Many executives are reluctant to take the issue of culture change seriously. However, an understanding of definable business benefits can make the case for such change more persuasive. Carolyn Taylor outlines the many advantages – and disadvantages – of different cultures and details how best to build the business case for culture change
Many executives are reluctant to take the issue of culture change seriously. However, an understanding of definable business benefits can make the case for such change more persuasive. Carolyn Taylor outlines the many advantages – and disadvantages – of different cultures and details how best to build the business case for culture change
In the early days of trying to establish culture change, organisations worked up a set of values statements, putting them on walls and coffee cups, and ran a few communications roadshows. Since then, two things have changed perceptions of culture change. Firstly, it has been proven that culture can deliver a series of performance benefits – and disasters – of a much more tangible nature than simply making an organisation a great place to work. Secondly, it has become obvious that culture is a lot harder to change than it first appears.
As a result, any investment organisations make in culture change now needs to be more substantial and over a longer timeframe. Serious investment makes it a serious business issue – one which requires rigorous research, risk assessment, planning and management. In short, it must deliver a worthwhile return on investment.
Whether you are an HR professional wishing to persuade executives to invest in culture or a line manager considering making the investment yourself, your first task is to build the case for investing in culture change. This case must be integrated into the business strategy and must spell out how culture change will enable the execution of a specific strategy.
Strategies and their implementation plans are developed logically and rationally. As they are written down, they map out a series of steps which will systematically lead the organisation down a chosen path. We all know, however, that there’s many a slip ‘twixt cup and lip’– and things often don’t work out the way they were planned. When a plan goes live from a written document, people become involved. And people are often not logical. People are driven by emotions, by unspoken rules about how to behave, by values and beliefs of whichthey themselves may not be conscious. The culture in which an individual works is a key influence on this mass of internal workings that produces behaviour.
Key culture change business questions
A good starting point is to study the emerging business strategy and plans carefully, and then ask two key questions: In what way will this strategy/plan require people to think and behave differently from how they do now? And, in what way could people impede this strategy/plan?
For example, if your strategy involves cross-selling, you will need more collaboration across the business. If you are undertaking acquisitions, you need people to be open and respectful of the ways of others in order to learn from the capabilities of the acquired business. A poor performing business will need an increase in accountability.
The five clusters of cultural qualities
It’s useful to ask them to look at their culture strategy in relation to five clusters of cultural qualities –each of which delivers a particular type of culture. While at first it may be tempting to take a ‘kid in a candy store’ view and want them all at once, when it comes to building a business case and focusing your investment, more traction is usually achieved if one is chosen as the priority. This can then be measured, monitored, targeted and receive the benefit of a focused investment. Others can be added in following years.
The five clusters of cultural qualities, seen in the diagram, are achievement, one team, innovative, people first and external care. In the centre, the core, are a cluster of qualities which add value to any strategy.
Each culture delivers specific benefits, and the absence of each impacts current performance in particular ways. In building a business case, consider both the cost of your current culture and the benefits a different culture would provide. The nature of your business strategy will determine which of these benefits, and costs, are most critical.
Achievement culture – embedded values drive the consistent achievement of stretch targets through delivering on promises.
Advantages of an achievement culture include:
• Increases the overall performance capability of your organisation.
• Decreases the risk that you will not achieve performance targets.
• Improves risk mastery – the ability to manage the risk/reward ratio to be neither risk averse nor gung-ho.
• Increases speed of decision making and execution.
• Makes you more focused, doing fewer things very well, and completing them.
• Makes you the employer of choice for high achievers.
Disadvantages of not having an achievement culture include:
• A lack of focused strategy, doing a little of too many things.
• An aversion to stopping things, remaining in an unprofitable sector/product for too long, continuing projects that are not working.
• Non-compliance – illegal practices, decisions by individuals to play outside the rules.
• Slow decision-making, rework, too much research and redrafting, and accompanying costs.
• Tolerance of under performers over long periods of time.
• Overuse and misuse of consultants, losing control of projects, avoiding internal responsibility
Innovative culture – embedded values drive the ability to lead and shape their own future in original ways.
Advantages of an innovative culture include:
• Delivers product innovation and industry leadership.
• Attracts and keeps unconventional people with original ideas.
• Removes the costs associated with ‘not invented here’.
• Allows early correction on mistakes, reducing escalating costs of unsuccessful strategies, projects or new products.
Disadvantages of not having an innovative culture include:
• Delays in coming to market with innovations, or failure to do so at all.
• Repeated rework, caused by the same mistake being made repeatedly in product design, project implementation or errors for the customer, for example.
• Bureaucracy, high costs associated with a failure to improve cost standards.
• Lagging behind the market, inability to keep pace with change.
