A proactive risk taking culture can enhance business performance

A study just published has shown that innovation in a proactive, risk taking organisational culture can enhance business performance.

The roots of business innovation

In the words of the authors “a true entrepreneurial genius is someone who has the capability to experiment with combinations of new process, resources and activities in order to bring about a responsively unique feature.”

For the purpose of this research the authors looked at…

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The connections between organisational culture, leadership style, organisational learning and innovation capability.

Keywords: Innovation capability, employee performance, organisational culture, leadership style, organisational learning

An interesting and fairly large-scale study that conducts a form of factor analysis called Structural Equation Modelling (SEM) on data from 398 organisations.

The study looked at the level of influence the following factors have on each other:

·      Organisational culture

·      Leadership style and

·      Organisational learning,

and how they affect innovation capability and performance within organisations.

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Developing organisational ambidexterity – the implications for HR, L&D and OD.

Keywords: Organisational ambidexterity, Human Resources, Learning and Development, Organisational Development

One of the big themes emerging from the management and organisational development literature at the moment is that of organisational ambidexterity.

This study focuses on the following areas in the organisational ambidexterity literature:

  1. Employee characteristics
  2. Leader characteristics
  3. Organisational structure
  4. Culture
  5. Social relationships and
  6. Organisational environment

and makes a series of recommendations for Human Resources, Learning and Development and Organisational Development

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Why professionals agree to things that go against their professional beliefs.

Keywords: Professional values, ethics, beliefs, autonomy

There is significant evidence that professionals frequently give up their autonomy and professional values and beliefs in the face of conflict with management edict, bureaucracy, systems and organisational agendas.  The question this paper attempts to answer is why they do this.

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How you cope with uncertainty predicts how see the world

Keywords: intolerance of uncertainty

Researchers looking at many issues from decision-making to anxiety are starting to focus on the intolerance of uncertainty as primary factor in how people see or interpret things. This study looks at how intolerance of uncertainty impacts our perceptions.

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Does the reputation of your organisation make any practical difference to anything?

Keywords: Organisational reputation, organisational performance

An interesting study has just been published that looks at the effects of corporate reputation on the people who work inside the organisation and the organisation’s performance in the market.

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When employees get p*$$ed off. What the manager does next makes a difference

Keywords: Management, employee dissent, psychological contract

It is estimated that somewhere between 50 and 70% of employees, will, at some point in their employment feel that the organisation has wronged, mistreated or let them down in some way. This study looked at this issue, focusing particularly on the issue of employee dissent as a result of psychological contract breaches by organisations.

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Being adaptable at work – its all about job satisfaction, performance and this…

Keywords: Workplace adaptability, job satisfaction, performance, emotional intelligence

An interesting study to find out what factors contribute to employee adaptability and ability to cope with change.

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How our view of our social status impacts on how we work in teams

Keywords: Team work, social status, social group

A new study just published has shown that your social status and social group will predict how you interact with other people in a team often without knowing about it.

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Getting people to be creative, take responsibility for their own and the groups learning and develop new ideas. It’s a balancing act.

Keywords: Creativity, responsibility, learning, ideas, communities of practice

In a paper published this month  researchers from two business schools in France have looked at why some Communities of Practice are easier to get going than others, and why some groups will readily take control of their own community and self organise in order to learn together, and other groups find it harder or almost impossible to manage their own communities and keep the learning going.

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How Zappos went from 0 – $1.2bn in 10 years

Keywords: Organisational culture, high performing teams

This study looked at Zappos to unpick what led to their meteoric success. Sales went from $8million to over $1billion in less than 8 years.

The researchers found that there were two overarching principles that drove Zappos success:

1.      Culture and

2.      High performing teams

and analysed exactly what the factors were that led to their success

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Other interesting papers this month
New books this month.

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In the hotel trade, as with many other industries, outsourcing to smaller companies for certain roles is becoming increasingly common. The hospitality industry is unique in that much of its business is customer focused and, where staff rebel against their employers, the customers tend to get the brunt of the bad feeling. Outsourced staff tend to be less well paid and have less job security than their directly employed opposite numbers.

