Why Understanding Culture Matters

Much of the work of performing culture audits as a part of diversity work misses the point. It is clear that an unexamined culture will likely continue to create an environment that will tolerate rather than appreciate and manage diversity. But to conduct culture audits under the guise that the culture must change to allow diversity to flourish is disingenuous.

Firstly, it is near impossible to do and second, it diverts leaders’ attention away from their real challenge. That challenge is to understand their corporate culture well enough to anticipate the reaction to change and to thereby manage change more effectively.

What many don’t understand is how intractable corporate culture can be. Even a visionary, charismatic, successful, and totally competent Chairman and CEO doesn’t have the power to change a longstanding, entrenched culture with a two-year program, a massive rightsizing, or a wholesale replacement of leaders.

Culture is created and embedded through shared successes, and it only evolves with new shared successes. The result is a small 3°-5° change, not a complete overhaul.

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Honoring the Existing Culture

The former CEO of Proctor & Gamble was let go by the board. His crime – failure to execute. As noted in a Fortune magazine article in 1998, failure to execute is the basis of most CEO failures. In the case of P&G, for example, the CEO made projections that he could not fulfill. Specifically, he promised to overhaul the culture of the old-line, household products division (makers of Tide, Bounce, and other well-known household products). This is another case of an executive not understanding how to manage culture.

His failure was not that he set unachievable financial goals. Instead, he overstepped his power when he asserted that he could change a deeply embedded culture in 18 months. Most change efforts (68% according to Arthur Little) fail due to unanticipated problems. The problems that most often crop up and derail a change effort have to do with how the culture reacts to the change. Serious leaders are able to manage change because they have learned to honor the culture that exists instead of attempting to make radical changes to the culture.

The 3 Piers of Culture

There are essentially three levels of culture (as defined by Edgar Schein). There is the level of actual behaviors and practices. These are the visible manifestations of the culture. It is the things that are seen, heard, felt, and done in the organization. It is the collective practices and unwritten rules of behavior that characterize the group of people that make up the organization. Examples include: we avoid conflict; we tend to hire and promote from within; we serve customers first, bosses last.

The next level of culture has to do with the values that are accepted collectively by the group. These values are often an extension of the personal values of the founders or legendary leaders. These values define the boundaries of behavior and practices by lifting up guiding principles that are collectively honored. Care must be exercised to distinguish between stated or espoused values and the real operational values. For example a company that has a stated value of Innovationbut tends to act only on ideas that are generated by senior leaders may in fact have an operational value that honors the hierarchy. Examples of real values are: hard work; customer focus; results over activity; relationships drive the business; and, assimilation.

Finally, the most intractable level of culture is that of shared assumptions or roots. These are the hidden almost imperceptible core beliefs that define the character and the uniqueness of the organization. It is from these core beliefs that the values and the behaviors spring. Seldom will you hear these beliefs articulated or referred to as a reason for certain actions. That is because they operate at a subconscious level; they are deeply embedded; and, they are very difficult to shift and almost impossible to change once they have been in place for a few years. Examples of Core Assumptions are: We are Family; We are the best; and, We expect to win.

Expressing Values and Assumptions

As you might expect, it is possible to make discernible changes to the list of collective behaviors in an organization. Often it will involve an addition rather than a subtraction. But if you look closely, you will see that the new behavior is consistent with at least one of the real values and totally supportive of the core assumptions. For example, when culture was addressed in the Quality movement, many organizations ramped up their attention to customer satisfaction as a driver for business decisions. Upon close inspection though we noticed that this new focus was not a change in values or core assumptions, it was a new expression of those values and assumptions.

At Bellcore (now Telcordia), the attempt was to build on the tradition of service that was at the core of the beliefs in the organization (as part of the old Bell System). That service ethic gave rise to the existing Customer First value. But, to implement TQM, we shifted the definition to clarify whose good service we were targeting. In the past, the practice had been that employees, because of their superior technical knowledge, were best able to define good service. Now, the customer was being asked to set the service standard. Notice, however, that the Customer First value and the Service ethic (root) were still being served by this shift in attention to customer needs.

Even the storied saga of GE under two legendary leaders (Reggie Jones and Jack Welch) illustrates the power of embedded culture over even the strongest, most charismatic, most accomplished managers of our times. It is important to take note of the fact that Jack Welch did not save GE. GE, under Reggie Jones, was doing “very well, thank you”. Jack shook things up and led the organization toward a few noticeable behavior changes. But those changes were still consistent with GE values and supportive of GE’s core beliefs. The central root at GE is the systematic way of exploiting technology and imposing strict financial controls on businesses known as the GE Way. The changes that Welch introduced were in effect a way to get the organization to really honor its traditions and support its beliefs by winning – and winning big.

The Bottom-Line

Realistically speaking, organizations should be very wary of changing their culture. After all, their past successes were built on that culture. Massive culture change would amount to “throwing the baby out with the bath water.” A better approach is to take deliberate steps to understand the corporation’s culture well enough to anticipate the impact the culture will have on organizational change initiatives. This approach allows us to manage through and around the culture to effect change. We cannot just change culture by fiat or activity.

So, the wise thing for leaders to do is not to change culture, but to let knowledge of culture inform them how to implement change.