• Poor quality goods and services, high reject rate. Lack of consistency in quality and wide variations.
One team culture – embedded values drive working together across the organisation for the good of the whole.
Advantages of a one team culture include:
• Customers experience a seamless service and cross-business processes work effectively.
• Cross-referrals occur between different sales and service teams.
• Best practice is picked up quickly across the group, so standards rise quickly.
• Effort is not duplicated unless there is a strong business rationale – a leaner cost base.
• Resources are easily focused where most needed
• underperforming areas, opportunities for quick wins in the market.
• Mergers between companies, divisions or teams can occur quickly, and planned synergies are realised.
Disadvantages of not having a one team culture include:
• The cost of duplication of effort – IT solutions and training programs, for example, being invented in many places simultaneously.
• Gung-ho goal setting – over-optimistic sales figures and other demonstrations of individuals outshining each other.
• Adoption, at a divisional level, of strategies not in line with the overall vision. The cost of market confusion or cannibalisation, such as winning customers from each other.
• Difficulty in implementing projects that are led in one area but need collaboration and input from others – such as new product design and customer billing systems.
• Customer complaints regarding handoffs from one area to another, such us between phone and face-to-face distribution channels.
• Loss of good people from the out of favour areas, such as in a merger or out of service/operations in a sales-focused culture.
• The wasted investment of one group not knowing what the other is planning, such as advertising campaigns with no frontline warning (or training), and thus sales opportunities lost.
People first culture – embedded values drive an environment where people are trusted and supported to do their very best work.
Advantages of a people first culture include:
• A strong employee brand, reputation as employer of choice.
• Enhanced performance from individual employees.
• Reduced turnover and recruitment fees.
• Access to the total spectrum of talent – true meritocracy.
• Compliance with policy, which allows empowerment within defined limits.
• Outstanding commitment at the frontline, which customers love.
• Abundant, high quality communication, including access to problems (no surprises).
• Reduction or elimination of cases of unfair dismissal, discrimination or sexual harassment.
Disadvantages of not having a people first culture include:
• Higher costs associated with recruitment, and training up new people.
• Losing corporate memory and relationships, when good people leave in frustration.
• Higher costs of stealing and other ways in which employees abuse the system for their own personal gain.
• Changes to process or product not picked up and used, because people did not buy in to the communication they received.
• Lack of feedback up the line about problems, an environment where whistle blowing cannot occur.
• Lawsuits from badly treated employees.
External care culture – embedded values drive an obsession with improving the quality of life for external stakeholders.
Advantages of an external care culture include:
• Facilitates customer loyalty, allowing you to win at customer retention.
• Positions you to quickly pick up and respond to customer needs.
• Builds pride at every level, especially the frontline.
• Forces empowerment and simplicity which in turn reduces cost.
Disadvantages of not having an external care culture include:
• Decision makers not understanding what makes the customer tick. Decisions made that repel or frustrate customers, and consequent loss of sales.
• Missing a shift in customer habits, such as a sector of your market moving away from your areas of traditional dominance.
• More focus on customer acquisition and customer retention – a much more expensive exercise.
• Damage to your brand and reputation of insensitive behaviour by your people.
• Blow out in costs in non-customer facing areas, roles which create activity to justify their existence.
• Difficulties with hand offs between back office and front office, and the consequent cost of rework.
Establishing ROI on culture change
It’s possible to put an approximate dollar figure against any one of the items listed above. Selecting your best area for cultural focus will depend on the nature of your strategy and the cost of your current culture. A worthwhile exercise which will usually lift the importance and urgency of cultural change work is to map the link between current culture and cost, using the examples above as a starting point from which your own business case can be built.
Combining knowledge of the business strategy, an understanding of the behaviours required to implement it, the culture that will support these behaviours, the risks of not acting, and the benefits of getting it right, provides you with an excellent business case.
In most cases, picking one or two of the qualities described in the diagram will deliver results faster than trying to do a little of everything. By translating culture into these terms, HR professionals are able to position their work within the business context, rather than off to one side of it. For line managers this rationale explains why culture is such an important driver of business outcomes, and how to target investment on those qualities which will deliver biggest bang for your buck.
If you’ve had difficulties in the past achieving executive buy in it may have been because they were not able to make the necessary links. When culture is seen as something unfamiliar and hard to define, it is easy to reject its value. The fact that culture change will require personal change adds to the discomfort many executives feel when it is first suggested as a strategy. There is no doubt that executives will have to walk the talk in order to achieve the business benefits required. The size of this prize, however, makes it one that few executives can afford to walk away from if presented in terms of business benefits.
Carolyn Taylor is a director of the Mettle Group and author of Walking the Talk: Building a Culture for Success. Tel: 02 9964 9511
