In the executive suites today, the concept of corporate culture is the new black. It seems that everyone is talking about the importance of culture, the impact of culture, and of course, the need for culture change.
The recent seismic shift in the global economy, along with rapid technological, political, generational and regulatory changes are impacting every industry with wave after wave of disruption. There is no let up, the changes just keep coming. And one common response in the executive suite is: “We need a culture change. We need a more _______(fill in the blank: agile, accountable, customer focused, innovative, etc.) culture to survive and thrive.”
The problem is, very few executives, not to mention culture consultants and academics for that matter, really understand what corporate culture is and even fewer understand the real levers for reshaping or changing culture. As a result, attempts are made at culture change using the hierarchical approach of top-down communications, cascading “culture workshops” and publishing new “Values Statements”. Lots of activity, some interesting Powerpoint slides, but very little change.
On the cover of my recent book, Leverage: The CEO’s Guide to Corporate Culture, is my favourite statement about corporate culture:
Few concepts in business contain so many powerful truths, and at the same time so much crap as corporate culture.
Corporate culture is anything but HR fluff or academic theory. It’s a business issue as real and meaningful as product quality or cash flow. Corporate culture can be a significant business risk, or a valuable asset. And there is no single culture but in fact nearly every company is a collection of strong subcultures, sometimes aligned with the overall business strategy, mostly looking out for themselves.
How I first experienced and understood what really drives culture:
Early in my career, back in the late 1970’s in fact, I was a young consultant working on improving customer service for a large regional department store retailer. The company was losing market share to other retailers and the overwhelming cause seemed to be poor customer service. After all, they had the same merchandise, similar pricing, similar large mall locations, similar store lay-outs, similar sales staff and were a well-known regional brand. But customers weren’t buying and focus groups unearthed the fact that customers didn’t feel anyone was there to serve them and it was hard to interact with floor staff.
So, a decree came from the top: Improve customer service. And the HR department got the job. New training in customer service was designed and made mandatory. Hiring profiles were changed to recruit and hire “more extroverted, people-friendly” floor staff. Managers were measured and bonuses given on customer service scores. The President made a video talking about the importance of customer service. Customer Service became the number one corporate value and featured on plaques and wall posters throughout the company.
And still customer service was poor! Insight: Maybe it’s not the floor staff that’s the problem, but the corporate culture!
Culture might be made visible by “how people behave”, but the drivers that cause and promote certain behaviours are very much buried on the internal business processes that are a part of the working of the company. So to understand why customer service remained poor, we had to look beyond people and training to how work really got done in the stores.
First we talked with sales clerks and floor staff and heard: “We know customer service is important and we’d really like to spend more time with customers, and the new training has been excellent, but we don’t have time. The supervisors demand we report stock levels and inventory on certain items, and it takes up a lot of time.”
Next we talked to department supervisors and heard: “I really wish we could focus more on customers, but the buyers ring us at all hours of the day for stock reports on key items and we have to give them the data so they can reorder.”
We then asked the merchandise managers about the issue and heard: “Of course customer service is important, but we get penalised depending on overage or shortages of key stock items and the only way to get the information is from the stores.”
We then sat in on a couple of senior executive meetings and discovered that the majority of the time and the agenda was focused on what stock is selling and what is not. Not one discussion in the entire meeting about customer service!
For me, two important things emerged from this experience:
- First, organisations are shadows of their leaders and what the senior team focuses on is what tends to drive behaviour from top to bottom.
- Second is that the business requirement for flash stock reporting and inventory checking drove behaviours that were actually counter to better customer service. Replacing the entire floor staff with professionally trained retail sales people still wouldn’t have mattered because the time available for customers was taken up by random and frequent stock checks.
They didn’t have a culture of poor service, they had a culture of excessive focus on merchandise stock levels and a leadership team which said one thing and did another! Yes customers received poor service, but it wasn’t caused by poor service behaviours.
Over the past 35 years of helping senior leadership teams improve business performance and reshape culture, I have tried to avoid using huge culture surveys with lots of questions, in favour of a more detective like approach to looking for root causes. More often than not, the root cause resides in the work practices, policies and management requirements that cause people to behave in certain ways in order to comply.
A more recent case study in culture change and the importance of investigating work practices and company policies as key behaviour drivers comes from the successful reshaping of Walgreens from a seller of drugs and prescription filler to a customer-centered, prescription information and support culture. One of the keys was to free up management time from paperwork and reports to coaching and supporting staff.
Next time you think culture change is just about people change, you might want to take a closer look!
Posted by: John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
Read John’s blog, Business Books Website
On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture
Read The Economist review of LEVERAGE
Also on Amazon: FASTBREAK: The CEO’s Guide to Strategy Execution
John also writes thriller novels!