The Insider's Guide to Culture Change

Creating a Workplace That Delivers, Grows, and Adapts

Siobhan McHale

• Publisher: HarperCollins Leadership
• Year: 2020
• ISBN:
  9781400214662
• Topic: Betriebswirtschaft
• Subtopic: Unternehmenskultur

Culture transformation expert Siobhan McHale defines culture simply: "It's how things work around here." The secret to the success or failure of any business boils down to its culture.

From disengaged employees to underserved customers, business failures invariably stem from a culture problem. In The Insider's Guide to Culture Change, acclaimed culture transformation expert and global executive Siobhan McHale shares her proven four-step process to demystifying culture transformation and starting down the path to positive change.

Many leaders and managers struggle to get a handle on exactly what culture is and how pervasive its impact is throughout an organization. Some try to change the culture by publishing a statement of core values but soon find that no meaningful change happens.

Others try to unify the culture around a set of shared goals that satisfy shareholders but find their efforts backfire as stressed employees throw their hands up because "leadership just doesn't get it." Others implement expensive new IT systems to try to bring about change, only to find that employees find "workarounds" and soon go back to their old ways.

The Insider's Guide to Culture Change walks readers through McHale's four-step process to culture transformation, including how to:

• Understand what "corporate culture" really is and how it impacts every aspect of the way your organization operates
• Analyze where your culture is broken or not adding maximum value
• Unlock the power of reframing roles within your company to empower and engage your employees
• Utilize proven methods and tools to break through deeply embedded patterns and change your company mind-set
• Keep the momentum going by consolidating gains and maintaining your foot on the change accelerator

With The Insider's Guide to Culture Change, watch your employees go from followers to change leaders who drive an agile culture that constantly outperforms.

1

LEARN THE INSIDER’S SECRET

The Culture Disruptor

Few scandals in the history of business rival the 2001 collapse of Enron, the American energy company whose culture of greed and rapaciousness tumbled it from the pinnacle of success to the abyss of failure. Its leaders’ unethical and illegal behavior resulted in one of the largest bankruptcies in American history and triggered the dissolution of Arthur Andersen, one of the top accountancy firms in the world.

During the Enron trial, the company’s CEO, Jeffrey Skilling, maintained his innocence. These claims withered in the glare of the public spotlight. Testimony during the trial revealed Enron’s involvement in a shocking number of illegal and underhanded schemes, including the firm’s role in perpetrating an electrical energy crisis in California, in which blackouts and soaring bills resulted from Enron’s manipulation of the energy supply. Enron even took power plants offline in order to make more money.

All this occurred despite the company’s sixty-four-page Code of Ethics. The document, widely circulated online, detailed the company’s values, including, believe it or not, integrity. Oh, Enron had maintained a strict policy of integrity over the years, if you define integrity as an adherence to a policy of greed and corruption. Unethical behavior ran from the C-suite all the way down to Enron’s middlemen buying and selling electricity on the floor of the commodity exchange.

This case illustrates the fact that you cannot legislate a strong, positive, vibrant, corporate culture. What, exactly, do we mean by corporate culture? Every executive I’ve ever met uses the term, but I’ve found few who can clearly and concisely define it. My definition of workplace culture is “The patterns or agreements that determine how the business operates.” A simplified version that I commonly use is: “It’s how things work around here”. No published policy can create a corporate culture. No document outlining an organization’s bedrock values can guarantee that people will faithfully practice those values. Culture emerges not from a proclamation or code of ethics but from how people, especially the organization’s leaders, behave day in and day out. As the sad story of Enron proves, it’s possible for even the most honest and upright worker to get ensnared in, and corrupted by, a bad culture.

A bad culture can corrupt good people.

In today’s hyperconnected world of instantaneous global communication, massive market disruptions, the expansion of an all-powerful urban consumer class, conflicts within the multigenerational workforce, and increasingly strict laws and regulations governing corporate behavior in some countries, it takes more than pretty words to instill the values that will successfully steer a company through volatile and uncertain times.

