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:
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:
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.
Here we draw together some of the key themes arising from our experience which we hope will help you to address the issues of culture change in your own organization. Specific themes are reflected in the three chosen case studies, and we pick these out in the separate introductions to each one later in the chapter.
Culture change as an isolated objective is meaningless. Organizations should only involve themselves in culture change if the current culture does not adequately support the achievement of strategic objectives. Start from the business strategy to determine what organization capability or core competencies need to be developed. Ensure that there is a clear vision and a real need to change. People need to be convinced by a compelling vision rather than compelled in a coercive way. They need to see the overwhelming logic of the proposed changes. The more people are drawn towards the vision the better.
The introduction of a foreign element into the organizational system is a good way of making change happen (see Satir’s model in Chapter 1). This can come from an external or internal source. Whatever it is, it needs to have the force to kick-start the culture change process. And there need to be plans and processes in place which keep the momentum going.
When you want culture to change you have to put yourself into the shoes of the stakeholders. Address the issues of the people who need to change by involving them as much as possible. Change brought in a crass or unthoughtful way will rebound on management. Whether change is being proposed for positive or negative reasons the organization’s future success is dependent on engaging staff to enter into the new way of doing things. How will the proposed changes benefit stakeholders? Will customers, partners, staff and suppliers really feel a positive difference? If some parties are going to lose out, how will you handle this?
Culture is about the way you do things around the organization. So if your organization has a set of core values, and of course it does explicitly or implicitly, then you need to be managing the cultural change in line with these values. If you say one thing but do another then you might as well give up now. For instance, a stated value of ‘integrity’ is rather hollow if senior managers do not keep their promises, or fail to explain why the plan has changed.
If you want to shift the organization from one way of doing things to a new way of doing things then you will need to see and do things from a variety of perspectives. Any current culture, like any person, will have positive and negative features. You will need to retain and build on the current strengths and ensure that you do not throw the baby out with the bathwater. You will also need to start right now in modelling aspects of the new culture – if you want a coaching culture then start coaching; if you want people to be empowered then start empowering! Now is also the opportunity to step outside of the bubble that you’re in. No one ever changed a culture by simply drawing up plans and listing required behaviours, so now is the time to be creative, do things in different ways and learn from people outside of the system.
It is important to generate enabling mechanisms such as reward systems and planning and performance management systems that support the objectives and preferred behaviours of the new culture. For example, this means ensuring that teams have clear objectives that are closely aligned to organizational objectives.
Managers need to act as role models. They will need to model the new values but also support individuals and teams through a period of upheaval. This can be done through using some of the strategies outlined in Chapters 1 and 2, such as working with teams through the stages of forming and storming, and working with individuals as they adjust to the new ways of doing things.
On the one hand many people want clear, confident and focused leadership during periods of change; on the other hand people also want leaders who will reflect upon what is happening ‘on the ground’ and adjust their plans accordingly. Leadership of cultural change requires clarity of end vision together with the ability to manage and cope with emergent issues. All six of Goleman’s leadership styles might be called for during a period of cultural change (see Chapter 4). However, it would be a mistake to believe that any one individual could carry this off by him or herself. Chapter 4 also describes a number of ways that leadership can be dispersed throughout the organization to make change happen.
One common trap is to make the HR department the owners of cultural change, while the CEO and the senior management team own the changes in business strategy. This type of functional decomposition of a change initiative is doomed to failure. This generally leads to senior managers becoming detached from the cultural issues, and thus neglecting their role modelling responsibilities. Employee cynicism grows (quite rightly!), and this can become a very powerful force for resisting change. This division of labour also leads to HR people being lumbered with programmes and initiatives that look like unnecessary overheads to the local line leaders, which HR people end up having to ‘push’ and ‘sell’. This can be a very disheartening outcome, especially when the initial ideas are often entirely sound.
This case study sets out our analysis and recommendations for an organization facing major strategic and cultural change. Some of these recommendations were taken up, and some withered on the vine, but the process of analysing and recommending is thought-provoking in itself and we felt worthy of inclusion here.
