Simon Sinek suggests the biggest mistake companies make when they’re doing cultural transformations is treating them as a marketing campaign with a launch date, programs, and powerpoints to support the change.These well-intentioned activities might feel like the right steps to take, but the truth is, cultural changes are much deeper than that.
This post will teach you how to manage organizational culture changes as more than just a marketing campaign. You’ll learn:
- Why company culture matters
- What cultural changes are in the workplace
- What change management is
- Steps for effectively managing culture change
- Advice from change management professionals
Why company culture matters
It might seem obvious, but company culture is a significant piece of the puzzle when it comes to running a successful company. Below we define company culture, and some of the reasons research suggests it’s a defining factor for employees and employers.
“Company culture” defined
Company culture (also called corporate culture) refers to an organization’s holistic shared values, attributes, and characteristics. It encompasses how team members interact, how managers support their teams, and how employees make decisions and do their work. It happens daily and includes the work environment, defined company mission, values, expectations, and goals of the organization. People are an essential element of all company cultures.
What research says about company culture’s importance
Some suggest company culture impacts everything, including our happiness and careers, meaning it should always be at the forefront of whether or not we choose to work for an organization. Not only is it a key consideration when joining an organization, but it also impacts everything beneath the surface. According to McKinsey, culture correlates with performance, is difficult to copy, healthy cultures enable organizations to adapt, and unhealthy cultures lead to underperformance.
McKinsey’s research also suggests that while healthy cultures enable organizations to adapt, unhealthy cultures don’t respond well to change, as 70% of transformations fail. Of those failing transformations, 70% are due to cultural issues.
Employees care about company culture, and when workers don’t adapt to a company’s culture or the culture is poor, they’re more likely to disengage or leave the company. Conversely, engaged employees connect to the company’s mission and are more likely to stay happy, motivated, and committed to the organization. This is important for employers because happier, engaged workers are generally more productive and produce better results.
What is a cultural change in the workplace?
Cultural changes are inevitable. Here’s a look at the definition of cultural change and eight reasons cultural changes occur (but keep in mind many scenarios can cause cultural change).
“Cultural change” defined
The Merriam-Webster definition of cultural change is “modification of a society through innovation, invention, discovery, or contact with other societies.” When societies merge, the combined result develops new cultural traits, behaviors, norms, and structures. While this definition is a broad application referencing societal change, the same concepts apply to cultural changes in the workplace (think, mergers and acquisitions—more on that later).
Gartner defines cultural change as “the process in which an organization encourages employees to adopt behaviors and mindsets that are consistent with the organization’s values and goals. Cultural change may be necessary to align better the behaviors of employees with current and future business objectives.”
To summarize, cultural changes are behavioral changes. When an organization decides to make a cultural change, it must commit to changing and transforming the work environment for the better.
8 catalysts for cultural changes
There are many reasons an organization may decide to change its culture. While an organization might make an active choice to change its culture, keep in mind that cultures are constantly evolving, so changes also happen naturally. Below are eight common reasons an organization might find it needs a cultural change, listed in alphabetical order:
1. Acquisitions or mergers
An acquisition is a corporate transaction that occurs when a company or investment firm (or individual investor) purchases most or all of a company’s shares. Mergers occur when two organizations collide and become one. No matter how seemingly similar two organizations are or how well the company cultures appear to fit together, no two company cultures are identical. Mergers create significant change as the two organizations come together, either adopting a pre-existing culture or creating a new one entirely.
2. Business model update
Strategic decision-making at the leadership level can inspire the need for a business model overhaul. This can include restructuring an organization, altering how the business offers products and services, or adding new products and services to the business model. These scenarios involve behavioral changes ranging from changing direct reporting managers to running through daily workflows to changing customer conversations.
3. Changing market conditions
Companies seek cultural changes to adjust the sails when an organization loses market share to competitors, generates less profit, or no longer fits in its market. Changing market conditions could signal that the culture needs an adjustment to protect retention and well-being while pivoting the direction of the business to meet market needs.
4. Innovative solutions
It’s not uncommon for new innovative solutions to spur cultural changes. An innovative solution could be a process update, policy change, or launch of a new system, to name a few. These additions impact how employees work on a daily basis, which means a behavioral change is necessary for long-term sustainment and success.
