Challenge 37. Company culture resists change

Nut to crack: How to adjust the organisational culture to support the necessary change

Many books have been written on the subject of organisational culture be- cause it appears to be a three-headed “monster”. Here, when organisational culture is mentioned, Edgar Schein’s basic model is applied, recognising that organisational culture consists of three layers:

  • A first layer of visible behaviour and expressions
  • A second layer of the values that have been formalised
  • A third layer of unwritten rules and assumptions that people carry around

Plenty of books talk about how company culture can cause an organisational change to fail or succeed. This validates the importance of working on the corporate culture but does not provide an answer to how to shape, adjust or change it. Where do you start? And how do you handle it?

Nutcracker: Measure so you know

In my experience, organisational culture is not fuzzy. It is measurable, just like financial results are. By measuring, behaviour becomes manageable. There are many ways to make corporate culture measurable. I like to work with the Barrett Values Culture Assessment13, an internationally proven measuring in- strument. This is explained below. In addition to the measurement, it helps to have focus group discussions comprised of a cross-section of the employee population. In these focus groups, you can clarify how the three layers of culture currently help or hinder the realisation of sustained business perfor- mance in practice. Then you bring the results of the conversations and the measurement output to the decision-making table. Based on that content, the desired culture can be defined.

By then examining, with the top team, what this desired culture means con- cretely for their behaviour at the crucial moments when they make a differ- ence as a leader, you can turn a generic discussion about organisational culture into a discussion about your own behaviour and the behaviour of others. This makes culture more tangible for the individual leaders and makes concrete what role model behaviour looks like. By subsequently having lea- ders and employees in the organisation take the same thinking step, you make an abstract concept, such as a culture evolution, personal and specific for everyone. And by finally stimulating everyone to develop their behaviour and measuring progress, you progress as an organisation. How you can do this is described in the example.

Support tool: Barrett Values Culture Assessment

The Barrett Values Culture Assessment measuring instrument works as fol- lows. Using a list of 100 validated values and behaviours, employees answer just three questions:

  1. Which values and behaviours best represent what you stand for?
  2. Which values and behaviours best represent how your organisation ope- rates today?
  3. Which values and behaviours best represent how you would like your or- ganisation to operate?

Next, you get the following outcomes:

An overview of:

  • the personal values of employees in the organisation
  • the current culture as presently experienced by employees
  • the culture as desired by the people in the organisation

 

You can obtain this insight at an organisation-wide level and per target group. In addition, the Barrett Values Culture Assessment provides you insight in the degree of entropy in the organisation, which is the extent to which employees are unable to devote to their work because they are hindered by one of the following factors:

  • Factors that slow down the organisation and obstruct effective deci- sion-making: bureaucracy, hierarchy, confusion, firefighting, rigidness
  • Factors that create friction between employees: blaming, manipulation, fighting and intimidation
  • Factors that impede focus on work: micro-management and control drive, extreme short-sightedness, job insecurity, risk aversion and territorial be- haviour

This input helps to formulate the desired organisational culture and to take targeted action in those places where energy leaks out needlessly.

Real-life example: Changing organisational culture does not happen overnight This family business is the largest maritime company in its sector but is no longer making a profit. The family has asked the new externally recruited ceo, Jonas, to prepare the company for an external investment round to gain access to new capital.

Jonas sets a clear business strategy with his Management Team and outlines the path towards profitable growth. The start of the strategy implementation is encouraging: the portfolio of cost­saving projects yields results, cutting €45 million in structural costs from the organisation, and new initiatives are also gaining traction, embedding customer segmentation deeper into the fibres of the organisation.

Jonas is concerned about the culture he experiences. He finds a lack of sharpness, speed and decisiveness. Everyone’s opinion is valued, leading to thoughtful disagree­ ment and careful hesitation before the final decisions are made.

There is a beautiful “can­do mentality”, but at the same time, it ensures acceptance of work without the right conditions, resulting in mediocrity. People are very friendly to each other, but at the same time, the blanket of love covers problems that should be dealt with.

Jonas knows that because of the organisation’s long history, these behaviours are deep­ ly rooted and that he cannot just transform the culture. He asks Lisa, the hr Group Director, and Michel, the Strategy Director, to help design a cultural change process.

