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The role of organizational culture in change management

The role of organizational culture in change management

Synopsis
5 Minute Read

Change is coming in 2023; organizations that are agile and have healthy cultures will be best positioned to handle it, and even capitalize on it. Your mandate is to build and maintain a culture within your organization that supports, rather than hinders, change.

Studies have shown most transformation efforts fail because the culture, not the strategy, was lacking.

For successful transformations, ensure your culture is:

  • Clearly defined and measurable
  • Aligned with your strategy and purpose
  • Manifested in what you do and how you do things, not just what you say
  • Underpinned by strong relationships of trust
Leader, Consulting – Organizational Renewal

2022 was a year full of change, and it’s unlikely 2023 will provide any respite. We’ve already started to see many omens of a recession in Canada — layoffs in some sectors, labour shortages in others, stagnation in real estate activity, high levels of consumer debt, and more. As leaders in business, non-profits, and the public sector, many of these forces are beyond your control, but they will compel you to adapt, nonetheless.

Like it or not, change management is now a fact of life. Agility is a key trait that will determine which organizations thrive, survive, or stumble in the next two to five years.

When you think about managing large-scale transformations in your organization, be mindful of the central role of culture in change management. Even the best strategy, standing alone, isn’t enough to ensure success. Two separate studies by McKinsey and Forbes revealed that somewhere between 75 and 90 percent of strategic change efforts fail because of cultural barriers.

Defining and measuring organizational culture

What is it?

The only way to understand why your culture is so essential is to define it first. When you hear the word “culture”, do you think of something soft and fuzzy? Does it seem amorphous, unknowable, and beyond your control? If so, it’s never too late to adopt a new mindset.

When you think of culture, your first thought should be the “how” of your organization. Culture is about how work gets done, how you execute your strategy, even down to the details of how you hire, run a meeting, invest resources, reward people, or approve decisions.

There can be more than one right way to drive your strategy forward; even if your strategy is similar to your competitors’, culture is something you can make uniquely your own.

Culture starts at the top — leaders and decision-makers in the organization set the tone.

Culture is comprised of the shared mindsets, behaviours, and beliefs that guide your team. To use a metaphor, if your goal is your destination, and your strategy is your charted path to get there, culture is the vehicle you take.

Indicators of a positive culture include:

  • Strong productivity and performance
  • High employee retention rates
  • Elevated engagement scores (i.e., how your people feel at work)
  • Effective decision-making
  • Agility and smooth management of change

How can you measure it?

If good companies understand culture, then great companies measure it. We use a highly effective approach, the Barrett Values Assessment, to help our clients get a reading on the health status of their cultures — and to compare their cultures to successful similar organizations. Armed with this information, you can even tie culture dysfunction back to lost profitability, seeing the impact on your bottom line.

To get a more nuanced understanding of the root causes behind your culture measure is to ask leaders and team members about the “why” and “how” of your organization. What do they think of how things get done, approved, or communicated, as well as the rationale behind those choices? Would they do things differently?

You can use these insights to identify a focused set of levers — e.g., shifts in policies, more transparent communications, better leadership training, more effective performance feedback and reward systems, or the design of jobs — to move the needle and make your culture more agile and positive.

While much of what’s happening in the world is beyond your control — war, supply chains, public health — your culture is largely within your control, when it’s properly defined and measured.

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How is culture linked to change and transformation?

As discussed, you’re almost guaranteed to make some strategy adjustments in the near future, either voluntarily or because you’re forced to. Your culture will drive the success or failure of those change efforts.

People resist change when they work in suboptimal cultures. If your team members are too attached to your current systems and tools and prefer to cling to the old pre-COVID ways of doing things, that’s a culture issue, not a strategy issue.

The combination of a mediocre strategy and a strong culture is more conducive to change than having a mediocre culture and a strong strategy.

On the flip side, if you foster open communication, listen to employee feedback, insist on transparency, and embrace progress, those are also indicators of culture. And those are good omens that your change management efforts will go much more smoothly.

How can I ensure my culture helps, not hinders, change management?

Let’s explore some of the most common reasons culture acts as a barrier, rather than a catalyst to organizational transformations.

Misalignment with strategy

Your culture should align to the strategic intent and the purpose of your organization. To return to our previous metaphor, you need to choose the right vehicle for your journey — if your journey takes you over mountainous terrain, don’t take a go-kart.

For example, a strategy that involves rapid expansion into new markets pairs well with a fast-paced and energetic culture, where employees are free to try new things and make mistakes. A strategy that’s focused on getting steady investor returns using tried-and-true methods pairs well with a culture of thoughtful mentorship, training, and level-headed leadership.

Misalignment with commitments

It may sound trite, but you must actually do what you say you’ll do. Nothing will kill your culture faster than a perceived gap between what you say is important, and what you actually prioritize with your actions. A prime example of this kind of gap would be “Greenwashing”.

This is especially true among your young employees, who will watch closely how you follow through on commitments such as environmental sustainability, social consciousness, pay equity, diversity and inclusion, and more.

People pay attention to what companies say, especially their own employer. Respondents to the 2021 Edelman Trust Barometer ranked “My Employer” as their most trusted source of information, above governments, other businesses, and all other forms of traditional and social media. 

As you align yourself with your strategy and purpose, and follow through on commitments, you build trust into all levels of your organization. Trust is a crucial element of culture; it breeds success in change management and transformation efforts because it helps people be less apprehensive about change.

Getting started

If re-shaping your organizational culture to be more agile and conducive to change sounds like a monumental task, you’re not alone. Start with the basics: clearly define your organizational purpose and strategy in writing, and then determine which metrics and indicators of culture are most important to you.

MNP’s skilled and experienced consulting team has helped numerous organizations build or refine cultures they’re proud of. They provide an unbiased assessment of what you’re doing well and what to work on, and provide you with the tools and processes you need to both execute your plan and measure its success.

Contact us

To learn more, contact:

Mary Larson, MBA, ICD.D, Partner, Consulting
[email protected] 
514.228.7905

Kevin Joy, MBA, Partner, Consulting
[email protected] 
514.228.7898

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