Many aspects of organizations are interconnected.
What is the first thing that pops in your mind when you hear the term corporate culture? A great many people refer to the classic phrase coined by the McKinsey organization, that culture is "how we do things around here". And while that may be true, there are so many elements that go into determining what you do and why, that this definition only scratches the surface.
Whether you can define it or not, you know that culture exists. It's that ethereal something that hangs in the air and influences how work gets done, critically affects project success or failure, says who fits in and who doesn't, and determines the overall mood of the company.
Culture often becomes the focus of attention during periods of organizational change – when companies merge and their cultures clash, for example, or when growth and other strategic change mean that the existing culture becomes inappropriate, and hinders rather than supports progress. In more static environments, cultural issues may be responsible for low morale, absenteeism or high staff turnover, with all of the adverse effects those can have on productivity.
So, for all its elusiveness, corporate culture can have a huge impact on an organization's work environment and output. This is why so much research has been done to pinpoint exactly what makes an effective corporate culture, and how to go about changing a culture that isn't working.
Fortunately, while corporate culture can be elusive, approaches have been developed to help us look at it. Such approaches can play a key role in formulating strategy or planning change.
The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization's culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy.
Elements of the Cultural Web
The Cultural Web identifies six interrelated elements that help to make up what Johnson and Scholes call the "paradigm" – the pattern or model – of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn't working, and what needs to be changed. The six elements are:
- Stories – The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior.
- Rituals and Routines – The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management.
- Symbols – The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes.
- Organizational Structure – This includes both the structure defined by the organization chart, and the unwritten lines of power and influence that indicate whose contributions are most valued.
- Control Systems – The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.)
- Power Structures – The pockets of real power in the company. This may involve one or two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction.
From "Fundamentals of Strategy" by G. Johnson, R. Whittington, and K. Scholes. Published by Pearson Education, 2012. Reproduced with permission.
These elements are represented graphically as six semi-overlapping circles (see Figure 1 below), which together influence the cultural paradigm.
Using the Cultural Web
We use the Cultural Web firstly to look at organizational culture as it is now, secondly to look at how we want the culture to be, and thirdly to identify the differences between the two. These differences are the changes we need to make to achieve the high-performance culture that we want.
1. Analyzing Culture as It Is Now
Start by looking at each element separately, and asking yourself questions that help you determine the dominant factors in each element. Elements and related questions are shown below, illustrated with the example of a bodywork repair company.
- What stories do people currently tell about your organization?
- What reputation is communicated amongst your customers and other stakeholders?
- What do these stories say about what your organization believes in?
- What do employees talk about when they think of the history of the company?
- What stories do they tell new people who join the company?
- What heroes, villains and mavericks appear in these stories?
Examples (car bodywork repair company):
- We are known as having high customer complaints, and for doing shoddy work.
- Staff members talk about the founder starting the company with a $1,000 loan..
- The message is that we do things the cheapest way we can.
Rituals and Routines
- What do customers expect when they walk in?
- What do employees expect?
- What would be immediately obvious if changed?
- What behavior do these routines encourage?
- When a new problem is encountered, what rules do people apply when they solve it?
- What core beliefs do these rituals reflect?
- Customers expect a newspaper and coffee whilst they wait, or a ride to work.
- Employees expect to have their time cards examined very carefully.
- There's lots of talk about money, and especially about how to cut costs.
- Is company-specific jargon or language used? How well known and usable by all is this?
- Are there any status symbols used?
- What image is associated with your organization, looking at this from the separate viewpoints of clients and staff?
- We use bright red shuttle vans.
- We offer bright red courtesy cars – compact, economy cars.
- The boss wears overalls, not a suit.
- Is the structure flat or hierarchical? Formal or informal? Organic or mechanistic?
- Where are the formal lines of authority?
- Are there informal lines?
- Flat structure – Owner, Head Mechanic, Mechanics, Reception.
- The receptionist is the owner's wife so she goes straight to him with some customer complaints.
- It's each mechanic for himself – no sharing tools or supplies, little teamwork.
- What process or procedure has the strongest controls? Weakest controls?
- Is the company generally loosely or tightly controlled?
- Do employees get rewarded for good work or penalized for poor work?
- What reports are issued to keep control of operations, finance, etc...?
- Costs are highly controlled, and customers are billed for parts down to the last screw.
- Quality is not emphasized. Getting the work done with the least amount of direct costs is the goal.
- Employees docked pay if their quotes/estimates are more than 10% out.
- Who has the real power in the organization?
- What do these people believe and champion within the organization?
- Who makes or influences decisions?
- How is this power used or abused?
- The owner believes in a low cost, high profit model, and is prepared to lose repeat customers.
- The threat of docked pay keeps mechanics working with this model.
As these questions are answered, you start to build up a picture of what is influencing your corporate culture. Now you need to look at the web as a whole and make some generalized statements regarding the overall culture.
These statements about your corporate culture should:
- Describe the culture.
- Identify the factors that are prevalent throughout the web.
In our example the common theme is tight cost control at the expense of quality, and at the expense of customer and employee satisfaction.
2. Analyzing Culture as You Want It to Be
With the picture of your current cultural web complete, now's the time to repeat the process, thinking about the culture that you want.
Starting from your organization's strategy, think about how you want the organization's culture to look, if everything were to be correctly aligned, and if you were to have the ideal corporate culture.
