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By Gerald Taylor, Managing Director TPMG
We have heard many definitions for corporate culture. Some academics take an anthropological perspective defining corporate culture as a system of company values, beliefs, norms and customs. Anthropologists believe it is culture that shapes the identity of society. They conclude culture determines how members of the society dress, what they eat, how they worship and overall how they govern themselves. By the same token, business cultures shape the identity of a corporation. It determines how company employees work, how they set priorities and accomplish goals. In effect, corporate culture is the day to day climate that absolutely plays the dominant role in determining the success of the firm. But what is a high performance culture?
At TPMG Consulting we define a high performance culture quite simply as:
The collective and consistent individual decisions and organizational practices that systematically pursue and obtain higher levels of individual and overall productivity. In effect, a high performance culture is one of success. It is the collection of decisions made and actions taken which deliver improvements in results and value. Based on TPMG analytics, in companies with high performing cultures there exists an intense, almost religious focus on four key organizational functions:
- Service: there is a fanatical commitment to meeting the needs, attitudes and perceptions of customers.
- Workforce Engagement: The terms and conditions upon which people and functions relate are very well defined and integrated.
- Performance Analysis: Leaders review, analyze, share and improve performance using data and analytics.
- Leadership: Management creates and maintains formalized methods and practices that promote and reinforce measurable improvement.
We recognize that not all decisions made and actions taken improved results. Like a genome, high performance cultures can be both dominant and recessive. This means a high performance cultures literally exist on a continuum within an organization.
Why does a High Performance Culture Matter?
Before getting into the mechanics of cultivating a winning culture, it is important for all senior leaders to first understand the benefits of a High Performance Culture.
A recent Gallup study uncovered several insights. They concluded high performance cultures inspire high commitment from employees. Their study revealed that companies with a favorable culture attracted and retained talented employees at a measurably higher rate and their employees were more easily inspired to consistently deliver on their organization’s value proposition. Favorable cultures improve performance. Among US healthcare systems, when 8 in 10 of their employees feel connected to their organization’s mission and purpose, they realize a 41% reduction in absenteeism, a 50% drop in patient safety incidents and a 33% improvement in quality. According to a McKinsey & Company study (2013), a favorable culture is a key predictor of revenue, profits, costs and quality of customer service. The bottom line is……employees and teams who most align with their organization’s culture consistently perform higher on internal performance metrics than those who least align.
The Leadership Challenge: Culture Eats Strategy for Lunch!
We all know how it goes…. At the beginning of the fiscal year, senior leaders convene off-site meetings. The goal is to set the stage so the accomplishments for the coming year will out perform prior year’s results. They reflect on organizational performance and most always believe they can achieve more.
For the most part, leaders know their business, their competition and are experienced enough at formulating a winning strategy. Every year they go big and expect things will be different……but the results usually end up falling short of expectation. What continually frustrates them is their company culture. No matter how much they plan, put together policies, or how many consultants they engage…..their day to day climate limits their potential. The one true lesson in both business and government is – culture eats strategy for lunch! This subject is what the coming series of articles is all about: How to Establish and Sustain a High Performance Culture.
In this series, we will provide real world examples of why high performance cultures matter. We will break down the organizational climate and discuss the mechanics of how cultures work and share with you the proven practices we have applied over the past 15 years.
If you would like the series delivered directly to you, feel free to contact us directly by clicking here!
Gerald is the Managing Director of TPMG’s Strategy and Operations Advisory Practice. His expertise includes senior leader advising, strategy and performance improvement.
Gerald Taylor – Managing Director
The purpose of this article is to provide context and insight relating to the topic of organizational change. It is our hope that it provides you the background and perspective you can use to stimulate creative thought and support your change management activities.
I have drafted 6 important questions to address major questions that relate to change management. This article provides concise responses, based on sound primary and secondary research. The questions and responses are as follows:
- What is change in the business context?
- What is the most important thing to know about change and employees?
- Why do employees fear or resist change?
- How does a change agent overcome resistance to change?
- Why do employees remain with companies?
- What can companies do today to satisfy and retain quality employees?
The body of this article will provide analysis and conclusions from prevailing management literature and from TPMG’s consulting practice. Should you have any additional questions, feel free to contact me directly at email@example.com.
CHANGE IN THE BUSINESS CONTEXT
What is change in the business context? A business context is the strategy, structure, procedures, technology, systems, and objectives employees function within. Organizational change involves altering or transforming the business context or significant portions of the business context from its present state to some future condition. Appropriate drivers of change to the business context include:
- Changes in Strategy: Shifts in direction and resources toward new business or market opportunities.
