Organizational culture plays a very important role in business, affecting organizational effectiveness, employee performance, the employee experience, and more.
In this guide, we’ll explore:
- Key concepts and definitions related to organizational culture
- How to improve organizational culture
- Tips, strategies, and best practices for changing culture
- Who is responsible for managing and improving culture
And much more.
Let’s start by defining organizational culture.
Organizational Culture 101: What It Is and Why It Matters
Organizational culture is a trending business topic these days and for good reason.
A company’s culture can impact many areas of the business, from the workplace experience to employee performance.
- Refers to the assumptions, values, and behaviors held by a workforce. Certain business professionals, such as Edgar Schein, have developed detailed models of organizational culture. Schein’s model, for instance, is based on the three characteristics, called levels, just mentioned.
- Is founded at the inception of the company, then built upon over time. A culture is initially created by a company’s founders, who represent the largest influence on an organization’s culture. Over the life of a company, that culture is influenced by new hires as well as the cumulative experiences of the workforce.
- Affects employee attitudes, behavior, performance, and more. Workplace cultures can have a wide variety of characteristics and values, which can affect the way that people interact, conduct business, and perform their duties. A culture that values learning, for example, will be better able to learn new skills, tools, and concepts.
There are several reasons why organizations concern themselves with culture.
As mentioned, it can affect workers’ attitudes, behaviors, and performance.
Culture can also impact:
- The organization’s performance
- Employees’ willingness and ability to engage in organizational changes
- The customer experience
- An organization’s digital maturity
For that reason, many modern organizations attempt to modify or improve culture.
However, changing a culture is easier said than done.
Later in this guide, we will learn a few approaches to changing organizational culture.
Before we do, though, let’s explore the concept in greater depth.
Organizational Culture FAQ
To understand this topic better, let’s answer some of the most frequently asked questions around organizational culture.
How does organizational culture impact organizational performance?
Since culture affects people’s values, beliefs, and attitudes, it touches virtually every aspect of an organization.
Among other things, culture influences:
- Employee sentiments. Employees who are a good fit for the workplace culture, for instance, are more likely to be satisfied and happy. In other cases, the culture itself may foster a particular atmosphere.
- How well teams work together. Cultures can also affect how well people cooperate. Poorly trained managers can, for example, have a negative effect on teamwork skills – not to mention employees’ feelings, retention, and productivity.
- Workers’ performance and productivity levels. Some workplaces inspire motivation, drive, and enthusiasm. Other cultures are built around values such as learning and innovation. Attributes such as those lend themselves to a more productive work environment.
- The effectiveness of organizational changes. When employees are more open to change, more innovative, and more willing to learn new things, they will be more likely to support organizational changes.
- The atmosphere and the feel of the workplace. Different cultures result in different workplace climates. Amazon, for instance, is known as a fast-paced, high-stress work environment. Other companies, however, do their best to reduce workplace stress and conflict, which certainly results in a totally different atmosphere.
Quantified measurements of organizational culture are very difficult, and some might argue that they are impossible.
However, a deep analysis can help business leaders understand their own organization’s culture.
This analysis, in turn, can help business leaders make informed decisions about how the culture affects their specific business.
How can organizations change their culture?
Yes, culture can be changed deliberately adjusted through targeted organizational change projects.
The purpose of these change projects can vary, but often center around performance improvement efforts.
To make such changes, businesses should:
- Create a set of specific goals. As we will reiterate throughout this guide, it is critical to stay focused on the overarching goal of a culture change program. That goal, after all, is the driving force behind every cultural change effort. And it is almost always part of a larger organizational transformation agenda.
- Perform an in-depth analysis of their existing culture. First and foremost, organizations should analyze their existing culture, through interviews, surveys, HR data, and so on. This information is imperative for anyone wishing to make changes, since it will dictate the direction and form that those changes take.
- Assess the impact of the culture on their business processes. A culture may or may not impact an organizational change effort. If project organizers think that the culture may hinder the effort, then they should continue with their cultural change endeavors. If not, then it is better not to attempt a culture change.
