There has been a massive recalibration of expectations of all boards and senior executives (not just in Financial Services) in relation to how organisations
A bad culture is counter-productive to strategy execution.
All organisations have a dominant culture and distinctive way of doing things whether they realise it or not. But leaders need to think much harder about the culture that’s essential for the success of their strategy and business plans. With the current rapid pace of change in most marketplaces, cultures will need to be far more diverse, innovative, collaborative, and adaptable. The era of the all-knowing and all-controlling CEO who runs an individualistic, hierarchical and highly structured organisation is way past its use by date.
Strategies, store layouts, websites are easy to copy – but cultures are not. Your culture has a significant impact on your organisation’s competitive edge, how employees interact and how others perceive your organisation.
Most organisations spend countless hours and resources developing, refining and articulating their strategy but invest little in assessing their current culture and planning changes required to deliver their strategy successfully. And, if actions are regularly inconsistent with words, cynicism will grow and a culture of mistrust can form. If you want to turbo-charge your organisation’s culture, continue reading.
Winston Churchill said in 1943, “We shape our buildings and afterwards our buildings shape us”. Churchill uttered these profound words following the destruction of the House of Commons in May, 1941 and prior to the construction of a new chamber.
Churchill’s epic statement reminds us that the structure, layout, colour, finishes, light, warmth, ambience and ventilation of our buildings all continue to have a significant impact on the way we perceive our buildings and interact with others in and around our buildings long after the completion of their construction. Large open plan spaces, for example, are far more likely to support collaboration and transparency than lots of walled offices and long corridors.
Churchill’s statement also rings true for the culture of our organisations. Our organisational culture has a significant impact on how others perceive our organisation, how our employees interact with each other and what is considered to be the norm and therefor what gets perpetuated.
This article looks at the following key areas:
What is culture and how is it created?
Organisational culture is often defined as “the way we do things around here”. All organisations have a dominant culture and a distinctive way of doing things whether they realise it or not. Certain ways of doing things become acceptable and other ways of doing things just don’t seem right or appropriate even though they might seem quite appropriate at another organisation or under other circumstances.
Cultures are shaped by the employees of an organisation and significantly impacted by its CEO and senior leaders. What a CEO or senior leader does and what they allow normally becomes acceptable. What they forbid or discourage normally becomes unacceptable. Their ongoing messaging especially about what is important and their priorities also has a significant impact especially when their words are supported by consistent deeds and actions.
Where actions are contrary to the messaging it is normally the actions that are modelled institutionalised by others into what is considered acceptable and what becomes the norm. If actions are regularly inconsistent with words cynicism will grow and a culture of mistrust will begin to form.
What you prioritise, reward and recognise has a significant impact on your culture. If you simply reward employees for producing or selling higher numbers don’t be surprised if quality drops. If you only reward individual performance don’t be surprised if collaboration is stifled. If you say you have a culture of excellence, among other things, you will need to reward and recognise quality as well as customer satisfaction or advocacy. Your reward, recognition and measurement systems need to support the culture you intend to form and shape.
Your culture is also influenced by your structure, systems and processes. If you have a very hierarchical, top-down structure you’ll find it more difficult to build a culture of engagement and empowerment. If you use many legacy IT systems that were designed primarily from an accounting perspective those systems are unlikely to support a customer centric culture. Supplementary systems and processes that support a focus on the customer will be needed if you intend to form and shape a customer centric culture.
Don't let your culture just drift along
Most organisations, their CEOs and senior leaders let their culture emerge and drift along without being explicit and intentional about the culture that they are attempting to shape and the style of organisation they want to become. They can get very busy delivering on their own, often short term objectives, without giving too much thought about how their actions and messaging is impacting their culture and entrenching cultural norms. This can often be counter-productive to the execution of their strategy.
A highly intelligent and busy department head and executive team member, for example, might become so busy keeping up with their bosses requirements that he or she starts to take their employees for granted. The demands of the board and shareholders might become so front of mind that their employees are simply treated as a cog in a wheel or a means to an end. Unfortunately this gives their direct reports the permission to do the same and a culture of taking employees for granted might become the norm down through many layers of the organisation. Successful CEOs and leaders understand the significant and far reaching implications of their actions on their organisation’s culture.
You can be very intentional about the culture you create
The alternative to letting your culture just drift and slowly emerge is to be very deliberate and intentional about your desired organisational culture. This assumes that you know the main attributes of your current culture and the attributes of the culture you want to create and therefor the changes that will be required to move from your current to your desired state.
Measuring and understanding the main attributes of your culture is difficult as culture is invisible to the human eye. You can’t see or touch it. And if you’re in the middle of it then it can be even more difficult to describe its main attributes.
Online employee surveys are a way to measure and understand an organisation’s culture. Focus groups and interviews can be beneficial too. Having an outsider with independent and objective eyes can often help as most senior employees are very invested in their organisation’s culture, particularly if they have been there for a while.
