This document summarizes research on common mistakes that leaders make when trying to change corporate culture. It identifies three main mistakes: 1) using simple adjectives to describe culture without acknowledging tensions, 2) overreliance on employee survey data to measure culture, and 3) not aligning policies and operations with espoused cultural values. The research is based on surveys of over 7,500 employees and 200 HR leaders. It advises leaders to illustrate culture through acknowledging tensions, gather both quantitative and qualitative employee feedback, and ensure policies support the desired cultural shift. A case study example discusses challenges and successes in transforming culture at a large Guatemalan conglomerate.
This document summarizes research on common mistakes that leaders make when trying to change corporate culture. It identifies three main mistakes: 1) using simple adjectives to describe culture without acknowledging tensions, 2) overreliance on employee survey data to measure culture, and 3) not aligning policies and operations with espoused cultural values. The research is based on surveys of over 7,500 employees and 200 HR leaders. It advises leaders to illustrate culture through acknowledging tensions, gather both quantitative and qualitative employee feedback, and ensure policies support the desired cultural shift. A case study example discusses challenges and successes in transforming culture at a large Guatemalan conglomerate.
This document summarizes research on common mistakes that leaders make when trying to change corporate culture. It identifies three main mistakes: 1) using simple adjectives to describe culture without acknowledging tensions, 2) overreliance on employee survey data to measure culture, and 3) not aligning policies and operations with espoused cultural values. The research is based on surveys of over 7,500 employees and 200 HR leaders. It advises leaders to illustrate culture through acknowledging tensions, gather both quantitative and qualitative employee feedback, and ensure policies support the desired cultural shift. A case study example discusses challenges and successes in transforming culture at a large Guatemalan conglomerate.
STRENGTHEN CULTURE C O M PA R E D W I T H S O M E other activities of business leaders, such as hiring the right talent and setting strategy, changing
The three missteps that
corporate culture can be especially challenging. Culture is amorphous; there are no direct levers for shifting it in one direction or another. Indications are that CEOs are putting
thwart many efforts a higher priority on this aspect of leadership than in the past. According to a study by the research and advisory firm
Illustrations by LARS LEETARU
Harvard Business Review July–August 2019 21 Gartner, CEOs mentioned culture 7% more often during earnings conference calls in 2016 than in 2010. In surveys both CEOs and CHROs say that “man- aging and improving the culture” is the top priority for talent management. But the data suggests that there’s lots of room for improvement: Each year companies spend $2,200 per employee, on average, on efforts to improve the culture (much of the money goes to consultants, surveys, and workshops)— but only 30% of CHROs report a good return on that investment. When trying to spearhead culture change, many leaders use the wrong tools. Having surveyed more than 7,500 employees and nearly 200 HR leaders at global companies and conducted in-depth interviews with 100 HR leaders, Gartner has written a report identifying the most- (and the least-) effective ways leaders try to transform culture. To increase their odds of success, the report advises, they should avoid three mistakes. Don’t use simple adjectives to Gartner’s managing vice president for culture of innovation while continuing describe culture. Because culture feels research, calls a say/do gap: Employees to seek growth and profits from legacy “squishy” and hard to describe, leaders see leaders’ cultural aspirations as businesses.” tend to resort to a generic, overused hypocritical. Other tensions evident in most set of adjectives: Cultures are said to Instead of using a single adjective businesses include the need to achieve be high-performing, collaborative, to describe the culture you aspire to, both short- and long-term goals and an innovative, customer-focused, entrepre- illustrate it by acknowledging an import- emphasis on results and accountability neurial, results-oriented, transparent, or ant tension. “The tension is about the while also caring about employees’ trusting. Gartner studied how compa- intersection of the ideal and present well-being and work/life balance. nies using these various buzzwords realities and how those play out day to Explicitly recognizing such tensions compared with one another on progress day,” Kurey says. Talk about wanting avoids the disillusionment that can toward revenue goals and found no sig- to create a “culture of innovation” might result when employees see leaders nificant differences—meaning that none sound fanciful and out of touch if the espouse one set of behaviors but live of the labels creates an advantage. One business currently devotes 80% of its by another. reason: Often the chosen buzzword is resources and personnel to existing Don’t measure culture with data at odds with how the company actually product lines. The CEO should instead alone. Because culture feels intangible, operates. That causes what Bryan Kurey, speak to the tension: “We support a many companies depend on employee