- Weigh the costs and benefits of cultural improvement projects. Cultural change programs take time, effort, and resources. The more radical and rapid the change, the more costly and psychologically taxing it will be. Costs such as these should be weighed carefully against the benefits of an improvement project.
- Develop and implement an organizational change aimed at systematically improving the organization’s culture. Cultural improvement processes are one type of organizational change. As such, they should be planned carefully and methodically, in coordination with other parts of the organizational change effort.
- Continually monitor, manage, and optimize the program. Change programs such as these must be continually analyzed, monitored, and optimized. And, after completion, reinforcement efforts should be made to ensure that the program sticks.
Because changing an organization’s culture can be costly, time-consuming, and psychologically taxing, it is important to carefully weigh the benefits of this change against its potential costs.
When is the right time to adjust the organization’s culture?
A culture change is appropriate when:
- The culture interferes with the desired outcome of an organizational change program
- The culture hinders the effective functioning of the business
- The organization must undergo a large-scale transformation that impacts many areas of the business, including the culture
- A company is acquired by a different organization
- Business leaders want to take the organization in a different direction
As mentioned in the previous section, it is important to weigh the costs and benefits of cultural change carefully, prior to making any changes.
Who is responsible for leading organizational culture changes?
Typically, an organizational change project will be led by several parties within an organization.
Cross-functional teams can include:
- Business leaders. Business leaders, such as executives and owners, will often guide any serious cultural change effort. Their vision, after all, is what drives and directs and organization.
- Change managers. Change managers control and execute organizational change projects. They will coordinate organizational transformations, as well as cultural change efforts.
- HR professionals. HR deals with everything related to employees and employment, so they will often take a direct hand in the implementation of cultural change programs.
- Senior and middle managers. Team leaders, such as managers, will often be advocates for change and lead cultural changes from the ground.
This team can also be supported by other groups as well, depending on the nature of the cultural change effort.
If a business aims to make its culture more digital-friendly, for instance, it may enlist the support of IT professionals, digital adoption managers, and outside consultants.
How do businesses measure the impact of cultural changes?
Measurement, as mentioned, can be a challenge, especially if an organization wants to tie its changes to quantifiable outcomes.
However, qualitative assessments can reveal the progress and success of a culture change.
Employee surveys, for instance, can track:
These metrics can then be combined with quantifiable business metrics, such as performance metrics and financial indicators.
An organization that wants to develop a more customer-centric culture, for example, could choose to perform assessments of:
- Employees’ attitudes and beliefs
- Their understanding of customer-centric business practices
- Changes to the customer experience
- Changes to the way teams perform customer-related tasks
Since performance improvements are the ultimate aim, it is important to attempt to make a connection between the cultural changes and any performance enhancements.
Changing Organizational Culture: A 7-Step Process
Here is a step-by-step process that can be followed by organizations who want to initiate culture changes.
1. Establish organizational performance goals
The first aim of any culture change should be the bottom-line outcomes – the net results that the business is aiming for.
Here are a few examples:
- Developing a culture that is data-driven and “digital,” in order to improve digital adoption successes. A data culture integrates data into every area of the business, using data to inform decision-making at all levels. Unless such practices are ingrained into employee thinking and behavior, via culture, it is unlikely that digital technology will play such a central role in a business.
- Improving organizational agility by integrating agile principles into the fabric of the organization’s culture. Agility is a mode of thinking that prioritizes traits such as collaboration, communication, and responsiveness. In today’s dynamic, ever-changing work world, agile is one good way to stay adaptable, relevant, and competitive.
- Increasing the performance and skills of the workforce by creating a “culture of learning.” Cultures that prioritize learning are also more likely to stay relevant in the digital economy. For instance, employees will maintain higher skill levels, which is crucial in the digital workplace.
Characteristics such as these can certainly be beneficial in most cases.
