Strat intent culture

Strategic Intent • 1

© 2011 Edelman Change and Employee Engagement Group

Corporate culture defined

Corporate culture is the distinctive personality of an organization. It is a key determinant in how employees behave – what to do and what not to do. At the core, corporate culture describes “how things are done in an organization” and includes an organization’s core values, beliefs and assumptions.

New employees assimilate culture as the way to perceive, think, feel, act and expect others to behave in the organization.

That said, there is no “right” culture model. Rather, the key for leadership is to adhere to a corporate culture that is consistent with the company’s vision, values and strategic goals. Not surprisingly, corporate cultures of industry leaders do not develop by accident. Instead, successful companies explicitly shape and define their corporate cultures to serve as effective enablers, helping them achieve their desired objectives. Often, corporate culture will determine whether an organization survives in the long-term, especially in volatile environments. The ability to align corporate culture

with strategy is a powerful means for gaining competitive advantage. Unfortunately, although companies are usually pretty good at establishing their corporate strategies, they often overlook or underestimate whether they have the right culture in place to direct the company toward continued and future success. Or they don’t know how to change their corporate culture to support future growth goals.

Assessing corporate culture

First and foremost, culture is seen today more than ever before as an important determinant in a company’s success. General Motors, for example, recently replaced most of its senior leadership citing the need for a new culture among other things.

But how do you know if your culture is helping or hindering organizational success? Certainly, traditional techniques such as employee surveys, focus group interviews, and regular pulse checks are common methods for assessing a company’s current culture by uncovering gaps between employees’ beliefs and values versus expectations and protocols

Strategic IntentA leadership perspective on today’s issues

and tomorrow’s trends for business success

Volume 3, Issue 3Published by Edelman Change and Employee Engagement

Transforming Corporate CultureHow Your Employees Think, Feel and Behave as a Means to Succeed in Today’s Competitive Marketplace

Strategic IntentA leadership perspective on today’s issues

and tomorrow’s trends for business success



defined by the company and gathering employee feedback and insights on the type of culture they want the organization to develop.

Even more alarming are the signs or symptoms indicating a company’s culture may be suffering and requires attention and change.

They include:• High turnover

• Difficulty in attracting top talent

• Low employee commitment to contribute to the organization’s success

• Lack of information exchange between individuals and teams

• Poor transparency into how decisions are made

• Drop in customer satisfaction scores

• Minimal employee participation in company events

• Reduced cooperation and collaboration between colleagues

Changing corporate cultureThe Four Dimensions of Culture Change

Once a company realizes its current culture needs to change, it must first comprehend the underpinnings of what makes a desired culture becomes a reality. Changing a company’s culture requires careful planning and critical understanding of which organizational levers have the greatest impact on transforming its culture. It is more challenging to change the culture of an existing organization than to create a culture in a new organization. When a

culture already exists, individuals need to unlearn the old values, assumptions and behaviors before they learn the new ones.

That said, companies can and do change their cultures. In fact, many of the most successful companies continue to exist because they have transformed their cultures multiple times. Think IBM, Apple, Nike, and Xerox to name a few. In studying culture change, we have identified the four dimensions that must be addressed.

Dimension #1: Leadership

When a company is looking to change its corporate culture, its leadership team plays two critical roles – 1) changing the conversation to reflect the organizational and individual behaviors, business focus, and priorities underpinning the change and explaining why it is important; 2) supporting the change through commitment – its own actions, behaviors, decisions, performance measures, and investments.

Employees will only begin rethinking and changing their own behaviors if they experience the new way to do things through

many channels and interactions. Consequently, it is critical that company leaders articulate why the change is important and how it relates to individual and organizational success. However, company leaders must also demonstrate behavioral support for the transformation. People look to their leaders for signals on how to act. Hence, executives must lead the change by altering their own behaviors and making sure their actions and decisions are aligned with values of the new culture.

Apple Founder Steve Jobs defined and developed the company’s culture in ways that can neither be replicated nor replaced. Similarly, Disney instills its core values to every employee at every level by enveloping the culture through story telling, sharing, recognition and rewards.

Dimension #2:Management Practices and Workplace Policies

As the formal arbitrator of what is acceptable in a company and key factor of determining how “things get done in an organization,” a company’s management practices and workplace policies are the tangible, significant ways for how people experience, live and feel culture. For example, allowing certain bad behavior from managers instills a negative set of people values. While instituting policies that allow working mothers to work part-time or from home on certain days help develop a family-friendly culture. Alternatively, management practices that ignore family obligations instill a culture that devalues work-life balance.

Leadership

Organizational Structure

Management Practices and

Workplace Policies

Performance Management



Supporting its mantra of: work should be challenging, and the challenge should be fun, Google permits engineers to devote 20 percent of their time on anything they want that they are really passionate about. To ensure global management practices support its unique culture, Google hired a Chief Culture Officer who works with employees around the world to identify ways to maintain, enhance and develop the company’s culture and keep its core values, even as it continues growing.

