The ABCs of Changing Corporate Culture

By Flanagan, Patrick | Management Review, July 1995 | Go to article overview
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The ABCs of Changing Corporate Culture

Flanagan, Patrick, Management Review

You can live with you corporate culture, or you can change it. However, you can't ignore it.

Corporate culture. It's always been there, but businesses never paid much attention to it ... until now, that is. With reengineering, downsizing, acquisitions and a host of outside pressures wreaking havoc on American businesses, many managers are taking a closer look at the inner workings of their organizations - their values, their beliefs, their priorities - to see if they still make sense in a new business environment.

When basic survival is threatened in terms of an organization's ultimate mission, there's a very strong external impetus to make a radical change in culture. This mobilizes people to do very difficult things, which go beyond reengineering, downsizing or restructuring, to fundamentally change how things are done.

But what exactly are we talking about changing? What is this thing called "culture"? Most executives find it difficult to define, and even harder to pinpoint. Yet it is as simple as "how things get done in an organization," says Doug Barile, a Los Angeles-based Towers Perrin consultant. Furthermore, it "affects people's performance either positively or adversely. It is rarely neutral," adds Dan Paul, president of General Management Technologies (GTM) in Pittsburgh.

Corporate culture is also inescapable. It exists whether wanted or not, good or bad, articulated or tacit. And, it "is very, very difficult to change," says Barile. What's at the heart of culture are the organization's core values. So, in order to change the culture, you need to first identify those values, he explains.

Behavior Modification

Doing some kind of baseline assessment of a corporate culture doesn't have to be a massive undertaking. It can be achieved through a combination of interviews, focus groups and written surveys by human resources, outside consultants or a task force. The goal is to identify values and behaviors critical to the enterprise's success. In particular, Barile recommends defining the culture you need to succeed, rather than trying to assess the culture that currently exists in relation to some type of generic stereotypes. "If you can define an ideal culture in terms of your strategy and leadership, particularly how the culture would be different from the way it is currently, then you have the basis for changing the culture," he says.

The most visible aspect of this change is that new skills are developed on how to behave differently. "You have to break established patterns that go back for years or decades on what leadership is and how managers and workers behave," Barile says.

There's not much choice but to focus on the critical success behaviors necessary to implement strategy and where these behaviors that need to be changed are located. Then, you must answer a number of basic questions:

* What is the current environment?

* Are we a slow, predictable company in a fast-moving unstable environment?

* How many behaviors need to be changed for business survival?

* Are just a couple wrong, or is it the whole culture?

The answers to these questions help to determine the depth of the cultural change needed in terms of changing basic behaviors. For example, MasterBrand Industries Inc. underwent radical changes in its environment that also required a change in corporate culture. Randall Larrimore, president of the subsidiary of American Brands, made this decision as the result of acquisitions.

"I needed managers who thought more like I did and who could help us change the way we operated," he recalls. His particular concern was how to achieve growth as well as how to meld two companies - Moen Inc. and 20th Century Hardware, which had acquired a number of other companies - into one home improvement/hardware manufacturer. The marketplace was undergoing radical changes. Retailers, such as Home Depot and Wal-Mart, were reinventing how hardware products were distributed and marketed, and international competitors were making inroads.

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