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Culture Change is in the Air

A recent study finds 96 percent of respondents indicating their companies need some form of culture change. While culture may be difficult to define as a concept, experts say senior leadership -- including HR -- must still identify the critical behaviors they wish to see employees exhibit, and reward workers who exemplify those behaviors.

Thursday, December 26, 2013
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We all know the important part a unique, rock-solid corporate culture plays in building a successful company.

Consider New York-based consultancy Booz & Co.'s 2013 Culture and Change Management Survey, in which 84 percent of more than 2,200 executives, directors, managers and employees acknowledged their organization's culture is critical to the company's success. Beyond that particular finding, however, the rest of the study's results suggest the current state of many corporate cultures is dire.

For example, 96 percent of those same respondents said some form of culture change is needed within their organization. More than half of participants (51 percent) believe their company is in need of a major culture overhaul, with 45 percent noting they do not think their organization's culture is being effectively managed.

Given the latter two findings, the near 100-percent of respondents indicating a culture change is in order at their company shouldn't come as a great shock, says DeAnne Aguirre, a San Francisco-based partner with Booz & Co.

"The fact that culture is recognized as essential to an organization's success -- and yet it is not seen as an important topic on the agenda of senior leadership and is not effectively managed -- perfectly explains why people feel a change is needed," says Aguirre.

The number of respondents indicating a need for a major culture overhaul, however, is "mildly surprising," says Aguirre.

"It is human nature to call out the negative, and this could explain why people feel there is a need for major change," she says. "When answering this question, they could have thought about all the parts of their culture they do not like, and not considered the positive aspects of their culture."

Booz & Co.'s findings "are entirely consistent with our own experience and research on the importance of culture in driving performance," says Adam Zuckerman, a consultant in Towers Watson's Chicago office.

"There is growing recognition of that fact among business leaders," says Zuckerman.

"The reality is that culture is one of very few truly sustainable competitive advantages. Companies win not because of what they do, but because of how they do it. And how they do it is determined by culture. The best strategy in the world won't deliver results without a culture that supports its execution."

Kim Ruyle, president of Coral Gables, Fla.-based talent management and organization-development firm Inventive Talent Consulting, frequently facilitates workshops with CEOs and C-suite teams to identify the type of organizational capabilities required to execute strategy.

" 'Leveraging culture' is one of the 20 capabilities we discuss and prioritize," says Ruyle. "During discussions, this is identified as one of the most important drivers, but when we go through the prioritization process, it invariably is ranked in the bottom third for importance.

"I don't have an explanation for this," he says, "other than that it's a nebulous concept, and is more difficult to explain and manage than tangible constructs such as innovation management or customer intelligence."

Defining the organization's ethos can indeed be an imprecise science. But every company can continue to evolve and improve its culture, says Aguirre.

"We have found that companies who work with and within their existing culture to change critical behaviors have more success than those who try to change their culture."

Companies must pull from the strong points of their cultures and strengthen cultural weaknesses, she adds. "By doing this, and focusing on a few critical behaviors, [companies] are able to act their way into new thinking, as opposed to thinking their way into new action. This is how you successfully evolve the culture."

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HR can be a key player in managing and nurturing the organization's culture, but can't do it alone, says Ruyle, adding that "in most organizations, culture is an afterthought, and usually only explicitly addressed by the folks in HR and organizational development.

"But HR and organizational development aren't the only ones who shape culture," he continues. "Since culture is the demonstration of our shared values through norms of behavior, you've got to start with values. The most senior leaders -- principally the CEO -- need to identify what they really care about and how those values are reflected in behavior. This is a primary responsibility of the most senior leaders. Never should employees be asked what they want the culture to be. That's not their job."

While many organizations spend a lot of time talking about the importance of culture, not all of them demonstrate what a solid culture looks like, says Rutger von Post, a partner in the New York office of Booz & Co., and a member of the firm's organization, change and leadership practice.

"This goes beyond leaders 'modeling the way' and communicating about the [firm's] culture," says von Post. "It is one thing to tell people we have a performance culture, but if you do not show them what it looks like, they will just continue to act in the same manner, and nothing will change."

Exemplifying the company's culture should be done both formally and informally, he says.

"On the informal side, there must be tangible behaviors that demonstrate what the culture looks like, and they must be granular enough that all levels of the organization can exhibit the behaviors.

"On the formal side -- and where HR can help out -- the performance management and rewards systems must reward people for displaying the right behaviors that exemplify the culture," continues von Post. "Too often, changes to the culture are not reflected in the formal elements, such as the performance-management process. This results in a relapse to the old ways of working, and a culture that never truly evolves."

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