Contrary to popular belief, corporate culture isn't stagnant. It's always shifting in response to both internal changes, and external forces.
The corporate culture of my first company, Information Experts, drastically shifted in 2013 when our largest customer, the federal government, shifted what they valued most. They moved from valuing innovation and value-driven solutions to valuing lowest-price solutions. That huge change dramatically impacted our corporate culture.
A recent study conducted by Korn Ferry Institute revealed that there are 6 major catalysts for culture change:
- A new CEO.
- A merger or acquisition.
- A spin-off from a parent company.
- Changing customer requirements.
- A disruptive change in the market the company serves.
The Company Gets a New CEO.
I'm currently working with an association that recently brought in a new CEO. The CEO inherited the values that the association defined prior to his arrival. Consequently, he's had to consciously work to adapt the organizational values, which drive the culture.
When a new CEO joins a company, they are under the microscope. Not only are employees evaluating their outward facing behaviors; they are also evaluating if they are walking the walk behind closed doors. Transparency is everything for a new CEO.
In its survey of more than 7,500 executives across 107 countries, Korn Ferry found that in most cases, the new CEO wants to implement a new strategy. Even in stable or well-performing organizations, the new CEO wants to make their mark on the organizational culture.
Microsoft is a great example of this. Former CEO Steve Ballmer was focused on how Microsoft made money. Current CEO Satya Nadella is focused on innovation.
A Merger or Acquisition
A merger of two organizations always brings cultural challenges. Companies must be very careful in evaluating what to keep in a newly acquired company, and what to discard. Korn Ferry shared that "leaders must create a new culture that retains the good elements from the 2 organizations, and discards the bad. In the absence of a common culture, people will revert to the culture they know."
A corporate spin-off can wreak havoc for the employees that are impacted. Separation anxiety, identity crisis, and survivor's remorse are all real consequences that result from a divestiture.
The newly separated entity will not automatically inherit the culture from the parent company. In fact, it will adapt a leaner, more agile, and entrepreneurial culture, more representative of a start-up.
Changing Customer Requirements
As I shared with my own experience, when the customer base demands a different way to do business, the culture will shift in response. This may result in a change in leadership, employee attrition, pricing structure, and a shift in service delivery - all of which have cultural impacts.
A Disruptive Change in the Market it Serves
In the early days of Information Experts (circa 1998), I vividly remember when Cisco CEO John Chambers declared e-learning to be "the killer application of the internet." Overnight, our business model changed. I had to pivot the company from being a traditional instructor-led training provider to being a web-based training provider. This required a shift in service offerings, and the hiring of additional employees with new skill sets. We evolved from a traditional training company into a multimedia company, which are very different cultures.
A global client base and/or employee base requires a culture that respects and reflects globalization. "Adapting leadership and management styles to local cultures is critical to gain the most engagement, participation, and brilliance from local talent," said Korn Ferry. "Leaders must examine their organizations' existing processes against the local landscape to see how to best make decisions and communicate. Leaders may need to adapt their styles to get the best results."
How Leaders Improve Organizational Culture
Corporate culture creation, improvement, and change rests with the organization's top leaders. "Through their actions, communications, and the values they embody, leaders set the example for others to follow, and the tone for what is important and valued in the organization."
The Korn Ferry study revealed that the top three culture change strategies:
- Communication of changing initiatives
- Leadership development
- Embedding culture change in management objectives
Despite these efforts, there is still a dangerous disconnect between culture and strategy. While 72% of executives say culture is extremely important for organizational performance, only 32% of executives say their organization's culture is fully aligned with the business strategy.
The Good News
The good news is that CEOs and supporting executives across the globe are realizing that corporate culture is not simply a feel-good catch-phrase, but rather the linchpin to an organization's overall performance.
Leadership expert Seth Godin believes that "culture is at the heart of whether you are going to get to where you want to go. Every choice is a culture-based choice. The culture you select will drive all of your choices going forward...leaders get the culture they deserve."
Once CEOs embrace their role in establishing and leading the corporate culture, the sky is the limit for both personal and organizational potential.
What cultural changes have you experienced? Please share how they evolved and transpired.