As we know, a CEOs primary responsibility is to drive growth and profitability. Yet, when it comes to investing in culture and people, many are hesitant. There isn't a week where I don't speak to a CEO where people are rarely a key investment in their priority list. This reluctance, though understandable, could cost companies their future success.
According to research from Harvard Business Review, 70% of change initiatives fail, often due to a lack of leadership buy-in. So, why are CEOs afraid of change, especially when it comes to cultural investment?
Fear of Unpredictability
One major reason CEOs hesitate to invest in their people and culture is the perceived unpredictability of the return on investment (ROI). Financial initiatives typically have clear metrics, while cultural transformations are seen as more abstract and less measurable. This can make CEOs wary of dedicating resources to initiatives that don’t deliver instant, quantifiable results.
Short-Term Pressure
The constant pressure to achieve short-term financial goals often takes precedence over long-term strategies like investing in culture. According to a Deloitte survey, while a staggering 86% of leaders believe culture is vital, only 12% of companies take meaningful steps to improve it. This imbalance is driven by the need to deliver immediate returns to stakeholders, leaving culture investments deprioritized.
Loss of Control
Cultural change can feel like losing control. It often requires CEOs to shift from a top-down approach to one that empowers employees at all levels. Letting go of centralized control can be daunting for leaders who are used to steering the ship with a firm hand. However, this fear can stifle growth, innovation, and employee engagement, leading to long-term stagnation.
Three Ways HR Leaders Can Convince CEOs to Invest in Culture
1. Present Data-Driven Results
Providing hard data is crucial. According to Gallup, companies with highly engaged employees see a 21% increase in profitability. Tools like SKOR, which assess organizational culture, provide CEOs with a predictive metric for future profits. By assessing leadership, communication, and goal alignment, SKOR helps quantify the direct impact of culture on the bottom line, giving CEOs confidence in their investment.
2. Align Investments with Business Goals
Cultural investments should not be separate from business goals. Use assessments like SKOR to highlight how a well-defined culture can drive specific outcomes and also demonstrate clear ROI with lower turnover, increased profits, and becoming a magnet for talent. These improvements will ultimately lead to higher profitability, directly aligning with the CEO’s objectives.
3. Start with Small Wins
Propose low-cost, high-impact initiatives as proof of concept. Introducing employee recognition programs or leadership development workshops can deliver visible results quickly, building confidence in further investments.
Investing in culture isn’t a gamble—it’s a strategic decision that can provide significant long-term returns. HR leaders must play a pivotal role by using data, aligning with business goals, and demonstrating quick wins to help CEOs see the immense value in prioritizing people and culture, so they stop fearing investing in Culture.