I was thrilled to partner with my good friend Daniel Forrester earlier this month on a virtual dialogue about space and culture and how they’re being renegotiated in this unprecedented environment we find ourselves in. Daniel is an organizational culture and strategy expert and founder of THRUUE, which just released a fascinating report, Corporate culture after COVID-19.
Watch the conversation, which runs about 14 minutes. You’ll also find a transcript (edited for clarity) below. I’d love to hear your thoughts and questions on these topics, so drop me a line anytime at email@example.com. (And if you’d like a copy of the presentation, I’m happy to share; just send me a note.)
What factors are currently impacting organizational culture and performance?
There is a lot going on in this country and in this moment with COVID-19 that is reshaping, rethinking and stressing organizational cultures in ways that we have never seen before. There's a little bit of culture that we say in every company, no matter how healthy you are, a little bit of culture is dying every single day that we are not in rooms with one another, which I know Derrick will talk a lot about. We are craving that. At the same time, if you have a strong culture, it's rising up in this moment and leaning into the values. Working from home, which is what all of us are doing and privileged to be doing, frankly, is in service of our health. Health in culture is everything. If your employees don't feel healthy and safe, well compensated, which I'll talk about later, there is no productivity or advancement.
And then finally, I'll just talk a little bit about two other things. The massive unemployment is just ripping fear across this country. Families are realizing 'Am I next?' That's the big question employees in any organization are asking themselves. That is real because employment is relevancy into your job, which all of us crave and we want to have. And finally renegotiation of what we call the social contract between employers and employees. These negotiations are not really happening in every single organization today. We're watching some workforces start to come back and then recoil. We believe it's a conversation between employers and employees through dialogue that is going to make the biggest difference.
It seems that we have more than ever to be clear about the fact that competitive advantage will be captured by those who have the most productive, high-performing workforce. The best example that I can think of ripped out of today's papers is going on in Southern California, where the cast members of the Disney company are having a profound impact on the decision about when Disneyland and likely Disney World will open. What used to be a unilateral decision has now become a conversation. That's because safety, physical and psychological safety is going to be a foundational component of performance.
Further, we find ourselves in a most extraordinary moment in this country with regard to social equity. Black Lives Matter appears to not be a moment, but rather a movement. And any corporation will want to ensure that they have the most diverse and inclusive workforce because that will ensure that they have the highest performing workforce. So these are issues that will need to be considered. If there is a religious component. If there are health issues like pregnancy. Executives are now more than ever going to want to consider the implications of their space and whether it is enabling or undermining diversity and inclusion.
What should leaders be thinking about now in terms of organizational culture and space?
On culture. I think there's a few things. Culture doesn't change instantly. Even in a pandemic. But there's a few things that we think are really important. This idea of renegotiating the social contract with your employees. That is the written rules, the contract itself, and the unwritten rules of the way things are done around here. That's things about commuting, telecommuting, onboarding, recognition, leadership development, even travel – policies that get pushed out that are dictation, we think are the things to be watching out for. Employee voice matters more now than ever. Focus in on the culture carriers, those that epitomize the best of what your culture is in terms of the values and behaviors that you stand for. And this desired culture that we're all longing to get back into.
And finally, a lot of people say to me, Daniel, this culture thing, does it really matter? We think it matters intuitively because it's tied to your strategy. Firms that are high performing, that grow, that come back and have revenue growth, have high performing cultures where people feel heard their voices matter and they have constructive dialogues. All of this sort of comes to the fore when we think about the future of corporate culture. Does it generally change in a pandemic? No, but there is a piece of it that I will say in our in our work, our research and what we're seeing with our clients – every single day we're longing for this connection, which I know Derrick will talk more about in a moment.
Finally, just some great advice from a recent study that we did from one of the great culture luminaries, Ginger Hardage, who led culture for Southwest Airlines. Well, the best advice that we keep bringing to the fore to all of our C-suites. It's about humility. It's about asking your employees very humbly what needs to change in our work, in our workflows, in our environments for you to be successful. And this beautiful linkage that Ginger points out that we advise our clients to think into all the time: Remember that only when employees feel safe and heard can they begin to make your customers feel the same way. Those are just some thoughts here in the opening salvo around corporate culture. Over to Mashore.
