Culture as Asset

This article addresses a commonly discussed concept—organizational culture. Drawing from years of industry experience assisting companies in organizational change efforts, we argue that there is ample opportunity for culture to function as an asset versus a cost. Most importantly, we highlight the manner in which targeted cultural initiatives can be leveraged to help companies harness their organizational culture and positively impact their bottom line.  Existing research documents the many assets attributed to a h6 organizational culture; these include low turnover, reduction in employee discontent, low absenteeism, high performance and high morale.

Does your current organizational culture function as an asset or a cost?

This article asks the following question, does your current organizational culture function as an asset or as a cost? In other words, does culture contribute to your employees’ performance and the bottom line, or detract from that performance and the bottom line? If you are interested in enhancing your organization’s success then attention to its cultural foundation is critical. This paper concludes that when the cost of culture is adequately understood and initiatives are tied to measurable organizational performance, cultural initiatives contribute directly to corporate profitability.  Alternatively, weaknesses in an organization’s culture contribute to systemic and costly dysfunction.

Typical challenges include:

Poor leadership alignment which contributes to contradictory demands and weak tactical and strategic implementation

Insufficient communication leading to confusion and anxiety as well as poor comprehension of priorities

A silo approach with departments working at cross purposes resulting in frustration, weaknesses in coordinated decision making and problem solving

Typical opportunities include:

Robust Business Plan Deployment with agreed to performance metrics at all levels and Project Management

Prioritization of issues and leveraging resources to address the most critical items while also supporting the day-to-day operations of plants brings cohesion, stability, and organizational effectiveness

Improve communication mechanisms, employee empowerment and processes of accountability

Cultural initiatives to directly combat the costly challenges associated with employee turnover, poor communication, lack of trust, worker fatigue, and burnout

The Cultural Improvement Curve

The Cultural Improvement Curve depicted below highlights the forms of loss associated with poor organizational culture as well as the impact that cultural initiatives can have on reducing associated losses by improving operational performance through a stable, trained, and aligned workforce.

A typical problem that companies face is recognition that their culture needs to be improved yet an inability to adequately impact and influence that culture. Employee surveys often offer a laundry list of weaknesses yet survey scores do not naturally translate into effective solutions. As such, many leaders readily admit that culture is at the root of their most persistent and costly organizational problems; however, they struggle to implement impactful and sustainable culture change.  By effectively investing in their culture, many companies can have a profound impact on their bottom line. Despite recognition of the role that culture plays in organizational behaviors, companies struggle to leverage the power of organizational culture and fail to generate comprehensive and successful strategies.

Crafting Effective Cultural Strategies

To craft effective strategies requires moving beyond narrow conceptions of culture and cultivating a complex and multifaceted awareness of the culture concept. At the end of the day, culture is the driver of organizational practices and directly impacts and influences a company’s norms, rules, and beliefs. On an individual level, company culture impacts what employees feel they have to do, ought to do, and want to do. To proactively cultivate a desirable company culture is to steer the ship of employee behaviors, beliefs, and practices. Additional challenge stems from the many forms of resistance to change present in organizations (resistance can be overt rejection of new process as well as structural hurdles i.e. old technology and infrastructure may not support newly identified expectations or goals). Our work has taught us that successful transformation is not a piecemeal approach (e.g. standalone workshops, motivational lectures, required reading). What is necessary is a comprehensive approach that includes:

A clear vision

Definition of required skills

Sufficient incentives

Adequate resources and

Comprehensive action plans

The absence of any of these key ingredients prevents controlled change. Unfortunately, incomplete approaches are what many of us are most familiar with and as a result we are all too familiar with failed cultural initiatives. Poorly executed cultural initiatives typically deliver confusion, anxiety, frustration and/or false starts. To transform the operations of the company requires a holistic approach which sets clear and shared objectives for the cultural initiatives and engages stakeholders at various levels.

Culture Change Efforts Should Always be in the Service of Business Objectives

Rather than treating culture change as an shapeless “soft” ambition, culture change efforts as implemented by FTE are always in the service of a business objective and therefore can be assessed through impacts on operational metrics and improvement in key performance indicators; hence the title of this paper: “Culture as Asset.” Too often companies attempt to change their culture through narrow campaigns and efforts that exist on the periphery. Instead, culture change should always be in the service of a specific goal or objective, and the appropriate focus should be how culture impacts and contributes to specific business concerns. Examples include turnover, efficiency, communication, and trust that directly translate into measurable performance improvements like quality, delivery and cost. By explicitly targeting areas for improvement and tying those targets to measurable indicators progress can be measured. Without the ability to measure improvement there is insufficient control over the improvement process.

Conclusion

Culture change is not exclusively the work of leadership nor frontline employees. It is a shared responsibility that begins with individual transformation and a willingness to alter ones own norms, expectations, and behaviors with respect to the business. Culture change is accelerated by initiatives that are crosscutting and that occur in parallel (from the executive level through to the frontlines). All members of an organization share culture, which is why top down and bottom up initiatives that run in parallel, quickly permeate the entire enterprise.

Organizational culture change is difficult, and piecemeal approaches make it almost impossible.  However, our work has established integrated and holistic approaches that circumvent the typical pitfalls and build momentum.  Lastly, observable impact on operational success will make cultural believers out of the most quantitative minds. Two thirds of major organizational change efforts fail and the largest misstep is attempting to drive culture change is the absence of identified and measurable business objectives, but they don’t have to fail. By deploying robust and proven strategies, new behavioral practices, and corresponding incentives, culture can truly become your company’s greatest asset.

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