10 PRINCIPLES OF ORGANIZATIONAL CULTURE
How often have you heard somebody — a new
CEO, a journalist, a management consultant, a leadership guru, a fellow
employee — talk about the urgent need to change the culture? They want to make
it world-class. To dispense with all the nonsense and negativity that annoys
employees and stops good intentions from growing into progress. To bring about
an entirely different approach, starting immediately.
These culture critiques are as common as
complaints about the weather — and about as effective. How frequently have you
seen high-minded aspirations to “change the culture” actually manage to modify
the way that people behave and the way in which they work? And how often have
you seen noticeable long-term improvements?
What
Is Corporate Culture?
At its worst, culture can be a drag on
productivity. At its best, it is an emotional energizer. Here's how companies
can use it to gain a competitive advantage.
If the answer to these last two questions is
“rarely,” it wouldn’t surprise us. We don’t believe that swift, wholesale
culture change is possible — or even desirable. After all, a company’s culture
is its basic personality, the essence of how its people interact and work.
However, it is an elusively complex entity that survives and evolves mostly
through gradual shifts in leadership, strategy, and other circumstances. We
find the most useful definition is also the simplest: Culture is the
self-sustaining pattern of behavior that determines how things are done.
Made of instinctive, repetitive habits and
emotional responses, culture can’t be copied or easily pinned down. Corporate
cultures are constantly self-renewing and slowly evolving: What people feel,
think, and believe is reflected and shaped by the way they go about their
business. Formal efforts to change a culture (to replace it with something
entirely new and different) seldom manage to get to the heart of what motivates
people, what makes them tick. Strongly worded memos from on high are deleted
within hours. You can plaster the walls with large banners proclaiming new
values, but people will go about their days, right beneath those signs,
continuing with the habits that are familiar and comfortable.
But this inherent complexity shouldn’t deter
leaders from trying to use culture as a lever. If you cannot simply replace the
entire machine, work on realigning some of the more useful cogs. The name of
the game is making use of what you cannot change by using some of the emotional
forces within your current culture differently.
Three dimensions of corporate culture affect
its alignment: symbolic reminders (artifacts that are entirely visible),
keystone behaviors (recurring acts that trigger other behaviors and that are
both visible and invisible), and mind-sets (attitudes and beliefs that are
widely shared but exclusively invisible). Of these, behaviors are the most
powerful determinant of real change. What people actually do matters more than
what they say or believe. And so to obtain more positive influences from your
cultural situation, you should start working on changing the most critical
behaviors — the mind-sets will follow. Over time, altered behavior patterns and
habits can produce better results.
You may be asking: If it is so hard to change
culture, why should we even bother to try? Because an organization’s current
culture contains several reservoirs of emotional energy and influence.
Executives who work with them can greatly accelerate strategic and operating
imperatives. When positive culture forces and strategic priorities are in sync,
companies can draw energy from the way people feel. This accelerates a
company’s movement to gain competitive advantage, or regain advantages that
have been lost.
Research
shows that companies that use a few specific cultural catalysts — that is to
say, those that use informal emotional approaches to influencing behavior — are
significantly more likely to experience change that lasts. Of the companies
that reported consciously using elements of their culture in Strategy&’s
2013 Global
Culture & Change Management Survey, 70
percent said their firms achieved sustainable improvement in organizational
pride and emotional commitment. That compares with 35 percent for firms that
didn’t use culture as a lever. Although there is no magic formula, no brilliant
algorithm, no numerical equation that will guarantee results, we have gleaned
some valuable insights through decades of research and observation at dozens of
enterprises, including some of the most successful companies in the world. By
adopting the following principles, your organization can learn to deploy and
improve its culture in a manner that will increase the odds of financial and
operational success.
1. Work
with and within your current cultural situations. Deeply embedded cultures cannot be replaced with
simple upgrades, or even with major overhaul efforts. Nor can your culture be
swapped out for a new one as though it were an operating system or a CPU. To a
degree, your current cultural situation just is what it is — and it contains
components that provide natural advantages to companies as well as components
that may act as brakes. We’ve never seen a culture that is all bad, or one that
is all good. To work with your culture effectively, therefore, you must
understand it, recognize which traits are preeminent and consistent, and
discern under what types of conditions these traits are likely to be a help or
a hindrance. Put another way, there’s both a yin and a yang to cultural traits.
