How Leaders Are Winning On Organizational Culture During Covid

The primary leadership skill that data reveals is connecting positively with employees is organizational leaders' honest communication and transparency about the virus, the impact on business and on jobs.

Frequent communication, honesty and ethical behavior impact performance. JL 

Donald Sull and Charles Sull report in MIT Sloan Management Review:

Average culture ratings experienced a sharp jump between March and April 2020. April through August 2020, which saw widespread lockdowns, shifts to remote work, and layoffs, occupy the top five spots in terms of average culture ratings from 2015-2020. One important theme that stands out in the pandemic is the quality of communication by leaders. Employees gave corporate leaders much higher marks in honest communication and transparency during the first six months of the pandemic compared with the preceding year. Employees spoke highly about the integrity their leaders displayed in dealing with the COVID-19 crisis. Employees were 88% more likely to write positively about leaders’ honesty and transparency and 57%  more likely to talk about ethical behavior.  At first glance, you might expect COVID-19 to be a disaster for corporate culture. The widespread shift to remote work — half of employees in the U.S. were working from home in April — decreased the face-to-face interactions that reinforce organizational culture.1 The economic downturn in many industries and a spike in layoffs threaten to unravel the social fabric that holds companies together. 

Our ongoing analysis of 1.4 million employee-written reviews on Glassdoor, however, tells a very different story. To examine how the pandemic has influenced employees’ perceptions of corporate culture, we looked month by month at how workers at Culture 500 companies rated their employer for the five years through August 2020. When current or former employees review a company, they are asked to rate its culture and values on a five-point scale, from “very dissatisfied” to “very satisfied." 

We found that the average culture rating across the Culture 500 companies experienced a sharp jump between March and April 2020. (See “Company Culture and Values Ratings Before and During COVID-19.”) The months of April through August 2020, which saw widespread lockdowns, shifts to remote work, and layoffs, occupy the top five spots in terms of average culture ratings during the five-year period. 

To understand what was driving this positive spike in culture ratings in the COVID-19 era, we analyzed how employees discussed more than 200 topics in company reviews during the 12 months before the coronavirus pandemic. Our natural language processing platform identified which topics employees mentioned in the free text of their Glassdoor reviews and whether they talked about them positively or negatively. We then compared how often and how favorably those topics were discussed pre-COVID-19 with results from reviews written during the pandemic.2 

For most topics, there was little difference in sentiment before and during the coronavirus pandemic.3 But one important theme that does stand out in the months of the pandemic is the quality of communication by leaders. Employees of Culture 500 companies gave their corporate leaders much higher marks in terms of honest communication and transparency during the first six months of the coronavirus pandemic compared with the preceding year. 

Employees were twice as likely to discuss the quality of communication by top leaders in positive terms during the months of the pandemic than they were a year earlier. In fact, they were 88% more likely to write positively about leaders’ honesty and transparency (46%). Employees also expressed more positive sentiment about transparency (42%) and communication (35%) in general. (See “Employees Gave Companies High Marks for Communication and Integrity During COVID-19.”) Companies on our Culture Champions list, including HubSpot, Hilton, Ultimate Software, Nordstrom, and HP Inc., scored particularly well on transparent communication during COVID-19. 

The theme of transparent communication is relatively rare among official corporate values. In an earlier study of the corporate value statements of more than 500 larger companies, we found that only 12% listed transparency or communication among their official corporate values. Because it is relatively rare in corporate culture statements, transparent communication is not included among our Big 9 values measured in the Culture 500.4 During times of crisis, however, the quality of communication is central to how employees evaluate corporate culture. 

This importance of communication and transparency in the Glassdoor data is consistent with findings from other studies. In late April 2020, we asked over 400 HR leaders an open-ended question about the most meaningful thing their organization did to support the transition to remote work during COVID-19.5 High-quality communication was the top answer, mentioned by nearly half of all respondents. A separate survey found that employers were the most trusted source of information on the coronavirus, ahead of government officials, traditional news outlets, or social media. 