5. New leadership
Recent data suggests that even managers and senior leaders are leaving their jobs at elevated levels as part of the Great Resignation. Even still, new leadership team members cycle through companies all the time. When new leaders join an organization, they bring their unique experiences and expectations that can impact the culture. This change is more impactful when a new CEO joins a company, as their vision for the organization may differ entirely from the previous CEO.
6. Social changes
When social shifts occur, these shifts trickle into our workplace environments. For example, many organizations are focusing on creating diverse, equitable, and inclusive workforces in response to societal disparity and injustice. Society has intertwined social change and workplace organizations now more than ever before. Forbes reported that 78% of people in a study conducted by Cone Communications said they wanted companies to address social justice issues.
7. Technology changes
Technological advancements force business leaders to reconsider or reinvent company workflows regularly. While some digital changes, such as an update to a software tool, may seem minor, these changes still require employees to act differently, which motivates a cultural shift. Introducing new technology can be more impactful, particularly if team members must alter their workflows to accommodate the new system.
8. Unplanned events
Sometimes leaders need to make a cultural change following unplanned events such as global health crises, public relations issues, employee resignations, or sensitive situations with clients. Most recently, we’ve seen the effects of the COVID-19 pandemic and how many organizations shifted to remote or hybrid work.
What is change management?
The reality is that change is never easy. But some tools and techniques can help lighten the load when it comes to managing a team through a cultural change. That’s where change management comes into play. Below is a look at what change management is and how it applies to cultural changes.
“Change management” defined
Change management refers to the approaches businesses can implement to prepare, support, and help individuals and their organizations navigate a changing landscape. Prosci, a leading organization in the change management space, defines change management as “An enabling framework for managing the people side of change.”
Think of it this way—project management focuses on the activities and tasks needed to get from point A to point B (or successful completion of the project). Change management focuses on moving the impacted people from point A to point B, helping them embrace, adopt, and commit to the change. Project management and change management support one another, but each discipline has its own focus.
The Society for Human Resource Management (SHRM) refers to change management as “the systematic approach and application of knowledge, tools, and resources to deal with change. It involves defining and adopting corporate strategies, structures, procedures, and technologies to handle changes in external conditions and the business environment.”
Why change management is essential
Since cultural changes require behavioral changes, businesses can set themselves up for sustained change efforts by leveraging change management. It requires significant effort to help individuals understand why they need to change and how it will impact them. Leaders should never expect that employees will be able to determine that information independently.
Instead, managers and leaders can apply change management concepts, or hire change management professionals, to help them successfully make the cultural changes they desire. Human resources (HR) professionals also play a significant role in navigating change initiatives since their function directly supports the people.
How to effectively manage culture change in the workplace
Managing organizational culture change requires teamwork and is a complicated effort. It requires dedication, commitment, and hard work, but with the right strategy and action, you can help contribute to a successful cultural change. Organizations are more likely to succeed when they plan change initiatives and follow a well-thought-out roadmap. Follow these steps for success:
1. Understand your current company culture.
Before making any cultural changes, you must develop a clear understanding of the current state of the culture. Evaluate where you are today from an unbiased lens. To obtain a complete picture of the current culture, consider surveying employees, conducting internal assessments, examining business metrics, or chatting with focus groups. Gather different perspectives from varying parts of the company.
2. Acknowledge what’s working and identify gaps.
After gathering information about the current state of the culture, you should evaluate what’s working and what’s missing or not working. Don’t focus solely on the organization’s weaknesses; recognize and acknowledge the strengths too. Determine where to go to allow the organization to achieve new goals and objectives. Understand if your current values and mission support the direction you want to head and how to adapt your existing culture while maintaining these values.
3. Describe the new culture you want.
Now that you know what you should keep and want to change, start envisioning what the future state of the company culture looks like. Ask yourself, “What will the future state look like when everything is working just right?” Identify the characteristics of the company culture you want so you can identify tangible changes that will help you get there.
For example, suppose your organization reports a lack of communication following a merger announcement. You know your current communication habits aren’t working or aren’t resonating with the team. To address this, you might imagine a communicative and transparent culture. Who is communicating? How are they doing it? How frequently? What do employees want to know more about?