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July–August 2019 surveys when trying to quantify what percentage of employees must receive IN PRACTICE frontline people think about it. Often low marks—it has created an environ- the surveys overrely on measures of employee engagement. Firms also ment in which workers must compete against one another for high marks, “It’s Not a commonly look at turnover rates as an indication of culture and morale. But undercutting collaboration. Similarly, companies might declare themselves to Win-Lose Situation” those numbers can provide false com- be customer-centric but clamp down on fort. “The feedback gets sanitized at the the expense account spending necessary leadership level, even if you’re not trying to let sales reps travel to meet customers to do that,” Kurey says. “Data gets aggre- face-to-face. “This is the area where In 2012 the Guatemalan gated and averaged and becomes a little leaders are least consistent—putting family-owned conglomerate generic.” Gartner suggests that compa- the operating model behind the culture,” CMI hired Oscar Rivera as its nies include open-response questions Kurey says. first-ever chief culture officer. in their surveys and ensure that leaders To drive change, leaders must align Since then he has led a cultural see some of the raw feedback. Smart what they say, how they behave, and transformation process to adapt how the firm’s 37,000 employees leaders also go beyond periodic surveys, how their companies operate in terms of work. Rivera spoke with HBR providing an atmosphere of safety that processes, budgets, and policies. Many about the challenges of the allows employees to speak up at any companies overlook the third item. effort and how he measures time without fear of reprisal. “The ‘operate’ component has the success. Edited excerpts follow. Such unfiltered feedback is espe- biggest impact on workforce–culture cially useful given that many employees alignment, [but] leaders are least What about CMI’s culture needed fixing? We are a highly feel disconnected from leaders’ cultural focused on the most important aspect diversified conglomerate, with aspirations. Gartner’s research shows of role modeling,” the researchers write. six businesses that were very that on average, 69% of employees Good leaders recognize that although siloed. The company had been don’t believe in the cultural goals set aspirational talk about culture may taking steps to create more by their leaders, 87% don’t understand originate in the C-suite, the actual cul- synergies, such as implementing a companywide IT system, them, and 90% don’t behave in ways ture manifests in cubicles and on shop transforming the HR function, that align with them. By closing these floors far from top leaders’ purview. That and consolidating purchasing gaps, Gartner says, companies are 9% disconnect makes it essential that CEOs efforts. Those projects had more likely to meet or exceed their do more than talk a good game. “As the trouble getting traction, and our annual revenue goals. And having a leader, you need to set up the structures, family owners concluded it was a cultural issue that CMI needed qualitative sense of how employees processes, and incentives in your organi- to resolve. are feeling can help them do so. zation and put your money where your “CEOs must not only encourage the mouth is,” Kurey says. “That’s the part of What did you do first? We unvarnished truth, but also create an leadership people often miss—enabling needed to hear what employees environment that demands it,” the your organization to actually adopt the thought and help them find a way researchers write. new culture you seek to have.” forward. Over 18 months we held Don’t forget to alter policies to HBR Reprint F1904A more than 30 workshops that included the company’s top 300 support cultural change. It’s all well leaders. The dialogues recognized and good to talk about a company’s ABOUT THE RESEARCH “Three Culture the tension between the benefits collaborative culture. But if that com- Conversations Every CEO Must Have of behaving more like a single pany uses a forced-curve performance with the Head of HR,” by Gartner (working company and the facts that each management system—in which a certain paper) business is unique, the people
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July–August 2019 running it have special expertise, and they need to run it with some autonomy. So there was some resistance to change.
How did you overcome that?
Through dialogues in the workshops, people recognized how siloed we were and concluded that what had gotten us here would not take us into the future. The leaders realized we would be more successful if we became more focused on managing synergies and value chains. And we urged everyone not to think of this as a win-lose situation, where the company is going to be one way or another. For example, you don’t need to focus on either short- or long- term goals; you try to balance them. There are many examples of how ideas that are in tension can coexist.
How do you ensure honest
feedback on how employees feel about the culture? We do surveys that yield data, but comments really matter too. Twice a year all employees attend a workshop at which they talk about how they are living our values. The focus isn’t on teaching behaviors; we want people’s opinions, and the of HR, José Miguel Larios, we progressing. That reinforced the and “visionary.” We invested workshops are the main source of proposed changing how we idea that people weren’t doing about $50 million in the overall feedback on the transformation. measure and recognize the this because it was politically transformation project. We’d Sometimes comments correlate performance of our top 300 correct. There were benefits to hoped to earn that back in 10 with the survey data; sometimes executives. In the past it was individuals. years; we managed to do it in they don’t. The most important focused on short-term and seven. We’re no longer organized thing is listening to what people individual business results. The What’s the return on the time around our six businesses; today have to say. new system introduced two and money you’ve invested in we think of the business as two significant elements linked to this? In 2012, when we asked large platforms. We’re starting What’s an example of how how the entire company was employees to describe our to have conversations to make you changed processes to performing over the long term culture, the majority said it was the two platforms unique but support the culture shift? and how the overall cultural coercive. By 2017 more people collaborative. The work on culture In collaboration with our head transformation effort was described it as “democratic” is never-ending.
Photograph by DANIELE VOLPE
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