A large local authority was not functioning as efficiently or as effectively as it wanted. It was not being fully responsive to the needs of its citizens or its various communities of interest. We conducted an organizational analysis of the city council to find out what was helping the council achieve its stated outcomes and what was getting in the way of this. The analysis consisted of interviews with directors and strategic managers, and focus groups with middle managers and front-line staff. Leading politicians of all political persuasions were interviewed. A number of key stakeholders such as citizens’ panels, partnerships and the trade unions were also involved. Our report highlighted six interrelated areas in which the council needed to significantly improve its overall effectiveness and thereby reduce internal and external pressure.
The commitment, talent and effort of all those we met were impressive. Many people from front-line workers to the most senior politicians and officers were enthusiastic about the city and what the council might contribute to its life and development. There were clearly many very good services being offered to the city. However, at the same time there was a strong feeling at all levels of untapped potential. The council’s energies were being dissipated through not having a true focus.
The emerging themes are outlined below and illustrated in Figure 7.1
Figure 7.1: Six key points from case study one
Continually increasing customer and citizen focus
The passion to deliver the best possible service to both external and internal customers, colleagues and partners was variable, with many parts of the organization moving forward, but at an uneven pace. The various self-inspection and external inspection processes were prompting the council to streamline systems and procedures for service delivery. However there were many instances cited where ‘customer care’ just was not part of the mindset and where systems, policies and procedures conspired to hinder the achievement in this area.
The interface between front-line services and the centre required particular attention, specifically on how best to commission the providers. Service level agreements, for example, were not fully used, and other mechanisms needed to be installed to ensure there was both a psychological and a written commitment to achieve excellent service delivery across directorates and to the end user.
Clarity and impact of core values and direction setting on service delivery
Everyone had accepted the council’s core values, but that was perhaps because they were commonsensical and there was nothing in them that anyone could contest. However there was scope for them to be revisited, made more specifically demanding and directed towards action in order to realize their potential. There were too many values, and these were neither meaningfully translated into ways of working nor explicitly linked to preferred outcomes or any performance management system. They had been launched with a fanfare some time before, and no investment had been put into their continued dissemination and implementation.
Everyone in the council had a mix of agendas to work to: various corporate policy priorities, service delivery priorities, inter-agency working and development initiatives. Greater clarity was needed throughout the council about what outcomes were being sought and how they could come together at every level. All managers and service heads felt the tension of multiple demands and needed an effective process for balancing these demands and setting personal and team targets.
The corporate policy priorities had a tremendously varied degree of ownership, due partly to the lack of clarity around what they actually meant, and also to a suspicion whether the political leadership and corporate managerial leadership were really committed to driving them through. They did not translate easily into a vision for a better city that employees could rally behind, and therefore the result was confusion and a growing cynicism, rather than commitment.
There was little evidence that people were rewarded or recognized for moving the corporate agenda on, and the lack of ongoing budget provision for these corporate initiatives also indicated a hesitancy when it came to putting money where the mouth was.
A visible and congruent leadership and management style
At all levels, but notably at middle and front line, there were requests for clearer, bolder and consistent leadership. This was seen as particularly being the challenge for political leaders and senior officers in managing the council’s myriad conflicting demands.
Clarity of vision and articulation of the council’s true direction and the way it was to be achieved were needed to minimize confusion and focus people’s minds and resources.
Clearer, bolder and consistent leadership needed to include:
Corporate leadership was most needed for tackling conflicts between front-line services and the centre. It was also needed for harmonizing corporate policy and the service/functional agenda, and for improving the way change was managed across the organization.
Good management of change was lacking. This was seen as particularly necessary with regards to the major modernizing agenda facing the council. Management needed to start to communicate these changes so that staff felt engaged in the co-creation of their futures, and so that the feeling of initiative overload, where change is endured rather than embraced, was reduced.
It was also noticeable that the roles of different management teams and groups were not always clear. The senior management team and the service heads needed to begin to take a more strategic role, at least part of the time.
Moving to a more consistent performance and enabling culture
There was wide recognition that the council was improving its ability to manage performance, but many wished to see greater consistency and general improvement. This meant a need to establish realistic targets for everyone across all their work, and to review progress regularly against these, ensuring that any changes to plan were discussed and incorporated.