However, it should be remembered that there is no one-size-fits-all recipe for what makes a great corporate culture.
Instead, cultures should be unique to each business.
A culture that works well for one organization may be ill-suited to a different set of circumstances.
Therefore, it pays to envision a future outcome, then design culture changes that support that vision.
2. Assess the impact of culture on current performance levels
It is important to stay focused on the end goal of culture changes: performance improvements.
An organization undergoing digital transformation, for instance, may choose to completely transform many aspects of its business, including its culture.
However, those culture changes should always be viewed in the context of that digital transformation.
To ensure that culture changes generate positive results, organizations should start by assessing:
- The organization’s current assumptions, values, and behaviors
- How those affect the organization’s performance
- Whether the current culture would support or hinder proposed organizational changes or transformations
This information can be uncovered through research that includes:
- Employee surveys
- Interviews with employees, managers, and business leaders
- Customer research
- Market research
- HR data
- Performance evaluations
And any other data sources that are relevant to the organizational change effort.
3. Assess the potential impacts of cultural change
With a thorough understanding of the current culture, the appropriate professionals can then determine the potential impacts of a culture change program.
At this point, businesses can:
- Gauge how different cultural traits would affect the business
- Estimate the risks of cultural change
- Consider the benefits of implementing cultural changes
Naturally, there is no way to be completely certain of the outcomes of a cultural improvement project.
For that reason businesses should do their best to assess the potential impacts of proposed changes before implementing them.
4. Clearly define the cultural change proposal
An organizational change program should be based on the data collected earlier and aimed at improving organizational performance.
The proposal should clearly articulate:
- The current state of the organizational culture
- Proposed changes
- Potential risks
- Desired outcomes and behaviors
- The rationale for the proposed changes
Because culture changes are complex, long-term investments, it is important to be very thorough and systematic when developing a proposal and a plan of action.
5. Plan a roadmap for change
A roadmap for change will describe the journey that the business will take towards the desired end state.
Like any other organizational change, this roadmap will be centered around individuals, and it should include all the essential components of an organizational change, such as:
- Building awareness of the need for change. First and foremost, change managers must explain “what” needs changing, as well as “why” it needs changing. Without this awareness, it will be difficult to earn employee support – and resistance will be much more likely.
- Providing employees with the proper tools. Employees require the right tools to enact change. An organization undergoing digital transformation, for example, cannot simply institute a digital culture. It must provide employees with the technology they need to succeed.
- Training employees in order to give them the necessary knowledge and skills. Of course, if employees don’t know how to use the aforementioned tools, they will confront a steep learning curve. To reduce employee resistance, a digitally maturing enterprise may consider implementing digital adoption platforms (DAPs) and other employee training tools.
- Reinforcing the change. A change must be reinforced to ensure that it sticks. If it is not, then employees can easily slip into old habits and undo all of the work completed up to that point.
The roadmap, in short, is the practical application of the strategy developed in the previous steps.
6. Implement the initiative
Cultural change initiatives are long, drawn out, and they require careful management.
Here are a few ingredients that can maximize the chances of success:
- Clear communication
- A systematic, data-driven approach
- Careful management
- Timelines and deadlines
- Regular progress assessments
The more well-structured and sophisticated the approach, the better the results will be.
No organizational change project is perfect right out of the gate, which is why it is important to adjust course over time.
This is especially true for long-term projects such as cultural change initiatives.
Managers should create a systematic feedback loop – that is, they should integrate a series of mechanisms designed to collect feedback and incorporate it into their program.
That series of processes could look something like this:
- Regularly collect data and perform assessments. When it comes to the cultural aspect of a change program, surveys are go-to diagnostic tools.
- Evaluate the progress of the project. Each change program should be broken down into a series of stages, replete with goals, descriptions, and a purpose. Assessments should be used to track progress against this roadmap, then optimize and improve the program when necessary.