:: Hiring PracticesPersonalities and experiences of employees have significant effects on a company’s culture. While training employees in the behaviors of the new culture is important, hiring employees who already embody core values of the new culture accelerates and strengthens the change. People tend to conform to the behaviors of those surrounding them. New hires can influence other employees to change their behaviors and adopt new expectations and ways of interacting with each other.

Aware that finding the right employees is critical to maintaining and developing its culture of commitment and professionalism, as part of its interview process, Zappos, an online retailer, asks applicants a series of questions pertaining to the person’s core values, to better understand if the applicant and Zappos fit well together. To reinforce Zappos’ core values, every new hire participates in a four-week immersion program to understand the company’s philosophies, culture and practices. A week into the program, Zappos stops the training

and tells new hires that if they quit on the spot, Zappos will pay them for the time they have worked, plus a bonus. The idea behind “the offer” is to give new hires the opportunity to leave the organization if they do not have the sense of commitment that Zappos is looking for.

Dimension #3: Performance Management

One of the most effective drivers of culture rests with how people are measured performance-wise including compensation, recognition, and training/development.

:: Training and DevelopmentBehavior change drives culture change. Employees must clearly understand what is expected of them and what their new behaviors should be, to support the culture transformation. Training is useful in defining and communicating new expectations and teaching new behaviors. Integrating core values of the new culture into training programs further clarifies for employees what the new culture looks like and how it differs from the previous culture.

:: Recognition and RewardsAcknowledging and rewarding ideal behaviors that support the new culture are critical. Recognition should be both private and public, so that everyone clearly understands what behaviors are valued. More private recognition can come from senior leaders or even the CEO so individuals understand what they did was important, not just for their direct manager, but that senior leaders also value their support in shaping the new culture.

The Walt Disney Company trains managers everyday on how to recognize employees who demonstrate the company’s core values and provides them with the tools to do so. Furthermore, Disney has over 180 recognition programs that encourage employees to support the company’s culture. Among these programs is the “Spirit of FRED Award.” FRED is an acronym created from the name of an employee who personified the Disney values: Friendly, Resourceful, Enthusiastic, Dependable. An employee had introduced this award to recognize the individuals who mentored and coached him as he began his management career after being an hourly employee. Employees liked the award so much, they kept giving it out.

:: Performance Reviews & Compensation StructuresTo ensure consistency, companies must make sure performance and compensation structures endorse the behaviors and beliefs of the new culture. For example, employees should not be rewarded for individual performance if the new culture specifies collaboration and team work as a core value. Companies should make sure they clearly define the new performance standards to prevent employee confusion.

A leading department store chain enforces its culture of high-performance and excellence in the earliest stages of an employee’s experience. The company designs performance standards, reviews, compensation and other HR management programs to reinforce its culture of excellence throughout an employee’s career. Its HR function also works to continually improve the communication of total



compensation programs, including cash compensation and benefits, so that employees know and fully understand the reward system and its links to the company’s core values.

Dimension #4: Organizational Structures

Organizational structures can play an important role in defining how individuals and teams interact with each other, which affects a company’s overall culture. Companies with multi-layer organizational structures tend to be more hierarchical, inflexible and process-driven compared to companies with flat organizational structures. Meanwhile, companies with many business units competing for the same customers and internal resources might lead to siloed teams that rarely collaborate on joint projects. Just as there is no “right” corporate culture, there is no “right” organizational structure. That said, companies should be careful that their organizational structures empower and encourage individuals to behave in ways consistent with the new corporate culture, instead of contradicting it.

:: Physical Work EnvironmentsOften overlooked, employees’ physical workspaces are valuable drivers for changing a company’s corporate culture. The amount of workspace different individuals have and whether this varies depending on seniority in the company, where offices are located, who are assigned offices, how many common areas there are and how common areas are utilized, affect how people behave, interact and communicate, which in turn shape the company’s culture.

For example, realizing that closed-door offices can impede collaboration and interaction, to maintain an open communications culture, some companies now operate in open-office environments. Instead of closed offices and cubicles, each workspace including the CEO’s, is out in the open and looks out upon the rest of the staff in each department. Some companies even use rolling desks, cabinets and seats, so that employees can set up their individual workspaces according to their personal needs and preferences.

A long-term play

Transforming a company’s culture is challenging, but it can be done. In some cases, it must be done, or the company risks not surviving in the long-term. In addition to the key levers discussed above, persistence, patience, discipline and employee involvement are critical to successfully transform a company’s culture. Culture change takes time. The speed of change depends on the size of the organization, the commitment of top leaders and the availability of resources to implement the change throughout the company. Nonetheless, with strong leadership, results will begin immediately.

Edelman Change and Employee Engagement is the global organizational (internal) change communications consulting group of Edelman, the largest independent public relations firm in the world and the third largest overall. The mission of Edelman Change and Employee Engagement is to advise and assist organizations on strengthening the ability to implement corporate strategy and initiatives through management and employee engagement and effective communications in order to build brands and achieve business goals.

The group provides distinctive expertise in organizational effectiveness, culture transformation, strategy implementation and accessibility, CEO transition and positioning, internal branding, post-merger integration, labor-management relations, internal communications programming and research/measurement.

For more information, please visit www.change.edelman.com.

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