USELETTER

How Do You Change a Culture?

 Why Programs Fail to Produce Real Change.


road to horizonOur clients sometimes ask this question and often it’s generated by negative events, failed internal initiatives or when they have received less than positive feedback on an employee survey. One example of the importance of culture is General Motors’ debacle with the ignition switch failures on some of their models that resulted in injuries and deaths. While a lot of smart and powerful people knew there was a problem with the switch, no one took ownership of addressing the problem or pushed for a recall. The issue may have been rooted in an engineering problem, but it was a cultural barrier that kept it from being addressed. In a company that spends millions of dollars on branding and customer loyalty, is overloaded with engineers schooled in quality and safety methodologies, and has hundreds of lawyers focused on limiting risk and liability, GM’s culture was its Achilles heel.

It’s important to recognize that GM had a “pass the buck and look the other way” culture for a long time, but it took a high profile example with public scrutiny, researched and reported by an independent third party to shine a spotlight on how GM’s culture directly contributed to the problem. It’s possible that GM, like many companies, saw culture as an “HR thing.” Too many executives and leaders believe culture is something soft, until they run into it. That’s when they realize their corporate culture is hard to change.

A Primer on Culture

Before we pass judgment too quickly on GM—and there are numerous examples of other companies whose cultures directly contributed to some sort of crisis—we need to check ourselves. There is a story I heard many years ago about two young goldfish who were swimming together in their tank. They happened to meet an older fish swimming in the other direction. The old fish said to the young fish, “Morning, how’s the water?” The two young fish swim on for a bit, and then one of them looks over at the other and asks, “What the heck is water?” The story illustrates the insidious nature of culture. We’re in it without even knowing we are in it.

The internet and social media have demonstrated the power of something “going viral.” The Marketing and Advertising world has been turned upside down by this phenomenon. It’s no longer about ad space and placement but cracking the code on creating something that takes on a life of its own and spreads informally from person to person and group to group. Cultures have always been viral and long before the concept of “viral” went viral. You can argue about the influence of an organization’s culture being positive or negative but you can’t argue about the effectiveness of its distribution model. Linking back to the story of the fish, culture is the water of every organization.

One of the most amusing aspects of culture is we often discover traits or dimensions of a culture when we violate them or try to change them. When cultural anthropologists study human cultures, one of the measurements they use is determining whether a particular culture is “strong” or “weak.” In this case, strong does not mean a culture is good and weak does not mean a culture is bad. Rather, a strong culture is one that resists modification or change. It’s as if the culture produces antibodies that isolate and resist outside influence. A strong culture is one that does not easily assimilate into other cultures. Hassidic Jews and Amish communities are examples of cultures that would be considered “strong.” Despite being in relatively close proximity with other cultures, the identities, traditions and values of those groups remain intact. In the same way, an organization’s culture can be either strong or weak in some or all dimensions. Strong organizational culture is one where a leader’s “style and fit” is a primary consideration in hiring. A weak culture is one that is more accepting of diverse leadership styles or other organizational changes. Again, strong and weak are neither good nor bad, but they are an important consideration in understanding the nature of your culture and determining how challenging it will be to change.

How Do You Change a Culture? Here are some important things to keep in mind, some of which are counter to culture change efforts you may have seen.

Words don’t change a culture. Displaying the company values in impressive lobby displays, or imprinting mugs, mousepads, note pads, or keychains with the values might be nice reinforcement, but these things do not define or change a culture.

Incentives, by themselves, can’t change a culture. We know from research that incentives are most effective when applied to very specific and narrow tasks but are ineffective, and often counter productive, when applied to a broader or more complex set of outcomes. For example, a cable company that was engaged in efforts to simultaneously improve safety and customer satisfaction employed incentive programs tied to each of the efforts. Safety metrics went up, customer satisfaction stayed the same and employee retention and morale went down. It was discovered later that employees were not reporting injuries because it would impact safety metrics and decrease their bonuses. Employees grew to resent the improvement efforts, which caused a drop in morale and failed to achieve improvements in customer satisfaction.

Actions forge a culture. Three of a technology company’s values stated that they value their employees, they value innovation and they value integrity. Those values were prominently displayed in every hallway and workspace around the company. However, what most employees experienced on a daily basis was struggling to get their work done while working on outdated equipment with expired software licenses. It’s true that investing in infrastructure costs money but while the company was reporting that profits were up and then employees were seeing money being spent in ways counter to the stated values, they determined that the company’s stated values were just words.