The organization was already moving towards a performance management and competency based framework. Some areas were beginning to experiment with a development process that linked to service plans, team plans and individual plans. This was successfully helping people to clarify key outcomes and contributions from individuals and teams, and this approach promoted greater ownership of the service and the council’s agenda.
For the organization to embrace performance management more fully, the organization needed to begin to address a number of cultural issues that were hindering progress:
More effective ways of working
There were many ways to improve council working, from making meetings more productive and less time-consuming, through to mastering the complexities of matrix management and having effective information management systems. With the complexity of the council’s task, with demands coming from all directions at all levels, there needed to be a clear (or as clear as possible) way of working a matrix structure to cope with the specialist, cross-cutting and geographical dimensions of service delivery.
There was a real need to accelerate the business planning process, to ensure a performance management system was delivered in a consistent way across the organization and to reduce conflict at the myriad of boundaries within the organization.
Extending the council’s capacity for community and partnership working
Increasingly the role for all staff required greater community engagement and partnership working. Although this was demanding both on workload and skills it also offered greater learning, and interestingly for some was preferable to internal working.
Most managers when prompted could cite examples of good partnership working that had been developed over the previous few years. This was one of a number of areas that the organization could be justifiably proud of. The challenge was for people to have the confidence to communicate this to all the stakeholders and be able to applaud and celebrate success.
The competencies in this new area of effective partnership were real nuggets of success. These competencies needed to be transferred not only to other areas of partnership working but also to where different parts of the council could work more effectively with each other.
This case study describes one organization’s journey as it worked towards reinvigorating its brand. The process chosen and the choices made along the way make interesting reading.
The case study concerns a financial services organization that undertook a strategic review and decided that it needed to reinvigorate the brand. With the previous case study we focused on gaining internal alignment to the organizational service. This case study takes a different perspective. The key focus of this rebranding exercise was the external marketing of the products and services on offer, and the way that customer-facing staff represented the brand. This is best illustrated by Wasmer and Bruner’s research (1991) which maps the relationship flows between the customer, the organization and the customer service provider (see Figure 7.2). They saw the major constituents of their brand as:
Figure 7.2: Map of relationship flows between the customer, the organization and the customer service provider
Source: Wasmer and Bruner (1991)
As a result of the strategic review the organization decided that the key to its competitive advantage was the way in which its customer-facing employees transacted with customers and potential customers. They were referring to not just the usual types of customer service behaviour such as greeting, courtesy and complaint handling but also the ways that the brand itself was being portrayed. The customer does not just receive communication from the organization in terms of its marketing and its goods. It also receives information via the customer service providers.
To focus more clearly on its target audience, the organization segmented its potential customer market into four quadrants based on their interest in financial services and their level of self-knowledge of financial needs and potential solutions. One quadrant of the market was generally knowledgeable and sophisticated. Another quadrant had a high interest in the financial area of their lives but relatively little knowledge. The third quadrant had a reasonable knowledge base but this was not accompanied by any great level of interest. The final quadrant had little interest and little knowledge (see Figure 7.3).
Figure 7.3: Segmentation of financial services customers
This segmentation generated a number of questions:
The areas that showed most promise were those potential customers who either were interested in investing in their financial future but needed help in negotiating their way through the financial maze, or did not have the interest but wanted someone to do it for them, and do it well. These were the ‘Show it to me!’ and ‘Do it for me!’ customers.
Although those in the High–High quadrant were generally high net worth individuals, the people who fell into that category wanted a high level of service but were also more liable to shift their savings and investments from one financial institution to another fairly frequently. The Low–Low quadrant likewise required a high level of support but did not necessarily have the available funds to warrant that level of investment from the organization.
Once the primary focus for business development opportunities had been established, the next stage was to decide what sorts of things needed to happen for customer needs to be satisfied. This included outlining the behaviours and attitudes that customer-facing staff (and those back-office staff supporting them) needed to exhibit. Key areas included the ability to generate interest, to establish credibility, to have clarity of communication and to be proactive to customer needs.