For example, a European pharmaceutical
company with a solid product development pipeline had a tendency to be
inward-looking. It had great execution capabilities and an excellent record of
compliance with regulators around the world. However, when new products were
ready to be launched, the company had a hard time marketing them to physicians
and healthcare providers. Rather than bemoaning the company’s ingrained
insularity — for example, its collective tendency to value the opinions of
internal colleagues more than those of outside experts — the leaders decided to
use this feature of its culture to its advantage. They set up a program through
which employees were acknowledged and rewarded by colleagues for “going the
extra mile” to support customers. By recognizing a new kind of internal
authoritativeness, the company tapped a powerful emotional trigger already in
place, and engendered a new (and strategically important) behavior in its sales
force.
2.
Change behaviors, and mind-sets will follow. It is a commonly held view that behavioral change
follows mental shifts, as surely as night follows day. This is why
organizations often try to change mind-sets (and ultimately behavior) by
communicating values and putting them in glossy brochures. This technique
didn’t work well for Enron, where accounting fraud and scandal were part of
everyday practice, even as the company’s espoused values of excellence,
respect, integrity, and communication were carved into the marble floor of the
atrium of its global headquarters in Houston. In reality, culture is much more
a matter of doing than of saying. Trying to change a culture purely through
top-down messaging, training and development programs, and identifiable cues
seldom changes people’s beliefs or behaviors. In fact, neuroscience research
suggests that people act their way into believing rather than thinking their
way into acting. Changes to key behaviors — changes that are tangible,
actionable, repeatable, observable, and measurable — are thus a good place to
start. Some good examples of behavior change, which we’ve observed at a number
of companies, relate to empowerment (reducing the number of approvals needed
for decisions), collaboration (setting up easy ways to convene joint projects),
and interpersonal relations (devising mutually respectful practices for raising
contentious issues or grievances).
A telecommunications company was seeking to
improve its customer service. Rather than trying to influence mind-sets by, for
example, posting signs urging employees to be polite to disgruntled customers,
or having employees undergo empathy training, the company focused on what
psychologists call a “precursor behavior” — a seemingly innocuous behavior that
reliably precedes the occurrence of problem behavior. Leaders had noticed that
poor teaming led to poor customer service, so the company rolled out a plan to
encourage better and more effective teaming within call centers. To accomplish
this, they set up regular design sessions for improving practices. When
employees felt they were part of a happy team, and sensed a greater level of
support from colleagues, they began treating their customers better.
In another example, a resources company in
the Middle East was seeking to make its workplace safer. Rather than erect
placards threatening workers with consequences, the company focused on a
relatively basic precursor behavior: housekeeping. It organized a litter drive.
Picking up trash as a team helped employees take greater pride in the
workplace, which engendered a greater sense of care for fellow employees and
made them more likely to speak up when they noticed an unsafe situation.
Changed behavior, changed mind-set.
3. Focus
on a critical few behaviors. Conventional
wisdom advocates a comprehensive approach — everybody should change everything
that’s not perfect! But companies must be rigorously selective when it comes to
picking behaviors. The key is to focus on what we call “the critical few,” a
small number of important behaviors that would have great impact if put into
practice by a significant number of people. Discern a few things people do
throughout the company that positively affect business performance — for example,
ways of starting meetings or talking with customers. Make sure those are
aligned with the company’s overall strategy. Also check that people feel good
about doing these things, so that you tap into emotional commitment. Then
codify them: Translate those critical behaviors into simple, practical steps
that people can take every day. Next, select groups of employees who are primed
for these few behaviors, those who will respond strongly to the new behaviors
and who are likely to implement and spread them.