I’ve also seen positive examples of how actions change a culture. When the cable company mentioned above realized that safety was an issue that needed a cultural solution, rather than an incentive program, they created a “Safety First” focus across the company and made it clear that employee safety was a primary concern for everyone. It took six months to make it a part of their “water” but today every executive, every leader and manager and every employee in that company thinks about and talks about safety. I was preparing to speak at a leadership forum at the company when one of the senior leaders noticed that the power cable to the projector wasn’t taped to the floor and he promptly fixed the potential hazard. When I thanked him, he responded with, “Safety is everyone’s responsibility here.” That’s an example of a culture that has taken root in actions.

In what ways does your culture enable or inhibit results at your company? On the people side, culture plays a major role in things like recruiting, hiring, promotions, development, diversity and values. On the performance side, culture can be seen in things like innovation, planning, decision-making, execution, accountability and ownership. In both areas, one of the cultural indicators can be seen in the levels of tolerance for making changes. How open is your organization to seeking, hiring, valuing and integrating candidates that are outside of your predominant “type” of employee? Also, how readily does your organization adopt new ideas, processes or ways of doing business in order to be more competitive?

So how do you change a culture? Below are the essential steps to effective, lasting culture change.

Step 1: Identify the Desired State

With your strategic business objectives in mind, what would your ideal culture look like? What results would you be seeing? How would the company be operating? How would leaders be leading? How would people be performing and behaving in order to achieve those results? The answer to each of these questions needs to be articulated in clear descriptions that define both the results and behaviors as the first step.

Step 2: Assess the Gap

What are today’s results? How are people performing and behaving now? Where are the gaps in each of those areas? How wide are the gaps between your current culture and your desired culture? Are they process gaps, capability gaps, skill gaps, or things that require a change in thinking or behaving? Clearly and honestly defining the gaps between your current culture and your desired culture can be sobering, but it is an essential step in the process.

Step 3: Scan the Environment for Supports and Restraints

Are there examples in the organization where the desired state is happening on some scale or to some degree? Can this be captured as a best practice and how could this become “viralized” and spread through the organization? As you look at the examples, be careful to articulate and acknowledge both the RESULT (what was accomplished) and HOW the result was accomplished (to showcase the desired behaviors). If you only focus on results without the behaviors, you might get a different outcome than the one you want (like the cable company’s initial focus on safety). If you focus on the behaviors without the results, you can inadvertently promote behaviors without linking them to results. For example, one company’s effort to promote cross company collaboration created a proliferation of meetings and conference calls which caused a slowdown in decision-making.

Are there leadership gaps and are leaders at all levels talking, thinking, acting and rewarding the right stuff? Do leaders “get it” and do they “live it”? What leadership mindsets need to be changed and what leadership incentives need to be addressed? The inability or unwillingness to address misaligned leaders is one of the most common reasons why change efforts fail. We’ve all seen executive teams come together at a summit meeting to get aligned and smoke the peace pipe only to discover later that some members didn’t inhale. Maverick leaders who operate outside company values, policies and agreements give permission for everyone at lower levels to do the same.

Are there “systems” in the organization that support or inhibit the desired culture? These can be operational systems like budgeting, forecasting, projections or goal setting. They can be informational systems like reporting, meetings, or decision-making. They can be HR systems like hiring, performance management or promotions, compensation, or reward and recognition systems. Transparency or openness is often stated as a desired cultural trait but sometimes budgeting, decision-making or promotions often lack transparency from the employee’s perspective. Remember, words don’t change cultures. Cultures are forged through actions.

Step 4: Honestly and Realistically Evaluate Senior Leadership’s Commitment to the Culture Change

Would leaders be willing to make changes if it meant replacing key personnel, changing existing processes or sacrificing sacred cows? What is senior leadership’s appetite for change and what is the organization’s capacity and tolerance for change? A binary answer of “yes” or “no” is usually not sufficient, unless the organization has no alternative but to change due to sobering realities. That’s why the explorer Cabrillo brought his soldiers onto the beach and burned his ships while his troops watched from the shore. To accomplish his objectives, Cabrillo’s soldiers could not think returning to Spain was an option.

Usually the answer to the commitment question is a sliding scale and both the leadership commitment and the organization’s tolerance are important. Think of a significant change your organization is considering. Draw two scales from 1 to 10, low to high. On the first scale rate what you believe is Senior Leadership’s level of commitment to the change. If there is a range of commitment levels on the leadership team, it is the lowest number that should be used as the operative number because the leader who is the least committed will ultimately determine the level of commitment for the whole group. On the second scale, rate what you believe is the organization’s tolerance for making this change. This number can also be influenced by the amount or extent of other changes going on in the organization. Now you have one number showing leadership’s commitment and a second number indicating the organization’s tolerance for making the change. It is the lower of those two numbers that indicates the degree of change the organization can take on at this time. Even when leadership is committed to the change, if the organization does not have capacity for change, it will not happen. In the same way, if the conditions in the organization are ripe for change, without leadership’s commitment, change will not happen.