The reorientation of the company to this particular strategy included the generation of a new set of company values. These values were not just a list of slogans but were translated into behavioural statements. These statements defined the preferred way of operating in the business and indeed also became part of the recruitment process.
The values were not only ‘nice-to-have’ or ‘motherhood and apple pie’, but were designed to align people within the organization to the company strategy and the preferred behaviours. So for example a value of ‘treat people well’ was translated into making people feel they are your number one priority, and treating all customers and each other with respect. The value of ‘say it as it is’ was translated into talking to customers and colleagues in a straightforward manner. These behaviours could be verified by observation or customer feedback. They could also be learnt.
Of course to get to the stage where frontline staff behaved in accordance with company strategy required other enabling actions, which were drawn from best practice and appropriate models of individual, team and organizational change.
The whole change started with a comprehensive strategy review and the generation of a programme plan with specific projects covering areas such as brand development, systems development, business lead generation and defining the customer experience. This was kick started by the senior management team with some input from relevant stakeholders. However initially it was a ‘top-down’ process which drew a lot from the machine metaphor. Using Kotter’s terminology a sense of urgency was created (‘with the market as it is we cannot carry on as we have been doing’) and an overarching vision developed.
The next layer of managers below the senior management team were enlisted to form part of the guiding collation. A change management team was formed, tasked with managing the transition from both a task and people perspective, with sponsorship from and direct reporting line into the senior management team. Quite soon however the changes picked up their own momentum.
It became apparent that not everyone was dissatisfied with the status quo. People were a little unclear about the desirability of some of the changes, and some of the more impractical aspects of the proposed changes were accentuated. The senior management team by now had extended the members of the guiding coalition to involve a critical mass of 85 ‘strategy leaders’. It was their task to reinforce the need to change, and to develop a clarity of vision that could be translated into tangible objectives and behaviours throughout the organization.
This translation process occurred over several months, and became an iterative process with all staff. Conversations were had, which set out what the managers wanted to see but involved staff at the front line talking through the practicalities. This process raised some points about the original thinking which needed amending, and enabled staff to get a much better idea of what was required of them.
Breaking the mould
The transition from the old to the new was effectively dealt with by the good use of programme management, led by the senior management team, and supported by a specially constituted change management team. Feedback loops to and from key stakeholders including staff were an integrated part of the process.
The generation of a set of values which were translated into behavioural imperatives, coupled with values workshops with all staff, set a benchmark for the organizational culture. The values helped to minimize organizational politics by encouraging ‘straight talk’. This was impressively role modelled by the senior management team and the change management team, who were open and honest with both good news and bad.
A key aspect of the new way of doing things was the openness to ideas wherever they came from and the development of an enabling and empowering culture. Creativity, risk-taking and learning were encouraged through the co-option of diagonal slices of staff onto change initiative working groups and by scheduled reviews throughout the transition period.
Self-esteem and performance can drop during periods of change. In a sense this is unavoidable – a natural and normal reaction to change affecting individuals (see Chapter 1). Key interventions here included demonstrable listening to staff concerns and many examples of staff issues being dealt with in a way that satisfied them but did not compromise the general business direction. In addition objective third-party consultants were used as additional support for individuals and groups of individuals who were most affected by the changes. Line managers were prepared with full communication of the changes to pass on, and open access was given to more senior managers to tap into their knowledge and experience. Greater emphasis was put on coaching through the line, which quickly enabled managers to tackle performance issues arising from the change.
Building new teams
The realignment of the organization as a result of the new strategy had a number of knock-on effects on different teams. The senior team was a newly configured team at the beginning of the strategy review process, and acquired a new sales director part-way through the process. An important component of the time its members spent together was attending to their team development process. The development process was focused on the tasks in hand – strategy review and strategy implementation – but on a regular basis members took the time out to look at where they were as a team, and how they were performing and inter-relating.
The generation of the values was both a real and a symbolic act for the senior management team. Having generated the values, they translated them into actions for themselves. They offered this to the rest of the organization as a guideline, but wanted different parts of the organization to discover what the values meant for them personally as a part of a team. This, together with the senior management team role modelling the values, was seen as a crucial part of the process.