A report by Aaron De Smet, “Culture can make or break agility,” published on February 26, 2018, by McKinsey & Company, underscores the pressing need to build and maintain a good culture in turbulent times: “Only 4 percent of survey respondents have completed an organization-wide transformation. . . . The No. 1 problem they cite is culture.” Another study, “2016 Global Human Capital Trends,” by Marc Kaplan, Ben Dollar, and Veronica Malian, published by Deloitte on February 29, 2016, reports that “the impact of culture on business is hard to overstate” and that an overwhelming 82 percent of eleven thousand survey respondents in business leadership roles believed that culture is a source of competitive advantage.

If you want a high-performing, agile, market-dominating company that gets results no matter what challenges it faces, you’d better create a culture that will get the job done. Simple enough, right? No. Actually, it’s a whole lot easier said than done. To paraphrase Louis Gerstner, the former chairman and CEO of IBM, turning a bad culture into a good culture is like teaching a herd of elephants to dance.

UNDERSTANDING THE POWER OF CULTURE

During my first year at university, studying psychology in the seaside city of Galway on the west coast of Ireland, I could not find a summer job in that recession-plagued coastal region. Desperately in need of funds, I decided to take the boat over to London for the summer, hoping to find a job there. By a stroke of luck, I landed a position in a warehouse in north London, where I filled orders from music stores for vinyl records, those dinosaurs of the recording industry that are making a comeback today.

On my first morning in the warehouse, Emma, the team supervisor, instructed us to set off at a brisk pace, filling record orders as rapidly as possible. However, at morning tea one of my coworkers took me aside and told me (in a rather threatening tone): “You’d better slow down. If you work that fast, the boss will expect us all to do the same!”

Uh-oh! I was doing my job too well? That possibility had never dawned on me. My coworker had given me a clear message to slow down or risk the ire of my colleagues. But it was in my nature to always do my best. Well, nature won out in the end. I kept doing the best I could.

Two days later, Emma called me into her tiny office. I sat perched on a rickety chair as she fidgeted with her pen and told me, “Unfortunately, Siobhan, I don’t have enough work here to keep you on, so we’re going to have to let you go.” As I looked around the bustling warehouse and thought about the backlog of customer orders, I could not believe my ears.

Only later, as I learned more and more about the nuances of corporate culture, did I realize that I lost the job, despite my best efforts, simply because I had operated outside the acceptable norms of that warehouse culture. I had not followed the unwritten rule that a worker should proceed at an orderly and tortoise-like pace. There was no room there for a hare!

Every culture, good, bad, or exceptional, exerts tremendous power in the workplace. A bad culture like the one at the music warehouse generates lackluster results. A corrupt culture like the one at Enron courts disaster while a good one ensures that employees perform to the best of their ability even when no one is watching. But people do watch! In today’s hyper-connected world, evidence of a company’s culture can go viral in a heartbeat. United Airlines learned this the hard way.

On Sunday, April 9, 2017, police officers forcibly removed a passenger from United Airlines flight 3411, breaking his nose in the process after he refused to give up his seat on an overbooked flight from Chicago to Louisville. When passengers’ smartphones captured the event in all its bloody glory, it immediately went viral, drawing more than 210 million internet viewers within a matter of days.

The video evidence suggested that United Airlines cared more about its own welfare than that of its passengers. As it turned out, the company wanted to remove Dr. David Dao from the flight in order to make room for a United Airlines’ employee who needed to get to another assignment. What sort of culture would do that? Not a customer-friendly one. Ironically, according to Fortune, the incident eventually wiped $1.4 billion off the company’s market value.

Culture can make or break your strategy.

In the end, United Airlines was forced to reexamine and alter certain elements of its culture. All companies should do the same, and they should do it often. A bad culture will leak value from your business, drop by corrosive drop, and it can get quite ugly in one social media posting. Even a good culture can, over time, lose its power to keep a company at the top of its game. It’s all about careful reinvention, making important alterations before that one costly mistake hits YouTube.

Culture differentiates one company from another. Think of it as an organization’s personality, the set of unique attributes that give it life, make it stand out from the crowd, and give it an edge over its rivals; or, in the case of an Enron or my summer employer or a United Airlines, it can undermine an organization’s ability to create and sustain a competitive advantage.

