Culture Change (including corporate)

Introduction

"...Cultus in Latin means 'care'. Culture is a set of living relationships working towards the shared goal. Culture, therefore, is not something you are, 'it's something you do'..."
Dan Coyle as quoted by Beata Souders, 2019

The aim is to mould your organisation's culture so that it is less of an anchor holding back change, and more of a force that fosters speed and adaptability.

 It is less measurable than more analytical approaches, ie there is a fuzziness
"...about exactly what culture is, where it comes from, and thus how to change it..."
John Kotter et al, 2021

However, it is a very powerful force in driving action.

Building a culture
"... It is really hard to build culture if you don't have the consistency of connection. We need to make sure we are in there for the moments that matter when energy is created. Culture is created by inclusion and by connection. People need to be inspired by the strategy..."
Ashley Reade, 2023

Some aspects of culture

- cultural consensus (the level of agreement around cultural norms by the group members)

- norm intensity (the strength with which the norm is maintained and supported)

- norm content ( the essence of what defines norm and which results in certain behaviours and attitudes.)

It has been found that
"...A high degree of cultural consensus, covering several norms and a focus on the adaptability norm showed improved financial performance..."
J A Chatman et al as quoted by Eshentha Moodley, 2018

Some characteristics of culture based on anthropological studies:

- generally, people have difficulty describing their own culture or agreeing to what it is

- cultural attributes are normally passed down informally, ie not through any intentional process

- people are praised if they behave in culturally-appropriate ways and sanctioned or ridicule when they do not

- it is essentially invisible

- it is very powerful, as people will make huge sacrifices to remain true to cultural norms and values

- it is very stable and changes slowly.

Corporate Culture

The findings of a study of corporate culture in the late 1970s are still applicable today, ie which found weak links between culture and performance

i) there was a relationship (but not significant) between 'strong' (even toxic) cultures and good financial performance

ii) cultures that were compatible with business strategies were often associated with superior financial performance (need to be careful here as once-appropriate business strategy does not guarantee future success and, similarly, a once-appropriate culture may not be suitable in the future, ie
"...the world could change, demanding a new strategy that was not compatible with the culture, which tends to change slowly, if at all. And there is the external environment or the stage of a company's maturity could render once-appropriate culture no longer helpful..."
John Kotter et al, 2021

iii) some organisations had (and still have) a built-in tendency to push the 'edges of what is legal' and to 'drive to win at all costs' (sometimes this is linked with harassment and bullying)

iv) it was relatively rare to find connection between cultures and superior performance (these 'rare' organisations valued the interests of all stakeholders particularly, customers, shareholders, employees, etc plus encouraged innovation; furthermore, these organisations were adaptive, ie
"...where the core norms and values are strong enough, we found that adaptation could even lead to changing more peripheral or less central elements of culture itself......it helps an organisation adapt to a more rapid and complex change..."
John Kotter et al, 2021

v) most attempts to change culture were not successful (especially the larger changes; they did not then understand how the brain works, etc)

vi) senior management commitment was important (the more committed the top manager, the more chance of success.)
One of the big challenges in cultural change is handling the status quo.  Almost all change challenges parts of the status quo, ie if people are satisfied with the way things are now, and, as a result, they will most likely resist the new ways. Therefore, the potential rewards from the change have to far outweigh the perceived losses from moving away from the status quo. Additionally, to keep momentum going, need to overtly celebrate, recognise, reward, etc when achieving milestones along the change journey.

NB Initially a new, or changed, culture is fragile and needs reinforcing, institutionalising, anchoring, etc (for more details, see elsewhere in the knowledge base).

Summary

(source: John Kotter et al, 2021)

Changing organisational culture is more than just changing some behaviours, mindsets, attitudes, habits, etc and generally takes time, eg years.

Remember: there are some powerful forces working against change, ie human brain and the modern organisation. The human brain sees change as a threat and the modern organisation is designed for maintaining the status quo, ie smooth operations, stability, reliability and efficiency. To overcome barriers by developing an 'adaptive culture', ie
"...stakeholder focus looking for changes and empowering up and down the hierarchy allowing people to act on what they see......A diverse and growing many, not just a select few taking new action. People acting in new ways because their hearts, not just their minds, are directing them to want to, not just to have to. Proactive action not just directed from the top by operating plans and budgets and hierarchy. Instead, movement because people in the middle and on the front lines actually help provide some leadership for cultural change.....See the opportunities that change provides......to take advantage of those opportunities..."
John Kotter et al, 2021

Measuring the impact of culture is not easy, especially as it can take years to change the culture.

To change corporate culture, it is best to focus more on

- showing and less on telling

- action and less on words

- leadership and less on management

Need to move away from a top-down approach, such as with communications, etc to demonstrating the behaviours and actions that would result from a new culture, ie
"...in a steady state, how we act and behave is heavily influenced by culture but changing culture starts from changing behaviours, not the other way around..."
Chief Quality Officer as quoted by John Kotter et al, 2021

A key part of corporate culture is the belief that business's purpose is to 'maximise shareholder gain'. This means focusing on a narrow set of short term-financial metrics, like quarterly financial targets, eg earnings per share, etc. and activities that have an immediate impact on profitability.

This can work against

- cultural change (as it can take time to happen)

- looking after other stakeholders (need for a multi-shareholder approach rather than a mono-focus)

- anticipating market changes, like in products and services, etc (need to focus on trends that will impact your industry and business)

- taking public positions and actions of topics such as environmental sustainability, racial and economic equality, choice of partnerships, diversity/inclusion, etc)