There is no perfect organizational culture. But what makes iconic companies great is their ability to understand cultural loopholes and their willingness to adapt and change when required. A carefully crafted and strategic corporate culture encourages values-based decision making characterized by cooperation, collaboration, communication, resilience and inspiration.
Google, Microsoft, Amazon, and Apple are among the most iconic companies today. They are pioneers, have large loyal customer bases and huge ever-growing market caps. However, all have made headlines for the good and the bad in their organizational cultures. Amazon culture was called ‘bruising’ by NY times, yet their stock price has risen 20x over the past 10 years. Microsoft went through a phase of being stagnant, having a maze of bureaucracy, turf wars and internal conflicts and is on the way to recovery. Apple’s culture is known for being influenced by Steve Job’s quirky style which created fear in employees, yet Apple continued to be innovative. And Google, known to be synonymous with the best work culture, has had its share of issues such as the anti-diversity memo which went public. So, what makes these Organizations Great? All these organizations have made efforts to change when there were elements of culture which were negatively impacting employees and businesses. Let’s begin with understanding culture and its evolution, then go on to explore how culture can be changed if needed and the role leaders/HR can play in shaping and nurturing it.
First, Let’s Define Culture Culture is a combination of artefacts (things you can see and hear such as stories, office space, dress, etc), behaviors (espoused values, partially visible) and assumptions (underlying beliefs which are invisible and taken for granted). In simple terms, organizational culture has been described as “the way things are done around here” or “DNA” or “fabric of the organization”.
“Iconic organizations have cultural elements which have helped them succeed and they have made conscious efforts to identify and change what was not working in their favour.”
Where Does Culture Begin and How Does It Evolve? There is a culture in the organization even if no one has thought or spoken about it. And once formed, it’s very difficult to change. So, you can have a “culture by accident” or “culture by design”
Founder’s Influence on Culture In the early stages, the founder’s personality has an influence on the culture, but as the company exceeds a certain mass, it becomes an organic process and culture is shaped by the people. However, the elements of culture which made the company successful are likely to be retained over longer periods of time. E.g. Customer obsession is one of the espoused values of Amazon founder Jeff Bezos. Even after more than two decades, this remains one of the core values, as customer obsession has been a differentiator and led to the huge business success of Amazon.
Evolution of Culture Culture evolves slowly and gradually, it gets embedded in the processes, social norms, and visible artefacts very organically and is almost invisible to the people on the daily basis. As decision making goes beyond the scope of founders to a larger employee base, the values need to be clear and consistent. E.g. how to take decisions – customer centricity comes first or profitability, how to reward people – merit or tenure, etc. Large organizations do not have this challenge as newcomers adapt to the existing culture which is strongly established through a natural selection process of hiring, onboarding and attrition. The company attracts those who feel they are a culture fit, culture fit is evaluated at hiring, culture is transmitted through onboarding processes and if the employee is a misfit, attrition is the natural outcome.
So, can you really change the culture? McKinsey states that 33% of culture change programs fail. Large-scale attempts at overhauling the culture are likely to fail. Why? Because culture is the very fabric of the organization and is made of emotional responses – how people think, feel, behave and go about their daily work.
“If there is no strong dominant culture in the organization to integrate the new people, it can become chaotic. Culture defines how an organization works, social rules and norms, decision making which are very fundamental to a business’s success.”
Glossy newsletters proclaiming culture change, posters, heartfelt emails from the CEO – all go to the bin when it comes to real change on the ground. But, culture change is possible – it needs to be approached thoughtfully. Microsoft! is a great example of largescale and systematic culture change which followed a focused approach. When Satya Nadella took over as CEO in 2014, Microsoft was stagnant, there were turf wars and a toxic work environment. Satya shared a new vision and mission with employees and tried to establish a renewed sense of purpose. He realized that turf wars were killing Microsoft and undertook a major restructuring of the company and defined common goals. A few important things to note, no matter which process or model you follow for organization change.
