Old habits die hard. We all run when it’s raining – to minimise the time in the rain as much as possible. It’s just common sense. But it’s wrong. As Mythbusters proved some years ago, we get less wet when we walk in the rain than we do if we run. But very few of us do.
That’s what culture change is – teaching people to walk in the rain, putting old habits to bed and creating new and better ones.
“A company’s culture is how people behave when they think no-one is watching,” said Bob Diamond, then CEO of Barclays, only weeks before the Libor fixing scandal first broke. The CEO of IBM, Louis Gerstner, was far more positive when he proclaimed "culture is everything".
An organisation’s culture underpins its success – or failure. The bonus-obsessed culture of the banks and their cosy relationship with the regulators was the root cause of the 2008 recession. QE-fuelled bonuses and the scandals that enveloped the banking industry in the years that followed (PPI mis-selling, swaps mis-selling, Libor fixing, money laundering) made many of us question whether the industry understood precisely how toxic its culture was. In contrast, successful companies are “a positive place to work” with “a culture of openness where ideas are shared and welcomed on all levels”, “a strong reputation for upholding ethical standards” or “a hunger for change and innovation”, according to employees who work for some of the Top 100 companies according to The Job Crowd.
The way your people interact with one another affects the way they treat your customers. Culture drives the quality of your decision-making processes, your ability to respond to challenges and opportunities, and your ability to change. The development of a change-ready culture is one of the essential ingredients to successful change. Sustainable change is simply impossible without it.
Your people will need help if they are to embrace change willingly and in turn this requires an environment where people eagerly look to improve the way things are done, are allowed to question the status quo, and are encouraged to learn from failure. As a leader you must be able to take your organisation in new directions swiftly and decisively when the need arises.
But if my culture needs to change – how do I go about it? I recommend a seven-point checklist:
1. Clarity. The new behaviours must be clearly defined – and why they are necessary. People need to know what good looks like.
2. Motivation. While the rational reasons for adopting the new behaviours will be of interest, the emotional reasons for committing to these new behaviours will be the ones that actually drive the changes in behaviour.
3. Tools. What will you give them to help them make the transition?
4. Learning. Your people will need training, coaching and mentoring to enable them to start working differently.
5. Reward. How will you reward people when they display the desired behaviours? This does not have to be monetary; recognition can be far more powerful.
6. Consequences. If there are no consequences to not adopting the new ways of working people won’t change.
7. Leadership. Culture stems directly from the behaviour of the organisation’s leaders. They must be the first to adopt the new behaviours or the change will fail. Culture change will only happen if leaders genuinely want their company to change the way it works.
Campbell Macpherson is CEO of Change & Strategy Ltd. His book The Change Catalyst: secrets to successful and sustainable business change is available now