 

Outsourced staff problem

Getting outsourced staff to deliver in your organisation

 

The research question

 

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An international team of researchers asked whether relationships between directly employed and outsourced staff contributed to negative behaviours toward customers.

 

The role of organisational culture in outsourced staff performance

 

Outsourced staff agency

The role of culture in getting the best out of outsourced staff

 

What they found was that the major factor that determines worker behaviour is workplace culture and that negative workplace behaviours are significantly more likely to surface in certain organisational cultural settings with outsourced workers.

 

4 types of organisational cultures

 

There are 4 types of cultural settings:

  1. Market
  2. Hierarchical
  3. Clan and
  4. Adhocracy

 

  1. Market cultures

 

Market cultures are defined by the researchers as those “that are oriented toward the exterior” and are achievement orientated. Market cultures place significant emphasis and importance on success and the achievement of goals. They tend to inculcate that the employees focus on competition and having and achieving clear objectives.

 

The success of the organisation is overt and paramount and overrides all other concerns. Usually market cultures use inter-worker competition between employees as a motivating driver to achieve the goals set. This often results in ‘role siloing’, or the attitude that ‘it’s not my job so I don’t care.’ The researchers found that market cultures have the most negative impact on outsourced staff behaviours.

 

 collective sense-making

 

  1. Hierarchical cultures

 

The researchers defined hierarchical culture as one that, “focuses on internal aspects of control and stability”. The employees tend to perceive a very structured and controlled environment with formal procedures generally ruling their behaviour. The role of management in these cultures is usually one of enforcement of compliance and control.  It is very rare in hierarchical cultures that workers, particularly outsourced workers, have the latitude to make decisions about customer needs. Instead they tend to defer decisions upwards.

 

The researchers found that “prior work on group engagement models of procedural justice postulates that unit members who have little opportunity to be involved in the decision-making process engender negative affect toward their respective units and peers.” What the researchers found was that employee dissent tends to be highest in hierarchical organisational cultures. Further, such employees are significantly likely to behave negatively toward customers and their needs.

 

  1. The clan culture

 

A clan culture is a family-like or tribe-like type of corporate environment that emphasises consensus and commonality of goals and values.

 

Clan cultures are the most collaborative and the least competitive of the four main corporate culture models. Because of the nature of a clan culture, usually everyone is working towards the same goal, which is often the satisfaction of their customers.

 

Knowledge Share

 

Clan cultures have good internal relations and tend to work together, regardless of whether any particular task is in their contract or job specification. The researchers described this as seeking “internal control, but with flexibility. This is translated into a familiar workplace which is united, where loyalty and mutual trust are dominant values. This culture values team work, participation and consensus.”

The researchers found that a clan culture tends to help internal staff to perceive the presence of outsourcing as wholly compatible with their interests and goals. This culture leads the outsourced and permanent staff to involve themselves in collaborative teamwork and to develop desirable collective attitudes and to participate in decision making and open communications.

 

In a clan culture everyone is working to the same goal and  outsourced staff are perceived as equally important to everyone’s success as the next employee.

 

  1. Adhocracy

 

An adhocracy is a situation where there is little if any formal organisational or management structure. People are encouraged to make decisions, particularly decisions in favour of the customer. As such an adhocracy tends to be flexible and highly responsive, with workers taking responsibility to the organisational outcomes. Further, adhocracies are able to adapt quickly to changes in customer needs and market changes.

 

The researchers found that adhocratic organisations and businesses tend to lead internal staff to jointly support outsourcing with external staff because it enables them to achieve their goals and to stay in the vanguard. Further, adhocracies tend to foster risk taking, creativity and learning. As a result the adhocracy is invested in improving workplace relationship quality.

 

 

Professional

 

Conclusions

 

The research found that outsourced workers tended to achieve more and offer far less dissent in clan cultures and adhocracies. Indeed, outsourced workers in these situations often attempt to join the organisation. However, both the market and hierarchical cultures tend to breed dissent as well as unproductive and dysfunctional working practices particularly in situations where outsourced workers were involved in customer facing roles.

 

Additionally this research shows the strong links between the quality of internal workplace relationships and the experience a customer receives.

 

Reference – available to members

 

What a shoe shop can teach us about developing high performance cultures

An interesting paper has just been published looking at the role culture change plays in mergers and acquisitions.

