Change in Corporate Culture is an on-going Process

Academics define corporate culture as the organization's values, visions, norms, working language, systems, symbols, beliefs, and habits. Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders. Management set the tone for corporate culture and creates the systems to ensure employees adhere to organizational values. The culture can be changed but it takes a long time and, sometimes, a change in leadership.

Imagine you are a newly hired worker and report to work at 8:45am on your first day even though the work day starts at 9:00am. You are trying to get off to a good start and show your enthusiasm by your actions -- that you are motivated to do the work. As a manager, I would conclude (assuming the employee keeps up the pattern) that this is a worker who is reliable and diligent and I can trust to at least work hard at tasks. I may be wrong but the tone set by the employee is eagerness.

Now, let’s assume as time goes on our new employee notices that some employees arrive at work at 9:05am, 9:15 and even 9:30 or later. Nothing seems to happen to these employees and the pattern persists. The new employee starts to wonder whether the company has any standards with respect to the workplace and whether they are enforced. Perhaps this spills over to other activities such as what is included in an expense report and how closely it is monitored.

Culture establishes whether ethical standards are followed. If employees are treated poorly, not respected, or work completed is credited to another employee, the culture breeds discontent and an indifference to what happens to the company. That employee starts to think that the company doesn’t care about me so why should I care about the organization. Creating an ethical corporate culture is like raising ethical children. They have to be guided by word and deed, and compliance either rewarded or penalties established for non-compliance.

It is important to note that an important feature of a good culture is that the majority of employees can be positively influenced by values and environments that reinforce strong company values. Such a climate arises when the workforce believes that certain forms of ethical reasoning and behavior are expected norms for decision making. The ethical climate of an organization serves many useful functions in organizations. It helps employees identify ethical issues and address those issues by giving answers to "What should I do?" when faced with an ethical dilemma.

But changing an entrenched culture is the toughest task a manager will face. To do so, the manager must win the hearts and minds of the people she works with, and that takes both persistent and persuasion.

In their book “Blue Ocean Strategy,” W. Chan Kim and Renee Mauborgne cite four hurdles that face a manager trying to institute broad change in an organization. The first is cognitive – people must have some understanding of why the change in strategy or in culture is needed. The second is limited resources – inevitably, changing an organization will require shifting resources away from some areas and towards others. The third hurdle is motivation – ultimately, workers have to want to make the change. And the final hurdle is institutional politics. They quote one manager who complains: “In our organization, you get shot down before you stand up.”

To overcome those hurdles, they suggest a “tipping point” approach to management. While they discuss many ideas, the one that starts the change process is to recognize, as the manager, that you won’t be able to convert everyone at once. So, start with people who have disproportionate influence in the organization. Get them committed to the change, or, failing that, get them out. And once they are committed to change, shine a spotlight on their accomplishments, so others get the message.

Culture change is an ongoing process and one that is well worth the effort. The business frauds of the late 1990s and early 2000s at companies such as Enron, WorldCom, and Tyco had a common feature of the culture. It was to win at all costs. Do what it takes to make the deal, increase reported earnings, gain market share and so on. Greed and self-interest ruled the day and created a culture of fear for those who did not go along with the wrongdoing. For true believers, the motivation was to share in the excesses and keep up with the masters of the universe – members of top management (i.e., CEOs and CFOs) who had made it big time.

My suggestion to change the culture and manage it going forward is to start with baby steps. Don’t do it all at once. You want employee buy in and they have to see the task is not overwhelming and at each stage the rewards for supporting the cultural shift will be forthcoming.

Managers are change agents and need to be true leaders to effect change. Noted management guru Warren Bennis once said: “Mangers are leaders who do things right, leaders are people who do the right things.”

Blog posted by Steven Mintz, aka Ethics Sage, on August 27, 2013