The last couple of years has triggered an unprecedented disruption to how we work. As a result, companies have had to restructure their processes, develop short-term strategies and manage remote or hybrid interactions; these changes have challenged both organisations and employees alike.
Although expedited, this is not new. Companies have been facing a cultural shift for many years, more so those that carry legacy issues due to their size, reach and organisational complexity. Just a few examples of challenges companies have battled over the past decade include rapid technological developments, the evolving digitalisation that has redefined consumer experience and the increased competitiveness of the global market.
Having to adapt constantly has caused an extraordinary rise in employee fatigue, lowering productivity, and causing mass burnout and dissatisfaction.
Aside from future-proofing a company, fostering a healthy culture is the ultimate competitive advantage in a world where business ideas and models are readily replicated. The challenge, however, is in the complex and demanding undertaking needed to shift an entire organisation’s deep-rooted practices and beliefs.
What are the main issues leaders face when tackling a cultural transformation, and what kind of results should they hope to achieve?
Challenges and impact of cultural transformation in 2023
Conceptually, company culture is difficult to define and therefore to measure objectively. If you can’t describe the people side of change and can’t measure it, it is much easier to focus on systems, processes and structures. However, studies have shown that 70% of change programs fail to achieve their goals due to employee resistance and lack of management support. On the other hand, when these transformations have employee engagement and buy-in, they are 30% more likely to stick.
Although the benefits of a cultural transformation are not immediate and can feel intangible at the outset, successful cultural transformations have resulted in an 18% increase in EBITDA or three times total return. The feeling that results are not immediate makes it more difficult to prioritise even though the underlying reason behind the cultural transformation is to reach refined or new objectives. However, it is important to focus on the endgame; getting buy-in from all levels of the organisation will accelerate a necessary culture change that will increase revenues and improve performance.
Assuming the success of a change initiative without thinking of how it affects people and why it’s essential to get them on board dehumanises the business. Changing the organisational ecosystem to a newer model generally creates a sense of unease among employees because of how it may impact them; fear of their roles becoming redundant, over-scrutiny of their work exposing their vulnerabilities and the initial upheaval or effort required to implement a change from which they can’t see immediate results. This contention often comes with a period of adjustment and reduced productivity levels. However, creating an internal movement that motivates employees to join in and work together towards that vision and objectives mitigates this challenge.
The results will follow. A great example of a cultural transformation is Unilever Brazil. After years of solid growth, the company decided to adjust their eighty-year-old legacy by addressing strategic and operational challenges and redesigning the company culture. The remarkable results of their cultural transformation are extensive, ranging from 4% revenue growth and an 18% drop in unproductive focus.
What makes the difference between temporary adjustments and new company culture?
How to make cultural transformation stick
Time and time again, studies have shown that a robust company culture enables company performance. So, it is essential to understand what changes can make a difference in the long run.
Strategy, operations and culture must be aligned for companies to achieve their objectives. Often, an organisation’s strategy and goals are defined in isolation from its business structures, operations and styles of working. This approach usually means that employees get the glossy view of values and intended culture but are hampered from executing their roles effectively because of how the business operates.
For example, imagine if the core value is empowering employees and the intended culture style is collaborative, but the organisation has an extensive hierarchy entrenched in bureaucracy with limited decision-making or idea-sharing abilities. Employees are likely to be disenfranchised and uncollaborative. This clash often results in reduced performance and constitutes a setback in any cultural transformation process. Therefore, leaders need to align their strategy and ways of working with the intended company culture.
Make small but steady changes to organisational culture. Cultural change is impossible without the support of employees, so incremental adjustments in culture, rather than a singular ‘all-at-once’ shift, will go a long way. More so, acknowledging the positive traits of an existing culture helps people embrace the “new”. This revitalises a company’s culture while preserving and championing its strengths.
Here are three ways to do this:
- Through leadership teams embodying and enacting those values in their day-to-day interactions with teams, practising what they preach gives credence to those changes.
- Demonstrating the significance of the core values, sharing positive behavioural impact on performance, or celebrating important milestones can motivate people to get on board and champion change.
- By measuring and monitoring cultural evolution at every stage of a transformation to provide an objective view of the improvements and correct course as needed, cultural transformation is iterative and a learned experience.
The success of a transformation lies often on a solid work culture – many companies have put emphasis on the people’s side as part of their value proposition. But not enough has been made to encourage other companies to join this movement. Zuleka Kaysan from The Cornerstone Advisory and Ivan Palomino from PeopleKult have launched a global initiative to promote human-centric work cultures – It is called the Simply Human Pledge, many organizations have already joined and we are hoping that many others will.
According to the World Economic Forum, over 1 billion people will have to upskill by 2030, and 42% of core skills required to perform existing jobs are expected to change. Organisations must understand that future-proofing a company is more than preparing employees and the business for new technologies; its success depends on a healthy culture. The solution to making cultural transformation stick lies in creating a solid company culture and operations centred on its core values.