by Jo Geraghty and Derek Bishop

In a nutshell

1. What is organisational culture?

Organisational culture is the essence of how an organisation and the people who work there behave. Sometimes visible, sometimes invisible, it can be described as ‘the way things are done’, or the DNA of the business. If you pull rank or pull together, put customers before profits or vice versa, it is the culture which governs your behaviour. Organisational culture

  • Is the essence of how the organisation and its people operate and behave
  • Is built up over time from internal and external interactions
  • Is there regardless of whether action is taken to manage it or not
  • May be encapsulated in documentation or simply seen by the way in which people act
  • Generally permeates the whole organisation, although subcultures may run in some sectors.


2. The importance of organisational culture

Organisational culture not only matters, it is increasingly becoming the prime differentiator between organisational success and failure. Company culture is the reason why some businesses survived the recession while others did not, and the underlying culture is the reason why some businesses are ready to meet the innovation challenges of the 21st century, while others will fall by the wayside.

Among key areas in which organisational culture makes a crucial difference are

  • The customer dimension
  • The employee dimension
  • Reputation and brand
  • Ethics and integrity
  • Compliance
  • Leadership and governance
  • Diversity
  • Innovation.


3. Why change the culture?

Even organisations in which the CEO and the leadership team have taken pains to set a strong culture can suffer from ‘culture creep’ ? a slow imperceptible change which degrades the vision and values of the organisation. Signs that the culture needs attention include

  • Inter-departmental wrangling
  • Project delay
  • Unhappy customers
  • Poor external reputation
  • Falling profits
  • Worsening relationships with suppliers
  • Lines of finance dry up
  • Increase in employee absenteeism or turnover
  • Changes in legislation and regulation.


4. The first steps to cultural change

Cultural change cannot be rushed into.

  • Unless you know what drives the culture at the start, you haven’t a hope of changing it. So step one in the process is to undertake a cultural audit. As well as outward signs, such as office layout and dress code, there are also hidden assumptions which may only become apparent over time and which have an equally profound effect on the way in which the organisation operates and presents itself to the world.
  • When running a cultural audit, the optimum results are obtained from a quantitative and qualitative analysis. Anonymous surveys, focus groups and observational reporting can all help to build up an accurate picture of current culture.
  • Take time to examine the purpose, vision and values of the organisation, with particular emphasis on the findings of the evaluation.
  • Once that the leadership team have defined the future shape of the organisation, they can start to set the attitudes and behaviours which will help to deliver a strong future.


5. Managing and leading culture change

Leaders must take the time to engage change advocates. These may be team leaders or leaders without titles, but time has to be taken to explain the need for change and to engage people’s enthusiasm for and understanding of the new beliefs and behaviours expected within the organisation. Middle management are crucial to success:

  • They are the team leaders who have to learn to work together in new ways
  • They are the leaders without portfolio who, by their very nature, will persuade others to act in new ways
  • They are the HR or accounts or IT people who will take the leadership intentions and devise new processes and procedures to translate them into action.


6. Embedding a culture change

Only once the departmental leaders, team leaders and leaders without a title have come on board is it appropriate to take the final step to cascade the changes throughout the organisation.

  • Leaders who fail to act up to their own high standards will bring the organisation down swifter than any other factor.
  • Leaders can’t afford to sit back complacently once a culture change exercise has completed in the expectation that the new status quo will remain unchanged.
  • There is a danger that old habits will creep back in and attitudes and behaviours will slowly move away from the ideal.
  • The trick is to understand when movement away from the norm is positive and when it can negatively impact on the desired culture.


7. Overcoming obstacles to culture change

Obstacles to change come in many and varied forms, but can generally be split into two distinct categories: the open and the covert. The key is to be aware and to stamp hard on any dissent. In most instances, if you take the time to explain, to engage and to demonstrate the benefits, you will win over hearts and minds.

Obstacles include

  • Lack of planning
  • Insufficient support from the leadership team
  • Employee resistance
  • Third party challenges
  • Customer resistance
  • Inertia
  • Seeming acceptance, but then sliding back into the old ways
  • A whispering campaign against the new regime
  • Disinformation and rumour.


