Why organisational culture matters, and how to … · Why organisational culture matters, and how...

Why organisational culture matters, and how to change it

Judy Parfitt

11 June 2013

Why is organisational culture important?

Organisational cultures characterised by

high levels of employee engagement lead to ...

↓ Higher service, quality and productivity

↓ Higher customer satisfaction

↓ Increased sales

↓ Higher profit and shareholder returns

Why is organisational culture important?

Organisational

culture became more

important when

intellectual capital

became mobile

11 June 2013

1800 1900 2000 2100

Agrarian age

Industrial age

Information age

Consciousness age

Industrial age Information age Consciousness age

growth change transformation/evolution

quality intellectual capital cultural capital

skilled labour knowledge management creativity

productivity learning vision

efficiency re-engineering shared values

cost effectiveness systems emotional intelligence

economies of scale processes social responsibility

mass marketing customer satisfaction customer collaboration

Richard Barrett and Associates LLC, Cultural Transformation Models and Tools

What is organisational culture?

“Culture is what 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, corporations, sporting clubs, schools, families, religious communities, professions and

social groups. Humans are tribal … we read the signals about what it takes to fit in, and we

adapt our behaviour accordingly. This is a survival strategy ...we in turn reinforce these tribal

norms, or accepted behaviours, and thus reinforce the culture … The process is supported by

peer pressure.”

Carolyn Taylor in “Walking the talk – building a culture of success”

“The culture of an organisation defines appropriate behaviour, bonds and motivates

individuals and asserts solutions where there is ambiguity. It governs the way a company

processes information, its internal relations and its values. It functions at all levels from sub-

conscious to visible.”

Charles Hampden-Turner in “Corporate culture – from vicious to virtuous circles”

11 June 2013

Culture refers to the pattern or set of thoughts, speech and actions that

we receive, transmit and reinforce – often unconsciously

What is organisational culture? ► Beliefs - opinions, doctrines or principles held as being true by a person or group

► Behaviours – the outward manifestation of beliefs (conscious or unconscious)

Associated concepts include:

► Cultural resilience - the ability of an organisational / human system to withstand shocks

and endure under duress

► Cultural entropy - the proportion of energy in an organisational / human system that is

consumed by non-productive activities e.g. bureaucracy, empire-building, politicking

11 June 2013

Context

Concept

Beliefs Behaviours

Values

“Values are the shorthand method for

classifying beliefs and behaviours”

Barrett – Cultural Transformation Models and Tools

Barrett’s 7 levels culture model

Positive focus / excessive focus

SERVICE 7 SERVICE TO HUMANITY

Long-term perspective. Future generations. Ethics.

2 RELATIONSHIP

SURVIVAL

Good communication between employees, customers and suppliers. Manipulation. Blame.

PURSUIT OF PROFIT & SHAREHOLDER VALUE Financial soundness. Employee health and safety.

Exploitation. Over-control.

DEVELOPMENT OF A CORPORATE COMMUNITY

SELF-ESTEEM Productivity, efficiency, quality, systems and processes. Bureaucracy. Complacency.

BEING THE BEST. BEST PRACTICE

RELATIONSHIPS THAT SUPPORT CORPORATE NEEDS

3

TRANSFORMATION Learning and innovation. Organisational growth through employee participation.

INTERNAL COHESION 5

4

Positive, creative corporate culture. Shared vision and values.

MAKING A DIFFERENCE 6 Strategic alliances. Employee fulfillment. Environmental stewardship.

COLLABORATION WITH CUSTOMERS

& THE LOCAL COMMUNITY

CONTINUOUS RENEWAL

1

Source: Richard Barrett and Associates LLC, Cultural Transformation Models and Tools

Barrett culture “dot plot”

Orange = PV, CC & DC Orange ONLY (no underline) = CC & DC Blue = PV & DC

Personal values Current culture values Desired culture values

2 5 9

8 4 6

7 3

1 7 7

2 4 10

1 5 6

3 8

9

1.

safety 352 1(O)

2. diversity 218 4(R)

3. blame (L) 215 2(R)

4. confusion (L) 205 3(O)

5.

continuous improvement

203 4(O)

6. bureaucracy (L) 187 3(O)

7. control (L) 183 1(R)

7.

customer satisfaction 183 2(O)

8. quality service 182 3(O)

9. equity 174 4(O)

1. accommodating 264 2(R)

2. commitment 248 5(I)

3. professionalism 241 3(I)

4. positive attitude 218 5(I)

5. respect 214 2(R)

6. family 213 2(R)

7. self-discipline 211 1(I)

8. ambition 201 3(I)

9. accountability 187 4(R)

10. fairness 186 5(R)

1 2 10

3 4 5

7

9

6 8

1. accountability 325 4(R)

2. continuous improvement

289 4(O)

3. employee recognition 251 2(R)

4. open communication 223 2(R)

5. customer satisfaction 206 2(O)

6. coaching/ mentoring 204 6(R)

7. safety 198 1(O)

8. employee fulfilment 191 6(O)

9. fairness 186 5(R)

10.

information sharing 181 4(O)

3 CC – DC matches: in a highly aligned culture, one would expect to see 6 or more matching values.

7 Service

6 External cohesion

5 Internal cohesion

2 Relationship

1 Survival

3 Self-esteem

4 Transformation

What do high performing cultures look like?

► The organisation has defined the culture it wants and needs to succeed, and

articulated the values and behaviours that give expression to that culture

• Most organisations operate with a “default” culture: it is simply “the way things are

done around here”

• They do not manage or monitor the culture

► Employee’s personal values are aligned with the organisation’s values

• Staff are able to bring their “full selves to work”

• As a result, they are more committed, feel a stronger sense of belonging, and are

willing to “go the extra mile”

• This means employees should have a say in defining the desired culture – and can

then be held accountable for “living” it

► The organisation espouses full-spectrum values (spread across the 7 levels

of consciousness)

What do high performing cultures look like?

