culture change

Changing Your Corporate Culture in 4 Steps

Listen in on board room conversations these days and you are bound to hear the word “culture” used as a strategic imperative for organizational success. We often get requests from established companies that want to become more nimble, entrepreneurial and innovative. They tell us, “We need to change with the times and react quickly to market demands!” Often they are convinced that the real problem is organizational culture. And often it is.

When a company’s leadership asks me to help change their culture to become more innovative, I ask them to give me two or three examples of innovations they have adopted in the last year or so. If they can’t, then they may be over-reaching. Perhaps they should focus on other aspects of culture that are smaller steps toward their goal, such as the fear (and consequences) of failure, or risk tolerance, or information hoarding due to competition for resources. My point is that you need a clear, honest assessment of where you are now before you begin the journey toward your goals. And while it’s great to have an aspirational component to your culture, it must be grounded in who you are, not just who you want to be.

If you have done the research and understand your culture—including its strengths, values and opportunities—you may be ready for a culture change program to help your company reach its goals and keep the employees aligned and engaged. Culture change models are numerous and widely varied. We respect these and encourage you to review them. As you do, you will discover that culture change is typically an exercise in “simple but not easy.” The model we use with our team here at IBM is a case in point. Though it is not complex, I have seen it produce excellent results over time—but true culture change in large organizations happens steadily over years, not months.

Assuming you’ve done the research to understand your current culture and know your corporate strategy, our culture change model guides you through the process with these four simple (though not easy) steps:

Step 1. Communicate the Vision

The kick-off is the time to cultivate understanding, excitement, and buy-in around the culture change process. Often, though not always, the CEO will handle this personally. You should begin by thanking those who participated in the culture research you have done, reviewing company strategy, and discussing the findings of the culture work. There will be the obvious rational facts and the deeper unspoken codes of what it’s like to work for the organization. You should also highlight the value proposition of working there. Follow this with a frank and open discussion of the cultural roadblocks to success, possibly in a town hall manner. Are there current stories that exemplify what the future vision should look like? Seek out these stories and share them. Employees should be aware of the company vision, why it matters, how they play a role, what it will look like when they get there and what’s in it for them. Without this information they may not become involved, dismissing your culture change effort as “just another corporate initiative.”

Step 2. Model New Behaviors

Company leaders and influencers must take enthusiastic ownership of this step. Once you have established an understanding of the vision and its roadblocks, have an open discussion about the role of each of these leaders in making it happen. Not every leader has the same skill set, so each must commit to modeling behaviors that will support the new vision in a way that compliments their individual abilities. Some may be inspiring speakers, some may be process experts and others may be amazing in developing effective cross-functional teams. Leverage these differences. The key is to get a commitment from each leader to follow through with their part of the vision. Build in accountability, either from the employee base or top-down leadership. Change is uncomfortable, and without this accountability the efforts will fade back into routine.

Also, don’t forget the role new employees can play in culture change. Hiring “change agents” is tricky. Without support, guidance or sufficient resources from leadership, they will be forced to leave or adapt—defeating the purpose of hiring them in the first place.

Step 3. Reward and Recognize

Once leaders have committed to new behaviors, the employee base needs to know what is expected of them to support the new culture. Put a Reward and Recognition system in place to support the critical areas that deliver immediate results. One company we worked with created programs to facilitate more open conversations; others removed certain metrics that made employees feel controlled and lacking in empowerment. Reward and recognition programs should be specific and flexible to meet changing needs of individual teams or functions, while working on the most important parts of the culture change initiatives.

Step 4. Tell the Success Stories

Culture change cannot happen in a vacuum. People need to see examples of what is considered exemplary of the new culture. When we tell the stories of people performing at their very best within the vision of the new culture, we are defining “What Great Looks Like Here”. This information is crucial for top performers. When they see, read or hear the stories of how the company defines greatness, they can change their actions to conform to the new culture at its peak. Others may decide that they simply cannot become “great” in the new cultural vision and self-select out of the company, either as a candidate or an existing employee. Either way, the employee is more likely to find a position that makes them feel engaged and fulfilled.

Measuring Success

Defining your culture is hard enough; changing it is harder still. How do you know if you have been successful? So far the best metrics we have been able to leverage are employee engagement and retention rates. Performance measurements are notoriously unreliable for their lack of variability and subjective quality. Of course, ultimately we are looking to impact a company’s bottom line. There are, however, certain aspects that you will uncover in your culture research that can be readily measured in your annual surveys or through interviews and focus groups. These help you keep a handle on key issues important to your success without requiring a full culture study every year. We don’t believe, given the slow nature of culture change (absent market crisis, organizational redesign, leadership change, or other burning platforms) that there is a need to reassess full organizational culture (culture surveys, focus groups and interviews, review of secondary data, etc.) until three or four years have passed.

Summary

Culture change requires constant, steady effort. It requires almost every employee to shed complacency and experience some level of discomfort. It requires leadership commitment and accountability. In short, culture change is hard. But it can be done. And for many companies, it must be done.


Learn about the impact organizational culture can have on business performance. Read our white paper, “What’s your story?”.