At an Asian banking company, rapid inorganic
growth had led to diverse ways of working across different units and
geographies. To focus on improving teaming, customer outcomes, and the ability
to realize synergies, the CEO and leadership embarked on a culture-led
evolution program. They targeted just three critical behaviors: taking extra
steps to delight customers, valuing performance over seniority, and backing up
and supporting one another. They then converted these three general behaviors
into specifics for each part of the company. Delighting customers, for
instance, was translated into frontline staff collaborating with other
colleagues to solve client problems and prioritizing the implementation of
process improvements that affected customer outcomes. For all three behaviors,
leadership recognized and celebrated examples in which people made an
extraordinary effort. Senior leaders acted as role models, explicitly modeling
these three new behaviors. The company also identified influential frontline,
client-facing employees who could demonstrate these new behaviors in action.
4.
Deploy your authentic informal leaders. Authority,
which is conferred by a formal position, should not be confused with
leadership. Leadership is a natural attribute, exercised and displayed
informally without regard to title or position in the organizational chart.
Because authentic informal leaders, who are found in every organization, are
often not recognized as such, they are frequently overlooked and underused when
it comes to driving culture. It is possible to identify such leaders through
interviews, surveys, and tools such as organizational network analysis, which
allow companies to construct maps of complex internal social relations by
analyzing email statistics and meeting records. Once identified, these leaders
can become powerful allies who can influence behavior through “showing by
doing.” In fact, when companies map out their organizations, they can identify
leaders who exhibit different core leadership strengths (see “Four Types of
Authentic Informal Leaders”).
Four
Types of Authentic Informal Leaders
Every
organization has people who influence and energize others without relying on
their title or formal position in the hierarchy to do so. We call them
“authentic informal leaders.” They are a powerful resource in spreading a
critical few behaviors from the bottom up. Among the many types of informal
leaders present in organizations, the following are seen most frequently.
Pride
builders are master motivators of other people,
and catalysts for improvement around them. Often found in the role of line
manager, they understand the motivations of those with whom they work. They
know how to foster a sense of excellence among others. They can be found at
every level of a hierarchy; some of the most effective pride builders are close
to the front line, where they can interact directly with customers as well as
employees. Pride builders often have powerful insights about the culture and
about what behaviors are likely to lead to improvement.
Exemplars are role models. They bring vital behaviors or
skills to life, and others pay attention to them. They are well respected and
are effective peer influencers in the middle and senior management cohorts.
Networkers are hubs of personal communication within the
organization. They know many people, and communicate freely and openly with
them. They serve as links among people who might not otherwise share
information or ideas. If you want to see an idea travel virally through an enterprise,
enlist your networkers.
Early adopters enthusiastically latch onto and experiment with new
technologies, processes, and ways of working. Involve them in your performance
pilots, or whenever you are trying to demonstrate impact quickly.
At one major oil company, an informal leader
named Osama became known as the “turbo-collaborator.” His role gave him very
little formal influence. But when he began working at the refinery, he walked
the plant with the engineers, maintenance technicians, and operators, and took
copious notes. As a result, he knew everyone and developed relationships across
disciplines. Whenever somebody wanted to know how the place really worked, they
would speak to Osama — who would either have the answer in his notebook or know
precisely the right person to ask. When the company formed a buddy program
between operations and maintenance aimed at using greater collaboration to
improve plant reliability, it knew it needed Osama at the heart of it. He
connected people, defined templates to encourage collaboration, and captured
success stories. Identifying, engaging, and nurturing such informal leaders
allows companies to harness their talents and further the company’s
transformation efforts.
5.
Don’t let your formal leaders off the hook. Most organizations tend to shunt culture into the
silo of human resources professionals. But leaders in all parts of the company
are critical in safeguarding and championing desired behaviors, energizing
personal feelings, and reinforcing cultural alignment. The signaling of
emotional commitment sets the tone for others to follow. If staff members see a
disconnect between the culture an organization promulgates and the one its
formal leadership follows, they’ll disengage quickly from the advertised
culture and simply mimic their seniors’ behavior. The people at the top have to
demonstrate the change they want to see. Here, too, the critical few come into
play. A handful of the right kind of leaders have to be on board to start the
process.