- Changes in Technology: Advances in internal operations for the sole purpose of improving cost, quality or operational productivity.
- Changes in Structure: Improvements in the hierarchy to improve the speed, quality and efficacy of decisions and actions.
- Changes in Culture: Counter measures undertaken to rid negative attitudes or behaviors that serve no useful purpose.
What ever the change, it can be likened to a rock being tossed into still waters. Change can cause ripple effects throughout an organization, often with unintended consequences.
THE SIGNIFICANT THING TO KNOW ABOUT CHANGE AND EMPLOYEES
What is the most important thing to know about change and employees? Change to the business context is disruptive and produces stress for employees. The introduction of new ways of performing a task can produce intellectual and emotional strain. New technology or procedures establish new learning curves for employees. Changes to the business context can also introduce new relationships into the work environment. When this occurs, storming and interpersonal conflicts between employees create sources of stress. Regardless of the reasons or the intensity of a change, the impact of the change causes stress. . A common reaction to organizational change is resistance from those whose jobs may be directly impacted. Management must be certain that the benefits of the change are worth the cost of the tension placed on the employee.
FEAR AND RESISTANCE TO CHANGE
Why do employees fear or resist change? Employees fear and resist change simply because they will be asked to do something new. This is even more true for older, more experienced employees. These veterans of the workforce can resist change because they are more intellectually and emotionally invested in the current context to accommodate a change. Younger employees, however, may be more comfortable doing their job with a new twist.
Change for middle managers and supervisors can cause a loss of power or diminished influence in their sphere of responsibility – so they will resist. Additional reasons for fear and resistance to change are illustrated in the force field analysis in figure 1.0.
OVERCOMING RESISTANCE TO CHANGE
How does a change agent overcome resistance to change? The first step in successfully implementing a change to the business context is communicating a solid and compelling business reason for the change. Management must be certain that the need to change is greater than the need to stay the same. Employees need to know that the change is either provoked by a threat to the business or by an added value that will simplify their daily efforts. If employees perceive a change will be worth the effort, they can be persuaded to “do the right thing.” Before introducing a change to the business context, management must be prepared to ask and respond to tough questions. They must ask themselves:
- What is the reason for the current policy, procedure or system we want to change?
- What will happen if the current policy, procedure or system is changed or eliminated?
- How do we minimize the risk of doing away with the old and installing the new one?
- What is the link between what we are proposing and the company’s strategy?
- How can I address the concerns of those attached to the old way of doing things?
It is imperative that management not only have a solid business reason, but also a solid moral argument for change. For example, a utility company often uses their field service technicians, who typically perform sophisticated maintenance work, to perform low skilled tasks because it provides the service techs with a break from the hard work of the day. The company’s senior management team decided to create a lower skilled, lower paid job category to specialize in performing the lower skilled duties. This change was preceded by a pilot study which found matching higher skilled work with higher skilled employees and lower skilled work with lower skilled employees increased the overall service order productivity 60% while reducing operational cost by more than 35%. Senior management’s business reason was solid. Their moral argument was articulated in terms of the employees’ long term financial needs. Senior management argued that this improvement in productivity would save the company more than 1 million dollars a year. These savings, over time, will increase the value of the company and thus each employees’ investment in company stock. They conveyed that the long term value of the company and financial security of employees was greater than the need for some employees need to “take a break” during the day.
Additional prescriptions for overcoming resistance to change include:
- Demonstrate Leadership: Employees respect strong, smart and effective leadership. The leaders should create, in the mind of the affected group, a tangible picture of the future state of the business context and the reasons why.
- Create options for those adversely affected by the change: A workforce trusts a management team who looks out for their employees. If management takes care of their people, their people will take care of them.
- Over Communicate: Employees respond effectively when they know what, why and how they will participate in the change. Communicate, in as many modes as possible, the true need and the logic behind the change. Over communicate!
- Move slow, as much as time permits: Employees who do not feel out of balance when change comes will be better positioned to help facilitate the change.
Think about when cities construct stop lights in new intersections. They first erect the post. Four weeks later they connect the stop lights (non working). Weeks later they turn on the lights, but blinking, to serve as caution lights. Then weeks later, they make the stop lights functional.
- Provide Resources: Ample resources are of particular importance if the change involves moving to a more sophisticated system. Management can head off much resistance by committing enough resources to train people to use new technology.
