I have experimented with several ways of helping clients to measure the return on their investment. Here is the best approach I have found. It’s not perfect, but it builds a strong case. If anyone has tried other methods successfully, please let me know so I can profile your methodologies.
Step 1 Look at your strategy and goals and ask the questions:
- What do we need people to do to achieve this?
- How do we need them to behave?
- How do we need them to think?
- And feel?
Example: Goals based on retaining more customers will require people to work collaboratively across the business, to trust and support each other, so as to produce one seamless, high quality experience for the customer.
Step 2 Define how this is different from how they are behaving, thinking, and what they are doing now. This creates the aspirations for the culture work, and the gap between this and current reality.
Example: Right now each part of the business is focused on pushing their product out the door. The business has a mental model of seeing the customer as a series of products, rather than as a single human being living a whole life.
Step 3 Find examples of how the type of behavior described in step 2 is costing the business money, and put financial estimates on these.
Example: A telecommunications company was struggling to implement an accurate single billing system, months of delays. The predictions of cost savings and increased accuracy were not being achieved. Billing in telecommunications requires incredible co-operation between all parts of the business and their culture was not delivering this.
Step 4 Find a way of measuring the behavior you want to change, on a year by year basis
Example: A proprietary or self developed 360 measures behavior. The combined results of all participants become a measure of behaviour change. If these results improve, you have demonstrated that the culture initiative changes behaviour
Step 5 Now you have to show how this improved behavior hits the bottom line. After culture work is underway, ask teams if they think they are working better together. If they say “yes” ask lots more questions until you get to the specifics issues they are now sorting out which previously they avoided completely or just fought about.
Example: A team I was working with had a team culture with very high avoidance, meaning that the difficult stuff got put in the “too hard” basket and not dealt with, and no decisions made. It drove the people underneath them crazy. We defined, with the help of those people underneath, the financial cost of these non-decisions. Later, when the team improved their behavior, everyone was able to define the financial benefits of the timely decisions they were now making.
Step 6 Pull all these examples together and you have the basis for demonstrating ROI. Keep updating it as goes along. This has the added benefit of reinforcing the achievements which are happening.
Examples: In the business with customer retention goals, a reduction in silo thinking has enabled much more innovative solutions to be delivered to the customer where marketing, product, service and sales have come up with offerings which actually make the customer much more committed to stay. Improvements in retention rates can be attributed to the change in culture (thinking and behaviors) which led to these solutions.
Step 7 Communicate your findings as much as possible. They show the crucial link between culture and performance, and it helps to affirm and recognize where good cultural work is delivering results.
If you like the results you are achieving through culture, and are measuring these, please share your story. Very soon, this blog will be extending into an e-zine with lots of room for contributions from others, and we intend to profile companies who are doing things well.
More about building a business case for culture in chapters 5 and 6 of my book Walking the Talk.