The researchers estimate that approximately 30% of all mergers and acquisitions that fail to meet their objectives and outcomes, do so because of a clash of organisational cultures within the new merged organisation.

The paper proposes seven steps that can mitigate cultural problems during mergers and acquisitions that research evidence supports.

 

Mergers and acquisitions

Mergers and acquisitions

The problem of organisational culture in mergers and acquisitions

 

The authors define culture as “the long-standing, largely implicit shared values, beliefs, and assumptions that influence behaviour, attitudes, and meaning in a company or organization.”

 

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Part of the problem is that usually, those within the company or organisation are unlikely to see and determine the culture surrounding them, they just do it and are an active part of it every day. Culture is a largely hidden force that helps to determine meaning, assumptions and action within the organisation.

 

Additionally, organisational cultures are frequently fairly resilient to purposeful and non-organic change. Part of the reason for this resilience is that the culture is hidden and often unquestioned. Additionally culture plays a largely underpinning role in creating the thinking and behaviours of its agents and as such  actually forms the rhetoric and understanding of the world inherent in the organisation.

 

organisational culture

Organisational culture change

 

Large company / small company difference

 

Mergers occur usually where both parties offer some form of intrinsic value to the other. One part of the merger provides or enhances a previously absent or comparatively weak capability or market penetration, for example for the purchasing or larger entity.

 

The success of the acquired company has usually been based on their way of doing things and their culture. An example is where a large, largely bureaucratic organisation, like Royal Mail, acquires a small fast moving and dynamic IT startup. Where the bureaucratic and slow moving parent organisation has its systems of work, that work for it, the fast moving IT company may well clash with the bureaucracy. This can fairly quickly stifle and even kill off the entrepreneurial IT company as people start to leave or projects take longer and longer to sign off due to the bureaucracy.

Here the parent company needs to both retain the staff in the smaller company that gave it value, but merge the two businesses without snuffing out the creativity and entrepreneurialism that actually made the smaller company a target for acquisition in the first place.

 

7 steps

 

The 7 steps that can mitigate cultural problems during mergers and acquisitions

 

The paper, drawing on previous studies, identified seven processes that need to be put in place:

1.    Make culture evaluation a major component of the change management.

2.    Insist that the cultural work focuses on making the cultural evaluation tangible. Preferably there should be a steering body for this work which should be run and managed by senior human resources managers or organisational development practitioners. The paper states, “To drive home the importance of the issue, culture should be on the agenda of regularly scheduled (monthly/biweekly) Steering Committee meetings.”

3.    Identify who “owns” the corporate culture and make them report to senior management. The paper states, “Culture owners should be required to discuss issues that are specific, well defined and supported by specific examples that can be tied to business results.”

4.    Consider the strengths of both existing cultures not just the weaknesses. However this should not be like a mix CD with the “best of” tracks throughout the new organisation! Companies will not always fully mix well, as with Royal Mail’s acquisition of smaller IT start-ups. The paper states, “Where the cultures are different, there should be an assessment of whether the elements can be integrated.” It should be noted that some cultural areas can and should be kept apart.

5.    Implement a decision making process that is not hampered by differences. Identify decision makers in each part of the organisation that is affected. Identify the styles of decision making and use this to assist decision making. Communicate expectations to those decision makers. Take an ‘adopt and go’ policy to decision making and emphasise the importance of speed in the process to all decision makers.

6.    Build an employee brand that everyone in the new organisation can live with. The aim is for everyone to be just as proud to work for the new organisation as they were working for the component organisations prior to the merger.

7.    Focus on flow. The paper says, “It is important to focus on the flow of work: how objects or information are passed from group to group or whether information is shared effectively. The interfaces should be designed, improved, or fixed so that they help create business value.”

 

Conclusions

 

In developing a structure in which behaviours are modified so the culture will change within the new organisation based on new workflows and optimum performance. The authors conclude, “By tying culture to value-creation and to identifying and changing specific behaviors when necessary, culture can become an effective tool for achieving post-merger integration objectives.”

 

References – members only 

 

The difference between organisational culture and climate and why it matters

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Organisational climate v change

 

What is the difference between culture and climate?

