I was invited to talk about organizational culture to a private group consisting of CDO’s of large Finnish corporations and digitally savvy CEO’s of smaller Finnish companies. All of them have addressed the importance of developing company culture and they had some really good questions about it.

The key questions addressed were:

  1. What is culture? It seems so intangible and difficult to “touch”.
  2. When I have been given a “culture” and many subcultures, how do I go about changing those?
  3. How do you measure culture (and the development of it)?
  4. How to speed up the adoption of a new culture especially in large, older companies where there are set traditions?

Let’s get into responding to the key questions.

What is culture? It seems so intangible and difficult to “touch”.

Culture to me is like the ERP for organizational behavior. It has also been described as “how we do things here”. Anywhere, where there are more than 2 people collaborating together, be it work or a hobby, there is a group culture. And it is very important to understand that every single organization has a culture. The key question is: does that culture drive the execution of the strategy. 

We as people are social beings and we have a need to belong. A need to belong into a peer group. When we group, we will quickly see who is the leader of this pack. Think about a group work scenario at school. You always saw immediately who took charge and who followed. The person who is in charge defines the culture, the “how we do things here” for this group. And because people have the need to belong, they copy. The leader corrects and when the group members get it right, the leader rewards. Sound familiar? If you are a dog owner, this is also what applies to training puppies.

Keeping this in mind, company culture works the same way. It is the rules of how we do things here. In general, those rules might be written and documented into processes, procedures, operating manuals and so on. But that’s not all. It was the folks at Netflix who summarized it very well: It’s the things we hire for and fire for. In other words, the leaders in the groups set an example of what the culture is, because they correct and reward the behavior they value and want to see.

Culture is the civilization of a group. The norm of how people in that group must behave or they will be corrected. 

 

When I have been given a “culture” and many subcultures, how do I go about changing those?

You start by understanding what are the requirements the business strategy set for the company culture. Then you evaluate the current culture and compare it with the culture that your organization should have. You need to really comprehend what the required change should be.

When you start as a new executive are are given the culture, it is very important that you are not trying to set a new culture based on your needs. In other words, that you are not attempting to do just the same thing the other pact leaders have done in creating all those subcultures. The only purpose of an organizational culture is to drive the execution of the strategy. You, as a leader, must only attempt to change the existing culture in connection with the strategy.

Culture is the ERP for organizational behavior required to execute the business strategy.

Once you have the understanding of what type of culture your organization needs to have to drive the strategy, you start communicating this with the people. Everyone understands the word “strategy”. If you say, this is what our strategy requires, it is easier for people to cope with the change.

Business strategy defines the need and the shape of the culture.

Changing people’s behavior will be a huge task and it will take a long time. This is why culture driven companies hire only people matching the the cultural requirements. Leading people is hard enough as it is. You don’t want to make it even more difficult by selecting people who cannot adjust and feel comfortable working the way your strategy and culture requires.

Changing the company culture must happen every time the business strategy is changed (significantly). These work very much hand in hand. It’s a heavy process and the bigger the change, the more time it will take. But if it helps you at all, changing culture is a continuous journey. Culture is really never ready. What you need to do is reorganize the way your people and you operate, the way you do things, and find a structure in it that feels comfortable for you so that eventually it becomes a habit. It takes between 66-254 days of repetition before a new habit becomes a routine, an automatic behavior.  When you change culture, you have tons of new habits to break into a routine and you cannot repeat all of them on a daily basis. Maybe this puts some perspective into how much time it takes to change culture. But let me assure you, companies with irresistible, mission driven cultures are just so exciting to work at, to lead and to cooperate with.

It takes between 66-254 days of repetition before a new habit becomes a routine, an automatic behavior.  When you change culture, you have tons of new habits to break into a routine and you cannot repeat all of them on a daily basis.

 

How do you measure culture (and the development of it)?
Culture is not measured as such. It is measured through employee engagement and the execution of the strategy. Employee engagement means how people working in your company feel about the way they are required to work and behave (the culture). In other words, how satisfied, motivated and committed are they about your strategy, your culture, your mission, your customers, each other, your products, your services and your brand.
Developing and driving high engagement starts with hiring people that are passionate about your mission (mission driven) and compatible with your culture. It continues by developing communication, trust, collaboration, learning opportunities and leadership at all levels of the organization. For some people it may also be about compensation and benefits, but all evidence shows people are more engaged to the company and their work when there are high levels of trust, collaboration and learning opportunities in the organization.
When you develop a culture, you in fact develop the processes and practices supporting the execution of the strategy. These include setting goals and objectives and how you are expected to work in order to reach those goals.
My recommendation is to measure:
  1. How people are able to manage their work from understanding their objectives and the processes they are expected to follow to using the tools and equipment required in their role
  2. The results of their work, be it in quantity or quality
  3. Their fit to the culture, in other words how well understand the company values and culture, how their attitude, behavior and personalities match with the “things you hire for and fire for”, and how great of an example they set for others in the company in regards to living the company values

These I learned and picked up from my previous workplace before I became an entrepreneur. So on an individual level, this is how I evaluate the performance and living the company values of my employees as well.

In addition, you should measure the engagement, but not on an annual basis but maybe even on a monthly basis. I’m not a big fan of anything done once or twice the year. The speed of development is so fast, we should evaluate what we do and how we do it regularly. But not necessary with 2 h development discussion on a monthly basis. After all, development discussion is just a process, like a tail of a dog, and it’s not supposed to move the dog around.

 

How to speed up the adoption of a new culture especially in large, older companies where there are set traditions?

To be honest, I don’t think you can really speed it up as per say. Remember that culture is organizational behavior and with behavior, I mean the behavior of us people working together in that organization. Every time there is a new person in and perhaps someone out, or people move from position to another, the dynamics of the group change. It affects behavior. And the changing dynamics give us a continuous and ever lasting flow of  new pieces to find a place in the culture puzzle. Some people are able to adjust to changes faster, for some it takes longer to copy, and then, if the culture really changes, it is quite possible you will end up losing some people too. You should not expect every one to find comfort working in a set manner. That does not make them bad as professionals, they are just in a wrong company. It is important to accept that. The longer you let a great professional with a poor culture fit to set an example to others of what is accepted, the longer it takes for you to make any change.

You have to learn to understand how people behave. And understand that resistance to change is in fact a survival mechanism in people. If you have children, you are probably familiar with how little toddlers at a certain age start to shun strange people. Often parents think it is a bad thing to do. But in fact, it is part of learning to make a difference between a potential threat and a safe person. It’s a good thing for a child to go through this phase. I would compare resistance to change as an adult form of shunning. The only way to speed up change is to get rid of all the question marks that feel threatening because you don’t understand what is going on. For you as a leader, this means a lot of communication, lot of feedback, lot of conversations and lot of listening to people. A successful change happens only by taking of the threats and being able to justify the needs for the change.

Below are my slides from yesterday. Just a few tips for developing organizational culture.

Article picture: Gratisography.com