A mid-sized international organization had not been growing for about a decade, despite significant market growth in their area. They stayed behind compared to several competitors, who had increased both in size as well as profits. After a few years of internal fights about who would take over the helm from the retiring owner, a new, strong leader was appointed.
He dutifully followed an unwritten rule that many newly appointed leaders seem to like to: he initiated a culture change. Although often an unnecessary step a new leader takes to demonstrate his strength and vision, for this particular organization it was actually needed and long overdue.
I’m not a big fan of grand overhauls of organizations, but this one had become a dinosaur and really needed to get fast-tracked into a modern, functional organization. In previous years they had turned a blind eye to underperformance, tolerated a high attrition rates among staff and an equally high attrition rate for clients, and accepted stagnating or even declining turnovers.
Energetically, the new top manager overhauled the performance management system. He implemented stricter defined targets, with a closer follow-up routine, and a stronger link to pay. The gap with the previous approach intentionally was big. Leaders know the new approach always gets softened down the line, and have to take care that the organization does not just infuse the old culture with minor new elements. So he created a big shockwave through the organization, aiming for real cultural change.
Fast forward to one year later.
The new buzz words, introduced to symbolize the culture change, were used everywhere. So changes must have happened, right? But upon closer look, people just used the new language while stubbornly sustaining a continuation of the old culture.
What went wrong?
- The company had a strong preference for leaders rising through the ranks. In itself, I am a very big fan of developing your own. But when you want a significant culture change, you have to choose leaders who will support it. That can be done by people in your own organization, but usually not the ones that were put on the succession planning by the previous senior managers, in the old culture setting. You are more likely to find them in a corner of the organization, as they didn’t quite fit in and established management tried to isolate them. In this case, the newly appointed leaders had already been infected by the disease the organization needed to get rid of.
- They hired new employees fitting the new requirements, and drilled them from the beginning to become advocates of the new culture. They hoped the new people would soon be more successful than the existing, change-resisting stagnant employees. And change the company culture from bottom-up. They didn’t reckon with the force of socialization: new employees, who are in the minority and dependent on their bosses and co-workers, will adapt soon to the current ways of working of an organization. When they started they saw a different culture than they were promised when they were hired, but they adapted in order to survive.
- They made exceptions when applying the new rigorous performance management. They claimed the performance targets were purely based on meritocracy, however for certain individuals targets were adjusted or compensated for unclear reasons. Soon people felt the system was rigged, or at least tilted. In addition, most of the non-performers, who happened to come out of the same cohorts as the new leadership, were still condoned. The message new employees got, was that underperformance was only addressed with people the current leaders hadn’t bonded with yet.
What could the new leader have done differently, in order to achieve the desired cultural change?
In the few cases where a drastic culture change is necessary, it needs to be implemented drastically. There is no room for condoning old-culture behavior. Once an exception is made, the message people get is that the culture change will be watered down. The new leaders (the level below top management) have to be fully on board. And, most importantly, there can’t be tolerance of underperformance, especially not from the ‘old’ crowd.
A drastic culture change takes a lot of energy. Once you start to make allowances for old-culture behavior, the change won’t happen, and you might as well not have put any energy in it at all. You have to go for it all the way.