2020 Global Culture Report

FOREWORD

In 2018/2019, we saw organizations make significant investments in workplace culture. Our research demonstrates that these deliberate culture strategies and efforts are making a difference across the board. However, the journey to thriving workplaces is just beginning. In spite of some positive changes in corporate culture, we have uncovered a new wave of challenges: a growing frustration with conventional workplace practices, an alarming increase in burnout, and a rejection of traditional leadership practices and philosophies. Organizations need to break out of the employee lifecycle mentality to focus on the everyday micro-experiences that, for employees, define life at work.

Last year, the O.C. Tanner Institute released our inaugural annual global culture report. Our objective was to provide a different type of research report that reflects both employees’ and leaders’ perspectives for a more holistic view of workplace culture. Our 2020 report continues this work, with an emphasis on how everyday employee experiences influence, and are influenced by, thriving workplace cultures.

We assert that a new approach to employee experience and workplace culture is needed. Why? Many organizations have depended almost exclusively on the “employee lifecycle” model to design better employee experiences. There is little doubt that this model has proven helpful. It provides a time-based framework for thinking about the different stages of an employee’s tenure. However, we found that the framework does not adequately reflect the employee point-of-view. Indeed, it barely scratches the surface of the broad range of day-today experiences that employees encounter at work. To create a better overall employee experience, organizations need to evolve beyond the limitations of the lifecycle view, and focus on high-impact, daily micro-experiences instead. These experiences connect employees to the cultural norms, values, and behaviors that add up to a thriving workplace culture. That culture, in turn, creates a strong, sustained influence on engagement levels, productivity, innovation, and many other core metrics of success.

This report draws upon a research study of more than 20,000 employees and leaders across the world who shared their experiences with the sometimes helpful, sometimes harmful aspects of corporate culture where they work. We learned that without deliberate and intentional efforts, there’s a real risk of continued increases in burnout, disengaged employees, and declining business results, particularly as we move into a softer economy. We’ve focused on sharing fresh insights, suggesting modifications to existing efforts, and offering a few possibilities for new initiatives. These will help you be more effective in your culture strategy, development, and design.

INTRODUCTION: THE STATE OF WORKPLACE CULTURE

It’s a story of progress and potential. As organizations become more intentional about improving workplace culture, identifying their target states, and beginning to address deficiencies and problems, every Talent Magnet index (as defined in last year’s report) has increased. However, we still see evidence that culture initiatives are often siloed, and strategies are fragmented, leading to wide disparities in the employee experience. Organizations appear to be missing out on the potential synergies of addressing culture holistically. To continue substantial culture gains, organizations need to pursue a cohesive strategy that deliberately connects culture efforts with employee experience initiatives.

The modern workplace and the experiences and relationships employees have with their organizations are constantly evolving. Employees, especially younger ones, have higher expectations that will put pressure on organizations in 2020. Companies that can keep up with the rapid changes in the workforce will flourish, and companies that cannot will lose their best people, their competitive edge, and ultimately, their customers. The old mindsets and practices for leading and listening to employees are beginning to crumble and fade.

Leaders are fast waking up to the crucial role of workplace culture in organizational success. Great workplace cultures generate an energy that fuels their people to innovate, to wow their customers, to draw in the best people, and to outperform their competitors in virtually every aspect of business results. Still, organizations around the world struggle to foster workplace cultures that employees can connect to; ones that inspire passion and loyalty. However, this past year, propelled by the intentional efforts of leaders to improve workplace culture, employees are reporting that progress is being felt and experienced. Like a giant flywheel, it appears that the momentum is building. A renewed effort to improve workplace culture and enable employees to thrive at work is leading to broad-based improvements in culture. We believe it’s just the beginning.

ORGANIZATIONS SHOW PROMISING IMPROVEMENTS

Last year’s Global Culture Report identified six core elements of workplace culture that are crucial to an employee’s decision to join, engage with, and remain at any place of work. We call them Talent Magnets, because of their power to attract and connect people to their teams and organizations. They are shown here with their corresponding improvement over last year’s study.

1. Purpose

Purpose is your organization’s reason for being. It’s the difference you make in the world. It’s what would go missing if your organization ceased to exist.

In order to feel passionate about their work, employees need to feel connected to your company’s purpose and understand how their role and the work they do contribute to it. Companies must clearly articulate their purpose and create experiences that inspire each employee to pursue it with all their heart, mind, and soul.

2. Opportunity

Talented, productive employees crave opportunity. So create an environment that helps them develop new skills, do work they are proud of, feel challenged, have a voice, and grow.

Opportunity is about more than promotions and pay increases. It’s about empowering employees to make decisions, offering them a seat at the table, and including them in special projects where they can make new connections and expand their skills. Opportunity is enabling employees to make a difference and to experience personal and professional growth.

