How To Measure Company Culture: 7 Methods + Guide
“Culture is not an initiative. Culture is the enabler of all initiatives,” said Larry Senn, a pioneer in corporate culture. Measuring company culture is essential to harness its power and drive organizational success.
Measuring and assessing company culture is essential for HR professionals, as it directly impacts organizational performance. Company culture encompasses decision-making styles, employees’ comfort in sharing opinions, and the overall work environment—whether collaborative or competitive. However, measuring these elements can be challenging because they are often intangible. To manage and improve culture, it’s important to have clear assessment methods in place.
Building a lasting company culture is extremely important because it determines whether employees love or hate their jobs and whether customers feel valued or ignored. Like reputation, it takes years to build a good culture but only a few missteps to mess it all up.
Contents
Why should you measure company culture?
Company culture metrics
Common methods for measuring company culture
Best practices for measuring your company culture
Company culture measurement examples
Why should you measure company culture?
First of all, let’s look into the reasons why you should measure company culture in more detail.
- Data gives you insight into what to improve: You’ve often heard ‘what gets measured gets managed.’ It’s true! If you don’t know what your culture is like or what type of culture you desire, then any culture can evolve – positive or negative. But culture is not something you want to leave to chance.
- Building and managing a strong organizational culture that helps the company achieve its business goals: A healthy, strong culture can lead to higher productivity, sales, and a competitive market presence. According to Raine Digital, “happy employees are 12% more productive, and highly engaged workplaces see a 10% increase in customer ratings with a 20% increase in sales. These statistics are supported by the fact that companies with more engaged workers grew revenue 2.5 times as much as companies with less involved workers over a period of seven years. 90% of employees within a winning company culture are confident in their company’s leadership team.”
- Improving employee engagement and retention: Once you are aware of the culture you are trying to build, you are better able to attract and retain top talent.
- Diversity, Equity, Inclusion, and Belonging (DEIB): Many organizations have been focusing on fostering DEIB. Developing a culture of DEIB also requires some measurement. The results will provide greater clarity on your overall organizational culture and provide you with insight into what you need to work on to foster an inclusive environment at work.
Company culture metrics
Measuring company culture is difficult because culture is inherently intangible, encompassing beliefs, values, and behaviors that aren’t easily quantified.
Unlike concrete metrics such as sales figures or production output, culture reflects how employees and leaders interact, make decisions, and uphold values, which can vary widely across teams and individuals. Additionally, cultural qualities like openness, trust, and inclusiveness are subjective and may be perceived differently by each employee, making it hard to capture a single, objective measure.
That’s why it’s not easy to determine metrics that would directly help you measure your company culture. However, there are several indirect ways to get a sense of what your culture is like. The following metrics can give you an indication of the quality of your company culture:
- Number of employee referrals: This gives an indication of the extent to which your employees are promoting your organization and referring others to join. Why they are (or are not) making referrals will provide some insight into the culture of the organization. If you are tracking this formally or informally, it is a good indicator of your corporate culture. Some organizations track Employee Net Promoter Scores (eNPS). This measures how likely employees are to recommend the organization as a place to work and why.
- Productivity metrics: A great company culture should lead to highly productive employees. Productivity metrics measure projected to actually completed ratios for your employees’ goals and organizational objectives.
- Employee turnover rates: If new hires and high potentials are voluntarily leaving your organization, this could be an indication of a toxic culture.
- Communication metrics: Email open rates, read receipts, number of intranet page visits, and length of these visits are also good indicators of the health of your organizational culture. If these rates are low, they may indicate staff are not engaged with the organizations as they should be.
Common methods for measuring company culture
Beyond the indirect company culture metrics, there are several methods of measuring company culture. You can use one or a combination of these methods to understand the state of your company culture from different perspectives. Larger organizations may need to use more than one method to get a better sense of the culture or cultures within their organization.
Employee surveys
Quarterly or pulse surveys usually measure a range of engagement drivers. Some of these drivers may be:
- Management
- Sense of accomplishment
- Workload
- Reward & Recognition
- Freedom of opinion
- Autonomy
- Opportunity for growth
To the degree these drivers receive high or low scores, they will paint a picture of what the culture is like or perceived as at the organization. You can design employee surveys and conduct analyses in-house or through a third party.
Third-party culture measurement tools
There are several third-party tools that help you measure company culture, such as CultureAmp or CultureIQ.
Using a third-party tool has multiple advantages:
- The tools may be more refined and agile than tools designed internally
- Participants may have greater confidence in the anonymity of their responses when engagement surveys are administered through a 3rd party
- Surveys and other tools through 3rd parties should be able to segment the workforce. This is especially important when employee populations are located in different geographic locations or there has been an M&A to understand the different subcultures that might have developed. Segmentation gives insight into these subcultures that need to be realigned to the core culture of the company.
