Cultural Change: How and Why to Reshape Your Organisation

If your organisation has shared values, beliefs, behaviours, and assumptions that shape the way people interact and work – and it does – then it has an organisation culture.

Organisational culture encompasses everything from overt signals, like the company's mission and vision, to unstated norms like expectations, work-life balance or power dynamics. While culture can be defined and described, some argue that it's difficult to pin down precisely because it's often intangible and constantly evolving.

Because culture is made up of a complex interplay of individual personalities, historical experiences, and organisational practices, it is constantly subject to changing forces. However, humans being creatures of habit, those collected into organisations tend to go about their business in line with the norms of existing organisational culture.

Cultural change is the process of transforming these shared values, beliefs, behaviours, and assumptions. It involves altering the underlying norms and practices that shape how people work together and make decisions. This transformation can be driven by various factors, such as technological advancements, market shifts, or leadership changes.

Generally, when an organisation deliberately deals with culture change, it is responding to external stimuli. This makes logical sense because, typically, change produced from within an organisation will be bounded by existing practices and norms and will tend not to fundamentally challenge culture.

There are many types of organisations out there including not-for-profit, government, private, member-based, philanthropic, for-profit and so on. Subject to the organisation’s drivers and the values of its decision makers, a change in organisational culture may be considered necessary.

Regardless of the type of organisation, very few survive without sufficient funding. This means that most organisations will be subject to fiscal drivers to a greater or lesser extent. Performance factors often drive cultural change, albeit that cultural change may be ‘dressed up’ in other language.

A prime example of how financial constraints can drive cultural change is the recent economic downturn and subsequent cost-cutting measures at many companies. When faced with reduced budgets, organisations often resort to layoffs, salary freezes, and reduced benefits. These measures can significantly impact employee morale, leading to a more cautious and risk-averse culture.

Culturally, a company that once encouraged innovation and experimentation might shift its focus towards cost-saving measures. Employees may become more hesitant to take risks or propose new ideas, fearing potential job cuts or reduced bonuses. To make cost-saving measures relatable to a creative, innovative culture, the cultural change may be communicated as “a strategic pivot towards operational efficiency to fuel sustainable growth”.

Notwithstanding, it is the positivity in an organisational culture that can significantly impact its performance. It can boost morale, increase productivity, and enhance innovation. A negative, controversial or outdated culture can hinder growth, lead to high turnover, and damage the organisation's reputation. An organisation resorting to layoffs to manage profitability has not yet got its fundamentals right.

Here are some reasons why you might consider changing your organisation's culture:

• To improve employee engagement and satisfaction: A positive culture can motivate and inspire employees, leading to higher job satisfaction and lower turnover rates.
• To enhance innovation and creativity: A culture that encourages risk-taking and experimentation can nurture innovation and drive growth.
• To improve customer satisfaction: A customer-centric culture can lead to better customer experiences and increased loyalty.
• To increase profitability: A high-performing culture can improve efficiency, reduce costs, and increase revenue.
• To adapt to changing market conditions: A flexible and adaptable culture can help organisations respond to changing market dynamics.
• To address social changes: As society changes, organisations must respond to demographic shifts, social movements, changing work models and larger concerns like climate change.

Implementing cultural change is, mechanically, like managing many other changes. However, one important distinction should not be ignored – that of change behaviours. Given time, the people in your organisation will be able to spot weaknesses in the plan such as hypocrisy, lack of leadership commitment, poor communication or misrepresented objectives.

Before embarking on a building a new organisational culture, check your foundations. If the right foundations are in place, you’re already closer to success - and to avoiding common pitfalls.

• Leadership Commitment: Strong leadership support is essential for driving cultural change. Leaders must be visible champions of the Target Culture.
• Alignment with Business Strategy: It may seem basic to mention that the Target Culture should support the organisation's business strategy. However, think Enron. The culture of Enron became focused on maximising shareholder value at any cost - directly opposed to the long-term sustainability and ethical principles that should have underpinned the company's strategy. Not only was the Enron story disastrous, it’s cultivation of risk-taking culture was misaligned to its business purpose and long term survival.
• Employee Empowerment: Empower employees to take ownership of the change process and contribute their ideas.
• Continuous Improvement: Cultural change is an ongoing process. Continuous improvement and adaptation towards the Target are key. And if you’re Blockbuster introducing loyalty programs and faster checkout processes, be prepared for your efforts to become disrupted by much higher priorities.
• Measure and Evaluate: Regularly assess the impact of the cultural change initiative and adjust as needed.

Among the following mini checklist of items to bring into your cultural change plan, watch “Lead by Example” closely. For your cultural change to succeed, you ensuring you maintain congruency between stated objectives and leadership behaviour is critical.

• Clearly articulate the desired values, behaviours, and norms. This might become your Target Culture.
• Ensure that the Target Culture aligns with the organisation's strategic goals.

• Conduct a cultural audit to identify strengths, weaknesses, and areas for improvement.
• Use surveys, interviews, and observations to gather data and ascertain the distance from Target.

