While the bottom line remains a key concern for all businesses, the building and fostering of workplace culture is receiving increased attention as an element that can impact it.
This year's PRWeek/Allison+Partners C-Factor Survey reveals that culture is top of mind across all industries. Of the 201 executive- and senior-level in-house officers who responded, 96% reported their organization put effort into establishing their workplace culture – with 84% saying they put in “very much” effort.
This rise in importance of culture to companies has been meteoric. In a 2012 study by the Corporate Executive Board, a leading member-based advisory company, corporate culture ranked fourth among risks that most concern CEOs and executives. Just four years earlier, it didn't register as a risk at all.
James Heskett, a Baker Foundation Professor, Emeritus at Harvard Business School and co-author of Corporate Culture and Performance, suspects a number of factors have contributed to the newfound focus on workplace culture. He cites economic challenges that “forced cutbacks, layoffs, and other especially difficult leadership tasks that have sensitized the C-suite to the importance of culture at a time of crisis.”
On the opposite end of the spectrum, he explains that the success stories of technology companies such as Google and Facebook are strongly linked to admirable workplace cultures.
There is also a growing body of empirical evidence – much of it done by Heskett and his colleagues at Harvard – that shows corporate culture can be linked to financial performance. In Heskett's most recent field study, the basis for his latest book, The Culture Cycle, culture was found to explain up to half of the difference in operating income between two organizations in the same business.
C-Factors Survey respondents similarly recognize culture's role in financial performance, as 93% say their organization's workplace culture has a direct impact on financial performance, with more than half (54%) opining it has a great deal of impact.
In an industry such as PR, where creativity is the life-blood of the discipline, the bottom-line importance of culture is keenly felt. But how much emphasis and effort do agencies and in-house departments put into it?
And how does it make PR pros better at their jobs? Several leaders at top agencies and brands with highly regarded workplace cultures spoke to PRWeek about how workplace culture drives performance and creativity.
Level: 56% are executive level (CEO, CFO, CMO, EVP, MD, CCO, chief talent officer); 44% are senior level (SVP or VP)
Gender: 63% male; 37% female
Region: Respondents represented 35 of the 50 states. 28% come from the Northeast; 21% from the West; 15% from the Southeast; 14% from the Midwest; 10% from the Mid-Atlantic; 5% from the Central States; 4% from the Plain States; and 3% from the Northwest
Staff size: 46% of respondents come from companies with 1,000 or more employees; 26% from those with 500-999 employees; and 28% from those with 200-499 employees
Company revenue: 35% work for entities with $200m-plus in annual revenue; 17% $100m-$199m; 20% $50m-$99m; 11% $20m-$49m; 4% $10m-$19m; 6% $6m-$9m; 5% $1m-$5m; 2% under $1m
Sector focus: The industries in which respondents work are broken down as such: Financial services 23%; Industrial/manufacturing 17%; Healthcare/pharma 11%; Retail 9%; Tech/Internet 7%; Arts/entertainment/media 5%; Education and government/public affairs (3% each); Nonprofit/charity and food & beverage (2% each); Other 18%
Product of the environment
The physical space in which employees work would seem to have a profound effect on their day-to-day performance. And indeed, when asked about physical work environments and flexibility, 53% and 57%, respectively, of executive- and senior-level respondents say it has a significant impact on workplace culture.
Those interviewed for this story believe the figures would be significantly higher if respondents included junior- and mid-level executives.
Mike Michels, VP of corporate communications at Toyota Motor Sales, admits that the automaker's offices across the group are a source of frustration for staff.
“We're not terribly hierarchical,” he says, “but our offices have been set up according to traditional rank and file.” In other words, those in senior positions are in offices – even though they might be better served being in the hub of activity – and junior- and mid-level executives may be in tight, highly populated quarters, even though they might be better suited in quieter, physical spaces so they can focus on tasks such as writing and media pitches.
Toyota is now in the midst of a “workplace” pilot project that is bringing together architects, planners, and sociologists, which will see half of the fourth floor of the company's 2.4 million-square-foot office in Torrance, CA, redesigned into a new space.
