Developing a strong and effective culture is an organizational imperative for success. A highly effective culture boosts employee engagement and productivity while lowering turnover and increasing profit margins.
While most employees and leaders understand the impact of company culture on business performance, a survey by Deloitte found 94 percent of executives and 88 percent of employees believe a distinct workplace culture is important to business success. But this understanding does not necessarily translate to practice.
Organizations that find a gap between the results and behaviors they are seeing and the results and behaviors they would like to see are experiencing a culture gap. Think of it this way: Organizations are perfectly designed to achieve the results they get. If you want to change the results, change the culture.
The first step in changing organizational culture is to understand what culture truly means. Culture is not defined by breakroom snacks, a relaxed dress code, or a foosball table in the office. Organizational culture is the emergent property produced by the interactions of everything that composes your organization. You can think of emergent property as what is emerging from the behavior or interactions of different pieces and parts of the whole. How the organization is designed (including its structure), how decisions are made, processes, policies, and systems—these all affect how people feel and behave. People form beliefs based on their experiences in the organization. Based on those beliefs, they behave in a particular way, which ultimately produces the organization’s culture and results. In a nutshell, culture always boils down to human behavior.
The next step is to know what an effective culture looks like. Organizations with effective cultures have high levels of employee engagement, a positive impact on employees’ lives, and high levels of organizational performance and market success.
Understanding what culture is and what an effective culture looks like is just the start of cultural transformation. The transformative process involves several other key steps:
Step #1: Evaluate
The process starts by evaluating whether there is alignment between your strategy and organizational culture. There is a powerful interaction between culture and strategy. Peter Drucker once famously said, “Culture eats strategy for breakfast.” Drucker was not minimizing the importance of strategy for driving market performance but was simply stating that if your strategy and culture are not aligned, then culture will always win.
Assess whether the culture you have within your organization regarding the attitudes and beliefs that produce employee behaviors are working to naturally reinforce and execute on strategy or working against executing the strategy. In other words, is everyone working together in the right way, in the right direction to propel the company forward? Misalignment between strategy and culture can lead to conflicts between departments and employees and turn the workplace into a metaphorical battlefield. This creates a drain on organizations and takes a toll on employee morale.
An example of this misalignment would be a company that wants to create a high-trust culture, but the organization’s policies require employees to clock in and out. This misalignment between desired culture and organizational policies and processes create experiences that drive beliefs of mistrust and skepticism.
Step #2: Align
To create alignment between strategy and culture, ensure the purpose or the “why” of your organization is clear and compelling. It is critical everyone in the organization understands the strategy (i.e., how the organization will compete in the market), that it makes sense and is easily communicated to employees, and that the values or standards of behavior in an organization are understood and agreed to so everyone is working toward the same end objective.
This alignment is the starting point or north star that guides organizational design.
Step #3: Design
The design phase is where you drill down to determine how to transform culture. You may decide you need to shift the culture to create high levels of employee engagement and positively impact employees’ lives. When it comes to strategy, you can shift it to be more in line with your culture or shift your culture to align with your strategy. Or it may be a combination of both.
Evaluating the organization as a whole is important, and it is beneficial for leaders to regularly assess their overall organizations to ensure they design the structure, decision-making, processes, policies, and systems of the company to produce the desired beliefs and culture. Think of your basic policies—such as the above example of clocking in and out—and evaluate them critically to ensure they are providing the desired result.
An exercise to help you in the design phase is to think about a meeting and what that meeting feels like—what are people doing, what is happening, and what is not happening. If your meetings aren’t productive, this is a product of your culture. Then think about what you would like a meeting to be, what would make a meeting really effective. Much of what you are likely envisioning for the meeting are dynamics that emerge from more effective cultures. As part of this exercise, invite your team to think about what they want their meetings to be like and talk about it. This exercise can help you transform the culture and start to move toward where you want to be.
Step #4: Outline
The next step is to outline change management and implement plans for executing the organizational design. Creating a solid change management plan that involves the affected individuals and helps them adapt to change is critical. An implementation plan also ensures what you said you are going to do actually gets done. Schedule, track progress, and hold yourself accountable to best execute the implementation plan.
Transforming company culture requires that you be intentional and put in some time and energy. This investment of time and resources will pay dividends in the form of increased employee engagement, productivity and loyalty, and better organizational performance and results.