 

Mixing up the difference between culture and climate can be very expensive! Following on from the last post about What is an organisational culture, today I thought I would explore what the difference between organisational culture and organisational climate is.  

 

Many people use the terms climate and culture interchangeably.  It does matter however and it can be expensive to get them mixed up.  Organisational climate change and organisational culture change are two pretty different prospects so it matters that you are changing the right thing.

 

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Organisational culture

 

Firstly, as I noted in the last article in this series the most widely accepted definition or explanation of an organisational culture is that of Edgar Schein:

Shine descries culture is “a pattern of shared basic assumption that have been invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration… that has worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think and feel in relationship to those problems”(1)

In effect, it is the commonly or underlying shared:

  1. Beliefs,
  2. Values,
  3. Norms of behaviour, thinking and emotional intelligence
  4. Routines,
  5. Traditions,
  6. Sense-making
  7. Perspectives

That pervade or infuse through the organisation.

organizational culture and climate

The organisational culture is a pretty rich, deep and describable but somewhat immeasurable emergent property. It is a result of the many interconnections and relationships in an organisation.

Organisational climate

 

The organisational climate on the other hand is the sense, feeling or atmosphere people get in the organisation on either a day-to-day basis or just generally.

You know when you walk into a place and you either think:

‘wow this place has an amazing energy. People are really friendly and it feels positive’,

or

‘wow it feels like something has happened here. I don’t think these people like each other. Feels like everyone is scared. The atmosphere stinks.’

That’s the climate.

Essentially, the climate are the perceptions and attitudes of the people in the culture.

 

difference between organisational culture climate

Organisational culture v organisational climate

 

Schien explains: “A climate can be locally created by what leaders do, what circumstances apply, and what environments afford. A culture can evolve only out of mutual experience and shared learning.”

Obviously the climate and culture are connected and feed off each other.

It should be also apparent that the climate can often change pretty quickly. The climate is  often be based on events, peoples reactions and incidents between people. The culture is less dependent on individual events but tends to drive people’s interpretation, thinking and perspectives of events that occur.

the difference between culture and climate

Getting the difference between culture and climate mixed up.

 

It is fairly common for people to mix up and confuse the distinction between the organisational culture and organisational climate.

There are many examples  where organisations embark on a culture change programme and then stop the programme once the climate has changed, assuming that the culture has changed also. As you can see above events can easily change the organisational climate.

Conversely organisations can set off an entire organisational culture change programme because they don’t like the organisational climate.

It matters and can be very expensive to confuse the two.
References

Schien E: Organisational Culture and Leadership. 1995, San Francisco: Jossey-Bass

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New research and a new understanding about culture change in organisations

 

People talk a lot about ‘organisational culture’ and changing the organisational culture. But what is an organisational culture?

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The definition of organisational culture

There are several different definitions of organisational culture (1)

These definitions range from the simple – “It’s the way we do things around here”(2)

to the more complicated such as Schien’s definition of culture:

“a pattern of shared basic assumption that have been invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration… that has worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think and feel in relationship to those problems”(3)

Schien’s definition of an organisational culture tends to be the most widely adopted in research.

 

Inferred and invisible

 

Invisible

 

The idea of a ‘Culture’ is actually a metaphor. It is an image or understanding that is symbolic of something that we can’t actually access directly. Culture isn’t something you can see or touch, rather we infer it from the behaviours, conversations, words, images, clothes, artefacts, art, decisionand other patterns we notice within any defined group of people, an organisation for example. In effect the culture of an organisation is the inferred and invisible curriculum and customs of that group of people.

 

Shared attributes of an organisational culture

When you look across the range of definitions we find that there are some things that are shared between these ideas of what a culture comprises. Things like shared:

1. Beliefs,
2. Values,
3. Norms of behaviour,
4. Routines,
5. Traditions,
6. Sense-making
7. Perspectives

etc.

 

through a lens

 

Through a lens

One popular way of understanding what a culture is, is that is it is the lens through which the people in an organisation perceive or view, understand, interpret and make sense of the world around them (4). As a result it is also the sense through which they make decisions and do things. One study (5) found that culture is not just what we infer from what we observe a group of people, but it is also the shared ‘cognitive and symbolic context’ within which they exist.(6)

The mental idea concept of a culture is also one of the lenses through which we view and evaluate the organisation in question.

