What Cultural Transformation is and Why your Business needs One
If you work in an organisation, the odds are that you’ve recently heard the term cultural transformation.
Although it’s a relatively old topic, there still seems to be a lot of confusion about whether it’s just another fleeting trend or a particular strategy that increases performance in organisations.
With that said, we compiled an article that explains the four most fundamental questions about cultural transformation:
- Why organisations need a business cultural transformation?
Let’s get started.
What is Cultural Transformation?
There is no single agreed-upon definition of cultural transformation, as it is still developing and evolving in scope. However, the closest and most universally accepted definition of cultural transformation describes it as the dynamic process of irreversibly changing the outlook (culture) of an organisation; and correspondingly its policies, processes and behaviours that result in a more effective mode of operation.
We’re going to use the terms transformation and change in this post interchangeably, but to be clear, we’re discussing ”transformation’’. Change seeks to merely improve upon the past. Transformation carves an entirely new path for the future and aims to create something new that is built upon the frameworks of the past. It has often been said that a butterfly is a transformation and not just a better caterpillar.
To understand this more closely, we will start by defining culture. According to Richard Barrett, organisational culture is defined as ”the way things are done around here.” To put it in a simple way, culture is a replica of the values, beliefs and behaviours of a group of people; that determines their ”personality’’. It is who they are, what they stand for. It is what defines them, and what distinguishes them from other organisations.
This definition tells us three essential and interconnected things about culture:
It is Holistic
It is Social
It is Learned
In short, it involves people — how they think, what they think; and how they act after analysing all these things. An example of this is how workers handle a customer; from the first time that customer makes contact with them to the very end of the transaction.
Culture develops over time, and it strengthens as practices and ideas are exchanged from person to person until they eventually become a part of the organisation. Once a culture is rooted, it can be a very powerful thing, one that is may be difficult to change.
As such, transforming a rooted culture is quite a challenge, but that’s not to say it’s impossible. Barrett’s definition tells us a fourth and very important thing about culture: it determines employees ”personality’’- this simply means it can be changed. After all, personality can be changed.
Even then, transforming a culture is never easy, and since it’s such a powerful force, it has this rather universal trait: the more that a culture needs to change, the more it is likely to resist the change.
Cultural transformation starts with the personal transformation of leaders. Organisations do not transform. People do.
— Barrett Values Centre
How does Cultural Transformation Happen?
To successfully change your culture, you not only have to change the behaviours and values of the current leaders, but you also need to change the organisational legacy of past leaders (the values and beliefs embedded in the organisation’s policies, systems and structures.)
The turning point in your culture change initiative is to start by finding out what’s working in the business and what’s not. This involves carrying out a cultural assessment of the entire organisation, which may include determining levels of honesty, integrity, accountability, teamwork, information sharing, among many others.
The results found from the cultural values assessment will give your organisation a roadmap for transformation and allow you to identify the key performance indicators, for instance, the cultural entropy score, the level of values alignment, and the most crucial value indicators.
To transform the culture in your organisation, you will need to make changes at two major levels: at the level of the company as a whole; and at the level of teams, units and departments. This will be done by working with leaders in the various units to reduce the level of entropy (culture-driven fear) that is in the organisation.
Major Steps Involved in Cultural Transformation
Every business has a culture. Sometimes it is well defined and promoted. Sometimes it just developed, unintentionally, overtime. Other times, it is the result of a combination of different cultures. Either way, every cultural transformation begins with something.
It’s changing from one culture to another, or it may be changing a small aspect of a larger culture. For instance, your organisation may have a strong culture in all areas, except customer service. They want to keep their current culture but change customer service. In this case, the transformation is not of the whole organisational culture, but only of a single component.
There are four main steps involved in transforming an organisation’s culture:
- Before an organisation changes its culture, it should first understand its current culture or the way things are at the moment.
- Once it understands the current organisational culture, it should decide where it wants to go, as well as define its direction and decide what its new culture should look like.
- However, just knowing how the desired organisation culture should look like is not enough. It must create a plan to ensure that the culture they want change becomes a reality.
- Finally, every individual in the organisation should decide to change their values, beliefs and behaviours to create the desired culture. This is often the hardest step in culture change.
Why is Cultural Transformation so Important in your Business?
The main reason behind cultural transformation or the benefits of its successful execution can be highly inspiring. When people understand the benefits that will follow a successful cultural transformation, they will be much more willing to support the efforts needed to achieve it. This clear understanding of the advantages of a culture change is the far end of the line. The current situation is at the near end of the line. By connecting these two points, we create what is called a line of sight- from where we are now to where we are headed. When the line of sight is clear to every individual in the organisation, and they are all able to identify the benefits of a culture transformation, then this provides a framework from which every other value of transformation can be communicated.
