Is organizational culture difficult to change?

The key problems in changing organisational culture are outlined in this brief revision note:

Definitions

• Culture clash: When one or more cultures are integrated into one environment, causing disruption and challenging contemporary traditions

Culture as a Corporate Priority:

• Corporate culture has become the buzzword as the culprit and potential solution for the problems of modern capitalism. For change to be effective, culture needs to be high enough on the boardroom agenda. But is it?

Problems of Change

• Common sources of culture clash:
• Mergers & acquisitions
• Generational differences
• National / geographical
• Departmental
• Strategic or leadership change

Forces Resisting Change

• Loyalty to existing relationships:
• Failure to accept the need for change; Insecurity; Preference for the existing arrangements; Different person ambitions
• Fear of change:
• Loss of power; Loss of skills; Loss of income; Fear of the unknown; Inability to perform as well in the new situation; Break up of work groups

Key Examples / Evidence

• Takeovers and mergers provide a rich source of examples of how difficult it is to change and integrate organisational culture:
• Classic example is “merger of equals" in 1998: Daimler / Chrysler:
• "I think part of it is the culture, because you had an upright, hierarchal approach to things at Daimler Benz and Chrysler was a risk taking, entrepreneurial, loose organization. " This (merger) is like trying to mix oil and water"
• But, compare and contrast with successful takeover of Pixar by Disney, and of Youtube and Zappos by Google.
• Barclays / RBS etc: can the big banks change their bonus culture? Is the risk-taking inherent in investment banking part of the DNA of the banks – i.e. impossible to remove?

Depends on Factors

• Organisational culture is deep: there is a danger that if management treat it as a superficial phenomenon and assume it can be changed at will, they will fail!
• Organisational culture is normally and inherently stable (resistant to change). Humans do not like chaotic, unpredictable situations – and they naturally work hard to stabilise things = resistance to cultural change!
• If an organisation is to change, then it has to unlearn something before it can learn something new. The same goes for cultural change. The "unlearning" is painful and causes resistance to change.
• Is there a role for regulation in promoting and changing corporate culture? Possibly (e.g. in financial services) but it can only go so far.
• Boardroom - does management truly understand the purpose of its business? What are the cultural values of the firm?

Further Evaluation Opportunities

• Recognise that an organisation's culture is in a continuous state of flux responding to change in the external environment (e.g. society, economy)
• Aiming to create, change or protect culture is challenging and takes time.
• Successful cultural change requires a clear business strategy and a strong set of corporate values.
• Culture change is unlikely to be successful if leaders don't role-model the behaviours they want employees to model.
• Edgar Schein: never start with the idea of changing a culture - start with the issues that the organisation faces and assess whether the existing culture gets in the way of resolving those issues.
• Always think first of the organisational culture as a source of strength even if some elements are dis-functional. If major changes are needed, try to build on existing cultural strengths.

The following questions are often posed by our clients:

1. Why is culture change so hard?

2. What is a ‘reasonable’ stretch goal for measurable culture change?

3. How long will it take us to change from a Passive/Defensive or Aggressive/Defensive culture to a Constructive one?

In many ways the answers to the second two questions lie in the answers to the first.

  
Changing an organisations culture is difficult for three main reasons:

   
1.The organisations culture itself. Assuming the organisations culture is Passive/Defensive and/or Aggressive/Defensive, then the culture itself makes change hard. Since culture influences how people behave, it is highly likely that the organisation will go about culture change in a manner that is consistent with its current culture.

a. Organisations with Passive/Defensive cultures are likely to focus on ‘quick wins’ but avoid dealing with some of the ‘tougher’ issues such as (for example) performance management. Whilst management may consider themselves to be kind in not dealing with known poor performers, this simply continues to send the message to people that there is no point in trying hard.

b.Organisations with Aggressive/Defensive cultures are likely to lose sight of the fact that it is the organisations systems, structures, job design, communication and leadership processes that is driving employee behaviour and instead (for example) focus on the people as being the issue as they are ‘not willing to take accountability’ or ‘not willing to change’.

This, we find, is the single biggest barrier to cultural change and why many organisations just don’t get past that first hurdle. It requires the CEO to show genuine commitment to the change and some wisdom amongst those (generally HR or P & C) beginning the process.

2. The second reason lies in the complex nature of organisational culture. We know that culture is harder to change than climate. Organisational climate (for example engagement) is about attitudes and feelings. Organisational culture on the other hand is about beliefs. And everyone knows that changing beliefs is much harder than changing attitudes or feelings.Attitudes can be changed by manipulating contextual factors – information, remuneration, work environment, social events etc; where changing beliefs require internal conclusions at the individual level across a large number of organisational members.

   3.The third reason lies in the reality that culture changes not by attempting to change the culture directly, but indirectly. Culture change is achieved by changing the various factors (we call the Causal Factors for obvious reasons; as shown in the below "How Culture Works" Model) that influence, shape and cause the current culture. Research has shown that these factors include:

• Articulation of mission and service focus – proving people with a sense of shared meaning about their effort.

• Structures – how structure impacts members’ involvement, empowerment and ability to influence.

• Systems – how the HR systems, reinforcement systems and goal setting systems shape behaviour.

• Technologies – how the organisation takes inputs and turns them into outputs – particularly job design.

• Communication – how information flows up and down the organisation.

• Leadership – how those in leadership positions behave and how they impact the behaviour of those they lead.

Identifying how these currently influence the culture and then identifying ways of changing these to reinforce constructive behavioural norms is the key to successful culture change.

How Culture Works Model

    

    The next question is: What is a ‘reasonable’ stretch goal for measurable culture change?

  
Here we specifically talk about the culture profile in terms of the ircumplex – the actual behavioural norms that exist throughout the organisation. We generally recommend re-measuring about 18 months after the initial measure and thereafter every 18 months to 2 years. Within this context, we believe a significant shift would be about a ’one ring’ – reducing the defensive styles from say the 75th percentile to the 50th, or increasing the constructive styles from say the 25th to the 50th and so on.

Don’t expect a miraculous change to the ideal or preferred culture profile in the first re-measure! It takes time to change culture and that will be addressed in the next question.

   
So how long will it take us to change from a Passive/Defensive or Aggressive/Defensive culture to a Constructive one?
  

The quickest we have seen a change from a predominantly defensive culture to a predominantly constructive culture (not necessarily as constructive as the ideal/preferred profile, but nonetheless more constructive than defensive) is about 18 months to 2 years. It must be noted that in these cases there has been absolute commitment from the CEO with those individuals leading the change and being very articulate about why and how the change needs to take place.

Typically we see it takes about 3 to 5 years to shift from a defensive to a constructive culture. Given, as noted earlier, culture is changed indirectly through changing the relevant causal factors, it take time for such changes to filter through and have people see that ‘things really are changing’.  Since it is about changing beliefs, organisational members need to see the reality of genuine change (not just a PR exercise) in several instances in order for them to form new beliefs about how they should behave. 

By Shaun McCarthy, Chairman of Human Synergistics Australia & New Zealand

Is it hard to change a company's culture?

Can organizational culture be easily changed?

What are some of the challenges in changing the culture of organizations?

Can you change a company's culture?