Form and shape your culture to fit your strategy
Ideally your culture will turbo-charge and not act as a hand-brake on the execution of your strategy. But most organisations continue to spend hundreds of hours and thousands of dollars developing, refining and articulating their strategy but invest very little time or effort in assessing their current culture and defining and planning the changes to their culture that are required to deliver that strategy successfully.
Most leaders need to think much harder about the culture they believe is essential to the delivery of their strategy and business plans. With the current fast pace of change most cultures will need to be far more diverse, innovative, collaborative, and adaptable than they have been in the past. The era of the all-knowing and all-controlling CEO that runs an individualistic, hierarchical and highly structured organisation are way past their use by date.
Strategies, store layouts, websites and the like are relatively easy to copy – but cultures are not. Cultures are very difficult to change and change takes a very long time. Cultural change requires great clarity as to the change desired, a clear and well documented change plan, adequate resourcing, sustained leadership and determination, one-mindedness and a co-ordinated effort. Most organisations are much better at applying these attributes to a new plant or IT project that to something as ethereal as culture.
One size doesn't fit all
The culture required for a kindergarten will be very different from that required for the defence forces. It will be different again for a global internet company, a large chain of chemist warehouses and high-end jewellery stores. The strategy for a chain of high end jewellery stores is also likely to be different from that of a large stand-alone jewellery store in a regional area.
Well formed and shaped, an organisation’s culture can create a sustainable competitive advantage. Some cultures match perfectly with the type of organisation and its specific strategy, but most don’t. The Board, CEO and leadership team need to ask:
- What elements of our culture are enabling our strategy?
- What elements of our culture are inhibiting our strategy?
These answers identify which elements of your culture should be leveraged and which ones should be changed. Sometimes the change will require significant transformation and other times it will be more at the margin. Ideally organisations continually shape and adapt their culture to fit their strategy and don’t leave change so long that a massive transformation is required.
Well embedded values and behaviours drive culture
Many organisations have adopted around five or six values as being important to their success. Many also link those values to the behaviours that they expect from their employees in relation to each of those values. Some go further and identify the behaviours that aren’t accepted or supported in relation to each value.
But how many organisations can say that their values are so deeply embedded into their DNA that those values become part of the organisation’s way of life? Not many! Too many announce their values and rarely refer to them again. Most don’t include them as part of their employee induction or build them into their recognition or reward systems.
Also many organisations haven’t adopted a set of values that will support their execution of strategy.
If partnering with others is crucial to the execution of your strategy you will need to build a collaborative culture. If you are up against some behemoth competitors, agility might be an important differentiator that will give you a competitive advantage. This requires a lot of careful thought. Just as you don’t want to let your culture just drift along nor do you want to integrate values into your culture that will act as a hand-brake on your strategy.
When finalising your values ask yourself these important questions:
- Do we have an appropriate balance of values that drive the performance of our organisation and those that help form and shape its character?
- Do our values apply equally well internally and externally?
Then develop a plan to deeply embed your chosen values and the related behaviours deeply into your culture and DNA.
Culture trade-offs and evidence to support change
Your organisation can’t be uniform and diverse at the same time, nor can it place a high value on individual accountability and collective accountability at the same time. There will be trade-offs. If you prioritise hard conversations, there will be a trade-off which will result in a lower level of harmony.
Insync has developed an innovative way to shine a light on the cultural change that is desired to support the execution of your strategy based on the views of your employees. Here is a hypothetical example of the cultural change that might be required as revealed by results from using Insync’s cultural trade-offs’ survey. The results shown are fictitious.
Insync’s cultural trade-offs’ survey can be used on a stand-alone basis or as a module of your employee survey. Impetus for change can then be grounded in strong evidence and the engagement of all employees.
How do you change and if necessary transform your culture?
Cultures are very difficult to change but it can be done. If transformation is required it should be treated just like any other major project with all the appropriate leadership, focus, resourcing, detailed project planning and follow through. New systems, different structures and new communication channels may be needed to commence and sustain the transformation.
Expect backlash along the way as some employees try to hold on to the past. Transformation efforts fall down when they lack commitment from the top team and a sustained change effort. It can take just one or two cynics or passive members of a leadership team to derail and undermine the rest of the team’s efforts. Employees will notice and take advantage of any lack of commitment.
Many transformation efforts require a change at the top as those at the top are normally invested in the status quo and what was. It is very hard for an existing CEO and leadership team to bring about significant changes to what has been. Take for example a CEO and leadership team that has not developed a culture of accountability or a high bar for performance. Even if the CEO and top team tried to change their actions and messaging, their employees would probably see their new words and previous actions as incongruent and are likely to have a low level of trust and some cynicism in relation to their desired “new” direction. This in itself would almost certainly undermine their efforts.
Change also takes time and a realistic plan should be developed for the new preferred state to become a new way of life for the organisation. Significant change can be effected within twelve months even in large organisations if a concerted, determined and shared commitment is applied. Engaging employees in the process and explaining why the change needs to occur and how it will support the organisation’s strategy will help grease the wheels as the change is implemented. Employee acceptance and support for the change will help ensure the ideal state becomes the organisation’s new way of life much sooner than it would have been otherwise.