely within and across the organisation, and a skewed focus on organisational and individual performance over customer experience were common cultural findings. The Royal Commission made it apparent that whilst employee engagement was often healthy, the operations of the organisation were unhealthy and unsustainable in an increasingly competitive market where customer experience and trust matter. This is a powerful example of mistaken identity; where employee engagement is considered a proxy measure for culture and organisational health. 

FROM DATA TO ACTION 

When we look to pivot from data to action, another key difference between engagement and culture diagnostic data is apparent. Because engagement measures how people feel, acting on this data in a way that addresses root causes is not easy or intuitive. The engagement question ‘I enjoy coming to work every day’ requires much more exploration (or lucky guesswork!) from a busy manager to effectively address that data point. Quality culture measurement, on the other hand, measures the behaviours known to support organisational and individual performance. ‘Authority is appropriately delegated so that people can act on their own’ provides reasonable clarity about where effort needs to be directed to enable change. 

WHERE TO FROM HERE? 

Leading organisations with whom we partner have recognised this tipping point and that a focus on culture is better able to develop organisational health, predict organisational outcomes and drive critical decision making. Simply put, a culture assessment cuts to the core of your business, highlighting the root causes of challenges and opportunities, whilst engagement is just on outcome of that culture. If you shift culture, you shift everything, including engagement.

The decision to measure either culture or engagement should be an easy one; both are important but they are not the same in what they measure or what they predict. Importantly though, where boards, executive teams and leaders are concerned about having the data necessary to inform sustainable organisational performance and health, measuring culture is critical.

You can read more about measuing organisational culture in our Revolution in Culture Change whitepaper.

1. Organisational Culture and Employee Engagement: What’s the relationship? Kotrba, 2016​
2.