- Globally 71% of CEOs highlighted culture as a top factor positively influencing financial performance—up from 26% in 2021
- 92% of Australian and 86% of Hong Kong and Singaporean CEOs are actively working on culture, higher thanglobal average of 83%
- 98% of CEOs in Australia, Canada, United Kingdom, Hong Kong and Singapore agree that culture has improved retention rates
- Australian and UK organisations shows marked improvement in DE&I performance due to actively working on culture, in comparison to other markets
SYDNEY, July 27, 2023 – Amid a challenging labour landscape and an unpredictable economic climate, the importance of company culture has been amplified, playing an instrumental role in boosting financial performance and enhancing employee retention, as per the data from a recent survey of 500 international CEOs disclosed today by Heidrick & Struggles (Nasdaq: HSII), a premier provider of global leadership advisory and on-demand talent solutions.
The research, titled “Aligning culture with the bottom line: Putting people first”, found a growing trend of CEOs placing talent management and organisational culture at the centre of their business strategy, with a majority witnessing favourable outcomes.
The Heidrick & Struggles survey of 500 CEOs globally identified the number of CEOs who perceive culture as a pivotal driver of financial performance has tripled compared to two years ago. An increasing number of these leaders also consider culture as an essential business priority, with three out of five stating its utmost importance or necessity to connect culture directly with strategy to yield financial growth.
“Company culture can no longer be separated from business strategy,” said Gaby Riddington, Partner and Heidrick Consulting Lead at Heidrick & Struggles Australia and New Zealand. “Rather, it must be positioned at the core of any organisation. When properly implemented and consistently maintained, culture can lead to significant financial returns. Our report reveals that investing in your people will better position your organisation to succeed in today’s volatile market.”
Responses from the three APAC markets surveyed (Australia, Hong Kong and Singapore) revealed that the number of CEOs actively working on culture surpasses the global average of 83%, with 92% of Australian and 86% of Hong Kong and Singaporean CEOs responding positively. More than half of Australian CEOs surveyed (52%) rated culture as the most important factor in retaining employees, followed by flexibility in work locations (44%) and compensation and benefits (40%) as the third priority. For Hong Kong and Singaporean CEOs, culture was similarly rated as the top factor (54%), followed by compensation and benefits (50%), and flexibility in work rules and locations (46%).
By way of contrast, in the US flexibility in work locations was ranked highest (61%) of all markets surveyed, while less than half of US CEOs (45%) rating culture as important, the lowest of all markets surveyed.
Australian CEOs displayed a higher tendency than most markets to utilise culture to enhance diversity and inclusion (50%), boost employee engagement (48%), align more closely with organisational purpose (40%), foster innovation (36%), and manage new styles of working (24%). Furthermore, Australian CEOs reported an 88% improvement in diversity, equality, and inclusion (DE&I) performance due to culture, the highest among all markets surveyed.
In contrast, CEOs in Hong Kong and Singapore saw DE&I performance improving by 71%. Hong Kong and Singaporean CEOs were found to take much more importance in Increasing employee engagement (51%) and innovation (45%), with improving DE&I (35%) coming in third in priority.
“CEOs in the region are increasingly placing a spotlight on their people and how they work together,” added Tonny Loh, Partner and Heidrick Consulting Lead at Heidrick & Struggles Singapore. “It is clear that culture has a positive influence on business and talent management strategies, employee retention, and financial performance. All thriving cultures begin at the top with purposeful leadership, as the model of the leader affects the entire organisation.”
A focus on company culture is paying dividends globally
Globally CEOs say the most important cultural element is direction and purpose, which saw the largest growth from 37% in 2021 to 69% in 2023. Other cultural elements crucial to boosting performance include agility, innovation, and growth mindset (57%) and a positive spirit and vitality (46%). In Australia, direction and purpose also ranked highest (66%), with innovation, and growth mindset (64%) in second place. On the other hand, CEOs in Hong Kong and Singapore ranked agility, innovation and growth mindset (72%) significantly higher than other markets, and direction and purpose (58%) second.
CEOs today are coming to terms with the fact that culture has a tangible impact on company performance, specifically financials—culture is clearly more than a buzzword. The survey found that 72% of Hong Kong and Singaporean CEOs highlighted culture as a top factor positively influencing financial performance—a touch higher than the global average of 71%. However, only 66% of Australian CEOs identified culture as an important factor in driving financial performance. Yet, 92% of Australian CEOs reported improved financial results from working on culture; with CEOs in Hong Kong and Singapore coming in at 82%.
CEOs need to keep culture initiatives alive
With growing evidence that company culture can help boost overall performance, CEOs cannot view these efforts as one-and-done. More Australian CEOs (92%) were working on culture, compared to the global average of 83%. Hong Kong and Singapore CEOs also ranked higher than the global average at 86%, with most of them (35%) starting 5 years ago. In contrast, German CEOs reporting the lowest score (58%). German CEOs however, had the highest score for those having previously worked on culture (40%) compared to just 8% in Australia.
Employee retention: the people-centric approach is working
Culture is not only driving financial outcomes but improving the talent experience overall. In fact, CEOs view the financial benefits as an added bonus, instead driving their culture efforts with an eye toward employee satisfaction and performance.
The leading motivators for CEOs in Hong Kong and Singapore to focus on company culture was increasing employee engagement (51%) and innovation (45%) and improving DE&I (35%). Similarly, Australian CEOs also highlight improving DE&I (50%), increasing employee engagement (48%), and creating stronger alignment with organisational purpose (40%) as its driving factors behind its emphasis on company culture.
The survey found that this approach is already proving beneficial. Culture was the top influencing factor on employee retention rates—surpassing even compensation and benefits and workplace flexibility. All three APAC markets surveyed also ranked the highest globally on CEOs agreeing that culture has improved retention rates at 98%, tied with CEOs in Canada and the United Kingdom and surpassing the global average of 94%.
Key Facts:
- Globally 71% of CEOs highlighted culture as a top factor positively influencing financial performance—up from 26% in 2021
- 92% of Australian and 86% of Hong Kong and Singaporean CEOs are actively working on culture, higher thanglobal average of 83%
- 98% of CEOs in Australia, Canada, United Kingdom, Hong Kong and Singapore agree that culture has improved retention rates
- Australian and UK organisations shows marked improvement in DE&I performance due to actively working on culture, in comparison to other markets
About us:
About the research
In Spring 2023, Heidrick & Struggles surveyed 500 CEOs worldwide on the value of corporate culture and how it contributes to the bottom line. These CEOs came from Australia, Brazil, Canada, France, Germany, Hong Kong, Singapore, Spain, the United Kingdom, and the United States. They lead companies in consumer goods, financial services, industrials and energy, healthcare and pharmaceuticals, and technology and telecoms.
About Heidrick & Struggles
Heidrick & Struggles (Nasdaq: HSII) is a premier provider of global leadership advisory and on-demand talent solutions, serving the senior-level talent and consulting needs of the world’s top organizations. In our role as trusted leadership advisors, we partner with our clients to develop future-ready leaders and organizations, bringing together our services and offerings in executive search, diversity and inclusion, leadership assessment and development, organization and team acceleration, culture shaping and on-demand, independent talent solutions. Heidrick & Struggles pioneered the profession of executive search more than 65 years ago. Today, the firm provides integrated talent and human capital solutions to help our clients change the world, one leadership team at a time.®www.heidrick.com