The realignment within the organization meant that other teams and groups throughout the organization were affected to a greater or lesser degree. For example, the increased focus on savings, investments and mortgages led to a division of labour and separate reporting lines for staff within the branch network. In addition the centralized contact centre was required to develop greater links and better lines of communication with the national advisor salesforce. Both these examples necessitated a breaking down of old groupings and the development of a new set of teams and consequent relationships.
People processes formed a large part of the change plan. This included a communication strategy that was in line with the new values of openness, honesty and straight talk. Processes were put in place to ensure that individuals displaced had clarity around their situation and guidelines as to how things would progress. Selection to new posts was made using an equitable process, and the new reward scheme was aligned to the new strategy and values.
Outplacement was provided for those leaving the organization and counselling provided for those who needed to talk their situation through in a confidential setting. Coaching and mentoring were provided for more senior managers who had to take up new roles and needed to make sense of the changes and make their own adjustments within themselves.
This third case study illustrates the challenges and opportunities offered by creating an employer brand. The organization in this case study is a highly successful and dynamic global spirits and wine business which has grown steadily through merger and acquisition over the last 10 years. The steady progress of industry consolidation worldwide led this business to consider its future as either an acquiring or an acquired company. This contemplation led to a desire to strengthen various aspects of the business, resulting in three interrelated aims:
In order to encourage full engagement and involvement in the new strategy, the organization decided to launch an employer brand which challenged all business units to get full commitment of all employees, so that each person could become part of a unified winning team, connecting with consumers and taking the business to new levels of growth. The top team wanted everyone to be engaged in the action, committed to the goal and confident of their part in achieving it. Everyone was expected to take an active role individually, and work with others as part of the team.
One of the significant pieces of data that informed this employer brand strategy was the following quote from the Collins and Porras survey, Built to Last (1994): ‘Companies with strong positive core vision and core values have outperformed the general stock market by a factor of 12 since 1925.’
The employer brand
The employer brand arose from the existing culture. It was worked on by both internal and external people through eliciting current views of the company ethos, and gathering aspirations of current employees.
The concept of the brand wheel was used to define the brand. This is encapsulated in Figure 7.4. The brand wheel idea, developed by Bates North America, is used to define the functional and emotional components of a brand. Bates North America has developed an impressive reputation for reinvigorating brands. The brand wheel is based on various concepts that go into creating a brand such as essence, values and personality. The brand essence is heart or spirit of the brand. The brand values are about how the brand makes a person feel and what it says about them if they become associated with the brand. The brand personality is a way of talking about the brand as if it were a person, to get to the emotional content of the brand itself.
Figure 7.4: Brand wheel for employer brand
Out of the brand wheel came a concise definition of the six key brand values together with their associated behaviours. See box.
THE SIX EMPLOYER BRAND VALUES
Value: performance with passion
The organization devised a three-stage process to move from this definition of six core values to a position of full involvement with the new strategy. The three stages were awareness, adoption and advocacy (see Figure 7.5), with only the first stage planned in detail. The second and third stages were give a broad brush plan, but awaited the results of the first stage to enable sensible planning.
Figure 7.5: Financial service quadrants
The awareness stage involved three main activities:
The Adoption stage is going on at the time of writing, and was preceded by a questionnaire which tested the success of the awareness stage. Adoption in this context is about implementation, so this stage of the process is very practical and involves lots of ‘handson’ activities. A brand director was appointed at the end of the awareness stage to look after and promote the employer brand, and interestingly, this person has a marketing rather than an HR background. Planned activities so far include a newsletter circulating stories of success and the creation of a Web site on the company intranet that allows exchange of views and offers team exercises and thought-provoking resources to help people to get to grips with the values. Employer brand items and gifts such as mugs, sweatshirts and hats will also be available for those who want to promote the brand locally, or wish to have themed celebrations.
Advocacy is already appearing in pockets around the organization. Various managers have been selected as brand champions, but this process is seen as emergent rather than one that needs to be closely managed.
The planning team also used the Beckhard change formula to guide their actions (see Chapter 3). This meant having a clear vision, explaining the need for change and devising some first steps.