Lisa and Michel conduct external research into successful cultural transformation pro­ cesses and use it to extract the most critical design criteria for their programme, namely:

  • You cannot change a culture overnight; it requires years of hard work. Therefore, cultural transformation needs to be one of the three most important strategic busi­ ness
  • Design those concrete behaviours that make a difference for the business; cultural change is the engine behind business performance improvement.
  • Design a transformation approach that feels intense to the leaders – “high touch, high impact”.
  • A culture only comes to life when each individual specifies what it means to them in daily work life – make that part of the approach.
  • Incorporate the proactive adjustment of symbols into the approach, so the culture you experience through what you see, for example, the look & feel of the Make sure these symbols change in line with the desired culture.
  • Ensure that the approach exudes energy, fun and a focus on
  • Measure! Make behaviour tangible at the level of the individual employee, the team and the organisation and make progress transparent.

Lisa and Michel start by measuring the current culture. Then, together with the Top Team, they specify which behaviour would be a realistic reach, whereby strong cultural elements are reinforced, and factors that hinder sustainable business performance are changed. Those elements are listed below.

I take responsibility

  • I lead performance and transformation
  • I prioritise and choose before acting
  • I take responsibility for actions and consequences

The customer is central to me

  • I focus on value for the customer and end user
  • I make choices based on data
  • I act decisively to deliver customer impact

 

I do the right thing

  • I make choices which contribute to our long term goals
  • I work safely
  • I learn quickly and apply what I learn immediately

 

They then develop a robust culture transformation plan that can be characterised as “high touch, high impact”. This plan builds on the lessons they learned from analysing the external case studies and has six workflows:

  1. Internalise behavioural norms

Using standardised material, each manager works with their team to make sense of the following topics: the change story, beliefs and behaviour from the past and present, the meaning of the nine behaviours for you, and review of kpis and targets for the coming year. The team’s results cascade and are the input for the next team afterwards.

  1. Adjust context

Teams are trained on the job to use the Lean Six Sigma instruments and work according to the scrum methodology with weekly stand­up meetings of up to ½ hour, in which busi­ ness progress is managed. This is done on a visual planning board, on which progress is visible to all. This way, the context leads to result­driven working.

  1. Leadership development

All leaders participate in a leadership programme. The programme clarifies role model behaviour at the most important leadership moments at work. Every leader receives feedback on their behaviour concerning this leadership standard. Through action learn­ ing and coaching on the job, the programme’s content is brought to the workplace of every manager.

  1. Employee education

All employees participate in an online simulation that informs them about the new be­ havioural standards and what this means for role model behaviour in the workplace. The online game does this interactively. The game challenges employees to reflect on their behaviour. The online simulation is linked to a work session in which game results are shared, discussed and translated into action for the team.

  1. Communication and inspiration

All employees are exposed to three communication moments per week as part of a communication campaign that brings organisational change to life. The communication is fresh, it energises, it shares concrete business examples (both positive and negative), and it celebrates progress. Symbols are also addressed, for instance, by branding the office design.

  1. Measuring progress

All employees are exposed to continuous measurement of organisational culture devel­ opment. This makes behaviour visible and measurable. The results of this are linked to the individual objectives of managers.

After a year and a half of implementing the six pillars above, Jonas sees an 11 per cent improvement in the transformation index. And more importantly, Jonas experiences that where the index moves upwards, the financial performance of organisational units also improves.

Tip for change leader

How you shape a change process must be consistent with the way the culture is now. Paradoxically, that means that if you, for example, want to show how to experiment in a risk­averse organisation, you must design the way to get there in a risk­averse manner. This means that you start with only one experiment, which you let a committee observe to ensure the quality and to identify and control risks that arise. The current culture, therefore, determines the route.

Tip for change enabler

Culture and leaders’ role model behaviour are so closely related, that you must be highly alert to the leader­led implementation of a culture transformation. If you accidentally end up in the change leader’s seat as a change enabler, the risk of failure increases significantly. I refer you (again) to Challenge 19, which is about activating the correct role concept in change processes.

Kernel: Measure, learn and toil away

Transforming a company culture is hard work. I recommend measuring the culture before and during to ensure that you are goal-oriented and that the intended stretch is achievable. Good measuring instruments are available for that. It is vital to design an approach that intervenes in behaviour and context. Challenge 39 takes a closer look at redesigning the organisational context.

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