 

What this means

What this means is that the culture tends to shape and define our thoughts and actions. It shapes what we think about, how we think and the rationale we use to explain things.

Does that mean that everyone is the same in a culture, that they all think alike and do the same thing?

No not at all.

There are likely to be a wide range of people who fit into that culture. This includes people who are more modal (more of an example of the culture) or more peripheral (less of an example of the culture).

Over the next few Thursday / Friday posts I will explore organisational culture, what it is, what it does and importantly the latest research on how to change it.

 

 

(My DPhil (PhD)  research at was focussed on acculturation – how people learn to become like something. For example, how does someone join the police and in a fairly short period of time; become like, act like, sound like, almost smell like a police officer? It is an informal and usually unconscious learning process.)

References

1. Alvesson M: Cultural perspectives on organisations. 1995, Cambridge University Press
2. Balogun J, Hailey V: Exploring strategic change. 2004, London: Prentice Hall
3. Schien E: Organisational Culture and Leadership. 1995, San Francisco: Jossey-Bass
4. Konteh FH, Mannion R, Davies H: Clinical governance views on culture and quality improvement. Clinical Governance: An International Journal. 2008, 13 (3): 200-207. 10.1108/14777270810892610.
5. Scott T, Mannion R, Marshall M, Davies H: Does organisational culture influence health care performance? A review of the evidence. J Health Serv Res Policy. 2003, 8 (2): 105-117. 10.1258/135581903321466085.
6. Parmelli, E., Flodgren, G., Beyer, F., Baillie, N., Schaafsma, M. E., & Eccles, M. P. (2011). The effectiveness of strategies to change organisational culture to improve healthcare performance: a systematic review. Implementation Science, 6(1), 33

HR create drag v culture change through HR

Sometimes, in fact frequently, when I look at organisations about to embark on change or who are agile and under constant change and flow a number of functions stand out as potential drag to the change. One of these is the HR function. Hr can be seen from the executive level as ‘administrators’ and as being less flexible than it comes to change. Some of this perception to be fair comes from their role in keeping the organisation safe and on the right side of the various laws and good practices.

A new study looks at this and asks some really useful questions for achieving culture change through HR.


Make informed decisions based on the very latest – most up-to-date research evidence. No more groping in the dark – give us a try and you will see what we mean. In HR? Try us, its free.


Are the goals of organisational culture change and HR the same?

Human Resources teams are charged with selecting, advising and assisting with the development of the people in order to achieve the aims of the organisation. This isn’t just about hiring and firing – this is about ensuring that people work together as a cohesive whole and about using their collective strengths to achieve output that is beyond them as a loose collective of talent.

Human Resources teams can (but few do) start going about this by defining and then moulding the culture that the organisation needs in order to achieve its aims.  This, the study finds, should  be the starting point.  It is not about talent alone.

HR culture change

 

If you are going to start creating culture change through HR, the study has some recommendations:

First define your culture

There is no solid, repeated definition of an organisational culture. The paper published in the Strategic HR Review instead describes three phases to defining a company’s culture:

Phase 1 is to start seeing the culture through the symbols, rituals, stories and other organisational events. We tend to experience and notice these cultural artefacts most when we first enter or join an organisation. These artefacts quickly become accepted as the norm as people ‘bed in’ to the organisation.

Phase 2 is to analyse how the culture shapes how people think, behave and feel in the organisation. The researchers comment “Culture shows up in the values, norms, unwritten rules, emotional responses to, or flows of how things are done in a company. Most of the above current definitions of culture follow this logic.”