Focus On A Few, Not Many It is important to identify and focus on what you want to change and how it impacts your organization. Do not be on a quest to build “world class” or “best in class” culture by copying blindly.
Be Cognizant Of Macro, Sub And Micro Cultures Macro culture can play an important role in shaping norms and social interactions within the organization. E.g. Japan is more of a collective culture whereas the US is individualistic. The idea of implementing group pay may work in Japan but in US, it is likely to be met with a laugh in the best-case scenario. Micro culture is a smaller subset of the macro culture. Micro culture can have further subsets like state, religion, etc. There are numerous examples of business failures due to lack of understanding the local context, e.g. Walmart in Japan failed because they tried to sell using “Every Day Low Prices” campaign, without considering that Japanese associate low prices with cheap quality making them wary of buying.
Get People Involved You need to get people involved in this entire process, whether its senior or middle managers or employees. When the online retailer Zappos, for example, was trying to define its corporate culture, CEO Tony Hsieh asked for input from all employees. The company then came up with a set of values and asked everyone to change one thing about Zappos’ policies or processes to align them better with the new set of values putting the values into action immediately.
“Trying to change the culture by only top down messaging will not work. Top management alignment is certainly paramount, as change efforts could take hit if their actions are in contradiction. But besides that, culture change happens through a social transmission.”
People Act Their Way Into Believing Examples, if the organization is trying to build a culture of collaboration, behavior change could be started through cross-functional projects which get people in the habit of working together.
As Leaders, How Can You Build And Nurture Culture? Look In The Mirror. Your behavior needs to be aligned with the change you want to bring. It also means constantly being conscious of your own assumptions and willingness to change when these come in the way of the organization’s interest.
Use Culture As A Lever In the role of a CEO, the most important thing you bring to the table is an understanding of what elements of your organizational culture have helped you succeed and what is hurting your business. This is an ongoing process and you play an important role in ensuring that the culture continues to adapt and evolve.
Build A Culture Which Works For You It is very easy to get carried away in the quest for building “a world class” culture by blindly looking at other organizations. The process of understanding your organization’s fabric and shaping will help you build the culture which is yours, connects with your employees and helps the business succeed.
Hold Your Leaders Accountable Leaders must walk the talk; their behavior needs to be aligned.
Don’t be a Lone Warrior One person does not own or create culture, it needs to be co-created. Involve your leaders and employees in the culture building process.
Role Of Hr In Driving And Nurturing The Culture
As HR roles become more strategic, it is important to be aware of what role you can play in shaping and building organization culture and using it as a lever for competitive advantage.
Be a Co-Pilot
As a partner to the business, HR needs to develop a shared understanding of what elements of culture help or hurt the business. HR can play a powerful role by collaborating with the CEO in co-creating the culture by acting as a sounding board, bringing insights about the organization, and knowledge about the change process.
Holding up the Mirror
Not many will do that to the CEO of the organization, and this is where HR needs to have a backbone, challenge assumptions and behaviors when required.
Processes & Inter-linkages As the owner of many HR processes which play an important role in the process of culture creation and evolution, HR needs to understand the interconnections. E.g. does our performance management system reward loyalty, tenure, or merit?
Equip yourself with the Tools An HR professional must have a foundational understanding of culture and how to use it as a lever. Culture cannot be le! to chance, it needs to be carefully built and nurtured. You should also be willing to engage experts with knowledge and experience of driving culture change when required.
Guardians of the Galaxy During Uber’s sexual harassment scandal in 2017, it is the HR that really failed the employee. Ensuring checks and balances in the system is one of the fundamental responsibilities of HR. At the end of the day, let’s not forget the ‘H’ in Human Resources. Summarizing, culture is not stagnant and it cannot be perfect. However, it can be a powerful lever for driving business success, if shaped and nurtured consciously over time.
All in all, as Walt Disney said,
“Develop your sense of humour and eventually it will develop you. The key is to constantly work towards humanizing the workplace, building a culture that people can connect with while having some fun along the way.”