The workplace pilot includes the departments of corporate communications, which has about 45 people working in the offices at any given time, and strategic planning. The new corporate communications area will feature quiet working spaces, as well as situation rooms. Michels will no longer be isolated from the rest of the team in an office.
“We want to allow for a lot more flexibility and give people the physical space that matches their job demands,” he says. “In terms of the work environment, it will look a lot more like a PR agency.”
He also suspects the workplace pilot will help foster a culture of collaboration, since communications disciplines (environmental, corporate affairs, automotive brand specialists, and more) will be less segregated by physical barriers.
Much like Toyota, many companies put a lot of thought and effort into creating a physical environment that will inspire their employees. And much like individual offices, every organization's culture is unique.
Culture at the core
Allison+Partners has a set of core values that serves to guide its people on how they should behave. Its five values – to be entrepreneurial, enthusiastic, collaborative, empowering, and always striving to exceed expectations – were fleshed out at a staff retreat in 2003, just two years after the firm set up as a flat, non-hierarchical new PR shop in San Francisco.
By 2009, Allison had expanded to seven offices in the US with revenue of $13.6 million. With so many additional offices and new staff, the workplace culture was at risk of becoming less driven by those values set out a few years earlier. “We had these core values, but they were just sort of sitting on the shelf,” says CEO Scott Allison.
He also knew the risk of simply assuming the agency's workplace culture was strong. “My guess is that 95% of CEOs would say they have a great corporate culture,” he notes. “However, if you pushed down a few layers and asked the same question, that stat would really drop.”
Senior partner and cofounder Scott Pansky took what Allison calls a “deep dive” into the agency's culture. He developed ways for the firm to bring its values to life in an ongoing and tangible way. For example, he instituted employee recognition programs such as the “Corey” award, which is given to an employee each month who best exemplifies the agency's values.
The firm now conducts year-end employee surveys, mini focus groups, and town-hall meetings in which more than 50% of the time is devoted to employee Q&A sessions. By acting on employee feedback, the agency has improved everything from its cellphone reimbursement plan to its maternity leave benefits.
“One of our core values is to exceed expectations,” says Allison. “If we expect staff to do that for clients, then we should expect it from ourselves as owners.”
That investment into cultivating culture has paid off for the firm, in terms of attracting and retaining top talent and clients, Allison reports. When Toyota awarded the agency a major piece of its business late last year, the automaker cited the chemistry agency staff had with one another as a key reason, which Allison says harkens back to culture. The financial impact is also not lost on Allison, as agency revenue surpassed the $23 million mark in 2012, growth of almost 70% from 2009.
Opportunity to engage
A 2012 Taleo Research study shows engaged employees are more than twice as productive as those who are not – and that culture is a primary determinant of engagement. It's perhaps no surprise then that 93% of survey respondents said their workplace culture had an impact on internal communications, with 57% saying it had a great deal of impact.
Conversely, only 38% said the organization's workplace culture had a great deal of impact on external marcomms programs, while just over a majority of respondents (59%) said their company's cultural values were very important in defining its brand.
This is an opportunity PR pros should relish, according to communicators at brands such as Starbucks and GE who feel that workplace culture can – and should – be a driver of external marcomms as well as brand identity.
Starbucks, for instance, engages its employees through its corporate story, the language it uses, and the perks it affords them. Employees are called “partners.” And all staffers who work 20 hours a week or above are provided with medical, 401(k), equity in the form of stock options, tuition reimbursement, perks such as in-store discounts and free coffee, and other benefits.
More than just about creating a good internal culture, Corey duBrowa, Starbucks' SVP of global communications and international public affairs, says the company's focus on staff is tantamount to brand building.
“Our people and our brand are fundamentally the same thing,” he points out. “There should not be any divisible line or separation between the values and culture that shows up in the behavior of our employees in stores every day and how we come into contact with people from outside that world.”
So when Starbucks CEO Howard Schultz is on CNN's Mad Money, as he was on June 27 talking about business in America, he espouses the company's cultural values. And when Starbucks communicates to its partners, it does so on digital platforms open to the public, such as Facebook, Twitter, and Instagram.