3. Mapping the Differences Between the Two
Now compare your two Cultural Web diagrams, and identify the differences between the two. Considering the organization's strategic aims and objectives:
- What cultural strengths have been highlighted by your analysis of the current culture?
- What factors are hindering your strategy or are misaligned with one another?
- What factors are detrimental to the health and productivity of your workplace?
- What factors will you encourage and reinforce?
- Which factors do you need to change?
- What new beliefs and behaviors do you need to promote?
4. Prioritize Changes, and Develop a Plan to Address Them
Used in this way, Johnson and Scholes' Cultural Web helps you analyze your current culture, and identify what needs to stay, go or be added to if you're to achieve your strategic goals.
Implementing cultural changes is not simple: it involves re-moulding values, beliefs and behavior, and it's a major change management challenge, taking a great deal of time and hard work from everyone involved. By providing a framework for analyzing the current culture, and designing changes, Johnson and Scholes' Cultural Web provides a good foundation for the difficult business of changing organization culture. Using it, you can create a cultural environment that encourages success, supports the organization's objectives and, all-in-all, makes for a better place to work.
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Sir Martin Sorrell Chief executive, WPP
Whatever the organisation, history and structure make a difference. Trying to change "culture" (and I don't like the word, because people use it as an excuse not to change) is more difficult in a multi-branded company that has grown quickly by acquisition (like WPP), than a uni-branded company that has grown organically and slowly (like Goldman Sachs or McKinsey).
In any event, what is needed, in my view, is a chairman/chief executive with a strong, simple vision clearly communicated internally and externally and rigorously agreed with and implemented.
Internal silos and politics, whether functional or geographic, have to be overcome. It will take time, and persistence is required. Reaching deep into the organisation helps as the deeper you go, you generally receive more buy-in. Usually the better the people are, the more difficult it is to convince them and the less co-operative they are. Keep at it.
Samir Brikho Chief executive, Amec
Turning an unfocused, underperforming company into a dynamic consulting, engineering and project management business required a clear vision, a strong, transparent strategy and, importantly, good communication.
As a leader at a time of change, personal style is important. You have to be clear and open in communicating what you want to achieve. You have to be humble, knowing when to listen to the views of others. You need to set ambitious goals, drawing out a previously unimaginable level of performance.
Together, we set about reducing costs, improving margins and focusing on what we are good at. Amec today is a very different company, operating in the strong-end markets of oil and gas, mining, clean energy and environment and infrastructure, investing in customer relationships and employee development and engagement, and looking for growth, including in Latin America, the Middle East and Australasia.
Lord (Digby) Jones Ex-CBI head, ex-trade minister
It has to come from the top, that is the first and most important thing. Whatever you say you have to do. You've got to walk the talk. But it is not just about behaviours, the rewards also have to have a different focus and on different things. Although money is important, more longterm measures are needed, holiday say or other things such as training. Money – business is about making profit – is important but it is about what you need to do to get the reward.
In terms of timing, it takes years, not weeks. Give yourself three to five years. I always say it is about QED. The Q stands for the quality of what they are doing, so you go to the pub and can say you are really pleased with what you do. E is about the environment in which they work. D is the dosh. Q is the most important part.
Colin Mayer Professor, Saïd Business School
Barclays urgently needs to re-establish trust among its customers, employees, investors and the public. To do this it needs to set out what it is going to do that those parties will value. We have completely lost sight of what banks are supposed to be doing except earning huge returns for their shareholders and executives at the expense of everyone else.
Having defined the real purpose of the bank, it should determine how it is going to deliver. What is it going to do to demonstrate credibly to savers and borrowers that it is not there to exploit them but to provide truly dispassionate, objective advice and assistance? How will it commit to persist with providing this when the next financial crisis strikes and it has to shrink expenditure? How will it reconcile these lofty goals with the interests of its shareholders solely in the returns on their shares? If it cannot answer these questions then no amount of rhetoric or good intentions will do anything to reform the bank.
An effective board is capable of acting decisively in aligning the interests of those running the bank with the wider communities that they service. It takes imagination and determination and it needs a board and management committed to achieving it. That unity of purpose may involve some managerial changes but more significantly it is what strong leadership can realise with the chief executive at the helm as its forthright champion. Without that, Barclays' directors can look forward to the ever tightening noose of regulation doing it for them.
Louise Cooper Independent analyst
I believe strongly that corporate culture is set by executives and management – their behaviour and attitudes implicitly tell employees what is acceptable and important and how to behave. Standards and morality trickle down an organisation.
If a firm has been proven to be highly toxic then bosses must leave. That is the first rule. It is very difficult to reprimand an employee for bad or illegal behaviour when it's been previously sanctioned, even encouraged or copied from bosses. Nothing can change without executives leaving.
Secondly, the new team must publicise there has been a change from the old world order. This is what the new boss at Barclays has done. He has sent a clear message to staff that if they don't like the new morality then they should leave. This is also important for clearing out the middle managers who refuse to adapt.
Thirdly, follow the advice of the [former] New York mayor Rudy Giuliani and adopt a "zero tolerance policy". The new standards of behaviour must be rigorously enforced. Fourthly, reward those who embrace the new rules and penalise those who don't – the carrot and the stick.
And finally, for those seeking to make the changes, it is important to realise it is a long process. It is a sad comment on human nature that bad behaviour spreads like wildfire through an organisation and yet good behaviour takes for ever to develop. Leaders get the organisations they deserve.