In today's rapidly evolving business landscape, against the backdrop of a hybrid work model and economic uncertainties, organisational culture has emerged as a critical factor for enhancing employee engagement, retaining talent, and driving financial success.
A recent survey conducted by Heidrick & Struggles, a global leadership advisory solutions provider, sheds light on the significant role CEOs are playing in prioritising culture alignment to achieve specific business outcomes.
"Aligning culture with the bottom line: Putting people first" found that CEOs are increasingly focusing on work culture, proactively engaging employees' mindsets, and ways of working as a path to specific business outcomes to drive financial performance—and that they are overwhelmingly seeing positive results.
"An intentional focus on company culture cannot be separated from business strategy, the two need to be inextricably linked, and when aligned can lead to significant financial returns," said Rose Gailey, co-leader, of culture & organisation practice at Heidrick & Struggles.
"CEOs looking to accelerate performance in today's volatile market can do so by ensuring culture remains at the top of their strategic agenda. The data is clear: investing in your people is an investment worth making, creating a more dynamic organisation better positioned to thrive in a rapidly evolving business environment."
Culture boosts results
CEOs say the most important work cultural element is direction and purpose, which saw the largest growth, from 37% in 2021 to 69% in 2023. Other cultural elements crucial to boost performance include agility, innovation, and a growth mindset (57%) and a positive spirit and vitality (46%).
The survey found that 71% of CEOs highlighted culture as a top factor positively influencing financial performance—up 44 percentage points from 2021. What's More importantly, 1 in 3 CEOs ranked culture as the primary factor overall.
A large majority of respondents doubling down in this area are seeing the results: 49% of CEOs said focusing on company culture significantly improved financial performance, with an additional 35% saying it somewhat improved financial performance.
People-first approach succeeds
Culture is not only driving financial outcomes but also improving the employee experience overall. In fact, CEOs view the financial benefits as an added bonus, instead driving their culture efforts with an eye toward employee satisfaction and performance.
The leading motivator for CEOs focusing on company work culture was increasing employee engagement, more than doubling the number of responses since 2021 from 26% to 54%.
The top three reasons for focusing on culture were rounded out by increasing innovation and improving diversity and inclusion. These drivers highlight a growing emphasis on employees and the way they work together—demonstrating that CEOs are taking a people-centred approach.
Almost every respondent said that a focus on work culture was improving employee retention, with 53% saying it significantly improved retention and 41% saying it somewhat improved retention across working models.
Heidrick & Struggles surveyed 500 global CEOs across diverse industries and countries, including Australia, Brazil, Canada, France, Germany, Hong Kong, Singapore, Spain, the United Kingdom, and the United States, in Spring 2023.