SEIZING THE ULTIMATE COMPETITIVE ADVANTAGE

If your company makes widgets, your competitors can copy your product or even disrupt your market share with something that makes your widgets obsolete. You may jump on every management theory that comes along, from Lean Six Sigma, business process reengineering, total quality management, management by objectives, and benchmarking to knowledge management, e-business, economic value-add, big data, etc., etc., etc. You’ll find a lot of company there. But no one can easily copy your company’s culture. This explains why all those executives surveyed by pollsters cite it as a major priority.

This makes culture change one of the greatest untapped sources of performance improvement in organizations. If you get the culture right, the results will follow. Leaders who focus on the conditions that produce success (the culture) stand a far better chance of delivering the outcomes they desire.

If you take care of the culture, results will take care of themselves.

You can picture culture at the hub of a multispoked wheel. It drives the way your employees design, research, and manufacture your goods; it influences how you move, sell, and service your products; and it dictates how you meet the expressed and unexpressed needs of your customers. Culture provides the key not only to today’s success in those critical areas, but also to tomorrow’s continued dominance in the marketplace. Manage it, or it will manage you.

Workers in every department spend a significant chunk of their lives on the job, whether in a high-tech startup in the Silicon Valley, a venerable insurance company in London, or a sprawling toy factory in Yiwu, China. The culture can either engage them to perform to the best of their abilities, or it can give them excuses for always falling short of the mark.

The human capital and management consulting company Aon Hewitt, in its report titled “Wired for engagement” published in November 2017, found that organizations with highly engaged workforces achieve measurably better business revenue outcomes. In short, highly engaged cultures, where employees feel inspired to strive for better results, get better results.

Annemarie Mann and Jim Harter, in a Gallup report “The Worldwide Employee Engagement Crisis” published January 7, 2016, reveal that a staggering 87 percent of employees worldwide are not engaged at work. The Gallup researchers found that, in the United States, only 32 percent of employees feel motivated to go the extra mile in the workplace. In other words, some 86 million full-time workers in the United States do not bring their best selves to their jobs.

What can leaders do to turn that around? They can construct and maintain a vibrant culture where people choose to bring their best selves to their work. This became especially important when the so-called millennials entered the workforce. This new generation did not want merely to come to work, punch the clock, go through the motions, punch the clock again, and go home. They wanted meaning and purpose in their jobs. The best cultures bestow that meaning and purpose.

That’s the good news. Here’s the bad news: building a great culture takes courage to begin the change and true grit to continue.

Culture change is the hardest work you will ever do.

I once worked with a colleague named Mal Ward, and admired his achievements over his career as a top executive. Mal always displayed the wisdom and humility of a truly great leader. Mal asked to meet with me, not long after he had been diagnosed with terminal cancer, to discuss the progress of culture change, at a company where he was serving as the chairman—a change effort that I had been helping to shape.

During our discussion in the high-ceilinged foyer of a Sydney hotel, Mal grew pensive as he shared memories of the high points of his life as a business leader. He singled out his role as CEO of a major telecommunications company: “That was the toughest but most rewarding job I’ve ever done, Siobhan. We contributed to the everyday lives of Australians by introducing mobile phone technology, but the biggest challenge was to prepare our people for the transition into a more competitive marketplace. That culture work was the most meaningful work of my career.”

Mal died three months after our conversation, but I still recall his parting words that day: “Keep going with the culture building, Siobhan. It is the hardest work you will ever do, but it makes all the difference.” Mal understood that culture building taxes leaders more than all of their other work combined. It makes budgeting and forecasting and strategic thinking look like middle school playground games. It takes both state-of-the-art technical management skills and best-in-class leadership capabilities to get the job done.

Sadly, however, a McKinsey report published in April 2015 and titled “How to beat the transformation odds,” reveals that up to 70 percent of corporate change initiatives fail to deliver expected benefits. Throughout this book, I will detail many case studies where well-intentioned leaders embarked on a major culture change initiative they hoped would happen overnight, only to find it moving at the speed of a glacier and often with far-less-than-hoped-for results. You will learn why the popular conventional approaches simply do not work. And more important, I will offer a new methodology that I have developed, not as an outside consultant but as an insider charged with making culture change happen. It boils down to activating what I call The Culture Disruptor.

ACTIVATING THE CULTURE DISRUPTOR

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