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Culture remains source of competitive advantage, but gap in attitudes between senior management and rest of workforce never greater

20 July 2021 PwC

  •  69% of business leaders globally (compared to 68% in South Africa), whose organisations have successfully adapted in the pandemic, say culture has been a source of competitive advantage
  • Average 20-point gap in attitudes towards diversity, equity and inclusion highlights divide between senior management and the rest of the workforce

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, according to a new PwC study.

PwC’s 2021 Global Culture Survey, canvassing the views of 3,200 workers 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

69% of respondents (compared to 68% in South Africa), who say their organisation has been able to adapt over the past year, also say their culture is a source of competitive advantage. The 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. 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 say making decisions quickly has either become easier or stayed the same during the pandemic. It is notable that in South Africa, 41% of respondents stated that making decisions quickly had become more difficult in their organisations as a result of the pandemic; 57% stated that coaching and developing talent had also become difficult; and 35% said it was more difficult to collaborate with colleagues.

Conversely, only 57% of respondents globally who state that culture is not a source of competitive advantage found decision making easier or the same during the pandemic. In China, this percentage dropped to 38% whilst in India it rose to 68%.

The global survey results demonstrate a clear divide between those who say their culture is distinctive and those who do not, namely that the following have become easier or stayed the same:

– Coaching and developing talent (55% vs. 41%)
– Developing or maintaining a sense of community (60% vs. 43%)
– Responding to customer needs (66% vs. 57%)
– Innovating new products and services (66% vs. 56%)
– Producing/delivering expected results (63% vs. 51%)

Dayalan Govender, Partner in PwC’s People and Organisation division says:

“Our survey results indicate that businesses with strong cultures tend to drive better business outcomes. It is notable that the majority of senior leaders credit much of their success during the COVID-19 pandemic to culture. They also agreed that top cultural priorities should include recruitment and retention, digitisation, health and safety and collaboration.

“It’s also clear from our survey that organisations with a distinctive culture found it easier to maintain performance and pivot if needed during the crisis. On the downside, our survey shows that when culture is not a priority, certain ways of working are not as easy or successful as when culture is prioritised.”

The divergence in attitudes between senior management and the rest of the organisation

The data 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. In South Africa, however, 60% of respondents stated that culture is more important to performance than an organisation’s strategy or operating model.

Similarly, there is a divergence in the way that purpose is viewed by different staff levels, with 77% 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. In South Africa 83% of respondents said their organisation has a strong sense of purpose, and 74% said they have a strong connection to their organisation’s purpose.

Attitudes towards diversity, equity and inclusion (DEI) demonstrate the divide most acutely, with the data showing an average 20-point gap between the views of management and everyone else on DEI topics. This gap grows to an average 30-point gap in the US and 35% in Japan. Conversely, there is only an average 10-point gap in India. In South Africa, 72% of respondents said that their organisations actively listen to differing voices and perspectives when making major decisions, even if it adds time and complexity. Notwithstanding these positive notes, 41% of South African respondents felt their organisations could do more to improve DEI.

Three-quarters of senior management (71% Global; 72% South Africa) feel that they can be themselves at work, against just 52% of middle management and front-line workers. In the US, 96% of senior management state they can be themselves at work, vs. only 60% of senior management in Japan. 62% of the rest of the US workforce feel comfortable vs. only 19% of ordinary workers in Japan.

Similarly, 61% of senior management globally (compared to 63% of senior management in South Africa) believes that their organisation encourages discussion on sensitive and uncomfortable topics, in contrast to 42% of middle management and front-line workers. Here the divide is clearest to see in China, where 70% of senior leaders state they encourage discussion vs. just 31% for the rest of the workforce.

Finally, 69% of senior management (South Africa: 78% of senior management) believe that their organisation embraces flexibility and accommodates people with differing needs, vs. 51% (South Africa: 71%) of middle management and front-line workers. In India, however, the spread between senior leaders is lowest with 78% of the workforce believing their company accommodates people with differing needs against 90% of senior management.

Govender adds:

“Our data shows a widening gap between what leaders say about culture (particularly diversity, equity and inclusion or - DEI) and what their people actually experience.

“It is possible for organisations to close this gap, though. As the past year showed, rapid transformation can be achieved with a targeted focus on a few critical behaviours.”

Govender goes on to conclude:
“ If businesses want to use culture as a competitive advantage, they need to start by taking stock of how their culture is currently helping or hindering their ability to drive business outcomes. They also need to identify what traits and behaviours are most needed to evolve to best support their strategic business goals. Then start proactively managing culture, which will likely involve building new capabilities to ensure that they're firing up all the relevant culture enablers — both formal and informal — for their respective organisations.”

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