Tuesday, November 1, 2016

How Much Does Cultural Fit Matter?

Cultural fit matters to senior executives. Several years ago, the CEO of a major consumer products company decided to hire an executive from GE to a senior level position, partly to help drive change in the company’s culture. GE’s culture, at least during the Jack Welch era when this event took place, was characterized by bluntness and an in-your-face and confrontational approach to interactions. This company’s culture on the other hand, was quite genteel. Individuals who were promoted were considered to be “nice” and conflicts were often avoided or handled very discreetly. Even the CEO himself was a product of this culture, and disdained having to confront others. The culture fit between the GE transplant and his new company’s culture was stark, and within a year, he left the company. The resistance to his style was stiff, and he could not get the full support of the CEO for the changes he wanted to make, not just to the business strategy but also to the company’s practices and processes.

Take Ron Browett, who lasted six months as head of Apple’s retail operations because, according to CEO Time Cook, he was not a cultural fit. Many search firms believe that at least half of CEOs and senior executives who fail to “make the grade” do so because of a lack of alignment with the company’s corporate culture. The Wall Street Journal (October 12, 2016) reported that in a recent survey by Millennial Branding and Beyond.com, human-resources staff, when assessing college hires, ranked cultural fit above a candidate’s referrals, coursework and grades. A consulting company called RoundPegg claims that it has helped companies reduce turnover by assessing candidates on their culture fit with their hiring companies.

Cultural fit matters not just at the CEO level but down the line as well. Companies from Goldman Sachs to Zappos claim that cultural fit is important and they try to hire workers who somehow will fit into the company culture. The rationale here is that such employees will not only be happier but also more productive in the long run if they work in an environment that matches their preferences.

Fit also matters when working across borders. Carl was an expatriate manager who was assigned to work in the Japanese subsidiary of his firm. Introverted, unfailingly polite and deferential, he was a very popular gaijin with his Japanese colleagues. In meetings, he would often not speak out and offer his opinions until everyone else had, and was very respectful of the other executives in the local subsidiary. Carl’s job performance was outstanding. After three years in Japan, Carl’s company sent him to Sydney to help fix the marketing function in that company’s Australian subsidiary. After six months, the local general manager asked his regional boss to have Carl transferred elsewhere. Carl just did not fit in well with the Australian culture. The local CEO reflected on how Carl was perceived there: “No one could get along with him. Everyone felt he could not be trusted, because we never knew what he was thinking. It was as if he was always holding something close to the vest. He was so quiet that we didn’t really get to find out what he knew or what he could contribute.”

Fit even matters when considering individuals’ beliefs and societal beliefs and values. For example, Lu (2006) did a study of 412 Chinese university students in Taiwan and mainland China and found strong correlations between the degree of fit between individuals’ beliefs and societal beliefs with subjective well-being for these Taiwanese and mainland Chinese students.

So what exactly does cultural fit mean? Fit suggests there are pieces that need to be joined together, and cultural fit suggests some sort of congruence between the organization’s culture and the individual. But what specifically is it about the organization and its culture? Since culture is so broad, we need to define what aspects of the culture are important and that need to be considered when assessing an individual’s cultural fit. Professor Edgar Schein (Schein, 2013) has described culture as made up of tacit assumptions and their manifestations through such artifacts as language, behaviors, processes and architecture. It is not always easy to unearth these tacit assumptions because they often differ from a culture’s espoused values. For example, organizations have espoused values as reflected in their mission statements and speeches by company executives. Yet, when we consider these organizations’ processes and the behaviors of their leaders, the tacit assumptions will often differ from these espoused values. Consider the recent Wells Fargo case, where the espoused value was to take care of the customer, yet the reality was far different. As reported in the October 12, 2016 edition of the New York Times, Wells Fargo employees had been complaining for years about what they had seen: “employees opening sham accounts, forging customer signatures and sending out unsolicited credit cards.” This was despite a sales quality manual that reminded employees that they needed to obtain a customer’s consent before opening an account. Employees’ complaints were either ignored, or in some cases, the employees themselves were fired for insubordination. John Stumpf, Wells Fargo CEO who himself was recently fired, kept blaming the bank’s employees, not the culture, for this mess.

In interviews with recruiters and business executives, it seems that there are several interpretations of cultural fit, some of which are more problematic than others. The first is on fit around demographics, especially race and gender. Overt discrimination based on race and gender is illegal but there are still subtle signs of it around. Many companies these days profess to value diversity, and in fact have Chief Diversity Officers in senior roles. While there continue to be some exceptions in the business world (for example, the lack of gender diversity in Silicon Valley), there has indeed been progress in diversity based on race and gender. Very few companies would openly advocate cultural fit based on racial or gender similarity.

The second interpretation of fit is on congruence with day-to-day behaviors. An organization I knew of was known to have a very friendly, extroverted culture. It was not uncommon for employees at all levels to greet each other very warmly at the beginning of the work day. One manager very much resented having to put on a happy face in the morning. He did not want to engage in small talk nor even to smile before he had gone to his office, turned on his desktop, checked his e-mails and had his first cup of coffee. The buzz quickly spread around home office that this was a person who would never fit in to the company’s culture. He did not; he left after two years for another opportunity.

The third interpretation is around congruence with attitudes and interests. For some organizations, this is especially important at a micro level when individuals are being asked to join teams. In her study, Rivera (2012) found that assessors were interested in the candidates’ play styles and how they conducted themselves outside their office, rather than their work styles. She attributes the importance of this to the firm’s demands on employees working in the office or on the road, and the desire to make those days more enjoyable by having colleagues who could be playmates or friends. Rivera conducted in-depth interviews and fieldwork in one elite professional services firm and found, among other things, that “…similarity was the most common mechanism employers use to assess applicants at the job interview stage. Similarities in extracurricular /leisure pursuits, experiences, and self-presentation styles were most commonly used.” (p. 1006). One executive recruiter I spoke with mentioned an executive client who was looking for candidates who he felt he could get along well with if they were sitting side by side on a plane for ten hours.

