Culture is a source of competitive advantage but gap in perception between top management and the rest of the organisation can erode trust

Tuesday 10 August 2021 – According to the PwC 2021 Global Culture Survey, culture is advancing on the leadership agenda, but the gap in perception between senior management and the rest of the organisation has never been greater. The survey, which polls the views of 3,200 workers and business leaders worldwide, finds that culture is a source of competitive advantage and a strategic priority for senior leaders, but it has been deprioritised in the eyes of the rest of the workforce.

Culture as a source of competitive advantage

Culture in an organisation can be defined as the self-sustaining patterns of behaviour that determine how things are done^[1]. 81% of respondents who say their organisation has been able to adapt over the past year also say their culture is a source of competitive advantage. PwC’s data also shows that respondents who say their organisation has a distinctive culture are more likely to also see an increase in revenue and customer and employee satisfaction. Almost three-quarters of senior management (72%) agree that their culture helps successful change initiatives to happen. 

Globally, 73% of respondents who state that culture is a source of competitive advantage also say making decisions quickly has either become easier or stayed the same during the pandemic. Conversely, only 57% of respondents globally who stated that culture is not a source of competitive advantage found decision making easier or the same during the pandemic.

“Organisations with a view of culture as a distinguishing factor and source of competitive advantage maintain a sense of community better, respond to customer needs better, innovate with a higher degree of success and deliver better business results,” comments Matthias Reyntjens, Partner in PwC Belgium’s Management Consulting practice. “As many organisations adjust to hybrid working models for the first time, with significantly less physical presence in the workplace, the key question is what approach senior leaders will take to maintaining a coherent organisational culture.”

Divergence in attitudes between senior management and the rest of the organisation

The data collected shows that culture has been deprioritised in the eyes of the rest of the workforce. In 2018, 66% of front-line workers believed that culture was more important than strategy or operating model, vs. 46% in 2021. Similarly, there is a divergence in the way that the purpose of the company is viewed by different staff levels, with 83% of senior management stating they feel a personal connection to the company’s purpose in contrast to just 54% for the rest of the workforce. Attitudes towards diversity, equity and inclusion (DEI) demonstrate the divide most acutely, with the data showing an average 20-percentage-point gap between the views of managers and non-managers on DEI topics.

Three-quarters of respondents in the C-suite and board (74%) feel that they can be themselves at work, against just 66% of other workers. Similarly, 64% of senior management globally believes that their organisation encourages discussion on sensitive and uncomfortable topics, in contrast to 51% for the rest of people. Finally, 71% of top management believe that their organisation embraces flexibility and accommodates people with differing needs, vs. 54% of other staff.

“This incoherence between leaders’ and employees’ perceptions creates a huge barrier to realising the benefits of investing in culture,” explains Tom Verboven, Director, Management Consulting - People & Organisation at PwC Belgium. “There is evidence that a lack of cultural consistency in organisations is causing employees to lose faith in the power of culture. In our work with clients, we’ve seen that this gap between what leaders say they want the culture to be and how workers experience it has a detrimental impact on one very important emotion: trust. And without trust, it becomes much more difficult to bring about change, motivate people and encourage the right behaviours within the organisation.”

Recruitment and retention: the top cultural priority

The survey shows that recruitment and retention of talent tops the list of cultural priorities ​ leaders consider most important to improve, followed by digitalisation and innovation in second and third place. PwC’s 24th Annual Global CEO Survey already revealed that almost a quarter (24%) of chief executives said they intend to significantly increase long-term investment in leadership and talent development over the next three years. The retention issue has come to the forefront recently due to “the great resignation”, with large numbers of employees switching jobs in the wake of the pandemic as economies begin to recover, looking for increased flexibility, better work-life balance or more meaningful job content. ​ ​ ​

The issue of authenticity plays a key role here. C-suite executives and board members believe (73%) they are the walking embodiment of the organisation’s culture, values and purpose, but only 46% of employees think the leadership walks the talk. “Our data shows that many workers today feel they’re not fully seen or heard, and that their workplaces aren’t as inclusive as leaders think they are. This has consequences,” states Tom Verboven, Director, Management Consulting - People & Organisation at PwC Belgium. “Some who don’t feel that they can be their authentic selves at work may resort to adjusting their behaviour, expressions or speech patterns in order to fit in or because they think they’ll be treated more fairly and given more opportunities as a result. And this risk might be exacerbated further in the future hybrid model of work. Employees who are uncomfortable are unlikely to stay for long. There’s still work to be done to translate leaders’ good intentions on culture into measurable gains in employee retention, DEI and transformation initiatives. But when aligned with strategy, purpose and the operating model, culture can be a powerful force that supports retention and acts as an insurance policy against future crises.”

About PwC Global Culture Survey 2021

The Global Culture Survey was conducted online from March 1–26, 2021. A business panel was used across 15 countries (Australia, Canada, China, France, Germany, India, Japan, Malaysia, the Netherlands, Russia, Singapore, South Africa, Switzerland, the UK and the US). Participants from these and other territories were also invited to complete the survey through a registration process. In total, 3,243 surveys were completed from 43 countries (there were 17 Belgian respondents among them). Over half of the respondents (52.5%) come from organisations of 1,000 people or more.

Download the full report here.

Contact

Erik Oosthuizen

PwC Belgium | External Communications

M: +32 474 56 42 76

E: erik.oosthuizen@pwc.com

^[1]Source: Katzenbach Center (the institute for culture, leadership and teaming at Strategy&, PwC’s strategy consulting group