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How Your Organizational Culture Impacts the Bottom-Line

"Change is the only constant"– Heraclitus, Greek philosopher

Company culture is important because it can make or break your company and it's success. Company culture occurs whether or not you plan, design, or careful implement a organizational head outline puzzle 800 clr 10307corporate culture.  Companies with an adaptive culture that is aligned to their business goals routinely outperform their competitors. Some studies report the difference at 200% or more. To achieve results like this for your organization, you have to figure out what your culture is, decide what it should be, and move everyone toward the desired culture. John Kotter and James Heskett provides the first comprehensive critical analysis of how the "culture" of a corporation powerfully influences its economic performance, for better or for worse.

They analyzed corporate cultures using metrics: substance, strength, and adaptability, and measured economic performance by profit, return on investment, and stock price (if applicable). Their research indicated that a company outperforms its counterparts when 1) its culture emphasizes customers, investors, and employees; and 2) its culture fits its business environment and adapts to changes.

Companies that have experienced only short-term success differ from those that have enjoyed long-term success in one key way: they haven’t had time to introduce changes to their corporate culture. With time, the same culture that once suited the environment and facilitated growth can become a hindrance.

Because corporate culture has a strong influence on a company’s economic performance, it can have a polarizing effect. A strong corporate culture that is compatible with the environment will drive better financial results compared with a weaker corporate culture. But a strong corporate culture that is not in tune with the environment will hinder the company more than a weak corporate culture ever could.

There are so many theories that suggest how to implement change.  John Kotter, change management expert, explained his eight-step change process in his book, "Leading Change."


Step 1: Establish a Sense of Urgencystop watch fifteen seconds 400 clr 8499

This is the first, if not the most important step.  Many organizations rush to plan and take action and almost HALF of companies fail to take their organization's pulse. For things to move forward as smoothly as possible, it really helps to know if your company wants it and will embrace the desired culture.  Kotter suggests that for change to be successful, 75 percent of a company's management needs to "buy into" the change.


Step 2: Create A Guiding Coalition

Putting together the right coalition of people to lead a change initiative is critical to its success. That coalition must have the right composition, a significant level of trust, and a shared objective.

No one person, no matter how competent, is capable of single-handedly:business team huddle 400 clr 12008

  • Developing the right vision, 
  • Communicating it to vast numbers of people, 
  • Eliminating all of the key obstacles,
  • Generating short term wins, 
  • Leading and managing dozens of change projects, and
  • Anchoring new approaches deep in an organization’s culture.


Step 3: Developcustom text blue print 12184 a "Change" Vision

Clarify how the future will be different from the past.  A clear vision serves three important purposes. First, it simplifies hundreds or thousands of more detailed decisions. Second, it motivates people to take action in the right direction even if the first steps are painful. Third, it helps to coordinate the actions of different people in a remarkably fast and efficient way. A clear and powerful vision will do far more than an authoritarian decree or micromanagement can ever hope to accomplish.  


Step 4: Communicating & Ensuring Buy-Intable of puzzle pieces 800 clr 5661

Ensuring that as many people as possible understand and accept the vision.  Gaining an understanding and commitment to a new direction is never an easy task, especially in complex organizations. Under-communication and inconsistency are rampant. Both create stalled transformations.

Most companies under-communicate their visions by at least a factor of 10. A single memo announcing the transformation or even a series of speeches by the CEO and the executive team are never enough. To be effective, the vision must be communicated in hour-by-hour activities. The vision will be referred to in emails, in meetings, in presentations – it will be communicated anywhere and everywhere.  


Step 5: Remove Obstacles/Barriers

Removing as mabulldozer parked 400 clr 6685ny barriers as possible and unleashing people to do their best work. Many times, these are the most difficult barriers to get past because they are part of the internal structure of the company. Realigning incentives and performance appraisals to reflect the change vision can have a profound effect on the ability to accomplish the change vision.

Many times the internal structures of companies are at odds with the change vision. An organization that claims to want to be customer focused finds its structures fragment resources and responsibilities for products and services. Companies that claim to want to create more local responsiveness have layers of management that second guess and criticize regional decisions. Companies that claim to want to increase productivity and become a low-cost producer have huge staff groups that constantly initiate costly procedures and programs. The list is endless.     


Step 6: Create Short-Term Winsribbon seal 400 clr 12051

Creating visible, unambiguous success as soon as possible.  For leaders in the middle of a long-term change effort, short-term wins are essential. Running a change effort without attention to short-term performance is extremely risky. The Guiding Coalition becomes a critical force in identifying significant improvements that can happen between six and 18 months. Getting these wins helps ensure the overall change initiative’s success. Research shows that companies that experience significant short-term wins by fourteen and twenty-six months after the change initiative begins are much more likely to complete the transformation.


Step 7: Keep Building

pushing stack up 400 clr 9724Resistance is always waiting in the wings to re-assert itself. Even if you are successful in the early stages, you may just drive resistors underground where they wait for an opportunity to emerge when you least expect it. They may celebrate with you and then suggest taking a break to savor the victory.

The consequences of letting up can be very dangerous.  Whenever you let up before the job is done, critical momentum can be lost and regression may soon follow. The new behaviors and practices must be driven into the culture to ensure long-term success.  Once regression begins, rebuilding momentum is a daunting task.  


Step 8: Implement the Changes into the Culture

Anchoring new approaches in the culture for sustained change.  New practices must grow deep roots in order to remain firmly planted in the culture. Culture is composed of norms of behavior and shared values. These social forces are incredibly strong. Every individual that joinshand drawing a to b 400 clr 11972 an organization is indoctrinated into its culture, generally without even realizing it. Its inertia is maintained by the collective group of employees over years and years. Changes – whether consistent or inconsistent with the old culture – are difficult to ingrain.    

Just remember:

  • Cultural change comes last, not first
  • You must be able to prove that the new way is superior to the old
  • The success must be visible and well communicated
  • You will lose some people in the process
  • You must reinforce new norms and values with incentives and rewards – including promotions
  • Reinforce the culture with every new employee

Creating an environment that fulfills the objective and subjective needs of employees often creates (or changes) organizational behavior that leads to improved performance and a more loyal staff. This helps employees to realize that the staff and their work is about much more than money.  This process does not happen on its own. It is important that the leaders of the company create the culture; otherwise, it will create itself.


View our Recorded Online Workshop on Building A Successful Organizational Culture!!!


 Sources: Kotter International

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