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“When working like the highly oiled pistons of a high performance engine, organisational culture can transform companies,” in the first of a new column Figuring Things Out Joe España, MD of Performance Equations exposes the reasons why mergers and change progammes often fail because of culture.
There are a number of inter-related performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness. Poor execution caused by organisational issues is held responsible for over 50% of corporate failures to fully deliver business strategy.
Moreover, at least 60% of company mergers fail to realise their anticipated pre-acquisition values, and approximately 75% of all change programmes are unsuccessful. Why? Because organisational culture can secretly conspire against these efforts.
Cultural clashes mean that what looks on paper to be a sensible restructuring solution often doesn’t work in reality unless potential incompatibilities of organisations and units during merger integration are addressed. Discovering cultural differences too late can prove costly, time consuming and hugely frustrating.
What is organisational culture?
Many books, filling plenty of library shelving, give us all sorts of statements and descriptions characterising organisational culture. Organisational psychologists talk of the values, assumptions, behavioural patterns, style, climate, atmosphere, norms, and observable attributes that we associate with a particular organisation or group.
Put more simply, “the way things are done around here.” Employees soon learn the ropes about the organisations culture by experiencing how people behave towards one another and ‘rules of the game’ through what is paid attention to. These behavioural norms may or may not be aligned with the company’s stated values and conducive to the achievement of its stated strategy.
Examples abound. The CEO who is adamant about the need for entrepreneurial creativity and innovation as a strategic imperative, and whose senior manager’s immediate response to any volunteered creative idea is: “It won’t work.”
The corporate centre that entreats frontline staff at a bank to engage in more consultative (and time consuming) dialogue with customers, only to have the branch manager quietly mouth “hurry up” from behind the customer queue. The FMCG leadership who extol an end to bureaucracy, operational slickness and efficiency while at the same time demanding the 27 monthly reports, 50% of which nobody reads.
What type of culture is best?
These might all be examples of potential misalignment between organisational behaviours and the view from the top, but they illustrate reality for many employees in UK Plc.
What these examples don’t really tell us and what many organisational culture diagnostics fail to uncover is what the “right” culture to have is. Even the grandfather of organisational culture guru’s, Dr Roger Harrison, couldn’t get us past the strengths and limitations of his model of four organisational cultures: Power, Role, Achievement, and Support. It has still been left to organisations to try to fathom out what type is best for them.
Ultimately, why organisational cultures secretly conspire against what a company is trying to achieve is because they are by their very nature so difficult to pin down. Virtually intangible, organisational culture has been notoriously difficult to describe in terms of how it operates and its concrete impact on organisational performance, even despite the plethora of stories and examples.
Luckily for us the 1980’s and ‘90’s saw an advent in corporate UK of organisational culture change initiatives with a strong emphasis perceiving them as the key mechanism to organisational effectiveness and performance. A focus was given to answering questions including: What type of culture do we need? What is the relationship between culture and performance?
What has to be changed to modify the culture? Recent writers including Collins & Porras, Hesketh and Kotter have found positive relationships, in terms of process, between organisational culture and organisational performance.
Models such as the European Foundation for Quality Management’s Business Excellence Model also provide some hooks to be able to understand and measure the impact of “the way we do things here.”
With these frameworks for measuring and monitoring how things are done influence an organisations performance outputs, we can begin to develop an answer to not only how “the way things are done around here” helps or hinders our organisational strategy, but also allows for a definition of the type of culture that is needed to achieve strategic goals.
So how does organisational culture help or hinder?
The body of research into this field of organisational performance seems to have certain common themes. There are be two discrete and independent scales or dimensions of organisational culture that work with each other to help to describe a number of combined organisational characteristics.
The first of these two dimensions provides a picture of whether an organisation tends to be orientated more towards tasks, processes and quantitative goals rather than people, relationships and qualitative goals.
The second dimension describes an orientation either towards collaboration, slower timelines, and considered responses rather than competition, faster timelines and pro-activity.
Rather than providing strict labels of organisational culture, they offer typical behavioural patterns depending on their combination. The research also identifies a number of internal performance factors directly linked to and influencing business performance and other outcomes.
What all the research points to is that there are a number of very discernable, inter-related organisational performance factors in a company’s operating style/culture (the way things are done) that can significantly influence its organisational effectiveness.
These factors, processes, ways of working and behaviours, clearly influence the psychological contract between company and employee and ultimately how it performs in the market.
They include the extent to which the strategy is clearly communicated and understood and is in keeping with organisational values; the extent to which goals are clear at the individual and team level and have an explicit fit with one another and the organisations overall business objectives.
They include the extent to which leaders and managers operate in ways that are consistent with the stated vision and values of the organisation, providing psychological reward and recognition over and above the financial, and engendering employee participation and cooperation across the business.
They also include the extent to which the business is generally structured and organised to facilitate decision-making, autonomy and control dispersed at the appropriate levels in the organisation and disencumbered by layers and bureaucracy.
What research has gone on to demonstrate is a correlated relationship between these organisational factors and levels of employee satisfaction and morale; the levels of willingness and ability to initiate and manage change successfully; the extent to which employees feel personal responsibility and accountability for customer service and business performance; the effectiveness of internal communications, cross-functional collaboration and ultimate organisational performance effectiveness.
These performance factors in an organisations style or culture are so powerful that they can make all the difference to the successful delivery of business strategy and execution of business plans. They represent the glue that creates engaged, highly committed workplaces. And when working like the highly oiled pistons of a high performance engine, organisational culture can transform companies, as Collins & Porras describe, “From Good to Great.”
Joe España is MD of Performance Equations
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