What is a transformation of culture?
To accomplish their long-term goals, businesses can benefit from cultural transformation, which allows them to adapt their business culture. Ensuring a great employee experience is equally crucial for the workforce. How do you know when a cultural transformation is necessary and how to implement it effectively?
What does organizational culture mean?
First, let’s review what we know about company culture before we look at what cultural transformation is. When executives and employees consistently act in the same way, we say that there is a culture in the organization (norms). Although it is a direct reflection of the leadership of a company, organizational culture frequently echoes its fundamental principles.
An organization’s culture evolves over time. For this reason, top management must keep a careful eye on the culture of their company and make sure it’s well-managed.
To get a feel for the company’s culture, try asking the following questions:
- Which way does it function, from the top down or from the bottom up?
- Do workers feel comfortable speaking out, even when their views are different from the majority?
- Do workers feel guilty when they mess up, or is it encouraged that they learn from their mistakes?
- Are tasks delegated and evaluated on an individual basis or in groups?
- Is everyone working together or are they competing?
- Is it more important to follow the rules precisely or does it encourage originality and creativity?
What is the definition of cultural transformation?
When a company realizes its present culture is at odds with its goals, principles, and purpose, it is time to start transforming its culture. This discrepancy tells upper management that the company’s culture is getting in the way of reaching its goals. When an organization goes through a process to bring its culture in line with its vision, mission, and fundamental principles in order to accomplish its goals, it is undergoing cultural transformation. It represents a shift in the way an organization is structured.
Cultural transformation can also be defined in various ways:
A company’s culture can undergo a transformation on a company-wide or even team-specific level. Supporting the desired culture necessitates a transformation of the workforce’s mindset, abilities, and character. Before someone can change their behavior, they have to be sure in their heart that they want to. Then, individuals need to be able to change their behavior because they have the knowledge and abilities to do so.
In Prophet’s view, it is about the fast improvements made by firms that focus on expanding their companies from the inside out – inspiring people and the way they operate through a human-centered strategy.
Furthermore, it has been defined as an adaptation of norms and behaviors, within the framework of the organization’s fundamental values, to bring these into line with a new business strategy or direction, according to the International Council of Management Consulting Institutes.
Due to the VUCA factors—Volatility, Uncertainty, Complexity, and Ambiguity—in our present world, the culture might likewise undergo unintended transformations if not addressed. Organizational culture is susceptible to unanticipated shifts when companies are reactive rather than strategic in the face of volatile, uncertain, complex, and ambiguous (VUCA) environments. Leadership must thus take the lead in bringing about a cultural shift while keeping the organization’s values, goals, purpose, and external and internal settings in mind.
What is the importance of cultural transformation?
Even though it’s hard to put a price on, an organization’s culture is essential to its success and longevity. Gaining an advantage in the market, retaining more employees and customers, and attracting top talent are all indicators of a robust corporate culture. When you successfully transform your culture, you make it one that empowers people and supports your mission, vision, and organizational goals.
A strong company culture has many advantages, including the following, according to CultureIQ:
- Companies with strong cultures had 20% higher scores from employees for overall organizational attributes, including cooperation, work environment, and goal and value alignment. By exhibiting these traits, winning organizations are able to maintain staff alignment and motivation.
- When compared to employees in non-winning cultures, 86% of those working in strong cultures report that senior leadership takes their feedback seriously.
- Ninety percent of workers in successful companies have faith in their management.
- Also, 13 companies that are on Fortune’s annual list of the 100 Best Companies to Work For have higher average yearly returns, with total returns of up to 495% compared to 170% for the Russell 3000 and 156% for the S&P 500.
What are the signs that cultural transformation is necessary?
A high turnover rate of both new recruits and high-potential employees, as well as persistently poor employee engagement levels, are signs that an organization is ready for a cultural transformation. Customers may be leaving the company in droves as new rivals enter the market, causing sales to drop to all-time lows.