- Manage the change: Employees trust and respect a management team that can create and professionally execute a change plan.
A final strategy for implementing change, we recommend only as a last resort. Mandate compliance to the change. Such a coercive action often happens when change must come quickly or when change is undesirable to the affected group. Pressing or forcing change can increase resistance to change, making the manager or change agent’s job more difficult. Managers and change agents sometimes have no choice but to force change onto an affected group.
RETAINING A SATISFIED WORKFORCE
Why do employees remain with companies? Retaining a hardworking, motivated workforce is not a difficult matter. As a manager, one merely needs to understand the sources of employee dissatisfaction, the sources of satisfaction and respond accordingly.
To that end, a company can be guided by theory. In the 1950’s, Frederick Herzberg proposed the most relevant theory of employee motivation – Herzberg’s Two Factor Theory of Motivation. His theory implied that a satisfied employee is motivated from within to work harder and a dissatisfied employee is not self-motivated4. Herzberg’s research uncovered two classes of factors associated motivation – employee satisfaction and dissatisfaction. These factors are outlined in table 1.0.
Table 1.0 Herzberg’s Two Factor Theory of Motivation
Factors Mentioned Most Often by Dissatisfied Employees
Factors Mentioned Most Often by Satisfied Employees
|1. Company policy and administration||1. Achievement|
|2. Supervision||2. Recognition|
|3. Relationship with supervisor||3. Work itself|
|4. Work Conditions||4. Responsibility|
|5. Salary||5. Advancement|
|6. Relationship with peers||6. Growth|
|7. Personal life|
|8. Relationship with subordinates|
Herzberg developed a list of dissatisfiers by asking a sample of 200 employees to describe job situations in which made them feel exceptionally bad. Herzberg’s research revealed dissatisfaction tended to be associated with complaints about the job context. He then asked the same sample of 200 employees to describe job situations in which made them feel exceptionally good about their jobs. His survey concluded that satisfaction tended to be focused on the nature of the job itself. The responders articulated that the opportunity to experience achievement, receive recognition, work on an interesting job, take responsibility and experience advancement and growth was at the top of their list.
What Herzberg concluded in the 1950s still has relevance today. By insisting that satisfaction is not the opposite of dissatisfaction, he encouraged managers to think carefully about what actually motivates employees. The implications are simple to understand. By providing competitive pay, good working conditions, and the like, a company can, at best, eliminate dissatisfaction. A workforce requires interesting, meaningful, and satisfying work to be motivated.
Unfortunately, many corporations and executives see things differently. A job factor survey from 1993 asked a sample of employees to rank certain facets of their job in order of importance. The survey then asks the same of a sample of managers and executives. The results are listed in table 2.0.
Table 2.0 Contrast of Employee and Manager Ranking of Work Factors
|Factor||Employee Rating||Manager Rating|
|Good Working Conditions||
|Loyalty to Employees||
|Help with Personal Problems||
This study published the Advanced Management Journal found if managers hope to be successful at motivating their employees, they must align their actions closer to those factors that their employees think are important.
What can companies do today to satisfy and retain quality employees? One of the most altering decisions an employee can make is to change companies. If companies lose good employees, 9 times out of 10, they deserve it.
Companies should first do their best to eliminate all sources of dissatisfaction:
- Employees will stay with a leadership team they can trust. Supervise employees fairly and nurture good relations between managers and their employees.
- Employees will stay with a leadership team they respect. Manage and administer the company’s policies, procedures and resources with professionalism.
- Most employees will put forth a good faith effort if they are being paid fairly for the value of their effort. Pay competitive wages and compensation.
- Provide life time employment. If employees don’t have to worry about their future with the company, they can concentrate on becoming more competent and productive.
- Provide an environment that is safe and an environment that has the resources for employees to get their job done well.
These steps should go a long way toward eliminating dissatisfaction.
In order to encourage job satisfaction and employee retention, companies should do their best to provide the following:
- Provide work that has identity in the workplace and significance to the value chain. Jobs which directly relate to generating profits, (i.e., customer service, field services, billing, collections) are all value creation jobs with identity and significance to the financial health of the company.
- Seek advice and council from employees regarding changes. Management may learn hidden details of the business, and employees feel important and appreciated for their input.
- Provide employees with feedback about their performance. Employees want to know that they are making a contribution to the success of the business.
Provide training and employee development. If employees believe a company is interested in their future success they will be interested in the future success of the company.