Is Your Company Culture Working For You?

22 Jul 2016 Is Your Company Culture Working For You?

When Lou Gerstner took over as IBM’s CEO on April’s fools day 1993 (1), the company was in deep trouble, and about to be split into several smaller firms. The former CEO of cookie maker RJR Nabisco quickly stopped the “splitting idea” in its tracks and set to unify IBM into a strong customer-centric company. He also recognized that the Achilles Heel of the once-dominant mainframe company was its corporate culture. The company had become arrogant, self-centered, ignorant of its changing market, and stagnant.

Gerstner initiated a major effort to restore IBM’s culture to one that is customer-centric, unified, agile, and innovative. Within a few years, IBM was back on track to regain its leadership position in the technology industry. When he took over IBM’s stock price was $12.88. On March 1, 2002 (the year that he left) the stock was at $104.00.

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In this post, I will discuss what is corporate culture, how to assess whether it is supporting the company’s goals or hindering its progress, who can change the company’s culture, and how. A tall order for a short Execu-Post.

What Is Corporate Culture?

Some define it as “The way we do things around here”. Another, the more formal definition is: “The collective values, beliefs, and behaviors of the organization”.

Company culture covers a wide range of values and behaviors, from how aggressive and competitive the company is, to the degree of respect and openness with which it treats its employees and customers, to how agile and innovative it is, and how uncompromising it is regarding the quality of its products and services.

Company culture is also characterized by the intensity and uniformity in which each employee believes in the same values and practices them in everything they do: day-in, day-out.

Does Your Company Culture Need Tweaking?

To figure out whether to raise the alarm on your company culture, you should ask two questions:

1. Do the employees’ values, beliefs, and behaviors support the company’s profitability, continued growth, competitiveness, customer-centricity, and quality?
2. How strongly and uniformly are the company’s values, beliefs, and behaviors practiced by all employees across the organization?

If your assessment is that the values, beliefs, and behaviors have been diluted, and do no longer support the company’s goals and strategies, it is time to think about tweaking, or even overhauling the company culture. Similarly, if you find that the values, beliefs, and behaviors are not as strong as they need to be, or that they are no longer uniformly practiced, it is time to take steps to bring them back on track.

Who Can Change The Company Culture?

Professor John Kotter (2), of the Harvard Business School, says that a change in company culture has to come from the top – the CEO of the company. If the CEO does not believe that the company culture has to change, there is very little chance that it will change.

But the CEO alone cannot change the culture. She or he needs the support of her/his top lieutenants and a critical mass of employees at all levels of the organization.

How Can The CEO And Her/His Followers Change The Company Culture?

The approach outlined below is a combination of what I have learned from Professor Kotter, Lou Gerstner, and my own observations over my 30 years of corporate life. Note that the steps below are highly abbreviated and that each one merits a much deeper discussion.

1. Create a sense of urgency. My experience as a coach has taught me that in order to affect a major change, either personal or organizational, there has to be a powerful driving force, usually, a shared high level of pain that the entire organization experiences. The CEO can use this anguish and pain to create a sense of urgency around the need for change.
2. Communicate the change widely and powerfully. This communication has to come right from the top, but be also supported by communication from all levels of management down the organization’s hierarchy.
3. Set specific goals. These should include the company’s business goals, as well as behavioral goals that will create and enhance the desired culture. These could include customer service goals, innovation goals, collaboration goals, etc. The goals should be measurable and meeting them should be rewarded handsomely.
4. Adjust the organization structure. The organization structure must support the new strategy and desired behaviors. For example, if the new culture calls for unity and customer-centricity, yet the organization is siloed around product lines, a change in structure is critical to achieving the desired change in culture.
5. Adjust the compensation and reward system. The compensation and incentive system of the company must support the desired change in values and behaviors. For example, if the new culture calls for customer-centered collaboration, the performance assessment, and compensation systems must incentivize this behavior.
6. Create a change network. The change network should comprise a large group of volunteering employees who are prepared to be the flag bearers, to communicate the message, to act as role models, and to rally the troops around the new values and behaviors. The employees in the change network should be provided with continuous training and support.

Final Words

I have once observed a new CEO who joined the company aiming to create a new service-oriented culture within the organization, just like IBM did. I knew this CEO from my previous job, and I respected him greatly. But sadly he was not successful in attaining his goal. Achieving a major change in the company’s culture requires it to be the highest priority above all other, an incredible amount of strong will, energy, patience, and skill. My advice is to go into this endeavor with open eyes and a realistic assessment of what it would take to make it a success.

Invitation To A Culture Strategy Session
If you wish to discuss whether your organization should be thinking about its culture, and how it can implement a culture change program, I invite you to a free Culture Strategy Session with me. Please contact me at Uri@thewilltochange.com

References

1. Gerstner, Jr., Louis V. (2002). Who Says Elephants Can’t Dance? HarperCollins. ISBN 0-00-715448-8.
2. Kotter, J. Eight Steps To Accelerate Change in 2015. E-book. Kotter International.