Kumar Kandaswami, retired Partner at Deloitte and advisor to CEOs, explores why building the right organizational culture is vital for long-term success, shaping values, behaviors, leadership practices, and sustainable competitive advantage.
Aphorisms like “Culture eats strategy for breakfast” reinforce the notion that the right culture is critical to an organization’s continued success. Yet strategy is often easier to grasp than culture: culture can mean different things, feels subjective, and is therefore sometimes treated as less important. The truth couldn’t be farther from this. There is no point in having a great strategy if the organization doesn’t have the moral and emotional core to implement it. The question is how do you define this for your organization and how do you ensure that it is established and leveraged to succeed.
Culture is personality of the organization
Culture is best defined as your organization’s personality or deeply ingrained values or behaviour traits. It would determine the manner in which the organization – meaning, most of the people, if not, all, would react to a given situation on a consistent basis. This would include a whole range of qualitative aspects like rights and wrongs, giving up versus being tenacious, being laid back versus being proactive, being respectful to the ‘smallest’ person versus respecting the mighty, feeling empowered versus being a follower of instructions, being fearful of failure versus being open to failing while taking an untested path, etc. These, when people are under pressure and when no one is watching.
At one level, it is desirable to have all the right aspects – being respectful, ethical – built into the culture. Think about some of these as foundational aspects of an organization’s culture that define the value system. It is important to go beyond good behavioural values – not that these are easy to achieve – to be successful. It would be being innovative, ambitious, empowered, collaborative, etc. That would require time and effort to build.
What does not constitute culture?
The organization cannot define its culture based on the fad of the season. It cannot keep changing the definition of culture every now and then. It cannot be the personal beliefs and values of a few powerful individuals in the organization. It cannot be different for different levels or functions or geographies. It cannot be divorced from what the long term vision and strategy of the organization.
It is true that influential leaders often deeply impact their teams and those who they come in contact with. It is almost like a cult. If it operates in a small island, it has no impact on the larger organization. In fact, there can be conflicts between the norms of the cult and what the organization tries to achieve. This, therefore, cannot be an enduring culture that helps the organization grow and flourish.
How to build
It is often a very deliberate effort that creates and sustains a desired culture. When it is a startup, the group tends to have common values and behaviour patterns, or the non-compliant individuals tend to leave. In a number of cases, it is something that evolves and if it has the right ingredients, the organization succeeds. The challenge is when the organization grows or when one wants to define a winning culture for an on-going organization.
The starting point for defining culture is knowing what the organization wants. It is determined by a combination of the broad values and aspirations of the stakeholders, the domain of the business, and the strategy of the organization – the basis on which it seeks to succeed and retain its winning waAs already said, it has to be for the long term and not for a quarter or year, and, what the entire organization will believe in and follow. In fact, it takes years to build some aspects of culture into the collective conscience of the organization.
Once the organization defines what it wants as its culture, the following will have to be done:
- Setting up metrics and aligning incentives
- Messaging
- Training
- Leading by example
- Punishing non-compliance
- Constant feedback
- Reinforcement
Align incentives
The first and most important step is to ensure the key aspects of culture are defined in measurable terms – KRAs. For example, in the case of innovation, it could be the use of the innovation budget by the relevant executives and the extent to which the ideas progressed. It is not enough to say we will be innovative. These metrics will then become a key measure of success for individuals, thereby, encouraging them to comply. It is almost impossible to get people to follow something across a large organization if their individual success is not impacted, at least in the initial stages.
Messaging
Once the first the measures are established, it is critical to communicate what is being attempted exhaustively. In these matters, it is better to over-communicate rather than less. It is best done by the leaders to their groups – board members, CEO/CXOs. It cannot be left to the head of communication or HR alone.
Training
We often assume it is easy for people to convert an idea to action. In reality, it is not so. Each individual interprets the ideas in their own ways. So, training people, again repeatedly, is critical. Even things we may think of as easy to understand, say, treating people fairly, are not so easy to practice consistently across the entire organization. Role plays, case studies, learning courses, presentations, etc are important tools.
Leading by example
The whole project fails if leaders or influential individuals are not seen to doing what is being preached. Therefore, it becomes the primary job of people at high places to visibly demonstrate they do what they say. And, highlighting the demonstration of the culture by people in the organization.
Punishing non-compliance
While there will be reward for doing the right thing, it is critical to punish bad behaviour. It is often difficult to punish your best regional sales head who has achieved fantastic numbers but very poor when it comes to collaborating with other product lines (assuming collaboration is an important organizational character you want to build). Do not give in to easy options and short term compulsions if you want to build a strong organization.
Constant feedback
What you don’t measure, you cannot manage. Particularly so, if the issue at hand is highly qualitative. It is important to have strong mechanisms – organizational climate or culture surveys carried out by third parties, focus group discussions, town halls, etc. Don’t look for convenient feedback – deal with anxiety, suspicion, resentment, etc as much as you would like happiness and satisfaction.
Reinforcement
Even if there is initial acceptance of these ideas, it is critical to keep up the campaign on an on-going basis. People tend to go back to old and easy ways. Or, with attrition new comers become a large group and they don’t know what the norms are. Acquisitions happen and those people come in with their version of what culture should be. The importance of reinforcing what seems obvious cannot be over-stated.
While it looks like a lot of effort, the prize is enormous. It helps organizations win, stay ahead of competition and makes it a rewarding place for its people and other stakeholders.