• Line up the current culture and the Target Culture and assess the specific gaps.
• Create a detailed plan outlining the steps involved in closing the gaps.
• Set clear objectives and timelines.
• Identify potential challenges and develop strategies to address them.

• Clearly communicate the reasons for the change and the benefits it will bring.
• Use multiple channels to reach all employees.
• Encourage open and honest communication.

• Role model the desired behaviours.
• Celebrate successes and recognise positive behaviour.

• Equip employees with the skills and knowledge they need to adapt to the new culture.
• Offer coaching and mentoring to support individuals during the transition.

• Foster a culture of trust, respect, and collaboration.
• Provide opportunities for employees to participate in the change process.

• Track key performance indicators to measure the effectiveness of the change.
• Be prepared to adjust the plan as needed.

Cultural transformation can be challenging, and there are several obstacles that organisations may encounter, including:

Resistance to Change: People may be resistant to change, especially if they are comfortable with the status quo. For cultural change to be successful, the drivers, benefits and outcomes need to be clear. Because culture itself is intangible, the drivers of cultural change can be difficult to articulate. Even when the case for change is clear, people can be sceptical that the changes planned will yield the results they are claiming.

Lack of Leadership Support: Strong leadership support is essential for driving cultural change. Standing out the front of the future that has not yet been written can feel like a risky place to be. The vision for change needs to be crystal clear, the expectation of setbacks understood, the aptitude for risk generous, and the support for visible leaders unfailing. Leaders who are supported will lead others. Employees who feel leadership support will spread the word and those who are energised by the changes will advocate with customers.

Insufficient Resources: Adequate resources, including budget and personnel, are needed to implement the change. Resources need to be in place as long as required to enable the cultural change to be fully embedded. Falling short the Target Culture leaves room for doubt and has the potential to reopen issues already thought to have been settled. Cultural change is perhaps the most people-focussed form of change, and mobilising the entire workforce against new ways of working should be anticipated to be a resource-heavy exercise.

Poor Communication: Effective communication is crucial for ensuring that everyone understands the change and its implications. Effective communication is a highly specialised skill. Crafting communications that are - consistent, specific, targeted, cohesive, relatable, believable, accessible, inspiring and build the right story just in time - should not be left to chance. Effective communication takes in a variety of channels and formats but is always consistent and cohesive.

Many of the challenges involved in cultural change are resolved when organisations focus on building trust. The ability to build trust relies heavily on leadership integrity; both in keeping promises and admitting mistakes. When leaders are open, honest and listening to the organisation, they are more able to treat everyone fairly and provide opportunities for growth. Strong relationships built on trust are imperative for an organisation changing its culture. Employees must be able to use new frameworks under the Target Culture to make decisions and take ownership of their work.

Decades ago, Australian banks were the subject of substantial public criticism, charging high fees coupled with interest rates that seemed outrageous, foreclosing on family homes and landholdings that had been held for generations. Public opinion came close to causing a run on the banks. In the aftermath of these tentative years, the banks started to review their culture and practices.

Banks had breached the trust of the public and were seen as commercial ogres. They were accused of theft, penny-pinching, greed and of being devoid of conscience. The behaviour of banks, while arguably commercially viable, had de-stabilised the confidence of Australians in banking institutions and to some extent, the economy.

When banks needed to completely rebuild trust with the public where did they start? Banks slowly rebuilt trust through many strategies, the most memorable being corporate rebranding - disassociating from the bad old ways - and lowering banking fees on every day transaction accounts. By starting with visible communications and focussing on the right audience, Australian banks steadily maintained that the public could again have confidence in the banking sector.

The trend of fee reduction in the banking industry has been going on for several years, driven by increased competition and consumer awareness. Through cultural responses to endemic problems, entrenched Australian banks have retained reasonable positions despite deregulation and market conditions easing the way for competitors.

Managing cultural change requires patience, persistence, and a long-term commitment. As with all change, managing cultural change can be made highly effective through planning and with thorough consultation, resources and time. For organisations considering changing their organisational culture, the following considerations are paramount and should come as no surprise.

• Involve Employees: Engage employees in the change process and seek their input.
• Build a Strong Change Management Team: Ensure you have experienced change management resources to lead the effort and assemble a team of change agents to drive the Target Culture throughout the organisation.
• Celebrate Milestones: Recognise and reward progress to keep momentum.
• Be Patient: Cultural change takes time. Don't expect immediate results. And then be even more patient still.
• Be Persistent: Closing the gaps between your current organisational culture and Target Culture will take time. Stay focused on the long-term goal and don't give up.

Cultural change is a complex and often challenging endeavour, but it can be a powerful means of turning threats into opportunities and transforming an organisation’s performance. By understanding the factors that drive cultural change, developing a clear vision, and implementing effective strategies, organisations can create a more positive, productive, and innovative workplace. Positive workplaces are high performing ones that can attract top talent, and create astounding customer loyalty.

If change is a journey rather than a destination, then cultural change is a marathon not a sprint. It requires constant effort and commitment applied at a steady pace, calculated to deliver the necessary outcomes on time. By continually assessing and adapting their culture, organisations can ensure that it remains aligned with their strategic goals and that their long-term success is in the hands of a motivated and engaged workforce.