As humans, we are highly susceptible to the behaviour of others. We naturally mirror each other's postures, smile when smiled at, and laugh along with others even if we don't get the joke. Studies like the Asch conformity experiments have even demonstrated that with enough consensus we can even be made to disagree with our own two eyes. In the workplace, over time this susceptibility creates a common set of behaviours and expectations among employees which we call organisational culture.
The Benefits of Organisational Culture
Generally, organisational culture is a good thing. It allows for quick communication of expectations. A manager at a prominent consulting firm may say, "I need your support at the sales meeting tomorrow" and their colleague instantly understands that they should study the client's business, go over the sales presentation, wear a well put together suit, and show up at least 10 minutes ahead of the meeting. These often unspoken rules, expectations and beliefs have a profound effect on an organisation's success.
Google, for example, is known for being a data driven, innovation-oriented, company that sets aspirational goals and supports its employees. As a result of cultivating these characteristics they have attracted an extremely talented and engaged talent base who can consistently produce new innovations, which, in turn, has enabled their dramatic success over the past 20 years.
When Culture Goes Awry
At the other extreme, the natural tendency for employees to converge on a behavioural norm can lead to spectacular catastrophes. Some are particularly notable because any sane person should be able to foresee and prevent the disaster.
In 2015, Toshiba's senior management was known for setting aggressive profit targets and not taking no for an answer. Unfortunately they also made it impossible for employees to voice any concerns. The process of culture creation took over and led to increasingly intense and unrealistic pressure from leaders to achieve impossible results. There was no way for division heads to criticise the demands, so many simply falsified their records. This led to over US$1.2 billion of falsely reported profits and when the story finally broke Toshiba's stock price fell by over one third.
A Well-Known Problem
Establishing the right culture is a challenge with which CEOs and leaders regularly struggle. The Hay Group reported that over 90% of mergers and acquisitions fail due to culture clashes. A 2016 Deloitte survey found that culture ranked as the 3rd most important human capital trend. Part of the problem is that culture is such an intangible concept. It is impossible to point to a moment in which a definitive transformation has taken place. Fortunately, our industry has developed tried and true methods for transforming company culture.
The Ideal Culture, is Unique for Every Business
While there are some common elements that prove effective in most businesses, leaders should avoid trying to copy and paste from other's successes. Harvard Business School Professor Michael Porter's view of strategy helps us understand why. If strategy is a set of aligned and complimentary activities that enable your business competitive advantage, then culture, which permeates nearly every action in the company, should be designed to multiply those competitive advantages. A great example of this is the online shoe retailer Zappos. They compete almost entirely on customer service. To gain their edge they foster a fun, wacky culture of empowered employees. Customers are willing to spend 20% more on shoes from Zappos because they know they're only a quick phone call away from a fun, positive person who will go the extra mile.
Employees are another key consideration when defining an ideal culture. Research shows that happy, engaged employees can be 20% to 30% more productive while disengaged employees cost organisations billions of dollars every year. Your Ideal culture must be designed to engage and retain the people needed to run the business. Studies from Deloitte, CEB, and others, repeatedly highlight cultural elements like, meaningful work, learning opportunity, recognition, and others, as top motivational drivers. Leaders should pull from this list but also make a point of asking their employees what motivates them and making them part of the process.
Finally a leader's actions more than anything else will influence the evolution of culture. Leaders who can tap into their authentic passions and motivation will have the energy necessary to continuously drive culture transformation. Therefore an ideal culture is one that every senior leader in the company can connect to emotionally.
The Importance of Experiences
One mistake often made when attempting to change culture, is to believe that words alone will be enough. You can't unlock people's full potential through mere compliance. Roger Conners and Tom Smith explain in their book "Change the Culture Change the Game" that human experiences are the key ingredient required to change beliefs and culture. For example, a leader who wants to increase collaboration can't simply say "be more collaborative". They need to plan a set of experiences, one of which might be to kick-off a project where each team suggests compelling ideas for improvement to each other. The best ideas could then be worked on offsite with leadership presence and involvement. Success here would demonstrate the value of a collaborative culture, show that leadership is committed, and get employees to personally experience the culture change.
A Never Ending Process
While there's much more to share on the topic of culture transformation, the key is to remember not to approach it like a regular project implementation. Culture is created, destroyed, and remade every day by the thousands of tiny decisions everyone in your company makes. This is a process of human nature and cannot be stopped. Leaders therefore have two choices: they can either play a conscious role engaging authentically with their people to create a culture they're proud of, or they can follow Toshiba's example, leave things to chance and hope for the best.
Author: Justin Paul, Fortune 500 HR leader & consultant has helped executives in over 20 countries build their leadership capability. Currently CEO, Latchmere Performance Solutions Ltd, Justin@Latchmereconsulting.com
Series Editor: Christopher F. Bruton is Executive Director of Dataconsult Ltd, chris@dataconsult.co.th. Dataconsult's Thailand Regional Forum provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.
