Transforming company culture and the role of the board

by | 28 Jul 2020 | Executive boards

Culture, and its importance in maintaining brand and reputation, connectivity of workforce and wider social licence to operate, has never been more important, according to Karen Thomas-Bland, founder at Seven, a business transformation consultancy based in London. This has recently been brought front and centre by the fact that we are now physically distanced, but socially connected remotely.

Culture has quickly risen to the top of the agenda of most organisations. Today we face constant scrutiny of what our organisations say and do by activists, investors, social media and a much broader set of stakeholders than we might previously have.

The role of the board in respect of culture is changing, too. Board members are being tasked with formal stewardship of employee engagement, with the board as a whole needing to set and meet a much higher standard. In the past, ‘culture’ was reserved for the board meeting where you got the employee opinion survey results.

We know the natural human instinct ingrained in the human condition is to resist change. We have all seen leaders not getting on board or worse derailing efforts, the board not engaging or being engaged, behaviours not really being embedded sufficiently to make them really stick, leaders being spread too thin, execution discipline not being built and people not adapting fast enough to realise the change in culture needed.

So how do we get clarity on an organisation’s culture, what data should we be looking at and what are the broad steps of changing culture that enable board members to challenge?

Firstly, it’s about connecting the desired culture with your strategy and objectives. This needs to be congruent so people can make the link and see and feel the alignment. It’s important to be explicit on the culture you want to create and involve all levels of the organisation from the board down in the culture change. You need to be able to answer: why do we want to change our culture now?

The next step is around diagnosing your current culture, to understand what works well and the big gaps. There is a broad base of data points to consider, as examples:

  • Purpose, mission, vision and values, both what they say and how they are lived.
  • Employee satisfaction, customer, pulse, values and brand surveys.
  • Asset audit of a selection of materials or artefacts e.g. customer documents, social media messages, board agendas and reports.
  • Culture specific interviews with a cross section of employees.
  • Benchmark of culture to other organisations, in and out of category.
  • Behavioural surveys (e.g. psychometrics) and leadership profiles.
  • Competency/behavioural/strengths frameworks — the behaviours the organisation has prioritised to be important.
  • Data from recruitment, development and exit exercises — who gets hired and fired and who doesn’t.
  • Hiring and exit survey or interview data.
  • Observing how the organisation works day-to-day.
  • Review of the social cues e.g. artwork on the walls, layout of meeting rooms.
  • People data e.g. retention, tenure and progression.

The third area is to work on the few most important things that will have the greatest impact. The culture change list can often be too vague and long to tackle and doesn’t create differentiation. It’s also important to acknowledge the existing culture’s valuable assets that will also make change feel less like a top-down imposition and more like a shared evolution.

Once the culture is defined its then about creating a campaign based on a compelling story and engaging people to shape the final destination. Finding example case studies of people who practice the desired behavior will help bring it to life. Below the campaign level it’s about identifying activities that will increase change adoption and address behavior change gaps.

To ingrain new behaviours, utilise behavioural nudges, delivered digital and habit formation theory to reinforce and hardwire behaviours and reinforce with socially ambient cues (what you can change in the environment). Nudges and cues work well if executed at the right time, in the right format. It’s important to embed new behaviours in an agile and iterative way of working and build short-change cycles and sprints around a culture of trust and security. A ‘fail fast mentality’ ensures speed of change with the psychological safety that it’s okay to get it wrong sometimes.

The change becomes institutionalised through bringing ideas to life with stories, competitions and score cards that keep people engaged and motivated to change. When resistance happens it’s important to address it head on and fast, otherwise it will fester. As you promote critical new behaviours, making people aware of how they affect the company’s strategic performance is important, through formal approaches like new rules, metrics, and incentive combined with informal interactions.

Finally, it’s essential to measure and monitor cultural progress at each stage of your effort, just as you would with any other priority business initiative. Rigorous measurement allows you to identify back tracking, correct course where needed, and demonstrate tangible evidence of improvement, which can help to maintain positive momentum over the long haul.

Board members in their increased scrutiny role should pay attention to four areas: business performance, critical behaviours, milestones and underlying beliefs, feelings and mindsets.

  • Business performance: are key performance indicators improving? Are relevant growth targets being reached more frequently? What is happening with less obvious indicators, such as local sales improvements?
  • Critical behaviours: have enough people at multiple levels started to exhibit the few behaviours that matter most? Are leaders role modelling the behaviours?
  • Milestones: have specific intervention milestones been reached? For example, has a new policy successfully been implemented?
  • Underlying beliefs, feelings, and mindsets: are key cultural attitudes moving in the right direction, as indicated by the results of the diagnosis and desired end state? This area is usually the last to show improvement. Most people shift their thinking only after new behaviours have led to results that matter.

Culture change isn’t easy but following a proven recipe leads to results. Boards have to access a broader set of culture data on the organisation to fulfil their duties and have a framework to challenge the design and implementation of culture change across the organisation.

Based in London and with over 24 years’ global experience, Karen Thomas-Bland is often cited as one of the top business transformation consultants and coaches in the world. She is a trusted, global board-level advisor and non-executive director, creating sustainable, long-term value for FTSE/Fortune businesses and PE funds. She writes for many publications including The Times, FT, Association of MBAs and Management Today.