“You can observe a lot if you just watch.” ~Yogi Berra
Culture gets blamed for a lot of things. Half of all merger failures, say the experts, are caused by cultural incompatibility. If business strategy is not aligned with corporate culture, corporate anthropologists expound, the strategy will lose – every time.
Corporate culture has clearly been established by many researchers as a major driver of organizational and individual performance.
Culture Clash
How does culture influence performance, stop change dead in its tracks, or derail a merger? And why should we consider cultural due diligence as seriously as we would financial due diligence?
Organization culture is an amalgam of assumptions or values created in response to business challenges that have worked well enough over time that they are taught to newcomers as “the way we do things around here.”
These values and assumptions don’t describe what tasks need to be done; rather, values provide guidance about how each task needs to be done.
When cultures collide, it is usually because conflicting values are driving different sets of behaviors.
Test Clash Dummies
For example, let’s consider a goal like “being the lowest price provider.”
Company ‘A’ may emphasize efficiency and cost reduction – e.g. just-in-time production, low materials costs – as the route to excellent customer service.
Company ‘B’ may emphasize quality – e.g. zero defects, 100% replacement guarantee – as the key.
Both are valid approaches. But, if the companies attempted a merger, the values would clash because, while both valid, they are potentially at odds with one another.
Ultimately, what people do (action) and how they go about doing it (behavior) define organization performance. So attempting to manage culture to create the right behaviors makes good business sense.
According to John Kotter and James Heskett, authors of Corporate Culture and Performance, “companies that actively managed their cultures in such a way that they were adaptive and flexible were able to outperform companies that had strong but rigid cultures.”
In fact, the authors wrote, “over an eleven year period, they outperformed them in a big way – revenue increases of 682% versus 166%, and net income increases of 756% versus 1%.”
Your 4 Steps to Culture Clarity
Culture is a type of shared mental model governing behavior. Examining I can be tricky, but you can maximize success by following these four steps:
Step One – Clarify Your Business Objectives
Culture only becomes relevant when it is viewed along side what you are trying to accomplish and in terms of whether it is helping or hindering progress.
The first step, then, is to clearly and concisely describe the business strategy or business change you are trying to achieve and how you plan to measure results.
Next, determine the behaviors that need to occur within specific employee groups to achieve the desired result.
Step Two – Examine Organization Artifacts
Convening a focus group or groups can be useful for this step and the ones that follow.
Examine things like:
- Your company’s dress code
- Policies and practices
- How decisions are made
- Whether relationships are formal or informal
- Working hours
- Formal and informal communication
- Rituals
- Work practices
- Leadership and management practices
- How disagreements are handled
Look for patterns that may illustrate underlying values.
Step Three – Determine Organization Values
Next, review the artifacts in terms of values they may represent.
What do these items say about your company’s value system? Make a detailed list.
Next ask the group to ponder how the company talks about values, and what the company does about them. If the organization leaders talk about a value, but do nothing to make it stick, it is probably not important.
On the other hand, if a given value has a lot of talk and a lot of action associated with it, it is probably a key driver of behavior. Company publications can also be analyzed to identify espoused values.
Look for the themes that are stressed and how much space is devoted to them over time.
Step Four – Identify Tacit Assumptions
Sometimes, organizations communicate values that just don’t ring true when you compare them with practices or the other artifacts noted in step two.
In this step, you compare espoused values with what really happens.
Does the organization practice what it preaches? If not, there may be shared, but unspoken, assumptions at work that are driving behavior.
Let’s say ‘Company X’ maintains that it “values employee ideas to improve work processes.” In practice, however, supervisors will not discuss an improvement idea unless it is accompanied by a supporting value proposition and some level of cost-benefit analysis.
In this case, there is a tacit assumption that could be stated:
“We value employee ideas to improve work processes as long as the employee can supply proof of its value.”
The Final Analysis
Understanding the espoused values and tacit assumptions that drive current culture and the behaviors required to make your change happen or to achieve your business results will help you determine the cultural helpers and impediments to change.
It can be both difficult and time consuming to change culture.
Rather than attempting to change it, you may be better off designing your business objective or organizational change to take advantage of those aspects of the culture that can be positive influences.
In the long run, by understanding your organization’s culture, you will be in a much better position to determine which initiatives will be culturally acceptable, which initiatives won’t, and what can be done to achieve success.
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Joel Harris Head is Managing Partner of Headwinds Ltd
He helps clients build more engaged and accountable teams and stronger leaders
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Related articles
- Value-Based Management Lessons from the Marines (blogs.hbr.org)
- How to Build a Bulletproof Company Culture (inc.com)
- Instilling Pride: A Key to Eliciting Excellence (linked2leadership.com)