- Use that data to inform future decisions. Data and surveys can also be used to guide future decision-making, preventing problems before they occur. Since organizational transformations are long-term projects, this type of foresight can be very valuable over the long haul.
An optimization approach such as this can offer a number of benefits, including:
- Improved overall outcomes
- Decreased risk
- Lower employee resistance
- Greater levels of motivation and engagement
- Shorter program timelines
The key is staying agile and adaptable, by creating a program built upon data, feedback, and two-way communication.
Tips, Strategies, and Best Practices for Improving Organizational Culture
Changing organizational culture takes time, effort, and resources.
And the results are never guaranteed.
However, by taking a systematic, step-by-step approach, it is possible to generate positive results and have a deliberate impact on the workplace.
Here are a few tips, best practices, and strategies that can help enhance the results of any organizational change project.
Cultivate the right cultural attributes
The first step is choosing appropriate traits to cultivate in the workplace.
As mentioned, there is no such thing as a perfect work culture.
Each business is unique, which is why each company should have its own unique culture.
However, there are certain cultural attributes that can strongly benefit any organization … especially in today’s dynamic, digitally-driven economy.
Here are a few traits that can be very useful in the modern business world:
- Agility. As mentioned in an earlier section, agile is an ideal mode of thinking for the modern business world. Cultures that are agile will help businesses stay agile, adaptable, and dynamic – which are all important traits to have in the dynamic digital economy.
- Digital-first. Digital-centric cultures do not just focus on digital skills. They are also built around digital processes and the digital workplace. Remote working, file sharing, mobile communication, and many other digital capabilities can transform and enhance the workplace – especially when the culture supports such capabilities.
- Learning. Perpetual learning goes hand-in-hand with digital transformation, one of the prime drivers of organizational change in today’s economy. A culture built around learning will help create a workforce that is more productive, more adaptable, and more relevant.
- Customer-centrism. A culture built around the customer experience and customer-centrism will naturally create products and services that are more relevant to the end customers. In terms of organizational performance, this can mean better customer growth, retention, and value.
Since the contemporary economy is digital and continually changing, attributes such as these can offer a significant competitive advantage in the marketplace.
However, as mentioned, to truly realize and measure such performance gains, it is important to establish metrics, then tie those to quantifiable target outcomes.
Implement a structured approach to change management
Any type of organizational change can be difficult, and failure is not uncommon.
To maximize the chances of success, improve project outcomes, and decrease the chances of failure, organizations should implement a structured approach to change management.
Typically, change management frameworks help businesses:
- Assess risk and an organization’s capabilities
- Increase employee engagement, while lowering resistance
- Provide workers with the appropriate skills and tools
- Institute change to ensure that it becomes permanent
When it comes to organizational change, it is important to choose the appropriate tools and techniques for that specific type of change.
Cultural changes, for instance, will require tools that are appropriate for that specific project’s purpose.
These can include:
- Diagnostic tools specifically built to assess the progress of change projects. Though cultural changes are more subjective than many other types of change, they can still be measured. Diagnostic tools and certain surveys can help businesses gauge progress by soliciting feedback directly from employees.
- Training tools that provide the right skills. Employee training tools are a must when engaging in many types of organizational change, particularly digital transformation and other large-scale organizational transformations. The right tools shrink the digital skills gap, keep employees productive, and improve the outcomes of the change project.
- Communication tools, project management tools, and other software that will facilitate the change process. Other software tools, such as HR platforms and project management tools, can help facilitate organizational change. The right tools make it easier to collaborate with team members and coordinate change efforts. The ultimate result: improved efficiency and project outcomes.
Since such tools can literally make or break a project, it is important to choose the proper toolbox at the outset of any change initiative.
Expand change efforts beyond culture
Change must have a purpose, as mentioned.
And since businesses are for-profit, performance-based enterprises, organizational performance is often one of the primary aims of change.
Today, cultural change has become a trending topic in the business world, and the reasons are justified. After all, culture certainly has a large impact on the organization.
