According to the Organisation for Economic Co-operation and Development, human capital is defined as: “the knowledge, skills, competencies and other attributes embodied in individuals or groups of individuals acquired during their life and used to produce goods, services or ideas in market circumstances”.
While the arrival of COVID-19 last year impacted on every facet of our lives, in business, it was felt acutely in all elements of human capital. The virus, and how it impacted our workplaces, magnified all the real issues in organisations. Previously, these issues were brushed off, played down or hidden behind, yet the moment COVID hit, and we had to quickly adapt to remote ways of working, numerous cracks started to appear, many of which could be traced back to company culture.
If you were an organisation which was by nature hierarchical with much red tape to jump through for every move to be made, COVID swiftly put a halt to that, creating blockages and a slowdown in decision making. Organisations which were hierarchical could no longer micromanage employers and had to quickly adapt in order to survive in the new environment (along with equipping employees to adapt).
HR had to move a lot closer to CEOs and COOs of organisations as it became apparent that people were the greatest assets in an organisation, and consequently human capital was best placed to support executives in dealing with this new reality. HR had to be innovative and creative; upskilling employees very quickly to work remotely, moving from physical to virtual reporting, using the right mechanisms, and teaching managers how to effectively manage people remotely.
What working from home (WFH) did do, however, is highlight where organisations were lacking trust, open communication, clear goals, commitment, and the capabilities to achieve the desired results. Previously, managers and employees could hide and manage their ineffectiveness and inefficiencies, however, lockdown and working remotely revealed the cracks. Managers and employees quickly realised the importance of communication, trust and taking accountability.
Hierarchical organisations with multiple levels of authority and a formal decision-making process that flows from top down really struggled in the new world of remote working. Leaders realised that they had to change the way they do things; they had no choice but to trust their employees to get the job done with limited real-time supervision and support. This meant a culture shift for many organisations. They had to move away from behaviours that limited trust, open communication and accountability and embrace different rituals and practices to drive results and sustainability for the employees and the organisation.
Ultimately, making more employees ‘the boss’ gets them more committed to the success of the whole. Communication, collaboration, trust, and accountability are non-negotiables as a company shifts its culture. Having a flatter hierarchy helps speed decision making, giving employees the latitude to make judgment calls and on-the-spot decisions. Success comes through collective work and information sharing across divisions, units, and functions. And none of this can be achieved without a culture shift.
Covid has already been with us far longer than anticipated and organisations are still learning how to adapt their ways of working and culture to fit the new reality. Key things you need to always consider when changing the culture include the role of leadership – they should not only lead it but embrace and live the new culture; the operating model has to change; and employees need to feel the change from the top and receive open and honest communication at all times, building trust and accountability.
In the next article in this series, we will be exploring the role of leadership in culture.