Why Culture Matters:A Road Map to Building a High-performance Culture
Updated: Apr 19, 2019
As a leader of an organization, especially during evolving economic times, you must analyze all components of your company (people, structure, technology, processes and strategy) for organizational and human systems alignment, shared values and high-performance potential. The key driver to reach these goals is your organization's culture.
What does the term culture mean?
There are many definitions for organizational culture. As a working framework, I define culture as the shared values, beliefs and norms in an organization, which evolve and persist over time and influence individual and group behavior patterns.
Many companies think about fostering culture as an investment in future growth and development that links directly to bottom-line performance.
Figure 1 highlights how culture directly links to high performance. Kotter and Heskett wrote, "The non-high performers increased net income just 1 percent over an 11-year period (compared to 756 percent improvement for the organizations identified as having high-performance cultures). Other factors such as revenue growth, workforce expansion and stock-price growth showed positive results as well."
Source: Kotter, J.P., & Heskett, J.L. (1992) Corporate Culture and Performance. New York: The Free Press.
Values that support healthy organizational culture
Healthy values create a strong sense of shared and acceptable behaviors. In the more than 15 years I've been involved with organizations that have successfully shifted their cultures to one of high performance, three values are always present: coaching, employee recognition and high team utilization. Many other values also contribute to their success, some of which follow:
Which values are most important to you and your organization? (Check all that apply.)
____Compassion _____Compelling vision ___Ethics
____Recognition _____Accountability ___Coaching
____Growth _____Belonging ___Relationships
____Excellence _____Achievement ___Commitment
____Recognition _____Positive attitude ___Flexibility
____Making a difference _____Profitability ___Productivity
____Creativity _____Shared communications ___Alignment
____Being the best _____Cooperative ___Teamwork
____Customer intimacy _____Flawless execution ___Process-driven outcomes
____Mutual learning _____Value creation ___Positive regard
____Quality _____Cost leadership ___Results
Think of your top five values as powerful forces of energy and influence that can have a profound impact on changing behavior and the future of your company. Transforming your organization to adopt these values is a process that requires an adoption change management approach.
In addition, as organizations' culture and values mature over time, a defined work ethic and shared set of behaviors develop. Heroes, success stories and leaders who make a difference and influence the culture of their organizations become part of the company's mythology.
One only has to remember business giant Steve Jobs of Apple or legendary football coach Vince Lombardi to see how successful leaders set the tone for shared, behavioral values related to how to act and behave as part of the norm.
However, building a high-performance culture is not just about successful leadership. Certain values can interfere with the creation of a healthy culture.
Barriers to healthy cultures
Four primary values limit the creation of a healthy culture:
1. Organization structure. These are control-centric organizational structures that create hierarchy where power and influence coupled with fear dilute workforce spirit, innovation and creativity.
2. Lack of organizational clarity. This leads to a poor sense of direction and drains the company's energy to support flavor-of-the-moment projects. This creates confusion and makes it difficult for people to rally around a compelling vision and aligned strategy.
3. Coercive self-intent. This promotes self-interest and internal unhealthy competition, stifles communication, fosters a me versus we mentality. It also results in self-defeating behaviors at the expense of others.
4. Lack of information sharing. This stops the flow of new ideas, has a negative impact on productivity and is contrary to the management of knowledge. It also leads to the building of community internal knowledge networks.
Relationship between large-scale change and culture
Any large-scale change typically confronts the established values, beliefs and norms of an organization. Therefore, transformational leaders must be proactive in stepping up to show how projected change plans impact the basic fabric, or culture, of their organization. It doesn't matter if that change process is reengineering, re-structuring, process optimization or a shift in safety and performance.
Figure 2 shows the relationship between large-scale change and culture.
Although culture change is not a linear process with clear beginning and end points, it can be illustrated at a high level as a process. The framework in Figure 3 provides a starting point for building a unique culture change journey in your organization.
Gaining an understanding of how to evolve a culture in an organization requires patience, resources and commitment, especially from the company's senior managers. Consider these three ponder points as you embark on the culture change journey.
Ponder point # 1. Culture change is a holistic process not a training program.
Large-scale change and culture change are holistic and will affect the entire organization. Senior managers need to realize that a dramatic, sustainable culture change won't result from simply creating a new training program.
Culture change occurs over time with help from significant investment of resources across all organizational boundaries. It represents a company-wide initiative. Commitment for the program must come from all aspects of the organization.
Ponder point # 2. Change drivers must link to internal and external factors.
Define the change drivers present both internally and externally, and how culture is impacted by and related to these changes. As you review your strategic vision, consider how the culture must change to support current and future initiatives. Within this context, identify what drives the need for culture change.
Organizations generally change when:
The organization is under stress. It sees decreased revenue, increased competition, decreased profits, high turnover, decreased productivity, ineffective processes and lost market share.
There's a desire to refocus the business to diversify product and service lines or to change the organization's image.
There's a general feeling of malaise within the organization, lack of new ideas, creativity and no growth.
All of these potential drivers are important components for a renewed cultural shift in the organization. In responding to these drivers, managers must determine how to restructure culture to respond to these changes, how it will affect future major initiatives and how the organization will promote the new culture to support these changes.
Ponder point # 3. How can you best quantify the benefits of culture change and the costs of maintaining status quo?
It's critical to quantify the benefits of any culture change effort to gain the support and commitment of the organization. Develop a detailed business case for change early on to help secure commitment by identifying the quantifiable results and benefits of change. The organization can accomplish this by conducting a culture change/organizational excellence survey at the start of the process.
Organizations need to discuss the costs of not changing and the effects of sticking with the status quo. Individuals must understand the urgency to change their own behaviors affects their individual successes, not just the organization's.
Bottom line, it is vital to illustrate and provide a quantitative link between culture and the organization's success, and to engage senior management.
The effects of organizational culture
Organizational culture is a major contributor to a company's success or failure. Committed leaders of an organization with the will to change can create effective cultures that are strong, adaptive and sustainable over time.
Creating a high performance culture leads to excellent stakeholder value, an engaged and supportive workforce and exceptional financial performance —a winning combination!