What is Organizational Culture and how do you change it?

A definition of Organizational Culture distilled from several dictionaries would run something like this:

The sum of the ideas, knowledge, beliefs, values and behaviors characteristic of and displayed by the members of a particular organization or group.

Of the five drivers of culture mentioned above, “values” is the foundation, and “behavior” the visible manifestation.

Any initiative to change organizational culture must first identify what values are paramount in the organization.  What do members of the group care about?

Second, the change agent needs to identify what values they’d like to inculcate and what resultant behaviors these values should engender.  What should members of the group care about?

Only then can you think about what needs to be done to inculcate change; that is, develop strategy and tactics to change what the organization (read, it’s members) values.  Note that there is no “organization” per se; it can hold no ideas or values, nor can it “behave”.  What exists are the members of the organization, and it is they who will need to change or be changed.

The change strategy adopted will depend on how big the gap is between where the organization is and where it needs to be, and how much time is available.  A severely dysfunctional culture requiring rapid change will need the methods of revolution. Heads will role, so to speak.  

A less drastically dysfunctional culture will be better served with an evolutionary approach.  Controlling stakeholders first need to decide what values the organization wishes to stand for and embody in the methods it employs to achieve its objective(s).

Then, the leader and the leadership group need to communicate this new philosophy to group members and other stakeholders, to embody the new philosophy in their own behavior, and to reward behaviors that reflect the new philosophy within the organization (and conversely to “punish” behavior that contradicts, ignores, denigrates, or damages the new philosophy).

Ultimately, an organization’s culture reflects what the members of the organization value most.

Just as in any individual life, an organization’s success depends on which values it seeks to pursue and create, and which values it embodies in the methods it uses to do so.  Ultimately, a company’s culture reflects what the members of the organization value most.  Any change in culture begins with the assessment of values – what are they now and what should they be?

Taken as a sort of laboratory analogy, a culture is a medium in which things grow.  In a good culture, flowers grow, in a bad one, weeds.  The medium is the values.  Every change initiative starts with values.  How hard the change will be, and how disruptive a change strategy is needed, depends on how big the weeds are and how many must be rooted out.

There’s a lot more to be said on this, a book’s worth probably.  For now though, let me respond to the questions that prompted the post, which were posed by a member on HBL.

Who are the key people who have to be convinced that the changes are good? Is senior management enough?

First, the controlling stakeholder.  Culture and morale are top-down phenomena.  That said, EVERYONE needs to be convinced, to embrace, and to embody the group’s culture.  You know what they say about one bad apple.

Certainly easier and quicker if you can get all of senior management on board.  The more people you have “walking the talk” the better.  During evolutionary change, people who don’t or won’t fit the new culture often leave on their own.  Culture evolves every time there’s a change at the top, even if no formal “culture change” is initiated.  The new boss brings different values, rewards different things, re-structures, re-deploys resources.  All of these things happen also when the change is part of a deliberate program, they just happen with more consequence and often more quickly.

16Apr13 Update:  Here’s two articles that make a pretty strong case for increasing focus on the vision communication effort:

Over-communicating     Over-communicating Vision

How are the changes best sold to the majority of the employees? What is to be done about people who work hard but are mentally passive? 

You don’t “sell” culture.  You reward behavior that embodies the values you want to inculcate.  People who work hard are great.  If by mentally passive you mean they don’t apply their mind to a job that requires it, then they are under-performers.  They need to be developed or let go.  If, however, you mean they work hard and perform well but don’t contribute to the broader culture because mentally passive, that’s really not a problem.  Culture is reflected in what people do, in behavior.  As long as these people embody company values (hard work is presumably one of these!), they are contributing positively.  So long as the mentally passive hard workers are doing what they are employed to do, nothing to fix.

What is to be done about recalcitrants who are in key positions? What are their rational values you can appeal to that will make them more amendable to changes? 

Their rational self-interest.  Do they want to remain engaged and contribute or do they want to move on.  What is needed is a frank discussion with the “recalcitrant” that clearly sets out what’s wrong with their approach and why it needs to change.  What do they do that does not reflect the new values of the organization and what should they do?

Ultimately they will change and be part of the team, or they will decide this is not a team that reflects their values anymore and move on, or they may try to stick it out and will need to be performance-managed… out the door if necessary.  [I know this sounds harsh, and in my experience most people (maybe 95%) can be “brought around”, but there are a few who just, well, their insecurities and defensiveness will not be overcome, so they need to be expelled from the team.  Ultimately, they will be better off for it too.]

This, needing to make tough decisions and take difficult action, is why the deal-breaker in any organizational change initiative is the support of the controlling stakeholder.  The person with whom the buck stops MUST be the initiator, the key driver, and the exemplar par excellence of the values and behaviors the organization wishes to embed in it’s culture.  Apart from being the example for everyone to follow, if there is wavering or inconclusiveness at the top, there will never be the resolve and willingness to take the tough decisions that real change for the better requires.

How do you keep people excited about the changes when some of the benefits are well into the future?

Communication.  A sophisticated workforce needs meaning and purpose.  Share with them the revised “blueprint” (philosophy + objectives), or better still, get them involved in its development.  Then they have a vested interest and are more likely to buy in.

In organizational change to improve culture, it’s mostly the “How we operate” that needs changing, but that is informed by the Who and the Why of course.

How do you measure the success of the changes on a weekly, monthly or quarterly basis?

Ultimately, rising profit.  But you won’t see it in a week, or a month, and only maybe the beginnings in a quarter.  Depending on how big the organization is, and how radical a change is being undertaken, impact will be felt in 6-12, maybe even 18 months.

Specific measures of success will depend on how the poor culture was impacting the business.  Could be less waste, higher productivity, happier staff making happier customers, reduced absenteeism, healthier employees, less staff turnover, increased sales, and a myriad of other parameters and combinations.  The end goal though, is increased profitability.

NB:  Tell the HR folks not to obsess about staff turnover, because it may well increase before it stabilizes at well lower then before the change.

How do you make the changes sustainable and transferable to new hires?

New employees are generally very adaptable to existing culture, especially at lower levels and with younger employees.  Beginners always adapt to the environment around them (this is why its so important that new-hires get a super-organized and professional induction that absolutely reflects the company culture and philosophy).

Company philosophy (Vision, Mission, Values, Principles) should be be taught at employee orientation and should be written into recruitment guidelines.  And of course should to be lived by all.

This, the new Company Philosophy, is what needs to be decided at the change planning stage – it is the standard against which the status-quo will be assessed (and all the individuals in the team), and will guide the change effort.  It is the destination towards which the Change Strategy will be the map.

Sustainability is a measure of how well everyone lives the organizational values.  The more influence an individual has within the company the more important it is that they embody said values.  To repeat, the top leader is key.

For an example of outstanding company philosophy, see that of BB&T, here.  Written I presume by John Allison.  The best I’ve ever seen.

Are there books or articles on this subject that you can recommend?

I have not read or heard of any personally, but I’m sure there must be some good ones out there.  When time allows I’ll try to review one or two and post on this again.

Anyone else know of good material on this subject?

UPDATE:  29Jun13

Scott Berkun advises hiring for cultural change, and makes a good case in his post: “How to build a culture of healthy debate“