Companies led by CEOs effectively prioritising culture have double the financial performance of those which do not, according to research by Heidrick and Struggles.
The HR and executive search consultancy surveyed 500 CEOs across nine countries: Australia, Brazil, Canada, China, France, Germany, Spain, the UK, and the US. Each CEO headed a company with a minimum of $2.5bn in annual revenue.
Heidrick and Struggles found a group it classed as “culture accelerators” were those that focused significantly more on culture than others, and listed culture as a top-three driver of their organisations’ financial performance. This group of 54 CEOs also thought it was important to link culture to strategy.
The average compound annual growth rate (CAGR) of companies led by culture accelerators was 9.1% – more than double that of other companies, which saw 4.4% CAGR.
A higher proportion, 48%, of culture accelerators, focused on culture to reinforce a change in strategy or direction versus 22% of CEOs outside this group. The survey also found two-thirds completely met or exceeded their culture goals versus 5% of other CEOs.
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Of the 500 companies surveyed, 50 were in the UK. Heidrick and Struggles said the UK ranked highest in the world for CEOs adopting personal leadership and positive role model attitudes as a way to bring organisational and cultural change. They were also the most likely to assess their company culture by looking at employee retention rate.
However, the UK was lagging when it came to making culture a key priority. Only 70% of UK CEOs had done this over the last three years, compared with an 82% global average.
The findings of the survey make a strong case for linking thriving culture with companies’ success said Rose Gailey, a partner and global lead for organisation acceleration and culture shaping for Heidrick Consulting at Heidrick & Struggles.
“The survey results reinforce the business case for linking company culture to strategy and creating broad engagement with the culture,” she said.
“A thriving culture is among a CEO’s best options for accelerating performance in today’s marketplace.”