When
Jim Rogers was CEO of GE Motors in Fort Wayne, Ind., he became frustrated
because his senior leadership group of more than 15 leaders seldom functioned
together as a “real team.” As described by Jon Katzenbach and Douglas K. Smith
in The Wisdom of Teams: Creating the High-Performance Organization (Harvard
Business School Press, 1993), a real team is one with a high level of emotional
commitment; the leadership role shifts easily among the members depending on
their skills and experience and the challenges of the moment, rather than on
any hierarchical positions. Team members hold one another accountable for the
quality of their collective work. Interestingly, at GE Motors the senior
leadership group members often demonstrated real team capabilities in running
their individual business units and functions. So Rogers decided to find ways
to break them into subteams of three or four members to address specific
cross-organizational issues facing the larger group. Over time, he mixed the
subgroupings to match emerging issues. By working in different subgroup
settings, the executives developed camaraderie, which in turn improved the
effectiveness of the group as a whole.
6.
Link behaviors to business objectives. When
people talk about feelings, motivations, and values — all of which are vital
elements of strong cultures — the conversation can often veer into
abstractions. It may then range far afield of what it takes to succeed in the
market. Too many employees walk away from culture-focused town halls or values
discussions wondering how the advice on how to be a better person actually
translates into the work they do. To avoid this disconnect, offer tangible,
well-defined examples of how cultural interventions lead to improved
performance and financial outcomes. Select behaviors that are aimed specifically
at improving business performance and can be measured over time.
An oil company’s drive to reduce maintenance
costs at an industrial installation highlights the importance of such an
approach. The critical few behaviors included empowerment and good decision
making. One of the company’s exemplars (employees who lead by example) decided
it would be a smart move to make costs visible to workers. So he placed price
tags on various pieces of machinery. These cues inspired behavioral changes
related to decisions about whether to repair or replace equipment. Workers and
managers began to recommend fixing expensive equipment rather than replacing
it. The company celebrated and publicized cost savings identified by employees.
The behaviors led to a change in focus and mind-set. When an employee noticed
that fans were cooling the machinery during the winter, he felt empowered to
call it out, and ask whether it was necessary to do so. It turned out that it
wasn’t — and the company saved US$750,000 annually in power costs as a result.
7. Demonstrate
impact quickly. We live in an age of notoriously
short attention spans. That applies as much to organizational culture as it
does to people’s media consumption habits. When people hear about new
high-profile initiatives and efforts, and then don’t see any activity related
to them for several months, they’ll disengage and grow cynical. That’s why it
is extremely important to showcase the impact of cultural efforts on business
results as quickly as possible. One effective method of doing so is to stage
performance pilots — that is, high-profile demonstration projects. Pilots are relatively
low-risk efforts that introduce specific behaviors that can then be evaluated
and assessed. They often rely on a dashboard that defines desired impacts, the
tactics used, and the specific metrics to be employed.
When Bell Canada first explored using new
behaviors at the front line to improve its customer service and profitability,
there were many more skeptics than believers within the leadership ranks. There
simply wasn’t any numerical proof that the tactics would work. So CEO Michael
Sabia decided to set up a pilot test in a sales unit near Toronto. The sponsors
of the test blocked out a tight time frame of eight months, and developed
realistic ways of measuring behavior change, customer reactions, and actual
sales and margin performance. Armed with positive results in these areas — a 29
percent increase in customer satisfaction in retail stores, a 31 percent
increase in revenue per call at call centers — the company went on to
accelerate the expansion of these efforts across the front line in different
geographies, functions, and businesses.
8. Use
cross-organizational methods to go viral. Ideas
can spread virally across organizational departments and functions, as well as
from the top down and from the bottom up. One powerful way to spread ideas is
through social media: blogs, Facebook or LinkedIn posts, and tweets — not from
senior management, but from some of the authentic informal leaders mentioned in
Principle 4.
By now it is well established that social
media can be more effective at spreading information, news, and music than
traditional modes of distribution. The same holds with critical behaviors.
People are often more receptive to changes in “the way we do things around
here” when those changes are recommended or shared by friends, colleagues, and
other associates. This kind of credible social proof is more compelling than
similar testimonials from someone whose job it is to sell something.
