Organizational culture. It can be a free-flowing front of competitive advantage or an insurmountable obstacle to change. What it can’t be, is ignored.
It can’t be ignored because culture persists. Strip away everything else from a company—its strategy, operating model, and customer offerings—and its culture remains. That’s a major reason why 82 percent of the respondents to Deloitte’s 2016 Global Human Capital Trends survey cited culture as a potential competitive advantage.
The persistence of culture is a good news/bad news story. The good news is that an organization’s culture—that is, the norms, values, and behaviors that govern how things get done within a company—can make it strong and resilient. The bad news is that an organization’s culture can threaten its very existence if it is too hidebound to accept change. The paradox is that both the good news and the bad news can exist in the same culture.
These days, employees and customers are demanding greater cultural clarity and authenticity than ever before. They especially want “the way we do things around here” to include a robust concern for corporate citizenship, which we at Bersin define as a company’s ability to do social good and account for its actions. In our 2018 Global Human Capital Trends survey, 77 percent of the respondents cited citizenship as important and 36 percent rated it as very important.
Cultural Myths
Since Andrew Pettigrew, emeritus professor of strategy and organization at the University of Oxford, wrote the seminal paper on organizational culture in 1979, the previously scant literature of culture has exploded in volume. As you might expect, this has given rise to a lot of confusion and contradiction surrounding the topic. So, it’s worth taking a few moments to dispel a few myths about culture:
First, culture isn’t a touchy-feely, nebulous concept promoted by HR. CEOs get it and they pay close attention to it. Moreover, culture is real, hard, and measurable. That means it can be codified.
Second, culture is not etched in stone. “The way we do things around here” can be changed. You can implant and cultivate new values and behavioral norms in a company, and there are times when that must be done.
Third, organizational cultures aren’t monolithic. Inevitably, some employees will interpret and manifest the culture in different ways, and different business units and functions within the same company can have different cultures.
Three Steps to Enable Culture Change
Changing a company’s culture isn’t as easy as replacing the posters hanging in the hallways and cafeteria that list the company’s values. It demands an accurate understanding of the existing culture, a clear vision of the cultural changes that are required going forward, and a concerted, consistent change effort.
Step 1: Know your culture. The best way to start changing a culture is to not change anything at all… until you have a thorough understanding of the company’s existing culture.
When Philips Lighting was being spun off from its parent company, Royal Philips, it needed to refresh its business strategy to better meet the demands of a shifting industry and evolving consumer preferences. Its leaders realized that the company’s culture would play a key role in supporting the new strategy, so they set out to define the existing culture and values using both qualitative and quantitative data. That successful effort set a baseline for aligning the organizational culture with the new strategy.
Step 2: Decide who want you to be. There is no ideal culture. Every organizational culture is unique, and different companies achieve success with wildly different cultures.
That said, our research has found that there are some cultural traits that are associated with successful companies. For instance, our High-Impact Leadership and High-Impact Talent Management research both revealed that organizational cultures that encourage widely-distributed leadership growth processes and continuous learning can help companies manage change effectively and, consequently, lead to better overall organizational performance. In fact, companies with strong cultures of leadership and learning are approximately twice as likely to be highly effective at anticipating change and responding effectively and efficiently.
No matter what kind of culture you choose to create, it’s critical that it be clear, honest, and authentic. Neither employees nor customers will accept anything less.
Step 3: Co-create the culture from the bottom up and top down.
When I give presentations about culture change, I liken the change process to moving a mountain a pebble at a time. If you want to move more pebbles faster, enlist more help.
Create culture change from the bottom up by enlisting employees in the effort. Make your organizational culture change effort inclusive. Give employees a voice. And find those employees who exemplify the new culture and enlist their help, too.
Ask senior leadership to step up. Culture change can’t be left to HR alone; the company’s top leaders should also be involved. They need to put their political and financial capital behind it. And, of course, they need to model the cultural values and norms they want to embed in the DNA of the company. “Do as we say, not as we do” is a prescription for failure in culture change.
Finally, make sure that everything, from the programs and policies of the company to work settings themselves, supports the new culture. That may mean changing compensation and performance appraisal systems to reinforce the behaviors espoused by the new culture. When healthcare IT company Cerner decided its culture needed an infusion of innovation and collaboration, it meant building an entirely new Innovations campus that included numerous physical spaces where employees would be likely to run into each other and share ideas.
There are a lot of ways to affect change in an organizational culture. But patience is key to success—and to keep nudging and prodding the company in the right direction. In the end, the rewards will far outstrip the effort.
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