A worldwide epidemic like COVID-19 might force businesses to go digital and allow workers to work from anywhere. A cultural shift may be necessary, for instance, for companies that are now adopting a hybrid model of operation. The higher-ups in the company may have come to the realization that they need a more diverse, fair, and inclusive workforce and set of processes.
Assessment of your organization’s culture
If your company fits any of the above descriptions, it may be time for a cultural transformation. Organizations can use culture diagnostic tools like the Organization Culture Assessment Instrument (OCAI) to get a better picture of their existing culture.
Kim Cameron and Robert Quinn of the University of Michigan created this evaluation as a verified research tool to evaluate company culture. On the basis of the Competing Values Framework, OCAI allocates 100 points to four “Competing Values” that the organization upholds. Cameron and Quinn state that there are four distinct kinds of company cultures, and that these competing values reflect them. There is a unique combination of these four forms of company culture in any given company. Here they are:
- Adhocracy Culture is the creative, flexible Create Culture.
- Clan Culture is the Collaborate Culture that is people-oriented and welcoming.
- Hierarchy Culture is the organized, process-based Control Culture.
- Compete Culture is the competitive, results-driven Market Culture.
Two organizational dimensions, internal and external, as well as stability and flexibility, are used to map the competing values.
When it comes to the internal-external dimension, some businesses choose to look inward, prioritizing things like development, collaboration, activity integration, and coordination. Another possibility is an external orientation, which would involve surveying the market, exploring the potential of emerging technologies, monitoring the actions of competitors, and listening to customer feedback in order to diversify operations.
The stability-flexibility dimension is all about the importance of clear structures, budgeting, planning, and reliability for businesses that like to arrange for stability. Their underlying premise is that we can know and manipulate reality. A flexible organization operates under the premise that no matter how much planning you do, there will always be variables outside your control. They prioritize people and activities over structure, procedures, and plans, and they favor an adaptable mindset and framework that allows them to swiftly adjust to new situations.
Findings from the OCAI culture profile show:
- The present dominant culture
- The contrast between the desired culture (blue) and the current state of affairs (fuchsia area)
- The present culture’s impact
- How strong the chosen culture is
- Which way would you like to see the change go?
- Present “suffering” and potential “benefit” from change
An organization should begin a cultural transformation process if the OCAI results show that there is a difference between its present and desired cultures.
Cultural transformation change management
A transformation is a change, typically a big and noticeable one, as the phrase suggests. Organizations can adapt and utilize a number of popular change management strategies to successfully handle cultural transformation. The 7-S model, Lewin’s three-stage change model, and Kotter’s eight-stage model are all examples of such models.
The organization’s interests and objectives will determine the choice of model. Each has its advantages and disadvantages. Nonetheless, rather than controlling the process, the models serve as a framework to help with the transition.
The 7-S Model by McKinsey
Just a quick rundown:
- Check your shared values against your organization’s strategy, systems, and structure to see if they are compatible. If not, what should change?
- Next, examine the structural and systemic aspects. What kind of support does each one provide to the others? Find out what needs changing.
- Examine the “soft” factors (commonalities in attitude, work style, personnel, and expertise) next. Will they hold the required solid components? How mutually supportive are they? If not, then what changes are necessary?
You’ll have to use a continual (and frequently time-consuming) process of aligning and adjusting the pieces, then going back and reevaluating how it affects other elements and their alignment. It will be worthwhile in the end because of the improved performance.
Lewin’s Three-Step Model for Change
- Change the behavior by shaking up the equilibrium state (unfreeze).
- Alteration – start putting your alteration into action.
- “Refreeze” means to maintain the change you’ve made. The objective is for the individuals affected to accept the new situation as normal, so they stop fighting against the forces who are attempting to bring about the change. Everything about the group’s routines, tactics, and procedures changes in light of the new status quo.
