Leaders see organisational culture as a powerful ally
According to our recent global survey of 3,200 workers in more than 50 countries, including Australia, strong cultures drive better business outcomes. In fact, the majority (68%) of Australian senior leaders credit much of their success during the pandemic to culture. During a year that necessitated major changes for companies around the world, more than three-quarters of respondents said that their culture helps change initiatives happen. Similarly, almost 68% who said that their organisations were able to adapt over the past year also reported that their culture has been a source of competitive advantage.
More generally speaking, the majority (66%) of Australian survey respondents said culture is more important than strategy or operations. They also agreed that top cultural priorities should include recruitment and retention, digitisation, health and safety and collaboration. But not everyone sees eye to eye on culture. Our data shows a widening gap between what leaders say about culture (particularly diversity, equity and inclusion or - DEI) and what their people experience.
It is possible to close this gap, though. As the past year showed, rapid transformation can be achieved with a targeted focus on a few critical behaviours. Going forward, as leaders take on a long list of business imperatives, organisational culture can provide the difference between thriving and surviving.
"Organisations with a view of culture as a distinction and source of competitive advantage maintain a sense of community better, respond to customer needs better, innovate with a higher degree of success and deliver better business results."
Key findings
Culture continues to rise on the leadership agenda
Respondents who say their organisation has a distinctive culture were also more likely to say that revenue, employee satisfaction and customer satisfaction increased during the pandemic.
71% of C-suite executives and board members believe culture is more important to performance than the organisation’s strategy or operating model.
85% of senior management report that their culture helps successful change initiatives to happen.
Culture is a source of competitive advantage
As leaders grapple with ongoing challenges related to digital transformation, innovation, better ways of working, and talent recruitment and retention, having a distinctive culture can truly be a competitive advantage. According to our data, the companies that were most agile and resilient during the pandemic had invested in their culture. Those same organisations were also more likely to have seen revenue growth and customer and employee satisfaction increase over the past year. Moreover, recruiting and retaining talent is easier for organisations that prioritise and proactively manage culture. Our survey shows that sincere leadership and cultural cohesion are aligned to higher levels of connectivity. When employees feel connected to their company, its purpose and each other, they feel more positive—and those positive emotions can then energise effort and enable change.
- 78% of respondents who said that their organisations have been able to adapt over the past year also said that their culture has been a source of competitive advantage.
An authenticity gap exists when it comes to DEI
Our data shows that many workers today feel their workplaces aren’t as inclusive as leaders think they are. At the heart of this mismatch is the issue of authenticity; business leaders believe they are a walking embodiment of the organisation’s culture, values and purpose, but their employees disagree. Unless this is addressed, and DEI values are genuinely embedded into culture, an organisation will struggle to attract and retain the talent it needs.
- 85% of senior management believe that their organisation encourages discussion on sensitive and uncomfortable topics, vs. 56% of middle management and front-line workers.
- More than half of respondents who cited a distinctive culture believe that their organisation embraces flexibility and accommodates people with differing needs.
Only 17% of all respondents say that diversity, equity, and inclusion needs to be improved in their organisation.
Base: C-Suite/board: 382. Below management: 926
Note: Percentages represent ‘agree’ and ‘strongly agree’ responses combined
Source: PwC 2021 Global Culture Survey
Nine key culture enablers
Our recent survey data shows that when more than four of the culture change enablers we’ve identified were activated during the pandemic, there was a significant lift on culture being a source of competitive advantage and an organisation’s ability to adapt.
So, if you want to use culture as a competitive advantage, start by taking stock of how your culture is currently helping or hindering your ability to drive business outcomes. Next, identify what traits and behaviours most need to evolve to best support your strategic business goals. Then start proactively managing culture, which will likely involve building new capabilities to ensure that you’re firing up all the relevant culture enablers — both formal and informal — for your organisation.
About the Katzenbach Center
For the past 25 years, the Katzenbach Center, the institute for culture, leadership and teaming at Strategy&, PwC’s strategy consulting group, has been studying the influence of culture on business success. We define culture as “the self-sustaining pattern of behaviour that determines how things are done.” This year, we asked 3,200 survey participants to reflect on their experiences in the context of the COVID-19 crisis. The results show that, for some, organisational culture was the hero of their pandemic story. By reflecting on lessons learned during the pandemic, business leaders can glean insights that will carry them forward.