Focus groups
Conversations with selected employees can shed light on a company’s culture. Here are some tips on how to conduct an employee focus group.
- Invite a cross-section of employees
- Organize as many focus groups as necessary but keep them to a manageable size
- Ask for stories and behaviors, not opinions or rumors
- Practice empathetic listening
- Let the group know prior that you would be recording (notes or recorder) the conversation
- Thank each person after they have shared
- Analyze the data for trends, patterns, and disparities and develop action plans to improve your workplace culture.
Exit interviews and surveys
A well-designed exit interview and/or exit survey can reveal a lot about your organizational culture. Conduct a thorough analysis of what employees say as they separate from the organization to better understand the culture as they have experienced it.
However, the disadvantage of using an exit survey is that it is reactionary. When employees or new hires separate from the organization, they will not benefit from any action you may take from the information they provide that may have prevented them from leaving.
Organizational Culture Assessment Instrument (OCAI)
OCAI can be very helpful in determining what your organizational culture is like and how it differs from what you want it to be. The instrument is based on the Competing Values Framework, where the organization distributes 100 points among four ‘competing values’. This assessment was developed by Kim Cameron and Robert Quinn. According to Cameron and Quinn, these four competing values correspond with four types of organizational culture. Every organization has its own mix of these four types of organizational culture. They are:
- Adhocracy Culture: The dynamic, entrepreneurial Create Culture.
- Clan Culture: The people-oriented, friendly Collaborate Culture.
- Hierarchy Culture: The process-oriented, structured Control Culture.
- Market Culture: The results-oriented, competitive Compete Culture.
The competing values are mapped against two organizational dimensions: Internal-External and Stability-Flexibility.
- Internal-External Dimension: Organizations might have an internal orientation, focusing inward on development, collaboration, integration of activities, coordination. Or it might have an external orientation; looking at the market, what’s possible with the latest technology, what competitors are doing, what customers want, and it could diversify activities as a result.
- Stability-Flexibility Dimension: Organizations that prefer to organize for stability value clear structures, planning, budgets, and reliability. They assume that reality can be known and controlled. Organizations that manage with flexibility assume the opposite: you can never predict and control everything. They prefer a flexible attitude and organization to adapt quickly to changing circumstances – focusing more on people and activities than on structure, procedures, and plans.
The OCAI culture profile reveals:
- The current dominant culture
- The discrepancy between the present (purple area) and preferred culture (blue)
- The strength of the current culture
- The strength of the preferred culture
- The proposed change: in what direction?
- People’s current “pain” and any “gain” of change.
Business Needs Scorecard (BNS)
Business Needs Scorecard is an expansion of the Balanced Scorecard, which was developed by Kaplan and Norton. It maps out organizations’ current and desired cultures by measuring “Finance, External Stakeholder, Relations, Fitness, Evolution, Culture, and Societal Contribution. The Culture section breaks down into three sub-sets to help give greater clarity around key areas of focus. These areas are Trust/ Engagement, Direction/ Communication, and Supportive Environment. It is a diagnostic tool to identify where the organization is currently focusing its energies (current culture), and where the employees would like the company to focus its energies (desired culture).”
A healthy organizational culture features equally distributed values across the six segments of the scorecard.
Behavioral Observation Scale
A behavioral observation scale is a performance appraisal tool used to measure behaviors that you want the employee to display. The scale portion means it’s not a yes/no situation but rates the employees on a scale. This tool allows you to measure desirable behaviors that represent the organizational values, which, in turn, are the base of your culture. The key to success with this method is to define these desirable behaviors.
Best practices for measuring your company culture
- Make your measurement focused: Pinpoint the key elements you want to focus on when measuring your company culture. That way, you’re making sure that you’re getting relevant insights into what needs improvement most. Based on that, you’re also able to select the most appropriate method to measure your company culture.
- Treat cultural measurement as an ongoing process: Once you conduct a survey or use a BNS, don’t treat it as done and dusted. You should measure your company culture regularly, gain insights, and act on the findings. Culture changes over time; therefore, you want to keep track of the cultural changes within your organization.
- Measure and observe how the culture and behavior align: You want to not only measure the perception of your culture but also how it manifests itself in your employees’ behavior. Is your culture leading to an increase in innovation or an increase in employee investigations? Both are signs of a healthy or unhealthy culture.