As duBrowa explains, when his team puts together messaging “there is little to no differentiation” between external and internal campaigns. “We want to engage in a totally transparent way,” he says, “so it's clear to our partners and public exactly what we believe in.”
In 2012, GE conducted 15 focus groups with its employees from around the world and launched a new communications platform called GE Works, which shows how its staffers innovative.
“We didn't want to force feed a campaign line to the world,” says Becky Edwards of the employee research, speaking to PRWeek in her role as director of employee communications. (She has since started in a new role, CCO for GE Oil & Gas, on August 1.)
Edwards says the campaign is “defined by staffers” and the brand continually revalidates the culture by looking for new internal stories to tell. This summer, for instance, GE launched a summer intern competition in which teams interview someone at the company about their career, create a video, and post it on social media. The top two teams will receive a cash reward.
“Sometimes people forget that our innovation or imagination – how we put it to work – is not just about the engineers and technologists,” she continues. “Certainly in the communications field, we are expected to be innovative, to believe there is a better way of doing things. One of the ways we are continually refreshing and validating our culture to all employees at GE is through storytelling.”
Taking a cue from forward-thinking marketers, PR agencies are also brand building from the inside out, with culture being a key facilitator. Ketchum, for example, has been creating its external identity around Break Through.
“We want creativity to be the drumbeat that pervades this culture,” says Karen Strauss, chief innovation officer at the firm. “We invest in tools, techniques, and infrastructure that feeds into that creative culture.”
Ketchum has created tools such as Mindfire, a crowdsourcing site of students from 50 global universities that helps the agency look and potentially solve client challenges in novel ways. A new curriculum focused on maximizing creative output has also been developed for Camp Ketchum, the firm's professional development program. One new course, Getting Past No, is designed to help give employees the tools to sell highly creative ideas to clients. If they feel more confident about their ability to sell through creative ideas, Strauss believes they will be more likely to get behind them in the first place.
“The experiments that take hold best are ones that fuel our creative culture,” she adds, “because they are most relevant to our people and our clients.”
Ninety-two percent of survey respondents feel their CEOs should have a lot of responsibility for workplace culture, while 94% say their organization's leadership is making an effort toward both establishing and reinforcing workplace culture. Of course, this doesn't fully translate into a notable effect. When asked how much of an impact leadership's behavior has on driving workplace culture in their organizations, the number dips to 76% for those who describe it as “significant.”
So how can leaders truly shape their workplace's culture, particularly as it relates to helping communications pros do a better job? Heskett says research he and his colleague John Kotter have undertaken indicates that one of the most important things leaders can do is “serve, in the sense that they make sure those around them have the resources they need to do a job.”
This insight became an important “a-ha” moment for Grace Leong, CEO of Hunter Public Relations, an independent New York-based firm that grew year-over-year revenue last year by 21% to more than $14.5 million.
“What I learned – and it took me a while to get this – is that you have to encourage the personal talents and passion of your staff,” she says. “You might have someone who started with you at 22 and then at 25 realizes he or she loves social media and wants to do that,” adds Leong. “You might think they should stay on the account side, but what you think does not matter as much as their own vision for themselves. If you are willing to move them into a new role and give them the resources to express their talent and vision, you will succeed in the business environment.”
All of Hunter PR's specialized services – Hispanic outreach, social media, and research and insights – originated from employees interested in spearheading a new department. “And,” Leong notes, “some of those specialized service divisions are now more profitable than our traditional ones.”
The right talent
If employees have a lot of responsibility for driving the workplace culture – and 63% of survey respondents believe they should – then the link between hiring and culture becomes more important. In fact, 46% of those who answered the survey say that views on how potential employees fit the culture play a factor in hiring decisions. An additional 18% claim they hire for culture first.
Pernod Ricard has shaped its culture around the idea of having employees build their own professional networks – taking the initiative and making their own connections with colleagues, suppliers, customers, and media. To ensure it attracts the kind of individuals who are entrepreneurial in nature, the global wine and spirits company spends a lot of time assessing cultural fit when making hiring decisions.