► Leaders role model the desired behaviours

• An organisation cannot operate at a higher level of consciousness than the

personal consciousness of the leadership group

• Leaders require high levels of emotional intelligence to drive the desired culture

You are a member of your culture. You participate in it every day. Yet you also

intend to influence it. To achieve this you must be able to both participate, and

observe your participation … to move in the dance and to watch the dance at the

same time is a skill you will have to develop … every step you take either supports

or contradicts your words about culture.”

Carolyn Taylor in “Walking the talk – building a culture of success

3 case studies

• The company’s business strategy was distilled into core leadership behaviours

required to drive success

• A set of definitions was developed for each of these core behaviours which

described in concrete, measurable terms how each behaviour should find

expression

• A 360 degree (multi-rater) review was conducted on the top 100 managers,

revealing considerable divergence between self and others’ ratings

1. Promoting leadership behaviours for success

1. We will develop skilled and engaged people

2. We will deliver world class quality

3. We will meet our customers’ expectations

4. We will make good decisions and deliver results

5. We will demonstrate a contagious passion and

commitment

6. We will exercise and encourage entrepreneurial skills

• The review results became key inputs into a voluntary executive coaching

programme for the 30 most senior managers

• Executive coaches participated in supervision sessions to surface trends and

systemic blockages, which were relayed to and addressed by decision-makers

(without breaching confidentiality)

• Workshops were conducted with functional teams on their aggregated scores,

and team-specific remedial action plans developed


We will develop skilled and engaged people

•This person provides, and clearly communicates, strategic

direction for the team

•This person focuses on developing skills and talent

•This person works in a way that develops the team and builds

trust and respect

•This person empowers team members by involving them in

problem solving and decision making

• There was a significant improvement in scores, and in alignment

between self and other scores, after a year – and again a year later

• Employee engagement scores also increased

• The company believes this intervention contributed to realisation of

business objectives

• The programme was adopted by the country’s parent company as a

best practice


2. Driving employee behaviour change


Step 1: define the desired behaviours

2. Driving employee behaviour change Step 2: work out how to measure lead and lag indicators

2. Driving employee behaviour change Step 3: launch the competition


Step 4: recognise and reward the winners


Step 5: provide ongoing support

2. Driving employee behaviour change Lead and lag indicators Online data capture system Key successes

Monthly ranking reports

•Halved unplanned

absenteeism by the

end of the first 6

months

•Halved the number

of “blow reds”

(positive

breathalyser tests)

in year 1 and halved

again in year 2

•Safety training

attendance

quadrupled during

the course of a year

•Injuries on duty

halved over a 12

month period and

disabling injuries

reduced by over

70%

• The aim was to describe and then shift to a culture that would support the

organisation’s turnaround strategy

• The project was designed and implemented

in partnership with recognised trade unions

• More than 44,000 employees were involved in

determining the values and behaviours that would

drive business success

3. Co-creating a new culture

• A national election provided them with the opportunity to vote on the most

important behaviours needed to win

• They rate the company annually on the extent

to which these behaviours have been institutionalised

• Scoring outcomes are used to design business unit-

specific plans to address shortcomings

• They also inform company-wide campaigns

on generic issues


Culture change is driven by systemic change, and through mobilisation


SYSTEMIC CHANGES

Performance management & reward systems

Talent management & leadership development framework

Operations re-engineering

Skills planning &

capacity building

Integrity &

risk management systems

Informal

recognition & reward

Brand ambassador programme

Visible leadership &

management engagement programme

Active change communication & employee engagement

Leadership behaviours charter

PEOPLE ACTIVATION

PROGRAMMES

The culture charter is the glue that binds systemic change and activation programmes


Recognise, capture, affirm, reward behaviours

Involve staff in defining desired culture and optimise buy-in

Regularly assess and make

transparent how we are doing

Lead by example, train, coach,

codify, give feedback, inspire

Embed it in systems and

processes, induct into it, measure it, teach it

Affirm it where

it exists

1 Name it and

sign up

2

Track it

3

Replicate it

4

stitutionalise it

5

Replicate

it

Track it

Institutionalise

it

Thank you

What shapes organisational culture? Deale and Kennedy’s model

► Deale and Kennedy argue that the most important variables influencing

organisational culture are:

► The import / amount of risk of frequent decisions or actions

► The speed of feedback as to whether the decision or action was wrong or right

11 June 2013

Low High

Slow

Fast

Import / risk

Sp

eed

of

feed

back

Government

departments

Riot

police

Surgeons

Futures

traders

Insurance

companies

Consultants

Slow feedback

High import

Fast feedback

High import

Fast feedback

Low import

Slow feedback

Low import

Restaurants

Oil companies

Call centres

Merchant

banks

Risk and Culture

What shapes organisational culture? Harrison and Handy’s model

► Harrison and Handy argue that the most important variables influencing

organisational culture are:

► The degree of formalisation

► The degree of centralisation

11 June 2013

High

centralisation

Power-based

culture

Atomistic

culture

Task-based

culture

Role-based

culture Low

centralisation

Low

formalisation

High

formalisation

Relationships

of independents

or free spirits

(e.g. consultancy)

Inter-disciplinary

relationships of integrated

but separate skills

Scientific / process based

relationships

(e.g. government department

or factory)

Verbal and

intuitive

relationships

(e.g. founder-led

professional firms)

Risk and Culture

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