October 3, 2019 Advisory Board's take: 3 steps to strategically design and build a culture

Some human resources experts believe hiring for "cultural fit" disadvantages companies by employing only like-minded individuals, but others argue that with the right definition in place, the practice doesn't have to undermine diversity.

The problem with hiring for 'cultural fit'

When choosing new hires, many employers prioritize hiring candidates who they think will align with the organization's values. But that the practice makes it is easy for employers to choose a homogenous group of new hires—a "bad" move for "anyone who cares about an office with a mix of races, genders and points of view," the Wall Street Journal's Sue Shellenbarger writes.

According to Shellenbarger, research shows that managers tend to hire candidates who make them feel good about themselves, in a pattern called "looking-glass merit." Shellenbarger explains that hiring for "cultural fit" can exacerbate the pattern by giving managers a path to hire someone with a common educational background or shared interests.

"What most people mean by culture fit is hiring people they'd like to have a beer with," according to Patty McCord, a human-resources consultant and former chief talent officer at Netflix. Instead of creating an office with a mix of genders, races, and opinions, "You end up with this big, homogenous culture where everybody looks alike, everybody thinks alike, and everybody likes drinking beer at 3 o'clock in the afternoon," she said.

How to hire for cultural fit without falling prey to common pitfalls

But, according to Shellenbarger, the true definition of a cultural fit hire is someone who has a "shared enthusiasm about a company's mission or purpose, … a common approach to working, … and a mutual understanding of how to make decisions and assess risk." 

By addressing misconceptions about what a culture fit is—and how hiring for culture fit can affect an organization's performance—employers can improve their teams by hiring new employees with shared values and goals. 

In the Harvard Business Review, Joeri Hofmans, an associate professor of work and organizational psychology at the Vrije Universiteit Brussel, Belgium, and Timothy Judge, senior associate dean for programs and outreach at Ohio State University's Fisher College of Business, outline four common misconceptions managers have about hiring for culture fit.

1. Culture fit is not a necessity. Research has shown that culture fit, defined as how well someone's values adhere to the values of an organization, matters more than an employee's skills. "Meta-analyses have found that people whose values are more aligned to those of their organization are more committed to the organization, more satisfied with their job, and less inclined to leave," according to Hofmans and Judge. So if managers want an engaged workforce, "culture fit is essential," Hofmans and Judge write. 

2. Hiring for culture fit prevents diversity. As noted above, when managers misinterpret culture fit, they tend to hire a homogenous workforce. But, if managers are truly choosing candidates based on their values rather than their gender, age, ethnicity, or sexual orientation, an organization can still bring in "diverse perspectives, experiences, and skills" while hiring for culture fit, Hofmans and Judge write.

3. Prioritizing culture fit can hurt innovation. If everyone thinks and acts the same, it can reduce creative thinking and innovation. But if managers hire people who think differently while still sharing the organization's values, hiring for culture fit can actually fuel innovation, Hofmans and Judge write. For instance, a study of 346 members of 75 health care teams found that when members believed they were a better value fit for their team, the leaders rated the team as more innovative. "Importantly, the effect of value fit on innovation was due to team members identifying more strongly with the team, which led them to be more accepting of the diverse ideas and approaches of the other team members," Hofmans and Judge write.  

4. Hiring for culture fit is not a science. When people hire for culture fit, they often use their "gut feelings" and intuition to evaluate candidates' values—a "bad" approach that can "easily get confounded by other things, like their personality or background," Hofmans and Judge write. To determine culture fit accurately, managers must establish a proper measurement, Hofmans and Judge write. According to Hofmans and Judge, this approach requires three steps: measuring the actual values of the organization or team using a standardized value instrument, using the same instrument to assess candidates' values, and using algorithms to compare the values of the candidate with those of the organization (Shellenbarger, Wall Street Journal, 9/23; Hofmans/Judge, Harvard Business Review, 9/18).

Advisory Board's take

Kate Vonderhaar, Practice Manager, HR Advancement Center

As Hofmans and Judge's work shows, hiring for cultural fit—when done well—leads to more engaged employees, higher levels of retention, and greater innovation. However, it's easy to fall into the trap of hiring for background or personality under the guise of culture. This is true especially because so many health care organizations haven't articulated exactly what makes their culture unique or different than others'.

To be able to truly assess how candidates' values match with those of your organization, you need to build a culture that is deliberate and differentiated. The good news? This can actually attract new hires to your organization—precisely because they believe in the values you've identified and they recognize that your organization's culture really is different from other employers they're considering.

So how do you strategically design and build a culture that makes you stand out from the pack? First, you need to crystalize a set of values that defines who you are as an organization. Our research has identified three steps to help you get there.

  1. Embed a consistent set of values across your organization. The first step in building a differentiated culture is to establish a set of values that are firmly embedded into the fabric of your organization. Aim for a set of seven (or fewer) values and ensure that this set is clearly translated into specific, observable behaviors that staff know how to model in their day-to-day work. Senior leaders should consistently reinforce your values in all communications with staff, and you should have specific recognition programs and performance criteria tied to them.
  2. Make your values pithy and memorable. For many organizations, the first step, having clearly embedded values, is already the status quo. But few organizations have achieved the next-level of a differentiated culture: Making their values memorable and pithy enough that staff are able to reference them in their day-to-day work and conversations. For instance, Quicken Loans specifically designed “ISMs” (or the ideals everyone at the company lives by) to be catchy, concise, and informative. For example, one of them, "We are the ‘they,’" could also be defined as teamwork—making sure that everyone, including senior leaders and staff in different departments, is on the same team and trusts each other. However, unlike just the word "teamwork," the ISM is highly memorable.
  3. Use your values to differentiate your culture from your competition's. Oftentimes, health care organizations have broad, abstract values like service excellence, top-class care, or financial stewardship. While all of these values are laudable, they're usually not substantially different from other organization's values and often too broad to be effective in differentiating you from your competition. Instead, you should be intentional and selective in identifying the values that truly set your organization apart. These should elicit a strong reaction from prospective employees—and it's okay if the answer isn't always "I want to work there." Remember, you don't necessarily want to attract everyone, you want to attract the people who will contribute most to the culture you’re trying to build.

To learn more about how to build a differentiated culture, and how to apply these values to your performance management, hiring, and leader development programs, be sure to download our new report on the Six Levers to Build a Differentiated Organizational Culture.

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