- Use multiple data sources for a comprehensive view: Relying on just one source of data, like surveys, may not give a full picture of your culture. Combine quantitative data from surveys with qualitative insights from focus groups, exit interviews, and one-on-one conversations. This layered approach ensures a well-rounded understanding of the culture.
- Involve employees in the measurement process: Engage employees at all levels to participate in defining and assessing the culture through focus groups and feedback sessions.You can also use anonymous feedback tools like surveys and suggestion boxes to gather genuine insights. When employees have input, they feel more invested in the process, and you’re more likely to gather genuine insights. This also helps create transparency and trust, reinforcing the cultural values you want to promote.
- Acknowledge that leadership styles largely define culture: Consider whether the current leadership styles are creating or fostering the type of culture you are trying to attain. This can be done through 360-degree feedback or personality assessments like the Hogan Assessment. If not, determine what types of executive coaching and leadership development plan you need to change the behaviors at the helm that would subsequently lead to the organizational culture you are trying to develop.
- Look for signs of cultural misalignment: After measuring your culture, you may notice that it is misaligned with your core values, vision, and organizational objectives. This misalignment should signal to leadership that the culture has become or will hinder achieving the organization’s strategic objectives. This is a good moment to start planning your cultural transformation process. This means realigning the culture to the organization’s vision, mission, and core values to achieve its strategic objectives. Cultural transformation enables you to foster a work environment where your employees are empowered to do their best work.
Get the skills to transform your company culture
Measuring and transforming your company culture starts with the right skills and competencies. HR professionals need to know how to identify the need for culture change and lead the organization through the process.
With AIHR’s self-paced Organizational Development Certificate Program, you’ll learn how to build an impactful organizational culture that inspires your workforce and helps your business achieve its goals.
Company culture measurement examples
As we’ve seen above, you can take diverse approaches to assessing organizational culture. Here are some real-life examples of how companies have successfully measured and improved their cultures.
Microsoft
In 2014, Satya Nadella became Microsoft’s third CEO, inheriting a company that was facing significant cultural challenges. The internal environment was marked by intense competition among employees, political maneuvering, and a lack of collaboration, which hindered innovation and growth.
Recognizing the need for change, Nadella partnered with Kathleen Hogan to drive a cultural transformation across the organization’s 130,000+ employees. To uncover the current state of Microsoft’s culture, Hogan and her team conducted a thorough assessment using a mix of employee engagement surveys, focus groups, and individual interviews, gaining both quantitative and qualitative insights into the company’s strengths and problem areas.
They also consulted with experts like psychologist Carol Dweck to integrate the “growth mindset” into their approach, aiming to create a foundation for ongoing cultural improvements.
Central to Microsoft’s cultural transformation was the adoption of a “growth mindset,” shifting from a “know-it-all” to a “learn-it-all” culture. This approach encouraged continuous learning, experimentation, and embracing challenges as opportunities for development. By implementing various initiatives, both large and small, Microsoft fostered an environment where employees felt empowered to collaborate and innovate, leading to a revitalized organizational culture aligned with the company’s strategic objectives.
A financial services organization
A financial services organization based in the United Kingdom decided to transform their culture under new leadership, aiming to shift from a traditional banking model to a more retail-oriented approach. This strategy focused on improving customer experience, refining customer segmentation, and updating the product portfolio.
An initial culture assessment revealed that, despite employees’ awareness of customer needs, existing systems and processes were not customer-friendly, and there was a lack of investment in tools to support optimal customer service. Moreover, a hierarchical structure and a tendency to avoid risk had stifled innovation and adaptability.
To address these challenges, the organization implemented several initiatives:
- Target culture mapping: Defined the desired cultural attributes aligned with strategic goals.
- Culture assessments: Conducted two culture assessments to measure progress and identify areas for improvement.
- Capability building: Enhanced skills among People & Culture teams and transformation leaders.
- Leadership development: Provided 360-degree feedback and coaching for leaders to model desired behaviors.
- Employee engagement: Organized large-scale events and workshops to involve all employees in the cultural shift.
These efforts led to significant improvements:
- A 40% increase in employees’ perception of the organization’s customer-centricity
- 81% of frontline staff viewed the culture as supportive of employees
- An 82% improvement in attitudes toward risk-taking and learning from mistakes
- A 62% enhancement in employee-leader relationships
- A 48% boost in feelings of empowerment among staff.
These outcomes indicate a successful cultural transformation to a more customer-focused and agile organization.
To sum up
As you see, there are multiple ways to measure your company culture. Understanding who you are aspiring to be as an organization, defining your objectives for what you want to learn, and being prepared to transform your organization will help you select the best method. Organizations will discover not only the state of the culture but also ways to improve it. This investment will benefit your leaders, employees, your business, and customers.
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