3. Success

Everyone wants to play on a winning team. So create a culture of success. Help employees feel the thrill of accomplishment, innovation, and personal victory.

Employees yearn to contribute in meaningful ways. Success needs to be experienced at the individual, team, and company level. It should be nurtured, articulated, and celebrated. To foster success, leaders must break down barriers to greatness, encourage risk-taking, and publicly recognize great work.

4. Appreciation

In order to thrive, people need to feel valued for their contributions and appreciated for their unique talents and points of view.

Employees lose heart when they are not appreciated. They need to know their extra efforts and above-and-beyond contributions are noticed and valued. To be effective, this needs to be done in a timely, personal, and meaningful way.

5. Wellbeing

Organizations need to care about more than just the physical health of employees. They need to care about the employee as a whole; their physical, emotional, social, and financial wellness.

Wellbeing is ensuring employees can be their healthiest, most authentic selves at work. Wellbeing is escalating in importance in today’s workplace because more and more employees are feeling stressed, disconnected, and lonely at work. Leaders need to create an environment of inclusivity, work/life integration, and connection.

6. Leadership

Employees need leaders who act as mentors and coaches, who inspire and facilitate rather than micromanage, and who foster a sense of collaboration and support.

Leaders cultivate a sense of purpose, opportunity, success, appreciation, and wellbeing in their people. The best leaders are more than “bosses” who tell their employees what to do. They inspire, mentor, create shared purpose, and empower their employees to do great things.

Companies with thriving workplace cultures perform well across each of the six Talent Magnets. They also see higher levels of employee engagement, higher Net Promoter Scores (NPS, which indicate how likely employees are to recommend their organization as a place to work), better revenue growth, more innovation, lower turnover, and fewer layoffs.¹

Employee engagement increased six points to 72%, and employee NPS moved from a negative 8% to a positive 5%.

It is encouraging to see that companies around the world are making progress, and that their concerted efforts are starting to pay dividends. While there may be some effect from external factors on these scores (good economic conditions, low unemployment, etc.), we see evidence that culture is gaining momentum. Purpose, in particular, increased significantly. Our research demonstrates that organizations are placing an increased focus on becoming more purpose-driven, creating and intentionally communicating a meaningful corporate reason for being. With coordinated efforts driven by senior leaders, HR, internal communication teams, and marketing departments, more employees feel connected to their organization’s purpose.

Our previous research found that the Talent Magnets are statistically interconnected. Improve one magnet, and there will be improvements in the others. This makes logical sense. A meaningful purpose, for example, creates a feeling of opportunity, which increases the chance for success. It also positively impacts employees’ perceptions of leadership, and helps them feel an elevated sense of appreciation and wellbeing. So improvement in purpose alone can strengthen your entire culture across the board. The same is true for every magnet.

These small but concentrated efforts may take time, but they are still having an impact. It’s clear the dial is moving.

BURNOUT IS STILL CAUSING MANY EMPLOYEES TO LEAVE

While workplace cultures are getting better around the globe, there is still a lot of room for improvement. The likelihood to leave an organization for a similar role, pay, and benefits at another company actually increased to 59% from 55% last year. While companies are improving when it comes to their workplace cultures, those cultures are not yet strong enough to cause employees to stay.

Just as concerning, employees are feeling more burned out than ever before. Employee burnout, a common occurrence in the healthcare industry, is now showing up in other industries. The World Health Organization officially classified burnout as a legitimate syndrome related to “chronic workplace stress that has not been successfully managed.”² Meanwhile, Oregon became the first state in the U.S. to give high school students five mental health days per year to mitigate burnout.³ Our research found that 79% of employees are experiencing some level of burnout at work. Organizations need to start looking at their culture to mitigate sources of chronic workplace stress.

High burnout shows that while workplace culture is improving, we have not yet reached the tipping point. There is still the lack of a coherent, integrated culture strategy to create breakthrough change in organizations, and address retention and burnout issues.

OUTDATED APPROACHES TO CULTURE DEVELOPMENT JUST DON’T WORK

The old ways that organizations define themselves, their leadership philosophies, work expectations, communications, and employee development are fading in eff ectiveness. In many cases, they are being outright rejected by incoming generations of employees. Workplace culture norms that worked for so long in the past are no longer relevant with Millennials and Gen Z-ers and do not work in the increasingly mobile, modern workplace.

Things like siloed, title-based decision-making processes, traditional leadership management practices, annual performance reviews, team structures, old technology tools, and even the 9–5 workday are no longer meaningful to today’s workforce. Employees desire more autonomy, more transparent communication, more mentoring, and more flexibility in how and where they work. It is imperative that companies listen, learn, and adapt to new ways of leading their people to actively shape their culture moving forward.

Redefining and reinventing how organizations interact with their people is a big task. How do we create workplace cultures that help employees successfully handle workplace stress, want to stay, and thrive at work?

It all hinges on rethinking the employee experience.

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