In our report Investment Firm of the Future, culture is positioned as a key part of future success. The organizational challenge will be a difficult balancing act of integrating technology with effective culture, given the disruptive inputs and anxieties introduced:
The people- or team-centered culture can be a valuable asset, a source of competitive advantage, and a means to create long-term value. The edge from a people-centered culture comes in various guises: It encourages maximum creativity, facilitates collaboration, and confers personal recognition; it helps workers develop through training, mentoring, and performance management; and it makes allowances for top talent and high performers, while respecting all professionals. A people-centered culture is also likely to be more ethical and purpose driven relative to one that is single-mindedly driven by results, with greater emphasis on diversity and inclusion as well as stakeholder responsibility.xxxvi
Various cultural signatures may be used, but a people-centered culture has significant growth potential in the next 5–10 years, not least because of the growing traction with purpose and values in an organization’s ethos. The Edelman Trust Barometer has supporting data emphasizing this trend.xxxvii We also observe that organizations can focus on personal growth through commitment to training programs, which are set to rise as a percentage of the employees’ total cost of employment.
The other major factor in the cultural orientation of organizations is how much focus is assigned to “workplace intelligence,” which includes the design and functional aspects of the workplace as well as the softer aspects about how employees work and interact. We see increased importance placed on workplace design as an enabler of culture. Workplace design is focused on the functional elements (e.g., the environment, layout, and the quality of any enhancements in the workplace), but it influences all aspects of the employee experience (what employees encounter, observe, and enjoy in their work journeys). Some employees seem to enjoy the pool table, the free doughnuts, and the espresso bar that the tech titans have evolved into the caricature of Silicon Valley places of work. The biggest factors sought by professionals, however, as captured in our data, are one step removed from these elements in the appetite for personal growth, inclusive culture, performance feedback, and flexible/remote working. Exhibit 20 shows the wish list among professionals.
One particular model of workplace intelligence concerns the style of communication and transparency at work within an investment organization. We suggest versions of this model have developed in a spectrum. First, there is the “hierarchical cascade” model, where communication is streamed from the top down through the organization. This communication cascade is used selectively as a tool of management and leadership to control behaviors. However, that model is declining because of a loss of effectiveness in fast-changing conditions where organizations fail to get real-time and accurate information for decisions and employees are denied empowerment and inclusion.
The contrast is the “radical transparency” model (notably supported by Ray Dalio, founder of Bridgewater and described in the book Principles), which applies widely distributed decision making. Following this model requires increased transparency to improve the speed and accuracy of responses. Employees need to know what’s happening within their organization to make the best possible decisions at all levels within the organization. Further, to some, radical transparency has the power to increase perceptions of fairness, increase involvement in running the business, and boost engagement in the workplace. The question is whether radical transparency supports only one type of particularly emotionally resilient individual and, as a result, produces a culture with weak diversity.
We suggest that organizations explore different cultural models and find a match between their organization and the values and beliefs in Exhibit 20, probably taking a middle ground. To a degree, the jury is still out. These issues will be explored in the next 5–10 years with increasingly accurate tracking and measurement of how well models work in practice.
WHICH OF THE FOLLOWING ASPECTS OF AN ORGANIZATION/COMPANY ARE MOST IMPORTANT TO YOU? (SELECT UP TO FOUR)
|Personal growth: training and development opportunities are encouraged and supported||87%||89%||83%|
|Inclusive culture: employees feel included, and differences of views and values are appreciated||57%||54%||61%|
|Performance reviews: performance management works from a framework of check-ins and reviews, both formal and informal||40%||42%||36%|
|Remote working: working from home is encouraged and IT supported||36%||30%||44%|
|Flexibility and part-time work arrangements: these are possible, with commensurate pay and benefits||34%||33%||35%|
|Wellness: firm provides wellness facilities like games areas, fitness centers, coffee spots, juice bars||32%||37%||25%|
|Increase in HR metrics: skills, competencies, productivity, and behaviors are assessed and are factors in compensation||24%||26%||19%|
|Diversity focus: the organization increasingly values diversity in hiring, promotion, and compensation processes||23%||26%||20%|
|Agile spaces: work spaces are more open, interactive, multi-functional||15%||17%||12%|