The 8-Step Model by Kotter
- Make things seem more urgent
- Form an advisory group
- Create a plan of action and long-term goals
- Form a volunteer force
- Take action by getting rid of obstacles
- Get results quickly
- Keep the momentum going
- Implement change
The 9-step process for bringing about a cultural transformation
How can you guarantee the success of your cultural reform efforts once you’ve acknowledged the need for them?
The following procedures are derived from Kotter’s model, which, although not perfect, can be helpful in overseeing cultural transformation. As we outline the stages of cultural transformation, we look at the story of 3UK, a British telecom company, to see how these processes might play out. A whole and successful revamp of the company’s culture occurred within four years after the firm underwent a dramatic cultural shift.
- Figure out what needs to change in your culture.
Find out if your existing culture is based on Adhocracy/Create, Clan/Collaborate, Hierarch/Control, or Compete/Market by taking a culture diagnostic like the OCAI. Take stock of your company’s goals and figure out how to steer the culture in a new direction that better serves your business goals and employee requirements.
As an example, 3UK was losing money due to issues with distribution strategy, device and network stability, and the company’s overall operations. They acknowledged that there was a lack of involvement from employees, a fractured leadership team, and a weak corporate culture. 3UK evaluated its present culture and the necessity for change using an Organizational Culture Inventory (OCI) developed by Human Synergistics.
- Secure the backing of upper management
Leaders have an impact on their teams because followers emulate their actions, attitudes, and viewpoints. For that reason, the leadership team plays a pivotal role in establishing the standards of conduct for the company. These standards ought to mirror the principles upheld by the company.
This is why it’s so important for leaders at all levels to model the right behaviors and embrace the new mechanisms to back the transition.
The CEO of 3UK, Kevin Russell, was known for setting a good example for many years. Belief in the “Shadow of the Leader” was a key component, and the CEO’s leadership team spearheaded the company’s cultural transformation. He picked people who knew full well how their actions affect the company’s bottom line. This humility, along with other traits like drive, passion, and intelligence, made it easy for team members to quickly get their people involved in the change plan.
- Zero in on critical changes in behavior
Make a plan that everyone in the business can get behind and use as a guide to achieve their objectives. Focus your interventions on a few key changes in behavior that you wish to bring about. Cohesion, engagement, empowerment, dedication, team building, and doing things together are the cornerstones of a Clan Culture, which is the opposite of a Hierarchy Culture. Then, to make sure you can measure and improve these new behaviors, be sure to incorporate them in your performance management system.
Leaders at 3UK increased the amount of time spent analyzing actions in performance assessments and coaching. The company chose sixty people from different areas to be change champions. It was their job to give constant, real-time advice and comments on behavior. In addition, the leadership has regularly modeled the target culture behaviors chosen to allow the business plan since 2007. A framework was provided to the broader leadership team for use in coaching and performance review.
- Carry out both official and informal programs
Introducing new measures, incentives, and new policies are all part of the formal approach to cultural reform. On the flip side, informal interventions would involve managers and staff engaging in casual conversations.
3UK implemented new policies and procedures as part of their official intervention during their transformation process. In an effort to foster the ideal work environment, they revised its policies regarding flexible scheduling and paid time off. The organization’s performance management system now includes the essential behaviors. In fact, when evaluating individuals, these actions were considered just as important as the results. Bonuses were also linked to how well the business did.
On a more casual note, the CEO made interactive visits to all sectors of the organization. The methodical nature of the sessions brought everyone together and gave everyone a chance to speak.
- Master the art of change communication
Explain the adjustments you want to make in a clear and understandable way. Listen to what your staff have to say and resolve their concerns. Nothing, no matter how far we get, can replace constant, open, and honest communication. Staff members would be more invested and trusting after receiving this kind of message. Personalize your communication strategy based on what you know about the best ways to reach the many generations, cultures, and locations that make up your organization.
3UK was not forthcoming regarding the company’s financial status. The business came to the conclusion that there was a risk of misinterpretation if confidential information reached the public. There was some sharing of information, but the communication was lacking in organization and agility. People became distrustful and rumors circulated easily due to this method of communication.