However, as McKinsey has pointed out, a single type of change is often not enough to generate substantial performance results.
Changing culture alone, in other words, cannot have a significant effect on an organization’s performance – and neither can any other individual change project.
Instead, to achieve true performance gains, organizations should focus on:
- Engaging in multiple change efforts that support one another and serve a larger strategic aim
- Don’t focus on cultural change by itself, but on the overarching purpose of the entire transformation program
- Only change culture if it supports the overall transformation initiative
Leadership expert Edgar Schein has pointed out that cultural changes are extraordinarily difficult.
It is not possible to change people’s minds simply by implementing new processes and tools.
In fact, Schein says, changing a culture is a “transformative change that requires a period of unlearning that is psychologically painful.”
For this reason, it pays to make adjustments slowly and only when necessary.
Manage culture by managing talent
Restructuring can be a rapid route to success.
But due to its high cost, that approach should be undertaken only when its benefits outweigh other approaches.
Another way to impact the culture – though certainly a slower method – is through talent management.
A talent management strategy can help:
- Filter out candidates that don’t match the desired work environment
- Attract candidates that do
- Help create a culture that fits with the organization’s vision
An effective talent management strategy, in other words, extends beyond simply recruiting top performers.
It can also be used to help build a company’s culture over the long term.
Restructure if necessary
In some cases, gradual culture shifts are appropriate.
In others, a more radical change is needed.
When an organization undertakes a major transformation, then it will be engaging in multiple simultaneous change efforts.
These projects are all interdependent, and can include culture changes, as well as restructuring.
And restructuring, as Schein has mentioned, is the only way to directly change a culture.
An organization may choose to engage in such large-scale efforts if, for instance:
- A business needs to alter its revenue model and fundamental business processes
- The company is undergoing digital transformation
- Competition is too fierce
- The organization is pursuing hyper-growth opportunities
Restructuring, though difficult and challenging, offers a myriad of opportunities for a business, one of which is an opportunity to fundamentally change the company culture.
Encourage total participation and gain buy-in from all levels.
Organizational change cannot succeed without the support of employees, not to mention executives.
Obtaining that support can:
- Ensure that all parties are on the same page
- Improve the program’s efficiency and effectiveness
- Decrease miscommunications and problems that result from those communication errors
- Lower employee resistance and frustration
- Offer valuable insight into the program, as well as new ideas and input
It is important to earn support and participation from everyone involved, not just one group.
By treating the project as a collective effort, everyone will stay aligned and work together – which is imperative for the success of any cultural change effort.
Here are a few tips to earning trust and support from participants:
- Communicate the “why” as well as the “what” of change. Studies have shown that providing a “why” – or a reason – dramatically improves the chances of success when making a request. Given what is at stake with organizational change efforts, program managers should do all they can to ensure employees are on board and supportive. And one way to do that is by explaining the rationale behind a change program.
- Provide ample opportunities for employees to be heard – and ensure that they feel heard. Everyone wants to feel important, included, and heard. Even if their opinion bears little weight on the final result, providing everyone with the opportunity to voice their opinion will help them feel like they are part of the process. This can prevent feelings of alienation and besiegement.
- Hold regular meetings, reviews, and two-way dialogues throughout the change process. Continual reviews help keep team members on task and on target. Since everyone is busy, it is rare that organizational change programs sit at the top of a person’s list of priorities. Regular reviews can help managers prevent change projects from slipping under the radar and losing traction.
- Be agile and responsive. Employee feedback, external circumstances, internal problems, and many other factors can affect the course of an organizational change program. Rather than sticking to a predetermined course of action, program coordinators should be ready to adjust the program, make changes, and revise activities as needed. An agile approach such as this will help ensure that the program stays relevant and produces the best possible outcomes.
Organizational culture changes are not democratic processes, of course.
They are typically top-down initiatives that fuel business improvement goals.
However, employees are human and their needs cannot be ignored.
The more they are allowed to participate and voice their opinions, the more they will support the organizational change initiative.