Have you ever entered a new year without some thought about how to improve your company culture over the next 12 months? And can you complete that thought without wondering what you need to do next to improve employee engagement? Do you then find yourself asking whether those are really different concerns or one in the same? And then someone brings up the need for creating greater organizational “line of sight”—and you feel like your head is going to explode. In exasperation, you might find yourself blurting out something like this: “Would somebody please tell me how these things are different?”
It is not your fault that you are confused. It is a bit mystifying to be sure.
That said, it is important to understand that culture, workforce engagement and line of sight are indeed distinct areas of focus—but they are connected. So let’s clear up the mystery by looking at each separately and then bringing them back together. Finally, let’s take a minute to consider the proper role of compensation in this discussion and how your pay strategy can either help or hinder the combined power of culture, engagement and line of sight in driving the performance you want.
Getting to Clarity
First, let’s define some terms. Certainly, each guru or business expert you speak with will have their own take on what each of these labels mean. These are some I’ve culled from various sources that I think capture their essence well enough for our purposes here.
This term represents the collective, self-sustaining patterns of behaving, thinking, feeling and believing that determine how things are done within a company.
This is a measure of how committed employees are to their roles and how satisfied they are with their experience within the company.
Line of Sight
This has to do with the level of alignment there is between ownership and employees regarding purpose, strategy, roles and expectations.
So those are the distinctions. Given those differences, which should a company focus on first and is one more important that the other? Further, can you really work on one without simultaneously considering the others?
Alice Zhou offers an interesting answer to those questions based on research done in her work at the Katzenbach Center, PwC's global institute on organizational culture and leadership.
…simply changing a culture in an effort to improve employee engagement won’t necessarily lead to improved business performance. In fact, treating engagement as the goal of culture evolution can have a negative impact. That’s because although there are widely recognized drivers of engagement that are independent of strategy or industry, the cultural drivers of success differ widely from company to company. The same behavior can drive success at one company while hampering success at another.
We’ve learned through our work at the Katzenbach Center that the key to unlocking performance via organizational culture is to align company culture to business priorities. This requires the selection of a “critical few” behaviors that enable the desired business outcomes. When these behaviors are coupled with structural and process changes that support them, the entirety of these changes have an impact on the employee experience. Using culture to drive performance thus requires emphasizing elements of the employee experience compatible with desired business outcomes, and downplaying non-compatible elements. Whether the elements of the employee experience that drive performance also drive increased engagement is of secondary importance. Employee engagement should be regarded as a byproduct of culture evolution efforts rather than a tangible goal of them. (“Improving Company Culture Is Not About Providing Free Snacks,” Strategy+Business, July 31, 2017, Alice Zhou)
Translation? What Ms. Zhou is saying is that organizations should focus on getting clarity about where company purposes are or can best be aligned with employee aims and ambitions. They then must leverage the potential impact of that alignment by providing clear roles for their people—and being just as clear about the expectations they attach to those roles. They can then use the natural mores and structural patterns of their cultures to reinforce the compatibility that exists between what the company is trying to achieve and what employees are seeking—and how assuming stewardship for their company roles brings about that fulfillment. The organization must use that same cultural structure to leverage its ability to celebrate wins and how they are positively impacting individual lives—including (even especially) those of individual members of the workforce.
The natural outcome—or byproduct—of this approach is a more engaged workforce. Engagement does not come from a direct campaign to improve it. However, employer brand strategies can be employed to leverage and promote the positive experiences employees are having within the organization with which they feel fully aligned. Such an effort helps to reinforce the engagement patterns the company is trying to encourage and makes individual members of the workforce feel like they are part of something special and unique.
The Role of Compensation
Once you understand the relationship between culture, engagement and line of sight, there are some questions that should naturally emerge about the pay strategy you are employing. If your intent is to positively impact these three organizational elements, you will want to ask: Does your present rewards approach…
…help or hinder the company’s business model and strategy?
…clarify or confuse roles and expectations?
…reward outcomes or behaviors?
…encourage stewardship or entitlement?
…reinforce or undermine high performance standards?
Business leaders run into problems when they try to separate the compensation discussion from the ones they have about culture, engagement and line of sight. They are inexorably intertwined. This is not to suggest that your pay strategy can improve workforce engagement, change your culture and create greater line of sight, all by itself. Rather, what I am saying is that if you do not approach compensation issues strategically and in the context of the broader employee experience you are trying to mold, everything else you are doing will have little effect. This is simply because your pay strategy is that powerful a communication tool. It either tells employees they are valued partners or that they are just hired help. It either conveys your belief they should participate in the value and growth they help create or tells them you think only shareholders should reap those benefits. It communicates whether you understand and support their performance role in the organization or you do not.
In short, your pay strategy can be either an asset or a liability in your pursuit of culture, alignment and engagement improvement.
To dive deeper into the impact of your compensation approach on the issues discussed here, download our free report entitled: What is the Impact of Pay on Employee Engagement?