How to change organisational culture to support business transformation

9 January, 2019
How to change organisational culture to support business transformation

Principles in how to change organisational culture

In a constantly changing world, it is critical that companies are able to change at pace. In a recent article, we discussed how to align culture with strategy for sustainable success. But what if the change itself requires a change in culture?

The four principles covered later in this article are key to working out how to change organisational culture in order that employees embrace a transformation process.

 

Why organisational culture matters

Culture is often viewed as a side show or as a consequence of what a company does. Yet it is a key part of any organisation. Lou Gerstner, who guided IBM through a business-saving transformation in the mid- to late 1990s, said that he came to realise that “culture isn’t just one aspect of the game – it is the game”.

Gerstner realised that while vision, strategy and management systems can sustain a company for a short period, a business cannot achieve its long-term goals if organisational culture does not support its goals. When he took the reins at IBM, its culture was counter-productive to the type of company it needed to become. Gerstner changed the organisational culture to enable organisational change.

Therefore, in establishing how to change a company you should first strategize how to change organisational culture to adopt the business transformation.

 

Four principles of how to change organisational culture

Organisational culture underscores an organisation much more deeply than its processes and systems; culture is the heart and soul of a business. It creates an organisation’s social dynamics and the emotional link between individuals and teams and the products and services they produce. If your employees’ hearts are not in their work, then productivity, quality, output, revenues and profits will suffer.

These four principles of how to change organisational culture will help ensure that your change initiative creates sustainable transformational change.

 

1. Articulate ambitions and aspirations

It is essential to be open about cultural change within an organisation. Just like a new business strategy must be understood, so, too, must the new culture – at all levels of the organisational hierarchy. As a prerequisite to changing organisational culture, leaders and managers must understand the ways in which the new culture will align with new business imperatives. Therefore, as a part of the business strategy defining how to change organisational culture, it is essential to describe the business opportunities and challenges that necessitate cultural and business transformation.

In 2013, GlaxoSmithKline (GSK) put into action organisational change after it had paid a mega settlement of $3 billion to the U.S. government after being charged for providing misleading information. GSK realised that paying the settlement wasn’t enough to avert similar action in the future. It needed to answer the question of how to change organisational culture, shifting from a practice of hard selling to putting patient outcomes at the head of its agenda.

Under the guidance of then CEO Sir Andrew Witty, GSK rolled out a programme of change highly focused on organisational culture. In 2014, GSK introduced a new performance system that placed greater emphasis on helping employees understand how they personally contributed to the delivery of its strategy and living its values. Instead of rewards based upon volumes of prescriptions generated, employees were rewarded for their individual knowledge and behaviours, customer evaluations, and overall business performance.

In deciding how to change organisational culture, GSK began with its leadership, spread the word to middle managers, and instructed them to cascade messages down. New values and behavioural expectancies were published in various forms including on the GSK website and in its 2013 Corporate Responsibility Report.

 

2. Align leaders with culture

Leaders have a deep responsibility for shaping and reinforcing organisational culture. It is they who set the example for others to follow. Where cultural change is necessary in an organisation, it is more likely to suffer higher turnover initially as the new culture may be at odds with the cultural bias of current leaders and managers. Best practice includes hiring leaders who align with organisational culture, and to let go of those who don’t. It may also be that those leaders who don’t identify with the new values, behaviours and culture will decide to leave.

Jeff Bezos faced such a decision before he founded Amazon. He was then working in Wall Street, but was lacking affinity with his role, his employer, and the industry. For Bezos, it was a question of identity. Eventually he asked himself, “What does your heart say?” It told him to move on. Bezos continues to evolve his personal identity each time Amazon asks how to change organisational culture (a constant and continuous process).

 

3. Reinforce organisational culture change with organisational processes and practice

Cultural change needs to be supported by organisational processes and practices. Such practices may include how people are rewarded, thus reinforcing the new culture and expected behaviours. Successful companies employ people committed to their vision and mission, and not individuals who simply turn up for the pay cheque.

Sticking with Jeff Bezos, in 2009 Amazon acquired Zappos.com (the online shoe retailer). Bezos liked the culture of Zappos.com and the loyalty of its staff. He adopted some of the practices into Amazon’s culture. One of these was ‘pay to quit’. Rather than retain an employee who was unhappy in their work, they would be offered up to one month’s salary to leave. The business removed bad apples quickly, and the benefits – a happier, more motivated place to work – far outweighed the costs.

 

4. Put culture at the heart of the conversation

Put “how to change organisational culture” the heart of conversations at all levels of the company, enabling people to discover current challenges and future opportunities. As you spread the message of new ways of measuring achievement (as GSK did in 2014), people will begin to act differently.

When Tesco wanted to improve engagement in its health and safety policy, they needed to engage the workforce in effective dialogue about safety. As well as increasing awareness of hazards and risk controls, Tesco wanted their people to understand the roles they played in ‘doing good business’.

To create constant conversations at all levels, Tesco employed gamification to boost learning, and a unique Learning Map formatted as a highly interactive board game. The game was based upon a representation of a Tesco store, and health and safety conversations were encouraged by teams earning points for demonstrating knowledge while avoiding pitfalls of ‘unsafe acts’ and ‘unsafe conditions’. Action learning tools further enhanced opportunities to discuss health and safety in the workplace, and enabled greater understanding of how they play a role in contributing to that.

The initial impact has been so great, that Tesco Maintenance have requested that the game now be adapted for their distribution centres in order to ensure their staff who work there can be included in the process. (Read more in the case study ‘Engineers and technicians put safety first across 3,000 UK retail sites’).

 

In summary

To lead successful change, companies have proved that it is necessary to first learn how to change organisational culture. It is the way that people think about and react to change that ultimately determines sustainability and culture is the beating heart of organisational change.

 

Want to know more?

Get in touch with The Big Picture People today to discuss how our Learning Map methodology could help your organisation embed the organisational culture that will sustain transformational change in your company.

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