4. Build a change coalition.
Successful organizational change is a big job and should never be one person’s responsibility. Unite a group with a shared purpose that can help guide and implement the transformation. This should be a group of supporters, cheerleaders, and influencers that can support the roll-out of the cultural change and help convey the vision.
5. Get employee buy-in.
Sometimes leaders have to change the company culture in a particular direction. To increase the likelihood that the change will be successful when the situation allows for it, leaders should solicit input from employees. Employee involvement in some decision-making processes doesn’t mean you have to include all employees. Rather, focus on creating a plan to involve as many people as possible early in the process. This method enables employees to feel that they have some say in the direction, which makes it much easier to ask them to change their behavior to support the change down the road.
6. Set goals for cultural change.
Specific and measurable outcomes are crucial to ensuring the change is successful. Understand what to measure—organizational and individual performance—and how to measure it for your initiative. As part of Prosci’s methodology, various measurement tools are available.
Once you’ve set goals, ensure the change coalition feels aligned and understands what you’re working toward. Be clear about how the group should work together to achieve them. Identify the metrics you want to monitor to help measure the cultural changes.
7. Leverage a change management model.
Change management models help leaders organize and implement a change, turning the business vision into action. Rather than leave cultural changes up to hope and faith, try planning the transition using a change management model. Some of the change management models to look into are:
- Prosci’s ADKAR model
- Lewin’s Change Management model
- Dr. Kotter’s 8-Step Process for Leading Change
- McKinsey’s 7-S Framework
- The Kübler-Ross Change Curve
- Bridges Transition Model
- Apogy’s The ART and Science of Change Leadership
A change management model serves as a checklist of the tasks and activities that should occur to help make the change successful, including designing targeted resources, tailored communication planning, establishing feedback loops, and celebrating successes.
8. Monitor results and adjust as needed.
Implementing a cultural change isn’t a one-and-done initiative. Monitor performance, reinforce the behaviors you want to see, and pay attention to employees who don’t get onboard. Gather feedback from employees to understand how the change process went and what areas they need more support. Make a plan for evaluating the company culture periodically. Rinse and repeat the process to maintain a healthy company culture in the long term.
And remember, change efforts are top-down, so senior management serves an important job as the role models of the new behaviors. Throughout the process, senior executives should display what the desired culture looks like so tenured and new employees have a clear understanding of organizational behaviors.
Organizational change management tips from experts
Fortunately, change management experts can support leaders and managers make organizational changes. I asked change management professionals for the one piece of advice they would offer to leaders and managers leading a cultural change. Here’s what they had to say.
1. Define, over-communicate, and follow up.
“A company’s culture is a direct reflection of the mindset and values of employees. Involve employees in the process; have them help define the new culture’s attributes and how to hold each other accountable for the results. Create visual reminders to keep people in touch with the values, recognize individuals who bring the values and behaviors to life, and be patient as culture change doesn’t happen overnight,” Crow said.
2. Provide adequate resourcing.
Shaun Slattery, Ph.D., a Director of Customer Change Management & Success, emphasized how critical adequate resourcing is in successfully influencing small behaviors, habits, and tendencies.
“To achieve transformation at such a massive scale, you must resource the initiative adequately. Adequate resourcing means an investment of time by leadership to participate in strategic planning as well as modeling the change to the organization by participating in tactical activities. It means appointing resources to plan, design, execute, and monitor the change initiative. It means incentivizing and creating space for change champions throughout the organization to participate in transformation activities that may differ from their legacy job duties. It means investing in the project over the long haul,” Slattery said.
3. Do the groundwork upfront.
Kerry-Ann Douglas-Powell, Manager of Organizational Transformation, strongly recommends spending time doing the groundwork. This includes defining the end goal, how you will assess the end goal, what the key behaviors of change look like, assessments of progress, and sustainment planning. On top of that, Douglas-Powell recommends creating solid plans for communication, training (learning and development), and stakeholder management.
Organizations embed their culture in their DNA, and it’s no surprise that company cultures are frequently changing. Culture change requires behavioral change and the discipline of change management helps people navigate and adopt changes. As a leader, you can effectively manage organizational culture changes by following a systematic approach involving employees in the process, setting goals, and using a change management model.