Cultural change

OVERVIEW

If you were asked to give a new recruit some words of encouragement on how to be successful within your organization, what would you say? You might give some formal advice about carrying your ID at all times, but you might also make some of the following suggestions:

Keep your head down.

It’s OK to make mistakes here, as long as you don’t repeat them.

The boss likes to see you working really hard at all times.

We work hard but play hard. The people who get on here work long

hours but enjoy themselves in the pub afterwards.

It doesn’t pay to ask too many questions.

You’ll find everyone pulls together here and will want to see you as part of the team.

With this helpful advice, you begin to educate the person about the way things get done around the organization. You also reveal what some of the required behaviours are, and thus you actively reinforce the prevailing culture.

As Schein (1990) says, culture is the ‘the pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.’

Culture is not just about induction programmes, it is everywhere in organizational life. Culture is vitally important for the organization because of its impact on performance. Molenaar et al (2002), quoting leading writers in the field, say:

[T]o truly understand corporate culture, its characteristics must also be understood.

The following is a compilation of the most prevalent cultural characteristics:

Corporate culture represents behaviors that new employees are encouraged to follow (Kotter and Heskett, 1992)

It creates norms for acceptable behavior (Hai, 1986)

Corporate culture reinforces ideas and feelings that are consistent with the corporation’s beliefs (Hampden-Turner, 1990)

It influences the external relations of the corporation, as well as the internal relations of the employees (Hai, 1986)

Culture can have a powerful effect on individuals and performance (Kotter and Heskett, 1992)

It affects worker motivation and goals (Hai, 1986)

Behaviors such as innovation, decision making, communication, organizing, measuring success and rewarding achievement are affected by corporate culture (Hai, 1986).

If we want to learn about how to change culture, we need to understand how it is created. Schein (1999) suggests that there are six different ways in which culture evolves. Some of these can be influenced by leaders and some cannot:

A general evolution in which the organization naturally adapts to its environment.
A specific evolution of teams or sub-groups within the organization to their different environments.
A guided evolution resulting from cultural ‘insights’ on the part of leaders.
A guided evolution through encouraging teams to learn from each other, and empowering selected hybrids from sub-cultures that are better adapted to current realities.
A planned and managed culture change through creation of parallel systems of steering committees and project-oriented task forces.
A partial or total cultural destruction through new leadership that eliminates the carriers of the former culture (turnarounds, bankruptcies, etc).

Schein underscores the fact that organizations will not successfully change culture if they begin with that specific idea in mind. The starting point should always be the business issues that the organization faces. Additionally he suggests that you do not begin with the idea that the existing culture is somehow totally ‘bad’. He urges leaders to always begin with the premise that an organization’s culture is a source of strength. Some of the cultural habits may seem dysfunctional but it is more viable to build on the existing cultural strengths rather than to focus on changing those elements that may be considered weaknesses.

This chapter focuses on culture in the context of managing change. We have chosen not to discuss concepts and theories of organizational culture as this is done so well elsewhere (see the reference list to get you started). We have instead decided to share our tips and guidelines on achieving culture change. These are derived from a variety of experiences of working within organizations, helping teams and individuals to make significant cultural shifts. We have also selected three case studies to illustrate the range of ways in which culture change can be tackled. The structure of this chapter is:

Guidelines for achieving successful cultural change.
Case study one: aligning the organization.
Case study two: rebranding the organization.
Case study three: creating an employer brand.

We wish to introduce the concept of ‘rebranding’ as a way of exploring cultural change. Our three case studies each take a slightly different approach to the process of rebranding. The first concerns the challenge of aligning the organization more closely to customer needs, the second is about reflecting the brand in everyday employee interactions with customers, and the third is about creating an employer brand to enable the organization to attract and retain the best staff, and to engage the energy and motivation of all employees.

Extensive academic research in the 1990s (see for instance Kohli and Jaworski, 1990) has consistently found that organizations with a strong market focus and brand presence experience better performance, based on measures such as sales revenue, profitability, growth rates and return on investment. Additionally a strong market focus has a number of related benefits including developing strong organizational culture, success in developing new products and services, sales force job satisfaction and offering a source of competitive advantage. This approach also aligns with our view that any culture change initiative must have sound customer-focused objectives at its core.

Internal rebranding is sometimes referred to as internal marketing. Greene, Walls and Schrest (1994) define internal marketing as ‘the promoting of the firm and its product(s) or product lines to the firm’s employees’. Berry and Parasuraman’s (1991) definition is ‘internal marketing is attracting, developing, motivating, and retaining qualified employees through job-products that satisfy their needs. Internal marketing is the philosophy of treating employees as customers.’ However, although these definitions both point us in the right direction, the important end goal is to ensure that the key components of the brand are communicated to customers and the wider external audience. The brand must therefore be understood, believed and exemplified by customer-facing staff, supported by the rest of the organization.

Crosby and Johnson (2001) conclude:

The strongest brands are those that elicit emotional attachment from customers. When interacting with your company, customers and prospects may have feelings of safety, pride, excitement, comfort, confidence, caring, or trust. These interactions activate feelings and build strong brand commitment.

… it’s important not to overlook the effects of brand on the employees of the firm. Employees often have a large role to play in managing customer relationships, and the brand can help guide their behaviour. In effect, the brand is a promise to customers of how they can expect to be treated by the company. To the extent employees understand the expectations being created by the brand, and are motivated and trained to live up to those expectations, then the firm can have a truly integrated customer relationship management strategy.