“Cultural fit when hiring someone is almost more important to us than their work ability, background, or education,” says Jeffrey Moran, VP of PR, events, and lifestyle marketing at the company. “You can teach people a lot of things, but you can't teach them a personality.”
He often reaches out to colleagues for referrals, seeks opinions about a candidate from several internal sources, and meets potential candidates inside and outside the office to see how they interact.
“We want to live our culture, so we meet them outside for a drink or lunch because they will often be going outside their office if they work here,” adds Moran. “You need to see them in different settings.”
The importance of hiring for cultural fit resonates on the agency side, too. In fact, many firms are using different ways to help determine this. Ketchum, for instance, tests measures for creative thinking and problem solving.
“We sought to get to the bottom of how the likes of Google and Apple interview,” says Strauss. “Ultimately we arrived at the conclusion that there is an element of subjectivity to it, but there are enough objective tests that gauge creativity.”
On the flip side, Allison notes that employers also bear the responsibility of demonstrating their culture to the talent they are recruiting.
“In markets such as San Francisco and New York, it is hard right now to find talented people and retain them,” says Allison. “We often bring in candidates who have many offers from other agencies. The culture and vibe of an agency can tip the scale in your favor.”
Creating a culture in which staffers feel empowered to take creative risks is an area of concentration for new and legacy companies alike. For a social media company such as Facebook, ensuring the corporate culture retains its risk-taking nature is crucial. In fact, it's a key reason the company's founder Mark Zuckerberg believes Facebook was successful in the first place.
As the company gets even bigger, Slater Tow, corporate communications lead at Facebook, says, “We focus on keeping teams small so that everyone can have a huge impact. It keeps us lean, scrappy, and helps people feel like they have the freedom to take risks.”
Orientation sessions for new hires trumpet Facebook's risk-taking culture and its offices are decorated with posters that read, “Move fast and break things.” These are constant reminders that it's good to take risks, a credo that Tow definitely wants his communications team to rally around.
“We've built our entire organization around the mission to make the world more open and connected,” he explains. “We've looked to our culture of moving fast and taking risks to help us achieve this.”
Companies with long legacies are taking a page from social media entities and trying to find a way to create a culture that embraces risk-taking. “We all know you're supposed to fail [to learn]. To do that, you need to build a risk-taking culture,” suggests Strauss, who is exploring ways to encourage creative risk-taking at Ketchum. “Of course this is a challenge because we're all in the business of living quarter to quarter. Failure is terrifying, but we're working on it.”
Toyota's Michels admits that creating a risk-taking culture can be challenging for PR units. His team is trying to learn from the example of Toyota's manufacturing sector, which celebrates mistakes through
Catches of the Week. The mistakes are appreciated because they help the automaker improve processes and products. Just as making mistakes can be beneficial in manufacturing, so it can be for communications.
“As an industry, we're generally culturally risk averse or at least always trying to minimize risk,” he says, “but we're starting to recognize the value of making mistakes. Off-site conferences have taught us that the value of a wrong turn and right turn are actually equal.”
An increasing priority
More than half (56%) of survey respondents report that the emphasis on workplace culture at their organization increased over the past two years, while 52% expect it will be even more of a focus in the next couple of years.
Those numbers underscore that workplace culture is clearly of paramount concern to organizations – and will increasingly continue to be so. And the communications arms of these companies, as well as PR agencies, will be at the forefront, as culture clearly impacts how PR pros work, how they feel about their work, and the kind of assignments they're willing to suggest and take on.
For Allison, the proof is ultimately in the output of his staff. “Culture has to be constantly cultivated,” he says. “I see culture in the way people are inspired to do more, take on more, voice their ideas, and try new things.”
The PRWeek/Allison+Partners C-Factors Survey was conducted by PRWeek and Bovitz. The study was fielded online within the US between June 3-21, 2013, among 201 executive and senior-level business professionals who work at companies with 200 or more employees. Results were not weighted and are statistically tested at a confidence level of 90%. This article offers a summary of findings. Additional charts and findings are available for purchase in the C-Factors Survey Premium Edition at prweekus.com/cfactorssurvey.