Thursday, 22 August 2013

Changing Corporate Culture

Organisational culture has probably been best defined by Deal and Kennedy in 1982 as "The way we do things around here" (p. 4). This explanation encapsulates all that can be right and wrong with organisational cultures; all that can hold us back, hold us together or blow us apart.

Culture is probably the single most important tool that leaders have in their tool kit. Good management of culture means that all staff know what they need to do, when they need to do it, and the spirit in which they should do it.

Culture usually reflects our societal culture. The trouble is, we can't see it; we can't taste it; we can't touch it; and half the time we can't even point to anything that reflects it. Culture manifests itself in our values: what we wear, what is acceptable to say, how we deal with customers, how we treat each other, how honest we are and how decisions get made. Culture determines whether we can talk to the CEO freely, whether it is OK to bring your kids to work, whether you need to follow formal communication channels, and whether there are hugs or hand-shakes or eye-rolls.

And sometimes we take our eye off the ball. We get out of step with the rest of the world, or the world suddenly shifts on us (think 11 September 2001). If we stay where we are, we slowly become irrelevant to our markets, our staff and our nation, and we die. To prevent that, we need to change what we have held to be our organisational truth, and make deliberate cultural change.

But that change is easier said than done.

In order to change organisational culture, you need resources:
  1. Audit – Conduct a situational analysis (SWOT), a market forces analysis, then a cultural audit/analysis, identifying those cultural elements needing change. Evaluate the gap between what you have and what you want to have. You need to understand CLEARLY why the change should happen, and what components of your organisational culture are holding you back. Are these Deal & Kennedy's organisational symbols? Rituals? Stories? Acts? Processes? Reward Systems? Values? A difference between what you say and what you do? Or a combination of these?
  2. Explain the reason for change – Clearly communicate convey why the change needs to happen. If the organisation's survival is threatened, it needs to be clearly communicated so staff understand this is 'mission critical', not just a ‘nice to have’.
  3. Visionary leadership – a leader, or an idea champion in the organisation, who grasps the need for cultural change, and has the authority, responsibility and the resources to be able to see the change through.
  4. Time – to achieve effective cultural change will take a LONG time, and a lot of dedication. It might take only three years to make cultural change stick; or as long as a decade.
  5. Commitment – because of the time it will take to embed cultural change, the C-team needs to be committed to resourcing this as a long term project, with wide ramifications. For example, to make change stick, you will need to consider EVERY ONE of the following items that Hellriegel and Slocum (2003) identified:
  • Organisational Design: how your organisation is put together - whether it is centralised, de-centralised, in autonomous teams, business units or geographically isolated will all have an impact on whether your cultural change works or is rejected. Culture, strategy, and structure are intertwined, so a new culture is likely to need a new combination of tasks and responsibilities. Be prepared to consider initiating a reorganisation, but wherever possible, don't make people redundant (redundant people may become bitter, and those left behind feel guilty).
  • Organisational Systems: implement the process and systems changes identified in your audit; for example, to green your entire work processes, you will need to consider strategy, finance, IT, marketing, manufacturing, value chain, supplier-customer relationships, and inputs and outputs.
  • Reward Systems: Change HR processes so new personnel are introduced to the culture and are rewarded for behaviours that benefit the organisation. You may need new rewards systems, evaluation, induction, socialisation & social functions to support the changed culture
  • Leadership: you will need new stories & rituals to convey and drive down the new vision - the cultural artefacts that are the warp and weave of the fabric of an organisations culture and legitimise your new way of doing things.
  • Teams: shake people out of their silos and comfort zones. Lack of team participation is a common way for cultural innovation to fail.
  • Individuals: though acts of leadership by individuals throughout the organisation, the new culture is embedded, story by story, act by act, ritual by ritual, until the change takes. This means you need to select people who will embrace the change and help drive it down through the organisation, and absorb their gritty understanding of the detail of their work, linking that with the intended change.

Cultural change is hard work, but well worth it.

  • Deal, T. E. & Kennedy, A. A. (1982). Corporate Cultures: The Rites and Rituals of Corporate Life. Harmondsworth: Penguin Books.
  • Hellriegel, Don & Slocum, John W. Jr. (2003). Organizational Behavior (10th Edition). USA: South-Western College Publishers [based on McKinsey 7-S Framework in Peters, Thomas J. & Waterman, Robert H. (1982). In search of excellence: lessons from America's best-run companies. USA: Harper & Row (p. 10)].


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