Step 5: Cascade Leadership Accountability for the Culture Down

Are leaders at all levels in the organization accountable for their actions and attitudes related to the desired outcomes? Can you count on every leader in your organization to “walk the walk” as they “talk the talk”? The commitment to the desired culture must cascade from senior leaders down to all people managers and influencers in the organization and all leaders must demonstrate their commitment to talking and acting in ways that are consistent with the culture. As you start moving your culture in the desired direction, consistent behaviors become part of the landscape while inconsistent behaviors and actions stick out like a billboard.

A hospital was in the beginning stages of making their culture more customer-oriented. They defined “customers” as patients, patients’ families and doctors. One of the restraints they identified was the limitation on parking close to the hospital entrance. Employees had been allowed to park in the parking lot closest to the hospital while customers often parked in the remote parking structure. A decision was made to reserve the parking lot for customers and have all employees park in the structure. The plan worked well for the first two weeks until the Hospital Administrator began parking in the lot, rather than the parking structure. The violation was more blatant due to the fact that she drove a luxury car with personalized license plates. A few employees saw what was happening and within a few days the issue had gone viral among employees. The Hospital Administrator’s lack of compliance wasn’t addressed by the boss and within a few weeks, other employees were parking in the lot and customers were forced to park in the structure. When there is not consistent, active support from all leaders, efforts to improve your culture can look like a program rather than feel like the “water.”

Step 6: Leverage the Supports and Attack the Restraints

Many companies are challenged with making their company cultures more collaborative following an acquisition. After all, leveraging the best of both companies is usually one of the reasons for an acquisition, but collaboration is not always a natural act and often there are behavioral and process obstacles to overcome. Often basic Finance, IT and HR systems are not aligned but that is an easier fix than some of the “softer” cultural aspects like leadership roles, meeting and communication etiquette or ways of resolving conflicts.

One client had two groups that could not agree on a best practice for managing projects so they each clung to their own process for two years, which created a significant amount of inefficiency for everyone. Ultimately we pulled key individuals from both groups together in a collaborative process to create a “new” process including reassigning people to mix up the work groups. This broke down barriers and created a collective ownership for shared success. Once this was done successfully with one group, we used a similar approach for other departments and over time people lost their attachments to their old organizations. Once you are able to make the new “water” more desirable than the old “water” it’s much easier for people to swim in the desired direction.

Step 7: All Leaders Proliferate the Culture through Acknowledgement, Recognition and Reinforcement

This last step is where many companies start their culture change efforts, thinking that the secret lies in providing incentives. Be careful what you incentivize because you may get temporary results without really changing the culture. One of the things we have learned through painful experience is that incentives quickly change in the way they are viewed, going from a reward, to a condition, to an expectation.

Take a moment and review Steps 1 through 6 in this article if you want to gain some insight into why most culture change efforts fail. These steps not only build the foundation for success, they also build momentum and critical mass for your desired cultural changes. This foundation creates leaders who are aligned and “walking the walk” while they are “talking the talk.” Employees notice what their leaders notice, what their leaders talk about and also what their leaders recognize.

Another case for consistency comes from a video game company that had a campaign to improve their game design process to reduce dependence on heroics and “diving catches” that contributed to massive employee burnout. I remember sitting at several awards events where management celebrated the team leaders who drove their people into the ground to get their game across the finish line while the team leaders who followed good processes to produce their great games were completely overlooked. You will never get to B if you are still rewarding A.

At this step, communication is deliberate in showcasing efforts and progress (the HOW) in addition to recognizing success (the WHAT) which reinforces the organization’s commitment to the desired culture. This is not always easy and this is where culture change can get wobbly as senior leadership has to make some tough choices that test their commitment to the change. This is a true example of managerial courage.

Are You Up for the Journey?

If you’ve read this far, you may have come to the realization that changing your culture is not a program. It’s a journey that requires preparation, planning, calculation and commitment in order to avoid getting lost or failing to end up at your desired destination. When it’s done properly, the journey brings people along and builds momentum you can feel. It also creates a workforce that is open and receptive to future changes. If you would find it helpful to talk with one of our culture change experts, please contact us at LRI. We’re always up for a challenging journey!

Contributed by Todd Alexander

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