A fourth interpretation is on congruence regarding values and beliefs. Let’s take an example from the Hogan Values Inventory, an instrument which some of my colleagues and I have used in the past with various clients. This inventory measures ten values, including Altruistic, Commercial, Hedonism, and Power. For example, here is what the Hogan inventory advises to a person who scores low in Power values: You don't need to prove yourself to others and may prefer to work in organizations that value teamwork and collaboration more than individual achievement. Being in an organization that trusts, respects, and supports you may be more important than having lots of opportunities for upward career mobility.
Kristol-Brown et al. (2005) did a meta-analysis of hundreds of studies examining various kinds of “fit,” i.e., person-job fit, person-group, person-organization, and person-supervisor fit. In looking at person-environment fit, which is the closest to the concept of culture fit, they concluded this type of fit correlated strongly with job satisfaction, organizational attraction, applicant job acceptance, and organizational commitment, but had low correlations with job and task performance.

Cultural fit does lead to a propensity for liking and greater cooperation, and possibly efficiency with which tasks get accomplished. After all, most of us feel more comfortable if we are among people who are like us; in fact, we tend to be more accepting of their ideas as a result of this “perceived similarity” bias. However, there is no hard evidence that cultural fit defined broadly leads to desired organizational outcomes, such as innovation, creativity, and productivity. A tight cultural fit might in fact lead, at a minimum, to a lack of diversity, and at worst, to discrimination and worse. As Thau et al. (2015) have shown through several field and laboratory studies, people who are at a high risk for being excluded from their group are more prone to engage in unethical behavior, especially if they have a strong need for inclusion. Their findings are a bit disturbing, for they show the extent to which individuals could go to in order to “fit in.”

In his book Originals, Adam Grant (2016) states: “If you hire people who fit your culture, you’ll end up with people who reinforce rather than challenge one another’s perspectives.” (p. 190) He suggests hiring on cultural contribution, not on cultural fit. By this, he means that organizations should be looking for people who can enrich the culture and hiring those who have qualities that are missing from the current culture. In fact, in the same October 12 Wall Street Journal article reported earlier, the reporter cited Facebook as one company that “… discourages its managers from using culture fit as a criteria (sic) in hiring, pointing out that term is a ‘bias trap.’” A senior attorney-advisor in the office of legal counsel at the EEOC said that culture fit is a “vague, amorphous term that potentially could lead companies to exclude specific groups.”

What this suggests is that cultural fit should be based on congruence between the organization and the individual on beliefs and values, not on superficial aspects such as the way someone looks, dresses, or what sports teams they support. Based on extensive research by cultural anthropologists, the most important of these beliefs and values are around the following dimensions (these are discussed in greater depth in my recent book, Successful Global Leadership):
1.     authority and power versus egalitarianism
2.     independence and individualism versus interdependence and collaboration
3.     assertiveness and competitiveness versus harmony and consensus
4.     tradition versus adaptability and openness
5.     expressiveness and looseness versus order and structure.

Here are three recommendations for managers seeking to hire for cultural fit. First, focus cultural fit on those values that are most important to the organization. For example, how much does the organization value assertiveness and competitiveness over harmony and consensus? Make sure to go beyond those espoused values by reflecting and observing what behaviors gets rewarded, who gets ahead, and the actions of senior leaders. By focusing on these five sets of values, rather than looking at fit based on how people look, how they dress, or what their hobbies or interests are, organizations can avoid the unintended consequences that too much of a focus on cultural fit can lead to.

Second, learn how to assess candidates’ values by focusing on their behaviors, listening, and observing non-verbal cues. For example, many candidates will say that they are team players and that they take initiative. By asking behavioral questions and probing, you will be able to infer their preferences and values more accurately. Using an assessment tool such as the Hogan inventory or a simulation also helps. Third, consciously hire some cultural misfits to “hire for the future” (as Henon and Thompson suggest), especially when the organization is attempting to change some of its own cultural values to align better with its strategic direction. For example, for an organization with a culture that discourages speaking up and empowering employees, this means hiring those individuals and leaders who value speaking up and empowering others, and who have demonstrated these behaviors. These individuals may be cultural misfits but will be important change agents for your organization.

In summary, cultural fit still matters, but with two important caveats. One, be careful about focusing cultural fit too tightly on superficial attributes. Two, there are times when organizations need to hire some cultural misfits.

Kristof-Brown, A. et al. (2005). Consequences of Individuals’ Fit at Work: A Meta-Analysis of Person-Job, Person-Organization, Person-Group and Person-Supervisor Fit. Personnel Psychology, 58, 281-342.

Lu, L. (2006). “Cultural Fit”: Individual and Societal Discrepancies in Values, Beliefs, and Subjective Well-Being. Journal of Social Psychology, 146 (2): 206-221.

Henon, T. and Thompson, L. (February 15, 2016). How to Hire Without Getting Fooled by First
            Impressions. Harvard Business Review Digital Article.

Rivera, L. (2012) Hiring as Cultural Matching: The Case of Elite Professional Service Firms. American Sociological Review, 77 (6): 999-1022.

Schein, E. (2013). Humble Inquiry: The Gentle Art of Asking Instead of Telling. San Francisco: Berrett-Koehler.