Phase 3 is describing the identity of the organisation or company. The authors suggest this is often summed up in very few words – Apple wishes to be known for design and simplicity while the Marriott hotel chain wishes to be known for exceptional service.
The 5 steps to creating and building a culture

Step by step culture change through HR

Having defined the culture using the above three phases the study finds that there is a series of steps you can use to achieve culture change through HR. Human Resource functions can:

  1. Define the ‘right’ culture. This is best done by the Human Resources team asking the senior management for three things that the company wishes to be known for. The senior management team needs to be in at least 80% agreement.
  2. Create an intellectual agenda. This should be easily communicable by senior management and the HR function to staff and customers alike. The idea is that this needs to be simple and based around a few core ideas and principles that get people to think.
  3. With the intellectual agenda comes the behavioural agenda. How do you want people to act, both internally (employees) and externally (customers / clients / stake holders etc.) What is the experience you want people to have and what behaviours will lead to this experience?
  4. Design and deliver key processes and structures. The authors explain this as institutionalising “the culture through management and organization practices like staffing, training, promotion, measurement, compensation, organization design, information management, physical arrangements and leadership development.”
  5. Define and implement a leadership brand. Once the structures and ideals are in place, so leadership and HR must reflect and encourage them throughout the organisation at all times in all that they do. Usually, the authors note, this entails a ‘customer focused culture lens’ so the organisation lives and breathes its culture from top to bottom.

Conclusion

The paper concludes, “HR professionals who understand the why, what, and how of culture will complement a talent agenda with a more sustainable winning organization.” This the authors argue puts functions like HR and L&D firmly at the centre of organisational development and change.

Editor’s note: It is essential that all the central functions of an organisation are at least aligned with any new culture. As this paper is arguing, functions such as HR can really help to embed new cultural practices. However this only really occurs where they themselves have gone through a process of ‘getting’ the new cultural norms and practices and are embedding it themselves

Reference – available to members

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Research Intelligence Briefing

What a shoe shop can teach us about developing high performance cultures

Tags: High performance culture, High Performing Teams, HR practices, Leadership Research, Management Research, Members Only Content, Organisational change, Organisational culture, Research Brief, Values

Zappos.com is the online shoe and clothing shop based in Las Vegas that was founded by Nick Swinmurn in 1999 and sold to Amazon ten years later for a cool $1.2bn! The firm, run by Tony Hsieh, has become an icon of contemporary business success. When you look at how Zappos managed to grow so fast in what is a highly competitive and well established market, and with the biggest financial downturn in history punctuating its journey, there are some interesting new lessons about success today.

A paper by three professors from the University of Colorado, Don Warrick a Professor of Management and Organisation Change, John F. Milliman a professor of Management, and Jeffery M. Ferguson a Professor of Service Management and Marketing visited Zappos to unpick what led to such meteoric success. Sales went from $8million to over $1billion in less than 8 years.

The paper is due to be published later in the year in the journal Science Direct.

The researchers found that there were two overarching principles that drove Zappos’ success:

  1. Culture and
  2. High performing teams

From the outset employees are specifically trained for the culture in a manner reminiscent of Google’s practices. Their staff turnover is around 7% whilst the industry average is over 150%.

The saying (attributed to Peter Drucker) that culture eats strategy for breakfast may have some truth in it. However it is much better if the strategy and culture are aligned. As the authors point out: this isn’t about trying to replicate a culture of Zappos rather than aligning the style of the leaders, with the mission, strategy and what the employees actually do. It’s a whole package. You can’t just implant a culture. Having said that Zappos very deliberately and step-by- step built a culture that was and is hugely successful. They also focused on developing high performing teams. An approach I am very much in favour of. It is the lessons from these two developments that the paper addresses.

Culture culture culture

The researchers’ definition of culture should be tattooed on every leader’s eyelids. It is useful and critical.

“…organizational culture is basically a term used to describe the environment in which people work and the influence it has on how they think, act and experience work”

Dysfunctional cultures can develop stress, distrust, low morale, a lack of sense of ‘team’, a feeling that they aren’t supported or cared for, a lack of listening, minimise learning, or make the learning either a negative experience or dysfunctional itself and resist change. A productive culture on the other hand inspires, helps to develop openness, builds trust, enhances performance, fosters developmental feedback, gets people to push themselves to be better and do better, boosts self-esteem, inspires a willingness to learn, flex, innovate and be genuine.