We were meandering through a transition where technology was enabling us to work from anywhere. Four months ago, all of that changed. And as Steve Jobs famously said, everything changes slowly until it doesn't. Four months ago, we arrived at a work from anywhere moment. There'll be no going back. But don't be confused. The rumors of the demise of office space are premature. We have arrived at work from anywhere, but it is not the end of the office. The things that matter – culture, recruiting, retention, brand reputation, the customer experience, risk – those are variables that haven't changed.
How we address those variables has changed. We now have to ask ourselves the question, 'How do we create a culture and a physical environment where the workforce wants to work?' 'How do we provide teammates with technology tools, mindfulness training and promote physical and psychological safety?' 'How do we address this moment with space that allows us to be agile and where there is a trust both among the workforce and between the workforce and the C-suite?'
I think the way that you want to do that is to acknowledge that space is not an asset that you amortize. Space is your new communications tool. If you had a laptop or an iPhone, you wouldn't focus exclusively on cost. You would focus on value and effectiveness as much or more than cost. And so if you're going to choose an e-mail provider that allows you to have the best collaboration and file transfer features, wouldn't you want to choose a space that allows you to have the best communication and innovation transfer capability?
The thing that's important to realize about this pandemic moment that we've been in is that there is a sense that we have been as productive. I think that what we have been is able to do the things that were in front of us that needed to be done, and maybe we've done them a little better. It surprised corporate America that we have done that. What's important to understand is that maintenance is not innovation. And the workspace is where the strong ties and the weak ties are all in one place. So we can prove – through studies and quantifiable evidence – that the workplace can enable performance.And I think the most important thing is that we create an environment that allows for those collisions to take place – allows for that trust to begin to solidify. Don't be fooled by a virtual environment. Zoom is not the next best thing to being there.
We have a great piece of evidence, the Allen Curve. A number of years ago – ten, fifteen years ago – Professor Allen did the research that demonstrated conclusively that we are four times more likely to talk to someone who is six feet away than we are to someone who is 60 feet away. And we almost never talk to somebody who's on a different floor in the building. Well, one would assume with FaceTime and Zoom and Slack and other technologies that the Allen Curve would be a figment of the 20th century. In fact, studies are now showing conclusively that the Allen Curve is in effect. In fact, we now know that in the workforce we are seeing the communication between the strong ties that we have – the people six feet away – has risen from traditionally about 40 to 45 percent, up to over 60 percent. In other words, we're actually talking more to the people who we have strong ties with. But the weak ties – those people who are 60 feet away or on a different floor – have dropped off the table. It's gone down to below 30 percent. That matters enormously for all kinds of reasons if you're going to create a high performing culture. So the Allen Curve is in effect, technology notwithstanding.
How should leaders apply these principles in their organizations?
Couple of things. A culture can be measured. I call that out because a lot of our clients tell us about engagement surveys and these things, and engagement surveys are worthy and necessary but those are measurements of what we call climate. Culture is norms, values, behaviors, stories, assumptions, narratives. And it can be quantified. And I call it out because the delta between the current culture of what your employees are experiencing in this strange federated space where we're in these digital screens all the time and what they want as the new desired culture as people come back – we think that that gap is the gap to close.
Second of all, if you haven't heard it once, you've heard it a few times in this. This is about dialogue. Dialogue is what one person called the art of thinking together. It's about listening. And Derrick and I are making a call here to say, do not look at space in the context of space and the demise of space. Look at it in the context of a high performing culture in which employees’ voices are heard.
Well, to Daniel's point, use the space to create collisions. We have evidence that there are high quality collisions and there are low quality collisions. But the evidence is conclusive that the nature of the collision doesn't matter. It's the quantity of the collisions. The highest performing teams have the highest quantity of collisions. And please understand once and for all that space is not 7% of opex and not strategic to core or mission. The space must align with long term strategy because your largest cost, your human resource costs, 78% of opex, are the human beings and everything human beings do happens in space.
Align your space choices with your long term strategy.