Only the wisest and stupidest of men never change.
Why Organisations need a Cultural Transformation
With the right work environment, your employees want to come to work every day- and are also less likely to quit. Given that it costs thousands of dollars to train and recruit new employees each year keeping your current employees happy makes solid business sense.
Fostering a positive work culture is often seen as a time-consuming process, and a drain on the company’s resources. But does it have to be that way? By all means, no. With a culture transformation, you can kiss goodbye to all these frustrations.
For example, if employees always need to check in with their managers, the existing culture is one in which people are either too reluctant to have their own opinion, or the management is too stifling. Creativity and innovation is limited. Or people are frustrated by the mindset, ”my boss is always working late, and I can’t possibly leave until he leaves.”
As a result, cultural entropy (culture-driven fear) increases. And as cultural entropy increases, so does employee unhappiness. At this point, your staff are just punching bags — entire rift from the loyal ambassadors you want them to be. When your organisation lacks a strong culture, it will eventually find its way into every unit, level and department.
Luckily, the reverse holds true. A healthy culture is likely to increase employee satisfaction and happiness. Finally, employees can see themselves as an asset rather than a liability. And this leads to increased morale, high turnover, improved productivity and more — all of which have a positive impact on profit and revenue creation.
The good news is that cultural transformation can happen faster with an effective initiative from leaders who instil confidence in their staff. In some cases, cultural transformation can be immediate. Small changes can be realised immediately through demonstration of new cultural behaviours.
Great leadership is critical to sustained positive cultural transformation. Leaders who build great working environments, instil trust, communicate effectively and are consistent with their behaviours, create positive cultural transformation.
The Benefits of Creating Positive Culture Transformations in your Workplace
- Employees will enjoy going to work, and will also be more committed to the organisation thus reducing the costs associated with low turnover.
Cultural Transformation: The Barrett Values Model
According to the Barrett Values Model, cultural transformation is evolutionary in nature. The whole journey of change covers both internal and external environments and the gradual sense of identity regarding who we are.
1. Survival. In this level, employees are focusing on everything related to physical survival. It comprises values such as health, safety, self-discipline and wealth.
2. Relationship. In the second level, employees begin to form relationships at the workplace. They gain values such as communication, respect and conflict resolution.
3. Self-esteem. Once they have established meaningful relationships, they begin to gain recognition at a personal level. The values in this level include personal growth and success.
4. Transformation. Cultural transformation begins. At this point, employees tend to be more accountable, independent and responsible for the decisions they make.
5. Internal Cohesion. At this level, employees become more clear, active and innovative. They take time to pause and reflect on decisions. They think in terms of achieving organisation goals rather than carrying out job responsibilities.
6. Making a Difference. . Employees operating at this level have developed a variety of skills. They have a sense of active involvement in their outside world. They are driven by the issues around them to create an impact on the immediate environment and the society at large.
7. Service. . At this level, employees focus on service to other people. They identify with the society and are ready and willing to infuse their knowledge and wisdom to every level of the human perspective. They are active in matters surrounding human rights, justice, and cohesion.
Case Study of Success from Unilever Brazil
Unilever Brazil had an incredible legacy built over 80 years. However, in 2005, after years of continuous growth, revenues started slowing down. It was obviously in need of renewal.
In early 2008, Kees Kruythoff, the new chairman, launched a transformational effort to reignite growth. He saw a need to address not only the strategic hurdles but also the organisational culture as well.
He came up with five big ideas: 1) to accelerate growth; 2) to create sustainable transformation; 3) to increase revenue; 4) to identify capabilities required to boost business, and 5) manage key performance indicators.
THE PROCESS: 1) He conducted a cultural values assessment after every six months; 2) Maintained discipline among workers for 36 months; 3) Ensured that leaders created a positive culture; 4) Took everyone through a journey of personal reflection about values and the culture they desired to create; 5) Established regular, consistent practices.
THE OUTCOME: 1) Revenue grew by 3 % in 2008, 7% in 2009 and 14% by 2010; 2) The amount of cultural entropy feel from 37% to 19%, and then to 10% in 2010; 3) From a culture characterised by internal competition, short-term focus and caution, people now experienced business with long-term goals, teamwork, shared vision and employee happiness.
All cultures change over time. No culture is static. Fortunately, it’s possible to move your culture in the right direction, as seen at Unilever Brazil. In our research, we discovered that all enterprises that have attained peak performance- including Apple and Microsoft, got there by embracing cultural change. Such companies see a cultural transformation as a competitive advantage — an accelerator of progress and not as an obstacle.
Unless you are prepared to give up something valuable you will never be able to truly change at all, because you’ll be forever in the control of things you can’t give up.
— Andy Law (Creative Company)