The most important result of a strong organisational culture is sustainability. Not in the environmental sense – this is about being resilient to shocks, capable of creative solutions and planning for the long term. That resilience and creativity is rooted in diverse and inclusive workplaces – which makes the right people policies central to both culture and enterprise value. We asked delegates at Contemporary FD 2018 to debate their approaches.
The culture of an organisation is intimately connected to the people inside it. And these days, many business leaders are realising that they cannot hope to compete in rapidly changing markets without a diversity of thought and culture among those employees.
Let’s be clear: no business needs a profit motive to make progress on diversity and inclusion. Obviously, avoiding hiring or promotion prejudice is, very simply, the right thing to do. But that’s often not as easy as it sounds.
Lots of businesses are succeeding, however, by addressing groupthink, unconscious bias and closed-off cultures in their own teams. We invited Richard Chapple, Chief Customer Officer at Gymshark; Andy Hogarth, CEO and former CFO of Staffline; and Jennifer Barrow, head of Corporate Responsibility, Financial Conduct Authority to present five questions on this subject for the Contemporary FD delegates.
Hiring: cast the net wider
The first group of tables discussed how they ensure recruitment isn’t skewed by unconscious bias – where innate preferences influence personnel decisions – and like-for-like hiring.
The good news is that many of the FDs run businesses where there is a clear attempt to challenge unconscious bias through, for example, training sessions.
There also seems to be a modern trend to anonymise job applications – removing information (such as names or schools) that might nudge managers toward or away from particular candidates.
All the tables discussing this question mentioned “blind CVs,” and a couple of FDs also advised their peers to consider training for interviewers.
Allied to training, a more considered approach to jobs and roles helps. Tighter definition of competencies (either alongside or instead of specific experiences), for example, helps businesses bring in people with new ideas, not just those capable of doing the same old things.
Equally, diverse management is a huge accelerant of more open workplaces, ensuring both recruitment and workplace feel receptive to new voices.
Monitoring: what gets measured, gets managed
Hiring is one thing; knowing whether your people are happy and your workplace open to ideas and different approaches is another. We asked our second group of FDs to discuss how they monitor and report on diversity. Some were disarmingly frank: “generally we’re not reporting…”
Several groups raised a huge number of options used in their own businesses. These ranged from HR monitoring of gender, race and other groupings to staff surveys, from putting the businesses’ social agenda in a written format to one-to-ones between senior leaders and staff and anonymous SWOT analysis of the company by employees (do-it-yourself Glassdoor, in a sense)…
However, throughout the day, a culture measurement technique that came up time and again was exit interviews.
Knowing why people leave, where they go and how they do are all crucial to course-correcting culture. Departing staff can be critically honest in a way employees cannot, no matter how reassuring management is. A well-managed process (that filters out score-settling, for example) can be of real benefit.
The generation game
Diversity isn’t just about race, sex, physical status, sexual orientation or class. With older people staying on in employment and some seemingly more defined qualities among younger employees (not least around technological adeptness), many organisations are starting to think about designing policies for radically different generational needs.
Some words of caution: don’t assume younger people are all that different, or a homogenous group; similarly, just because “millennials” are supposed to desire greater “purpose” in their employment, that doesn’t mean that older workers aren’t equally motivated by values or flexibility.
Useful, then, that “facilitating group discussions among teams” was mentioned as a smart approach. This can also feed into more sophisticated team design, looking to match complementary skills.
“CFOs need to build a balanced team,” explained one group. “Younger members can be more dynamic and speed the adoption of new technology; older workers deliver experience and stability.”
Sitting alongside that more open communication, one table also identified flexible employment policies as a big win for multi-generational workplaces. Both young and old might value flexible hours for different reasons. And flex benefits can make a big difference; while the young probably prefer cash, the older employees may be after more generous pension provision, for example.
Culture and rewards
We wanted the fourth group of FDs to consider whether HR, pay and benefits policies make a difference to their culture. One group nicely summed up the heart of this question: “what motivates employees?”
How does any kind of remuneration address people driven by the pursuit of knowledge, for example? What about employees who feel they have no other choice but to work for your business - who aren’t passionate about coming into work?
You might still design rewards to nudge health or set policies to make the workplace more welcoming. But, as with the multi-generational workplace, it’s the flexibility of your pay and benefits that is likely to make the most difference.
Others concentrated on the business life-cycle. Most of the delegates at Contemporary FD are from high-growth companies who expect to change and evolve. As start-ups, it’s all nervous energy and employees motivated by risk and future equity value – but, with maturity, pay levels have to meet market norms. Benefits should reflect that lower risk appetite.
One FD explained their business’s bonus policy in a cultural context: half an employee’s bonus is geared to EBITDA, and 25% personal objectives. But 25% is earned through alignment to company values and behaviour in the workplace.
Another point: rewards should be regular and tailored. Want to recruit young people for your business out of town? Lay on a minibus. Want people to enjoy being in the office out of hours? Great kitchen facilities can make a difference. And balance the rewards to sustainable business objectives – not just sales. Speaking of sales…
Meeting customers on their own ground
There are lots of reasons to have a more diverse and inclusive workforce. But a huge one is creating a business where customers of any kind feel “at home” – and new products and services emerge to meet their needs.
How do FDs ensure that their own people reflect their customer base – not just at low levels, but into senior management? And if that’s taking time, how else do they bring different voices into decision-making?
The first step is to be conscious about your customers. Who are they? Who might they be in the future? And then how do you embed a listening culture in your people, and appropriate feedback mechanism to get the news to decision-makers?
Customer panels and insight reports are just two options – another was a balanced scorecard approach to understanding the interface between customers and employees.
“But this all means nothing without executive sponsorship,” stressed one group of FDs. It’s the leadership that can ensure the employees have a customer-focused culture; and that the employees reflect the customer base in terms of diversity.
“Customer might be the wrong word,” said another group. “Our culture must reflect wider stakeholders. Who is the customer in a B2B2C business?”
That’s why having open-minded teams with a diversity of viewpoints is valuable: it helps ensure that your people can be in the mindset of any potential customer – and delight them time after time.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.