How Do You Measure Culture? Part II – Indirect Inputs

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By Kristy Grant-Hart CEO of Spark Compliance Consulting


Culture springs from the interactions of people in an organization. Repeated actions create expectations, common experiences, and the sense that “this is how things are done around here.”

Regulators like the Department of Justice have been very clear that they expect companies to measure culture, but they aren’t clear as to how they expect us to do this.

The How

This is the second in a two-part series that highlights various ways to measure culture. The initial analysis came from an industry group called the Tapestry Network. They created a five-step framework for board oversight of culture. Step four of this framework relates to measuring and monitoring culture. They give examples of direct and indirect ways to measure culture, which we have expanded on in this series.

Part I of this series explores direct inputs, or those that come directly from employees. Part I can be found here.

Indirect Inputs

Data from direct inputs is easier to quantify than data from indirect sources, but indirect inputs are just as valuable. Indirect sources give important insights, especially when more than one source is used or the information is paired with direct inputs. Why not look at…

  1. Turnover Rates

Are people leaving in droves? Maybe they have a reason to do so. There are many sources of industry benchmarks for turnover. Find one relevant to your industry, and compare your turnover rates. Higher than average? Investigate why using exit interviews.

  1. Tenure

Does the average employee stay ten years? Five? One? Two months? If people are sticking around for a long time, the likelihood is, they like the culture and feel comfortable. Again, industry benchmarking will help you to get a sense of whether your numbers are normal. Sure, younger people tend to stay in jobs a shorter time than more senior folks, but there are breakdowns to help you to judge whether your company is at the top or bottom of the distribution.

  1. Absenteeism

Absenteeism refers to people calling in sick or not showing up. A high level of absenteeism may indicate an unhealthy culture where employees are disengaged. If they don’t care about their jobs, that can indicate a bad culture.

  1. Hotline Reporting Data

Hotline reporting can show you whether people feel comfortable and confident reporting misconduct. Use benchmarking tools like those available from technology companies to find out if your average number of reports is above or below the norm for companies of your size. If your average is significantly below, that may tell you that people are uncomfortable reporting and don’t trust management to respond appropriately.

Trends in hotline reporting data can also show you if culture is moving positively or negatively depending on whether reports go up (yay!) or down (hmmm).

  1. Job Review Sites

There are places online where people can anonymously review their jobs or provide feedback to candidates about what it’s like to work at a company. Peruse those sites to find out how current and former employees feel about the workplace. Sites like Glassdoor.com can provide this information.

  1. Google

Google your company to see what comes up. Look in the general tab, as well as the others. Do negative articles come up? Have employees (current or former) created videos on YouTube, Vimeo, or other sites about the company? Look at your company’s reputation from the vantage point of an outsider.

  1. Survey Response Rates

If your engagement survey or ethical culture survey are voluntary, check the response rates year-on-year to see if they’re going up. People tend to participate in surveys when they feel their voice will be heard or make a difference. If participation rates are going down, that may indicate a deterioration in culture.

Many companies providing engagement and ethical culture surveys also provide benchmarking for participation rates. Be sure to get this information so you can put your survey response rate in context.

  1. Training Completion Rates/Overdue

Look at your training completion rates. How many people failed to complete the training by the deadline? Perhaps more important, how many managers failed to complete the training on time? Commitment to completing compliance training on time can be an indicator of how much people prioritize compliance at the company.

  1. Policy and Code of Conduct Engagement

Many policy management systems have the ability to track the number of times various policies and/or the Code of Conduct is accessed internally. Are there more people looking at the Code or policies this year than last year? Year-on-year reviews may give you information about whether people are interested in the compliance program, the values of the company, and being compliant.

  1. Participation in Compliance and Ethics Week Activities

Many companies celebrate compliance and ethics week with activities highlighting the compliance program. How many people participated in voluntary activities? Did this number raise or fall this year? Fluctuations may occur because people simply like the activities one year better than another. But a drop-off in participation may reflect a lack of interest in compliance and ethics as a whole.

An Important Note

None of the indirect inputs in and of itself gives as much information as say, the results of an ethical culture survey. But taken together, multiple indirect inputs give solid and measurable information, especially when combined with direct inputs.

Putting it Together to Measure Culture

Here’s how to put it together to measure culture effectively.

Find What You’ve Got

First, go through the list of inputs and determine which are available to you. You can use this downloadable checklist. What if your company doesn’t have an ethical culture survey. That’s OK – does yours have an engagement survey? How about pulse surveys? Exit interview data?

Choose the Initial Inputs

Next, choose at least one direct and one indirect input. If possible, choose two direct inputs and one indirect. To get a well-rounded view, use as many inputs as you can easily obtain. You can add new inputs year-on-year. It’s best to get the data you can easily get first. The perfect can be the enemy of the good.

Gather Insights

It’s now time to look at the data to gauge where you are. What insights can you gain from the multiple inputs? Do the numbers tell you if you have a healthy culture? Are there benchmarks you can use to help you find out? Write down your thoughts.

See if you can create a dashboard of the inputs you’ve gathered so you can track them over time.

Review and Update Your Dashboard and Insights

Review your data over time and track how it moves. See if you can find correlations. For instance, when hotline reports go down, does the turnover rate go up? That may indicate a worsening culture. Or when ethical culture survey numbers go up, does policy click rate go up too? Once again, these correlations may be indicative of movement within the culture.

Gaining Confidence

All of these measurements should help you to review the culture in a holistic way, which will give you confidence in your understanding of the company and the employees’ experience. Ideally, the compliance department will report these findings to the board and senior leadership to match regulatory expectations and meet best practices.

Quantifying culture is hard, but worth the effort. Go forth and conquer with knowledge, metrics, and a solid plan for doing so.