Operating out of numerous locations, including retail stores and customer centers, the organization understood the need of removing information silos through rapid and transparent communication. The company also started to make an effort to include remote workers in meetings, whether that was in person or through teleconferencing. Embedding the cultural transformation was the primary goal of the communications strategy, which also included discussing the company’s financials.
- Get around obstacles
Figure out what’s holding your company back and do something about it. Resistance to transformation or change is common. Identifying the source of resistance and making deliberate efforts to remove it is critical when implementing change.
Any change model can benefit greatly from having Change Champions on board. Employees at various levels of a company can be change champions if they actively and unofficially support the change process.
In order to embody the new open culture and facilitate cultural transformation, 3UK even revamped the design of their office to eliminate physical obstacles. The corporation remodeled their cafeteria at headquarters to create a central gathering area, with the goal of further reducing silos and facilitating better collaboration. In an effort to foster a more welcoming environment for both staff and guests, they also renovated the lobby. Also, free-flow areas made it easier for people to work together. Members of the senior management team made changes to offices to make them more accessible and set up new spaces for team meetings.
- Rejoice in the little wins
Another way to get people on board with your ideas is to set short-term goals (next to long-term goals), work toward them, and celebrate when you’ve succeeded. There are also quick successes with short-term ambitions. To keep the momentum rolling and to further involve people in the change process, small victories are essential.
The human resources staff at 3UK sought out methods to rapidly reinforce the transformed culture’s defining features—openness and trust. In the past, staff were expected to be in the office from 9:00 am to 5:30 pm, which did not exactly exude trust. The Human Resources department responded by instituting a Flexible Working Policy. Both managers and employees now have greater leeway in planning their workdays. Workers might supplement their already-granted vacation days with an additional five that they could purchase.
These modifications to the work policy made sure that the workers were included in the change.
- Think about the shifts
If the cultural shift has had any good effects, what are they, and how can you expand upon them? Is there anything you could change? In what ways has the change affected the way your company operates? Has the shift in perspective and behavior been noticeable?
If you want to know the answers to these questions, you should run another OCAI culture profile assessment to see how far the company has come and what improvements it still needs to make to reach its ideal culture profile.
To reevaluate its culture, 3UK used an OCI together with an engagement survey. According to the OCI tool, there was a marked change from the old cultural profile to the new, more positive one. Employee engagement, client numbers, and staff turnover were all areas where they saw significant improvements.
- Strengthen the shift
To make a change stick, you have to see it as an ongoing process and keep working to strengthen it by celebrating its successes.
Hire people who are a good cultural match for your company. To more objectively find the applicants who are the proper match for the new culture, it is helpful to incorporate a cultural fit evaluation into the recruitment process. This is especially important in light of the ongoing transition.
Organizational investment in ongoing training and education to hone skills suited to the new culture is another necessary condition for a successful transition.
In order to better reflect their culture, 3UK updated their hiring process. The Performance Management method and the new organizational behaviors made it easier to decide who would work for the company and how to promote them.
They did other things as well. To help them grow professionally, the top 50 leaders attended Leadership Conferences where they learned how to conduct themselves in certain ways. In order to help managers introduce the culture to all employees, culture advocates helped run “3 Story” workshops. The senior members of the team were the first to participate in a new leadership program designed for mid-managers. They rethought their induction and other training sessions to better fit in with the company’s culture.
Collectively, 3UK’s cultural shift resulted in a 77% increase in client base size, a decrease in operational costs, and a substantial expansion of the company’s operations. The organization was able to attain long-term success by changing its culture.
Wrapping up
As 3UK has shown, cultural transformation takes time and energy, but the payoff is substantial. Because of this, cultural transformation isn’t something you should do as a last resort when your culture starts to collapse. Instead, you should put your energy into strengthening your organization’s culture through ongoing monitoring and management in order to accomplish its strategic goals.
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