Just as there is an art to making content go
viral, there’s a craft to making behavior go viral. For example, in a model
that we have tested successfully in several situations, a company starts with a
few carefully chosen groups of 12 to 15 informal leaders in three or four
different parts of the business. After several weeks, an additional 10 to 15 groups
of informal leaders are set up in every business unit. After about three
months, the existing groups are encouraged to expand and bring in new people.
After another three to six months have passed, the groups become more
autonomous, allowed to control their own expansion. Meanwhile, the company
facilitates connections among groups to share learning and insights. As
behavior spreads, company leaders see increased performance as well as peer and
leadership recognition.
9. Align
programmatic efforts with behaviors. We’ve
emphasized the role that informal leaders can play in helping ideas go viral.
But it’s also important to match the new cultural direction with existing ways
of doing business. Informal mechanisms and cultural interventions must
complement and integrate with the more common formal organization components,
not work at cross-purposes. By providing the structure in which people work —
through disciplines such as organization design, analytics, human resources,
and lean process improvement — the formal organization provides a rational
motivation for employee actions, while the informal organization enables the
emotional commitment that characterizes peak performance.
The U.S. Marine Corps provides a classic
example of integrating formal and informal leadership efforts. The “rule of
three” dictates how the Marines design their organizations and projects and how
they execute in a hierarchy. (Three squads form into one of three divisions,
which form one of three battalions.) The formal leaders of those units are
expected to know the intent of the officer two levels above them — and to call
out any order or situation they perceive to be incoherent or in conflict with
that intent. But there are also informal leaders: Each of the four members of a
frontline rifle team is prepared (and expected) to take the lead whenever the
formal leader is disabled or loses the high-ground position. This means that
the informal leaders also need to know the intent of that officer two levels
above. Integrating informal norms with the formal structures helps enable the
timely battlefield adjustments that have served the Marine Corps well for more
than 200 years.
10. Actively
manage your cultural situation over time. Companies
that have had great success working with culture — we call them “culture
superstars” — actively monitor, manage, care for, and update their cultural
forces. Why? As we noted at the outset, when aligned with strategic and
operating priorities, culture can provide hidden sources of energy and
motivation that can accelerate changes faster than formal processes and
programs. Even if you have a highly effective culture today, it may not be
good enough for tomorrow.
Southwest Airlines stands as an example
of a battle-tested company in which culture has been managed over time. Famous
for its long-term success in an industry where even the largest players
routinely fail, Southwest for 40 years has been energized by a deep sense of
pride among all employees. Southwest has found that constructing an environment
that puts its employees first — above customers and owners — fosters a sense of
emotional commitment and pride that delivers excellent customer service. But at
Southwest, the work on culture is never completed. Just as the airline’s
strategy, tactics, and technologies have evolved to cope with a changing
external environment, specific HR practices, including informal behaviors, have
shifted over time.
Living
in Your Culture
Although challenging, multidimensional, and
often difficult to deal with, a company’s cultural situation constitutes a
powerful set of emotional resources. As is the case with other resources —
human, technological, financial — it is incumbent upon leaders to strive to get
the most value out of it.
To a degree, culture can be compared to natural
forces such as winds and tides. These elements are there in the background,
sometimes unnoticed, sometimes obvious. Endowed with immense power, they can
waylay plans and inhibit progress. They can’t really be tamed or fundamentally
altered. But if you respect them and understand how to make the most of them,
if you work with them and tap into their hidden power, they can become a source
of energy and provide powerful assistance.
The best way to start is to ask yourself a
series of questions. What are the most important emotional forces that
determine what your people do? What few behavior changes would matter most in
meeting strategic and operational imperatives? Who are the authentic informal
leaders you can enlist? And what can you and your fellow senior leaders do
differently to signal and reinforce those critical behaviors?
Of course, you shouldn’t plan for dramatic
results overnight. Expect an evolution, not a revolution. One of the challenges
of working with culture is that, as we’ve noted, it changes gradually — often
too slowly for leaders facing fast-moving competitors. That’s the bad news. The
good news? If you approach culture with respect and intelligence, as a milieu
in which you and your enterprise live, you can use it to accelerate your competitive
momentum. There’s no better time than the present to start.
No comments:
Post a Comment