The ROI of a Human Workplace Culture: Q&A with China Gorman
The seasoned executive explains why leaders who fail to build a workplace culture based on humanity and trust risk hurting their business success.
Photo: China Gorman
China Gorman is a global business executive in the human capital management marketplace. She serves as board chair for Universum Americas, board member for PeopleStrong and Motivis Learning, and previously served as CEO of the Great Place to Work Institute®, COO and interim CEO of the Society for Human Resource Management, and president of Lee Hecht Harrison. China’s extensive leadership experience and exposure to workplace research has made her an advocate for the strategic value of “human” workplace cultures. We got on the phone to discuss how human workplaces compare to traditional ones, what research shows all employees want from their leaders, and common mistakes leaders make when initiating culture change.
“What it always comes down to is the leader.”
How do human workplaces compare to more traditional workplace cultures?
I really began to delve into the research on these cultures when I became CEO of the Great Place To Work Institute®, the research and analysis firm behind the Fortune’s “100 Best Companies to Work For For” list and dozens of similar lists around the world. The data collected in the institute’s Trust Index survey is really clear: all people want the same three things. They want to:
- trust their leaders,
- feel like they’re making a difference, and
- like the people they work with.
That’s irrespective of a person’s gender, age, job function, seniority, geographic location, or nationality.
Trusting leaders, in particular, has lots of dimensions to it. For example, trust includes feeling like you’re being treated equitably as it relates to your peers, whether that’s pay, promotions, or assignments. Trust is also so easy to screw up; one non-congruent decision can negate 100 congruent decisions.
So human workplaces focus on building trusting relationships between leaders and employees. Employees will tell you that they are treated as human beings, not just a replaceable set of skills that clocks in from eight to five.
What are the benefits to creating a more human workplace culture?
When you look at the data from this movement – the data collected by the Great Place To Work Institute®, Conscious Capitalism, WorldBlu, and B Lab – you see that when leadership is really focused on creating cultures that are nurturing and effective for employees, the business becomes hugely successful. Stock market performance outpaces competitors. Turnover is much lower than at other firms in the same sector. You see more, and wider-ranging, diversity in the workplace.
Frankly, as a business leader, it seems like a no-brainer to me; when leaders are trustworthy, approachable, and provide meaning within the work relationship, strong performance happens. At the same time, engagement scores go up, turnover goes down, and your ability to compete in a tightening talent market goes up because of the employer brand you’re creating – an employer brand you’re not just marketing, but actually living.
Why should this matter to business leaders, right now?
Every business leader is looking for an advantage in this difficult global marketplace. Most thinking leaders understand, at some level, that it actually comes down to the people. And if people are what powers your business, then culture is everything.
Intellectual property merchant bank Ocean Tomo has conducted its “Intangible Asset Market Value Study” for over 40 years. In 1975, the research found that intangible assets made up just 17 percent of the average valuation of S&P 500 companies. By 2015, intangible assets made up 87 percent of the average valuation. Intangible assets: that’s people! That’s what’s locked in people’s heads: goodwill, patents, code, processes, collaboration, and relationships with customers. It’s amazing that in 40 years, the way we create corporate value, from a financial valuation perspective, is all about the people.
Which brings us back to finding your advantage in the global marketplace. Well, people are your advantage. If you’re going to attract, develop, and retain the people you need, you need to be concerned about your culture.
Are there any common mistakes leaders make as they work to shift workplace culture?
Where most culture change initiatives get balled up is when the top layer of leadership doesn’t change its behavior. Leaders might say one thing and do another. Or they treat people with disrespect, or they are unapproachable. That kills a culture initiative faster than anything else. What you need is for the CEO, along with the leadership team, to say: here’s how we’re going to behave towards each other, our customers, and the marketplace. And the first time somebody senior breaks that commitment, there must consequences that are are at least semi-public. That will keep the wind in your sails.
Employees really want to trust their leaders. That’s hard; it’s hard to publicly respond to questions when the answer isn’t positive or to own strategic mistakes. But that’s how you build trust, and trust really is the foundation for moving a culture forward.
“If people are what powers your business, then culture is everything.”
Are there one or two examples of organizations that stand out to you for exemplifying the human workplace?
There are lots of them! From all different kinds of sectors. What it always comes down to is the leader.
Kip Tindell, chairman and CEO of The Container Store, was determined to find a different, better way to build a retail organization that attracted and retained the best customer service people on the planet. Now, the company is perennially on the great places to work list, very involved with the Conscious Capitalism movement.
Kent Thiry, chairman and CEO of DaVita, was brought in to lead what was a struggling business. Over the course of several years, he’s worked to establish an extraordinarily successful culture that’s been ranked on “The WorldBlu List of Most Democratic Workplaces” for eight years running.
Ben Salzmann, president and CEO of ACUITY, came into his role determined there was a better way to engage employees. They’ve now ranked repeatedly on the “100 Best Companies To Work For” list – number two on the list in 2016. I had dinner with Ben several years ago and asked him, “How do you do this?” And he said, “Every night before bed, the last thing I think about is what I’m going to do the following day to make my employees happy. And when I wake up in the morning, the first thing I think about is how I’m going to make that happen.” And when you spend any time with him, you just know that’s exactly what he does.
What one element or idea is key to creating a more human workplace?
Leadership. It all starts with commitment, awareness, and real passion at the top, both for the people and business success. Because the bottom line is, you’re not creating a great culture just because you like people. This is about having a successful business that positively impacts customers and communities. It’s a smart business decision. Building a “human workplace” might sound fluffy, but it’s about profit. It’s about share price. And it’s about attracting and retaining the people you need in a tight talent market.
For more of China’s insights, read her blog at chinagorman.com.
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