Hsieh became Zappos’ CEO in 2001 and deliberately set about creating a culture that was focused on three principles:

  1. Employee happiness
  2. Exceptional customer service and
  3. High performance

The researchers suggest that there are five ‘drivers’ that shaped Zappos’ culture:

  1. Committed leaders
  2. Practised core values
  3. Customer focused strategy
  4. HR practices aligned with the core values
  5. Management practices aligned with the core values

Committed leaders

The leaders need to be zealot like about creating a culture that will energise the employees to fulfil the mission of the organisation and that the mission needs to be customer centric. These three things

  1. Leadership passion and focus
  2. Energised happy workers and
  3. Genuine focus on exceeding the needs of the customer

create purpose. People need to be aligned behind a common purpose that they believe in before they will drive and strive to fulfil it. And for Zappos that common purpose was making the customer happy. Underlying this is highly personable and exceptional customer service, offering a wide selection of products, along with fast, accurate product delivery.

As the IBM CEO Lou Gerstner put it – “Culture is everything”. The underlying understanding Tony Hsieh had was that if you get the culture right the rest will follow.

The job of the leaders at Zappos is to think about the culture, to support it and maintain or improve it. Culture isn’t something that just happens at Zappos. They actively develop it. In fact it is the focus of the leadership. Get the culture right and it will create happy employees who strive and drive to deliver the exceptional customer service required.

Openness, honesty and feedback

Part of the culture is honesty in all directions. They spend a lot of effort on communication with (not to) the employees, their suppliers and their customers, so everyone knows exactly and truthfully what is going on at all times. Previous research and practice has shown that high performing teams are founded on feedback, continual ‘at the time’ and ‘in the moment’ feedback. Everyone is expected to provide this level of feedback on performance. There is no hiding from giving or receiving performance feedback for anyone in a high performance team. The focus is on performance, which in turn, in Zappos is focused on the service to the customer.

  1. Deliver WOW through service
  2. Embrace and drive change
  3. Create fun and a little weirdness
  4. Be adventurous, creative and open-minded
  5. Pursue growth and learning
  6. Build open and honest relationships with communication
  7. Build a positive team and family spirit
  8. Do more with less
  9. Be passionate and determined
  10. Be humble

Culture inquiry

The leaders lead what is known as a continual culture inquiry. This means monitoring and nudging the culture and working practices in the right direction using insight from all the stakeholders, the employees, customers, suppliers and anyone else who has sight of the company. The primary question here is: ‘is this helping or hindering our mission?’

This means that the organisation is continually adapting, learning and getting better.

Core values

In 2010 Zappos codified its ten core values:

The two values the researchers pull out as the ones Zappos mainly focus on is Deliver WOW through service” and ”Create fun and a little weirdness”. These align perfectly with the two arms of their strategy: happy employees and happy customers.

The customer centric strategy

Zappos’ customer focused strategy is:

  1. Customer service should be a priority for everyone
  2. Enable Service Reps to solve customer issues without involving a supervisor
  1. Don’t keep customers who are overly demanding or disrespectful to employees
  2. Don’t restrict Service Reps regarding call time, scripts, or sales pitches
  3. Connect directly with customers and make contact information available on every web page
  4. See customer service as an investment, not a cost
  5. Reinforce the culture by sharing great service stories

HR practices

Zappos spends a lot of time and effort recruiting and selecting the right people for the culture and training extensively to meet the requirements of the culture and of their job.
The key here is that new employees go through an extensive cultural orientation programme. The orientation programme lasts for 4 weeks following which all employees, regardless of role or seniority, will then complete two weeks in the call centre dealing with customers directly and learning how to deliver exceptional customer service. Interestingly during the orientation period every employee is offered $3000 to leave if they feel they don’t fit with the culture, which is a very clever tactic when you think about it.

The management

The manager’s role is to help create the conditions where the employees are happy and can deliver exceptional customer service. This involves the creation and maintenance of a fun working environment, high social engagement, lots of recognition, celebrations, rewards and personalising, for example having birthday celebrations and parties for events.
Additionally the management are there as custodians of the culture and to look after the employees. Personal life coaches are available to every employee and everyone has access to free or low cost healthy food on-site and health advice, for example.

Reference

Warrick, D. D., Milliman, J. F., & Ferguson, J. M. (2016). Lessons learned from Zappos on what it takes to build high performance cultures. Organizational Dynamics.

 

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