In their Glassdoor reviews, employees spoke highly about the level of integrity that their leaders, and their company as a whole, displayed in dealing with the COVID-19 crisis. Employees were 57% more likely to talk positively about ethical behavior during the pandemic and 51% more positively about the company’s compliance with regulations. Integrity is the most common official corporate value, listed by 65% of companies we studied, and is included among the Big 9 values. Culture 500 companies also received positive reviews regarding leaders treating employees fairly and embodying corporate values in the midst of the pandemic. 

Financial services companies, including The Hartford, U.S. Bank, and TIAA, were among the leaders in integrity during COVID-19, along with SAP, Marriott International, and Lockheed Martin. 

Of course, not everything was good news. Culture 500 employees spoke more negatively about their company’s lack of agility during the first six months of COVID-19 than they did in the preceding year. Employees spoke more negatively about the level of bureaucracy, the complexity of processes, the speed in responding to changes, and a lack of entrepreneurship. (See “Employees Give Companies Low Marks for Agility During COVID-19.”) While employees, on average, believed that their leaders responded ethically and communicated well during the crisis, they were less positive about their employer’s flexibility in responding to the global pandemic as well as to the recession, economic uncertainty, political unrest, and widespread protests. 

We also analyzed which topics employees were more likely to mention during the first six months of COVID-19 compared with the preceding year. For most topics, there was little difference in terms of how frequently they were discussed before and during the coronavirus pandemic.7 But a few important themes do emerge. Not surprisingly, employees were two and a half times more likely to mention the word recession after March 2020 compared with the preceding year. (See “Which Topics Employees Were More Likely to Discuss During COVID-19.”) Other themes that employees talked about more frequently include mental and physical well-being; transparent communication by leaders; and diversity, equity, and inclusivity. 

To gain insight into what the best companies did differently during the first six months of the pandemic, we first calculated the difference in a company’s average score across culture values before and during COVID-19. The typical company experienced a small increase in its culture values score, but a few companies saw their scores rise significantly.8 We created a subset of the 50 companies in our sample that experienced the biggest gain in their culture values score (the top 50) and compared them with the 50 companies that experienced the largest decline on that measure (the bottom 50). 

We then identified the topics that experienced the biggest bumps in sentiment scores (positive or negative) during COVID-19 in the top 50 companies and the biggest decreases in sentiment among the bottom 50 companies. (See “Culture During COVID-19: Companies With the Biggest Gains Excelled at Communication, Employee Welfare, and Agility.”) In the top 50 companies, for example, employees talked about transparent leaders 43% more positively during the early months of the pandemic compared with the preceding year, while employees in the bottom 50 companies discussed that topic 17% more negatively during COVID-19. 

Communication again emerges as the most important differentiator between companies that saw a significant boost in their culture values score and those that suffered a sharp decline. The top 50 companies excelled at transparent leadership, effective top team (senior leadership) communication, and clearly communicating strategy throughout the organization, and they fared well in employees’ general assessment of transparency throughout the company. 

The top 50 companies also did a much better job in addressing issues related to employee welfare. They put in place policies that helped employees balance work with family responsibilities, protected employees’ physical health and safety, and supported their mental well-being. Companies like Deloitte, IBM, and SAP scored particularly well on these dimensions. 

The top 50 companies also responded to environmental changes with more agility. Employees in the leading companies were more positive about their employer’s focus on the external environment, experimentation with new ways of working, flexibility of processes, and ability to execute strategy despite market changes. 

A recent New York Times article argued that business leaders failed to live up to their responsibilities as corporate citizens during the early months of the coronavirus pandemic. Our analysis of more than 330,000 employee reviews on Glassdoor, however, finds that employees of large companies gave their leaders a strong vote of confidence in responding to COVID-19 — the five highest-scoring months in terms of culture and values were April through August of 2020. Corporate leaders in the companies we studied have, on average, received high marks for transparent communication and integrity. The very best companies further distinguished themselves by supporting their employees’ well-being and exhibiting agility in response to unprecedented circumstances.