Changing Performance through Cultural Change

Culture, as defined as the shared values and norms of a company, is probably one of the most difficult concepts to get your mind around as it applies to execution excellence. All of us know that it exists within an organization, but few of us can actually measure it. If you ask 20 people within an organization what the culture is of that organization, you will in all probability get 20 different answers. The trouble is culture impacts behavior which in turn impacts organizational performance and sometimes it may be necessary to change the culture of an organization so as to change performance. The question is "how?"

Allow me to reiterate: Culture affects behavior and behavior impacts a company's performance. What is considered acceptable behavior in one company may not be acceptable in another. For example, one company may have a culture that supports risk which in turn drives innovation and cooperation within business units or departments whilst another company may be more conservative and risk averse and so encourages behavior that never questions the status quo, maintains a mentality of silos and very little cooperation.

Subcultures also exist within organizations which further complicates cultural change. Marketing personnel have different values and perceptions of getting things done than say Sales or Manufacturing. The sales director of one company we deal with complained that people in R&D did not understand him and that they didn't seem to approach problems with the same sense of urgency as his team.

 

Many attempts at cultural change focus on trying to change employees' attitudes. However, it is extremely difficult, if not impossible, to appeal to people to change their beliefs, values, or attitudes and have them change overnight. Behavior simply does not change easily when requested to do so. Rather to change behavior and ultimately culture, you need to change people, incentives and controls, and structure.

In his excellent book 'Making Strategy Work: Leading Effective Execution and Change' * (Wharton School Publishing; 2005), Lawrence G. Hrebiniak suggests that hiring new people may result in bringing in fresh ideas and new ways of doing things within an organization. The fastest and most effective way, for example, to eliminate complacency is to bring in people with a sense of urgency.

Hrebiniak argues further that changing incentives and controls can impact culture change. 'Incentives' guide behavior in new directions and 'controls' reward new desired behaviors and outcomes thereby reinforcing their importance and creating new norms and values about 'appropriate ways to act and compete.'

Finally, changing organizational structure also affects behavior and can lead to cultural change. Flattening organizations, for example, increases spans of control that in turn encourage decentralised decision-making and thereby forcing managers to stop micro-managing their subordinates.

In summary therefore, if you need to change culture in order to improve performance and execute with excellence ~ avoid standing in front of your team and requesting changes in attitudes and behavior. Rather consider bringing in new people, changing your incentives and controls and adapting or changing your structure. Embracing all 3 will change behavior which in turn will change culture and hence performance.

ian

* 'Making Strategy Work: Leading Effective Execution and Change' (Lawrence G. Hrebiniak; Wharton School Publishing; 2005) is perhaps one of the best books (if not the best book) that I have read on the topic of execution. It provides a practical model to execution excellence that companies can use. I would highly recommend the book as a must read.

Comments

[Rodney Brim]

Ian, great summary of a 3 important change related strategies. I recently wrote a blog on "Letting the Dead, bury the Dead" [http://www.managepro.com/blog/index.php/2007/12/26/let-the-dead-bury-the-dead/]
as a needed approach for managing people and performance improvement. I'm curious if you agree. I also just put up a blog on software adoption system tipping points,
[http://www.managepro.com/blog/index.php/2008/01/14/system-tipping-points-and-adoption-of-performance-management-software/]
which I think adds a 4th, but valuable point to your discussion. My experience is that missing a system tipping point is a huge obstacle to driving performance improvement and ultimately executing strategy.

Rodney Brim, CEO
Performance Solutions Technology,
www.ManagePro.com/Blog

[campbeli]

Rodney, thank you for the comment and thank you for the two blogs 'Let the dead bury the dead' and 'System tipping points..' both of which I would recommend that others read because they do highlight challenges that any change agent faces when leading a change process or executing strategy.
We have certainly experienced the 'Dead Wall' and the challenges of confrontation necessary with those who 'block' change but because of their 'perceived power' sponsors try to work around them to ensure that a project moves forward. You are absolutely right when you suggest that by insisting people change or else let them go - as much as it hurts - it does usually make things much better, not worse. Which leads to your article on 'System tipping points' and your last point - 'If you miss the tipping point the system or software adoption is severely compromised.' How often we see this occur and a project that should take say, 6 weeks to implement takes alot longer and costs blow out as a result which then leads to other challenges. Great points Rodney. Thanks. ian

[ClearPoint Strategy Management Software]

Awesome article - even 4 years later - it's a great seeing how your described the ways in which culture and ethics are very much intertwined with strategy and performance - not to mention satisfaction and employee retention!

Thanks again!
-JS
http://www.clearpointstrategy.com