Measuring the Impact of a ‘Healthy’ Culture
Smart and Healthy: that’s the ticket.
Is your organization "smart"? Probably. How do you know? You measure things that a smart organization measures: key metrics like sales, operational efficiency, profit, customer satisfaction, product recall percentage, etc.
Yet almost all organizations focus on these kinds of things, yet they are dysfunctional or mired in being a "good" company. So despite common perception, smart is not a differentiator between good and exceptional organizations.
I coach leadership teams around the United States on a system called EOS (The Entrepreneurial Operating System®). One of the core tenets of EOS is that performance is inextricably tied to having an organization with the right people. Right people = a core value fit.
So besides being a "smart" organization, a “healthy” organization is one in which its people are a reflection of its core values. Each individual works for the good of all, engages with each other to find solutions and holds each other accountable on a peer-to-peer basis. What it looks like is lower turnover and higher morale.
A healthy organization is one in which its culture makes all of these behaviors and expectations readily apparent and intrinsically encourages everyone to buy in.
That’s nice, but what’s it worth?
Patrick Lencioni calls a healthy culture a multiplier of smart. That is, if a smart organization is not much of a differentiator, then a healthy organization is the true key to unlocking value. Here's a quick video of Lencioni explaining the concept.
The importance of a healthy culture is not new, and a lot has been written about it. Over the last 12 months, ‘Workplace Culture’ and related terms averaged more than a million searches a month on Google. In spite of that, a great many small-medium sized businesses view culture as a soft metric – something they can’t quite measure. No matter how many studies show a correlation between highly rated cultures and business performance, the lack of a standardized hard metric puts culture in the ‘nice to have’ column for many business leaders.
OK it’s valuable. How do I measure it?
If you need hard data to measure whether your efforts to build a healthy culture is gaining traction, you might consider using a measure call eNPS (employee Net Promoter Score).
A company’s Net Promoter Score is a widely adopted measure of customer satisfaction and a leading indicator of performance. Simply put, NPS is a measure of this question put to customers: “How likely is it that you would recommend our product or service to a friend or colleague?”
It’s simple, yet powerful.
Now, through anonymous means, you can ask a variation of the same question to your employees: “How likely is it that you would recommend this company as a place to work?”
Respondents are directed to answer the question on a scale of 1 – 10, where the scoring is as follows –
9 – 10 – Promoters
7 – 8 – Neutral
0 – 6 – Detractors
eNPS = % Promoter - % Detractors. This will result in a score on a scale of -100 to +100.
What’s it all mean?
Now that you have your eNPS score, it needs to be put into context to make it useful. That is done via the answer to the second question in the research: “What’s the primary reason for the score you gave?”
So, before you get all giddy that your company’s eNPS is +95%, take a look at the answers to question two.
What if the reason you got a 95% was because your people by and large felt that everyone was so friendly, there was great coffee and the softball team was killer?
Makes you feel all warm and fuzzy.
On the opposite extreme, say your overall score was a -12, but the reason for it was that everyone was expected to offer opinions when issue solving, and they are uncomfortable speaking up. How would you interpret that?
Thoughts to Consider
A healthy culture is not a “nice to have” for a company that wants to achieve its objectives – it’s a “got to have.” Consider using the eNPS methodology to diagnose the degree to which you’ve have a healthy organization.
- A strong eNPS for the right reasons – those that are in line with your definition of a healthy culture – indicate you’re on track.
- A strong eNPS for the wrong reasons indicates you are off track and your culture is ill or you have too many of the wrong people.
- A weak eNPS for the right reasons indicate that you are off track and need to reconfigure your team to those with matching core values.
A weak eNPS for the wrong reasons should never exist – it indicates an organization that seems to have no specific culture at all along with a ragtag group of employees. If this is the case, you’ve got some real decisions to make.
Talk with us about helping your leadership team build a smart and healthy organization to get the most out of the multiplier effect on your bottom line.
About Grow Exceptional
Grow Exceptional works with leadership teams to help get their businesses “unstuck” by implementing and teaching the widely adopted Entrepreneurial Operating System® (EOS®). Visit GrowExceptional.com.