8. Growing the culture

One of the greatest challenges for any organisation is to maintain a strong entrepreneurial start-up culture once the business takes off. Particularly in the technology field, companies which start as a couple of friends kicking an idea around in a basement can suddenly find themselves with hundreds of employees.

  • Ideas of company culture scarcely have time to form before they are being influenced by new employees.
  • Rapid growth means that the culture can change so fast that, rather like a computer virus, harmful elements can become embedded before anyone notices them.
  • Insufficient care may be taken over indoctrinating the organisational culture into the outsourced companies.


9. Hiring for cultural fit

Hiring for cultural fit is a two-way street. Prospective employees need to be sure that they are going to be happy working for the organisation as much as the organisation is happy that those individuals will step up to meet the expected cultural standards.

  • It is not the same as hiring clones.
  • By flexing the recruitment process to identify beliefs and behaviours, organisations can save themselves a lot of internal strife as well as a potential derailment of culture.
  • The first few days with an organisation can make or break engagement in organisational ideals.


10. Identifying and managing subcultures

No matter whether your organisation is firmly based in a single building or spans several continents, there are inevitably going to be some internal cultural divergences. When people from different cultures, backgrounds and age ranges come together, outlooks and attitudes will never be identical. Understanding the subcultures in play within the organisation helps leaders to optimise results and deliver a successful strategy.

  • Subcultures can be leveraged to create immense strength and flexibility within the organisation.
  • Cultural traits can be leveraged to optimise project planning or service delivery.


11. Outsourcing the culture

Outsourcing brings its own challenges when it comes to culture. Values, such as timeliness, accuracy and customer service, may depend as much on delivery by the outsourcing agents as by internal functions. So organisations cannot afford to overlook the importance the culture when outsourcing activities to third parties.

  • It is vital that outsourcing suppliers are also appointed on the basis of cultural fit.
  • Contracts should include the expectation that values, beliefs and behaviours will meet expected parameters.
  • Take time to share the organisational culture with the outsource partners.


12. Cultural due diligence in mergers

Cultural due diligence has a vital role to play in mergers and acquisitions.

  • Between 50 and 75 per cent of all mergers in the commercial sector fail outright or do not achieve the expected benefits.
  • It is usually the failure to merge cultures and engage employees in the values of the new organisation which leads to the downfall of a merger.
  • Cultural due diligence may highlight some areas in which there is a complete conflict of culture. For example, businesses which have devolved from the public sector may be strongly process-driven, while entrepreneurial private companies might lack process but be highly creative.


13. Leaders at every level

The executive team may set the strategy, beliefs and behaviours, but the team leaders are the ones who will translate it into action or scupper good intentions. These are the people who will counsel and guide and who will in their turn take the organisational strategy and make it work on the ground. For the majority of staff and customers, it is these team leaders who represent the face of the organisation and who are ultimately responsible for its reputation and profitability. So how do organisational leaders ensure that the beliefs and behaviours which they have so carefully crafted are translated into action on the ground?

  • Involve team leaders at the earliest possible stage in the process by asking for input, listening to feedback and explaining the rationale behind and the effect of the proposed changes.
  • Empower the team leaders. Empowered leaders not only are more likely to guard the culture of the organisation, they are also more likely to influence it for the betterment of the organisation.
  • For team leaders to be truly effective, they require training in personal skills, such as negotiating, counselling, awareness of self and others, and influencing.


14. Team leadership in action

What specific contributions can team leaders bring to the culture?

  • The more you prioritise and highlight customer needs, the easier it is for management to build an organisation which has a strong brand and reputation for customer service excellence.
  • The more you act and expect good conduct, the more engaged employees will be in furthering the cultural aims of the organisation.
  • Using your influence in a positive way can make a huge difference to the external perception of your organisation and in turn that can affect customer take-up, the chance of investment and the receipt of favourable terms from suppliers.
  • You are the conscience of the organisation.
  • You are in a perfect position to drive regulation and compliance forward for everyone’s benefit.
  • You are in the perfect position to help, instruct and guide people and in the process to develop a strong organisational culture of diversity and tolerance.