Culture transformation No transformation without culture

We’re not talking about culture — or are we?

Let’s not talk about culture. It’s an amorphous thing that’s hard to work on and hard to measure.

Let’s talk about the significant challenges companies face instead — the tangible things we can measure, like digitalization, for example. Digitalization used to be all about technology until we found out we couldn’t master it without an appropriate digital mindset. And what about growth? All organizations want to grow — growth is tangible, and we can measure it. Everybody knows what growth is, but few people understand how to “do” it. There’s no silver bullet, and we can be confident it won’t happen without a growth mindset. And innovation? In many organizations, silo thinking blocks innovation and presents a barrier to overcome. And customer-centricity? If there is one thing organizations aspire to, it’s a strong customer focus. But what else is customer-centricity but a mindset?

So, we are talking about culture, then? Yes, indeed, we are. Whatever transformational challenge an organization faces, we can trace it back to culture.

Why culture is more important than ever

Culture is an organization’s operating system (or OS). In the Industrial Age, “command and control” was the dominant OS. Now, in the Digital Age, we must change our OS to reflect trust and responsibility. This new operating system isn’t perfect; no OS will ever be. We need to continue to work on it to get the bugs out.

If anything made everyone aware of the need for change, it was the pandemic. When people were working from home, there was no more control — employers needed to trust employees to be responsible and do their jobs. And, as we all know, it worked. But something else suffered: our sense of belonging, our identity and spirit.

You don’t miss it until it’s gone. And sitting in our home offices in front of our laptops, we all felt we lacked something. Many organizations are now asking themselves how to preserve their culture in this hybrid world of working as we continue our efforts to overcome COVID-19. The bad news: It will never be the same again. The good news: Now is the time to make a real change and come out stronger than before.

Recent Mercer studies show an increase in the relevance of culture work. Forty-two percent of respondents say that “how we build culture” is the aspect of the employee experience that has changed the most due to the pandemic.¹ Nearly three-quarters (74%) of respondents agree that culture is crucial when implementing flexible working at a larger scale.² Companies increasingly perceive culture as a strategic capability. Sixty-eight percent of mature organizations see an improved culture as critically important to driving business outcomes and attracting and retaining talent. Already 60% of HR departments have been tasked with changing their workplace culture.³

So, the word is out. Plans are on the table. Expectations are high, but what is it, exactly, that needs to change when we consider culture?

What culture is

“Culture is how we do things around here” — this is a commonly used phrase that nicely summarizes the nature of culture. Or, to call on another definition, culture is the “glue” that holds an organization together. Culture determines all aspects of an organization:

• How decisions are made
• How feedback is given
• How employees work with each other
• How individuals and teams learn and develop
• How people deal with change

Any behavior we typically find in an organization is a testimonial of its culture.

We haven’t come across a better model of organizational culture than Edgar Schein’s. Schein describes it as “a pattern of basic assumptions — invented, discovered, or developed by a given group as it learns to cope with its problems of external adaption and internal integration — that has 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.”⁴ Schein describes culture as having different levels. At the most fundamental level, he identifies basic organizational assumptions that are neither questioned nor discussed. These implicit shared values shape the corporate mindset. They determine what an organization considers to be “right.” Visible manifestations of culture surface, on the one hand, as organizational artifacts (for example, visible rituals or processes) and, on the other, as the concrete, visible behaviors that define daily collaboration

How to transform culture

Some people say you can’t change culture. They believe culture is a result, not an equation with parameters you can tweak. However, we believe — and have demonstrated — that culture is part of the equation, and business objectives are the output. So, yes, you can change your culture. But it requires calling out the prominent paradigms that need to shift. Some of these we have known about for a while now. But old habits die hard: We have learned that it takes more than communication to move beyond what we have practiced over decades.

There’s no mistake: Cultural transformation is not an easy undertaking. Changing culture is a process that unfolds over time, and it’s resource-intensive. First and foremost, it takes the leadership team’s utmost determination to really change. We have seen too many campaigns about purpose, corporate values or leadership principles fail because they were only marketing efforts. They might have started strong but vanished quickly, leaving no one to remember any of the content or the reason for the campaign in the first place. Instead, in many cases, what’s left is vague skepticism from employees when they hear of yet another similar exercise.

Taking the levers of Schein’s model is the way to avoid these pitfalls and start transforming culture. We can postulate a mindset that we envision for the future. We can work on the barriers that prevent us from acting accordingly. We can reflect on behaviors that move us toward or away from our desired culture. It means stepping out of our individual comfort zones. It’s where the hard work starts, and it’s where most cultural exercises fail. But if there is a silver bullet for changing a company’s culture, it’s making genuine feedback and reflection an organizational reflex.

Making transformation efforts work demands engaging everyone in the company in co-creating the desired vision for their future organization. It requires describing the mindset and behaviors they want to see and working together to remove the barriers. It demands inviting everyone to learn to give and take feedback. It makes for a brighter future, doesn’t it?

But to overcome the barriers and skepticism many organizations may face, it’s vital to consider the critical few factors that determine whether a cultural transformation will go all right — or all wrong:

The process of transforming a company’s culture is a long-distance run. There is a tendency to declare victory too soon — don’t do it; resist the temptation. Managing expectations is crucial.

The same goes for perspectives on change. Many people tend to think it’s others who need to change, not them. This is one of the biggest illusions that must be addressed and overcome at the beginning of the process. Everyone in the organization must be invited to make a genuine change — for themselves and the entire corporation.

Probably the most critical success factor in cultural transformation is how individuals respond to the challenge. Employees will observe to see whether leaders “walk the talk.” If leaders aren’t making the required effort to change, then employees won’t either. If you allow yourself to fall back on old habits, your transformation efforts will stall, and it will be business as usual.

The rewards of cultural transformation

To succeed, we will have to get out of our comfort zones. Cultural transformation is hard work. But it is rewarding: Doing the work of transformation allows us to create a better working environment and, in the process, develop and grow as individuals.

Cultural transformation is the most critical factor for organizations that want to be future-ready: It’s a journey that will drive engagement, productivity and retention. And it will help prepare them for the significant challenges that lie ahead — for example, sustainability, which is next on many companies’ agendas. If organizations want to become truly sustainable, they must start with their culture

Change is possible. And it’s worth the effort.

_{¹ Mercer. Global Talent Trends 2021.}

_{² Mercer. Global COVID Surveys.}

_{³ Virgin Pulse. State of the Industry Report 2018.}

_{⁴ Edgar H. Schein. “Coming to a New Awareness of Organizational Culture,” MIT Sloan Management Review, January 15, 1984.}