Many leaders mistakenly believe that strategy or planning or management directives drive organizational behavior. While those things can certainly influence what people do, particularly in the short term or with discreet tasks, it is the deeply held beliefs and values within an organization that sway behavior over time more than any other factor. And this reality presents a more complicated leadership challenge than most managers realize because so much of organizational culture is implied, below the surface, rather than overt and easily visible.
For example, how many times have you seen an organization proclaim a set of values that says one thing, but notice that the organization actually incentivizes other values in its day to day operations? I recall an organization in my past in which the CEO claimed to value transparency—so much so that he built offices with glass walls as a symbol of transparency. In reality, the organization was so driven by fear that it was the least transparent culture I have ever observed in my entire professional life.
Because culture is so powerful, it can actually defeat even the most compelling strategy or initiative. It can also defeat the most talented managers. Fortunately, the reverse is also true. When you see organizations that are “world class” in some endeavor, those organizations invariably have cultures that support what they are really good at—their core competencies. In those organizations, strategy and incentives and operational plans are aligned with culture—with beliefs, mindsets, assumptions, etc. In fact, research over the last 25 years has shown that alignment of strong culture with strategy provides a huge competitive advantage and, according to Jim Collins at Harvard, such companies are typically six times more financially successful than companies with weak and poorly aligned cultures.
It is important to note that there is no “right” culture, but there is rational culture. In fact, quite different ethos or values can even lead to similar outcomes, but only if the culture is aligned with the objectives. For example, it is possible to deliver great service with a culture that supports autonomy and empowerment in its employees while another organization achieves great service by supporting extreme attention to detail. Those are different cultural values, but they are both aligned with the objective of providing great service.
As noted in this article from the consultants, Spencer-Stuart, one of the reasons that leaders often struggle to effectively align strategy and operations with culture is because most organizations don’t actively engage in dialog about culture—they don’t even possess a shared vocabulary for talking about it. Remember that most of an organization’s culture is like an iceberg, in which what you can see above the water (stated mission, vision, values) is only about 10% of the whole iceberg! Leaders must be highly cognizant of what is below the water line, because that is where the organization lives and where the cultural values that drive behavior lurk. It’s probably safe to say that the vast majority of an organization’s cultural rules are unwritten, although implicitly understood, by the people in the institution.
Because culture has a lot of inertia, it is not easily changed. If a leader determines that some key elements of culture above or below the waterline are counterproductive for the organization, then he or she must be prepared for a relatively long term commitment. You cannot change deeply held beliefs and behaviors with a memo or an all-staff meeting. For example, if a leader realizes that the organization needs to innovate, but is culturally averse to risk, he or she will need to take a comprehensive approach to shifting people from risk-averse to risk-tolerant. That may require an increase in employee autonomy and it absolutely requires that management stop punishing employees for “failure,” if not actually incentivize them for taking risks. And that has to happen repeatedly, over time. In most cases, aversion to risk is actually a manifestation of fear of failure, and that fear is usually deep in the organizational DNA.
So, cultural change is possible, but it is longitudinal and strategic. Culture is built and learned over a long time with great attention paid to what behaviors are rewarded and which are punished—regardless of what values are proclaimed publicly. In order to change culture, leaders must make an equally deep commitment to creating exceptional clarity around the ethos they want for the organization, which in turn must be supported by compelling language and communication, policy, incentives, targeted promotions, modeled behavior, and consistency, even when it would be easier slide backwards. In any high change environment, let alone one as fraught as culture change, people in the organization will be looking for any indication that the “new way” is not real or not lasting. People have a lot invested in existing beliefs and behaviors, even when they’re unpleasant or ineffective. In fact, this element of psychology is so strong that people will often choose the certainty of misery over what they see as the misery of uncertainty. As a result, if you as a leader determine that organizational culture is not aligned with strategic objectives in your organization, and you have the courage to change that, it will be one of the most difficult and long-term things you do. On the other hand, due to the power of culture over organizational behavior, if you don’t have the courage, you will dramatically limit your potential success before you even start.
Lastly, culture is also central to employee retention and success. Recent research found that nearly 70% of failed management hires were due to poor cultural “fit.” Again, this does not necessarily imply that the culture was bad or wrong, but that it wasn’t aligned with the values of the newly hired manager. This has significant implications for how we screen candidates for cultural alignment rather than simply skills or experience or even personality.
Clearly, there are multiple reasons to care about organizational culture—and significant risk if you don’t!
In a previous article I discussed the critical role that macro-culture plays in organizations. Although organizational culture tends to be its own microcosm of beliefs and values and behaviors, virtually all organizations are influenced by the macro-culture in which they find themselves. In other words, the people that make up organizations bring external beliefs and ethos into organizations, which then affect the culture inside the organization. These are often very deeply held values that span generations. They can be influenced by religion and politics and socio-economics and it generally is not wise to attempt to change those values, but rather to determine how the macro culture can be respected and even leveraged to achieve organizational objectives.