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In times of crisis, corporate culture is a matter for the CEO

Debby Jannink Partner Change & Leadership, PwC Netherlands 11/03/21

CEOs need to develop paradoxical qualities more than ever before 

COVID-19 has put employee well-being and involvement high on the agenda of CEOs. Leaders are expected to do two things: be empathetic in the here and now, and allow themselves to be vulnerable in order to ‘hold everything together’. At the same time, they have to show that there are prospects for the longer term. The COVID-19 crisis has shown that possessing almost paradoxical qualities is essential for CEOs.

In our annual CEO Survey, CEOs were asked this year what aspects of their HR strategy they would like to change to improve their competitive position. Strikingly, forty percent of CEOs would like to devote more attention to strengthening the corporate culture. 

That's even slightly higher than the 37 percent of CEOs who focus on improving the skills of their employees, something they've considered the most important in recent years. Strengthening the focus on employee health and well-being also scores high (thirty percent) in the 2021 CEO Survey. 

COVID-19 and the massive increase in working from home

Consequently, the desired ‘hard’ digital skills of their employees now have stiff competition from the softer aspects of HR policy on the agenda of CEOs. This cannot be seen in isolation from COVID-19 and the massive increase in working from home since March 2019. 

Focus shifted from hard to soft side of working from home 

In the first few months of lockdown, CEOs were primarily concerned with crisis management to ensure the continuity of their organisations, while HR and Facility departments handled the physical safety of the work environment.

Offices were fitted out for social distancing, walking routes were mapped out, office reservation systems were installed and an access policy was formulated. Employees received help and tips on how to set up their home office. 

Difficulty with a balance between private and work

The focus has now shifted from the physical placing of social distancing stickers to the softer side. After all, it has become apparent over time that employees are tired of working from home and have difficulty achieving a satisfactory work-life balance. Research has shown that they miss working together but also having fun with colleagues, they feel less involved with the business, with consequences for effectiveness, creativity and innovativeness. 

It has gradually dawned on us that it is not only physical safety but also mental well-being that is the most important issue when working from home. Whereas previously there were concerns about what automation would do to the labour factor, the emphasis is now on the wear and tear effect of working from home. 

Continuously measuring, managing and acting 

The dramatically changed working circumstances demand continuous measurement and adjustment. Many employers – and those who are not yet doing so should start doing so immediately – periodically send out surveys to gauge the mood among their staff and to act on it. If employees are feeling lonely, perhaps it's time to encourage colleagues who live close to each other to take a walk together. If employees are having difficulty combining work and care responsibilities because schools are closed, then perhaps the employer could arrange and fund childminders. 

Employee involvement requires leadership from the top

CEOs need to communicate, not via a layer of management, but themselves. If only to say how they are doing, how they approach problems (leading by example!) and to show empathy with all those different individuals in different circumstances.

It is also important that they communicate frequently, because how people feel during the crisis is often a snapshot. For example, the mood may well drop in the week following a press conference by the Prime Minister. If there is ‘another day at the office’, CEOs can spread their messages through their management structure. 

An HR department can continue to take care of benefits negotiations, pay rounds and even vitality programmes, but keeping employees involved and the corporate culture in place requires leadership from the top. In a crisis like this, CEOs have to hug their employees directly, so to speak, to keep everyone on board.

CEOs must continue to offer prospects

At the same time, CEOs must continue to offer prospects and show how the business is doing. How are things financially? How is the implementation of the strategy going? What are the plans for the near future to emerge from the crisis? During this crisis, it has become clear that nothing discourages people more than a lack of prospects. 

‘Soft’ leadership may take some getting used to, but it is crucial 

Before the COVID-19 pandemic, business leaders were still mainly occupied with content, with strategy, with mapping out routes to desired goals, adopting a position and appointing a management team to carry it all out. There is now an added dimension. Although new, because embracing may take some getting used to, but it is crucial.  

We call these the 'soft' aspects, but they are not that soft. Needless to say, working from home also results in cost savings, especially in terms of commuting kilometres and office space. On the other hand, there is also a price to pay for the effects of less cooperation, less involvement in the organisation, isolation and stress.

In our research The costs and benefits of working from home, part II we calculated that these costs could total between 375 million and 1.5 billion euros if employees were to spend more than half the week working from home without colleagues. And these are costs borne almost entirely by employers. 

COVID-19 accelerates paradoxical leadership

In recent years, a lot of attention has been given to new leaders who have seemingly opposing skills. To leaders who do business around the world, but have an eye for their immediate vicinity, people who act with self-confidence, but at the same allow themselves to be vulnerable. To CEOs who can handle the latest technology, but who realise that this technology is used mainly by people. 

To CEOs who take a firm line, but at the same time respond to the changing wishes and expectations of their stakeholders. COVID-19 is accelerating the importance of these characteristics – those paradoxes of the new leadership, as we call them. In this sense, too: ‘never waste a good crisis’.

Focus on corporate culture and behavior ranks high in PwC's 24th CEO Survey

The results of PwC's 24th CEO Survey show, among other things, how important CEOs consider the so-called soft sides of their organization's HR policy. When asked what they would like to change in their HR policy to improve their competitive position, improving digital skills and increasing productivity through the use of technology and automation have traditionally scored high. However, the respondents consider a focus on corporate culture and behavior even more important than these two aspects.

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Contact

Debby Jannink

Partner Change & Leadership, PwC Netherlands

Tel: +31 (0)62 394 98 21

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