Corporate culture is the self-reinforcing web of beliefs, practices, patterns and behaviors that become “the way things are done around here.” Leaders’ own conscious and unconscious beliefs drive behaviors, and repeated behaviors become cultural norms. That’s why changing a long-established corporate culture is so tough. But when the business landscape radically changes, culture must change, too.
In an effort to better understand the drivers for change, the issues, challenges faced, and how companies are introducing cultural transformation initiatives, CCL and Corporate-Leaders surveyed 160 VPs and directors in HR, L&D, Leadership Development, and Talent Management mainly in Germany, UK, the Netherlands, France, Sweden and Denmark this spring. The results were telling.
Drivers of Cultural Transformation
According to the survey results, the 3 biggest drivers of cultural transformation — in order — are internal redefinition of the business model/goal/performance levels, maintaining a market position under intense pressure, and technology trends.
The Top 3 drivers — as well as other top-ranked aspects — show that organizations seek to adapt to changing times. As the world shifts quickly, senior executives realize that they can’t rely on change through simple restructuring and re-engineering, but rather that they need strong corporate cultures that support efficiency, innovation, and agility to navigate the turbulent business landscape.
The fact that nearly half of respondents pointing to a CEO requiring a new business model correlates with our findings on the ground. But this factor runs the risk that employees don’t assuming ownership.
‘’You potentially have an organization filled with ‘renters’ who don’t see themselves as responsible for the success of the organization, as opposed to ‘owners,’” our COO David Altman explains. “If you have people throughout the organization with an ownership mentality, the odds of success go up dramatically. ‘’
Behavior change is a lot easier for people to envision by making incremental changes to something that they’re familiar with, compared to doing something radically transformational. But cultural transformation is achievable.
When respondents were asked which category best describe their cultural transformation initiatives, 57% said that their cultural transformation initiatives strengthen, deepen or refine the organization’s existing culture. In other words, gradual — rather than radical — change is the norm.
Big companies like Unilever have shown that transformation is possible on a large scale. Going into developed economies and frontier markets while simultaneously extending its reach into established, high-end consumer markets has been truly transformational, requiring opposite skill sets and strategies.
“When we talk about cultural transformation, we are not always talking about the whole organization: there are cultures within cultures,” David adds.
Challenges in Culture Transformation
Change fatigue — cited as the second biggest challenge blocking culture change by 55% of the respondents — is something we see frequently. Similarly, resistance from managers, the senior team, and staff is high. Leaders currently have their heads down and worry about the changes that are constantly buffering their organization, but they aren’t conveying it to their employees in a way that would allow them to be more resilient.
The importance and value of leadership training and coaching came out clearly in the survey results: a resounding 81% rated “leadership coaching and mentoring” as highly-to-somewhat effective in implementing cultural transformation; 84% also rated “leadership and staff training” as highly to-somewhat-effective. The message is clear: leadership matters most.
Our perspective is that leadership takes 3 components:
- Direction: The collective knows where they it’s going.
- Alignment: The organization’s technical resources, human resources, and IP are aligned in support of that direction.
- Commitment: People are willing to put aside their individual or team interest in support of a higher purpose.
“Whether you’re in a command and control, hierarchical organization or one that is decentralized, if you see evidence of direction, alignment, and commitment, then leadership is happening,” David explains. “When you don’t have high levels of either of those 3 things, then there’s a leadership gap, and many organizations struggle with that. An organization might have direction and commitment — everyone knows where they are going and are pulling together to achieve it — but the processes and the systems and the way the organization is set up is chaotic. In that instance, it doesn’t matter how clear the direction and commitment are, because the lack of alignment is preventing you from getting there.”