Much has been said lately about culture and the impact it can have upon organisational performance. In the first of a two-part article, Carolyn Taylor looks at how culture change works and details HR’s role in the process
Much has been said lately about culture and the impact it can have upon organisational performance. In the first part of a two-part article, Carolyn Taylor looks at how culture change works and details HR’s role in the process
Recent high profile corporate disasters have moved culture to centre stage as an executive priority, risk management issue for the board and an opportunity for real performance differentiation. Culture was named as a primary cause of National Australia Bank’s troubles last year by the APRA and PwC reports on the fiasco; for Enron’s self serving arrogance; and for pushing Shell executives into overstating oil reserves. Culture accounts for Virgin’s quirkiness, Apple’s innovative spirit and Flight Centre’s frontline passion.
It remains one of the last untapped management disciplines, with most organisations spending more to update computer systems than they ever would on figuring out how to align employees’ behaviour to their strategy. Once harnessed to competitive advantage, the power of culture makes it hard for others to catch up, at least in the short term.
HR professionals can help and sometimes initiate the culture change process; they can, however, also be left behind in its wake. Many organisations today are undertaking some form of culture work, so it is important that HR professionals stay ahead of latest thinking on what culture is, how it can be driven and, importantly, what HR’s role in the process can be.
How culture works
Culture is best described as ‘how we do things around here’– it is created from the messages that are received about how people are expected to behave. Cultures develop in any community of people who spend time together and who are bound together through shared goals, beliefs, routines, needs or values. Cultures exist in nations, in corporations, in sporting clubs, in schools, in families, in religious communities, in professions and in social groups.
We humans are basically tribal animals, who are hardwired to fit in with our tribe. We read the signals about what it takes to fit in, and we adapt our behaviour accordingly. This is a survival strategy. If we absolutely cannot do this, we either leave the tribe, or the tribe ejects us. As we adapt to fit in with our new tribe, we in turn reinforce these tribal norms or accepted behaviours and thus reinforce the culture.
The process is reinforced through peer pressure. Existing tribe members, concerned about the threat to the tribe a newcomer represents, work together to ensure that the new member does not rock the boat and thus expose weaknesses in individual members.
So, to change a culture, you have to change the messages people receive about what is valued. Once people really experience new values emerging, most will adjust their behaviour accordingly. Culture management is message management. Most of these messages are non-verbal – the ‘walk’ rather than the ‘talk’– and are received from three sources: behaviours, symbols and systems.
Of the three, behaviour is the most powerful. A small but significant change in a leader’s behaviour (starting to listen and ask questions instead of telling, for example) will send the message over time that others’ opinions are valued and that this culture values openness. Symbols, such as changing how time is allocated in meetings, are also powerful.
The role of HR
Because culture is about people, a knee-jerk reaction could lead to culture change being put in HR’s basket of responsibilities. As such, one of the first education tasks of such change is to show that culture is created by how your business is run, by every decision made, how priorities are assigned, how a person is promoted and how meetings are conducted. Culture is not a stream of work that happens off to the side of the business. It is what happens when you are not concentrating on culture, but running day-to-day business affairs. The ‘walk’ of every executive in their daily life sends signals much stronger than any initiative that can be planned to ‘build the culture’. In an organisation where the numbers are valued above all (and let’s face it, that’s most), the CFO and the finance processes – planning, budgeting, capital allocation, reporting – will often have a more powerful impact on culture than the HR director.
The HR team can play an important part in role modelling, in addition to their likely contribution as the managers of some of the cultural initiatives their organisation may choose to take on. To influence in a credible fashion, HR functions must first and foremost be a model for the future culture themselves. If a high performance culture is the goal, it is completely unacceptable for the HR function to carry poor performers within its ranks. If collaboration across the business is a priority for the business strategy, the HR function should be leading the way through transfer of best practice across divisions, working well with other functions and avoiding duplication of effort.
When measuring culture, the HR department is often one of those with the largest gap to close in terms of being closest to the organisation’s target culture. Perhaps HR practitioners see the negative elements of culture most clearly and are personally affected by this. It can be very frustrating to see the opportunities to differentiate on the basis of culture in your organisation, and yet to watch behaviour being played out which limits performance through time-wasting, politicking, decision avoidance, lack of accountability or one-upmanship – to name just a few common cultural challenges. It is only one small step to start to blame line managers for the culture, and then to start to follow these cultural trends oneself.
HR leaders have to take a stand for the values and behaviours that will underpin the culture of the future, and this can mean being counter-cultural oneself in the short term. There is nothing more compelling and persuasive than a division that is walking its talk. People follow leaders who do not compromise their values and standards for reasons of expediency, who keep their word, support the success of others, make and stick to clear decisions, look at themselves from the customer perspective, and are disciplined and are consistent.
The place to start if you are to become culture champions, and demonstrate the benefits culture can deliver, is in your own team. Ask for lots of feedback, measure yourselves against the cultural targets you are setting, take a look in the mirror, and set HR performance expectations with both behaviour and results orientation. Cast an objective eye over all of the HR policies, websites and documentation – the language often betrays a tone which is a long way from the values described through your organisation’s aspirations. If meeting disciplines are bad in your organisation, start leaving meetings early, rather than arriving at the next one late. Mahatma Gandhi said: “Be the change you wish to see in the world.” Doing so takes courage, but if you cannot do it, it is unrealistic to expect this of others.
With this work on the personal front underway, there are a number of other levers the HR professional can pull to accelerate the process of culture change. In the diagram on leverage points are seven which can have a significant impact. Each is associated with the source of some of the strongest messages about what is really valued in your organisation. Pull each of these levers within a one-year timeframe, coupled with lots of communication about what is really required in the emerging culture, and the cumulated effect will be a change in the messages people receive about what matters. Once these messages are received loud and clear (without too many counter-messages) most people will be able to adjust their behaviour. The reason they have not done so to date is that the counter-messages are strong enough to have them believe that, despite the words, the organisation does not really require them to change.
Persistence is key
Lion Nathan is an organisation that has been able to demonstrate a direct link between its total shareholder return (TSR) and improvements in its measurement of culture. They lifted their TSR by 180 per cent over a seven year period and exceeded the performance of most of their peers worldwide. The recently retired CEO Gordon Cairns is the first to admit that, for the first couple of years, he did not believe that culture could be an important source of increasing shareholder value. Lion Nathan’s HR team, led by Bob Barbour, held firmly to a vision of what was possible. They were prepared to doggedly work towards that vision before they had line management support, and through the inevitable squawks of the ego as leaders came face-to-face with the reality that a changing culture will mean changing themselves.
Charting this course is certainly a test of the HR professional’s influencing skills. At the beginning or in the middle of culture change, it can often feel as if you’re walking through a huge fog, unable to discern if you’re making much progress. Changing messages does take time. The multiplier effect, however, is gained when you can successfully align the messages from a range of sources, including the behaviour of the HR team itself. At times, other organisational priorities may seem to swamp the work. Persist with your vision – eventually the fog clears and you come out into the sunlight to see how far you have come.
Carolyn Taylor is a director of the Mettle Group and author of Walking the Talk: Building a Culture for Success. Tel: 02 9964 9511
