What it really takes to change culture

We won’t have been the only people who were shocked to learn in January that VW had experimented on live monkeys in the US, forcing them to ingest diesel fumes to measure how damaging they were to their health. In the wake of the VW emissions scandal, this was particularly surprising and, whilst the events themselves pre-dated the scandal, it had been known about internally for some time. Had they learnt nothing?

There are parallels here to the 2012 LIBOR rate scandal and 2014 Forex trading scandal, where several years after the financial crisis (following promises of a change in the culture at the banks), widespread gaming of the system for personal gain was unearthed.

A fish out of water

Also, our eye was caught last week by Paul Polman’s (Unilever CEO) admission that, despite promising widespread action to mollify shareholders (increased profit margins, accelerating cost cutting, a share buy-back and an increase in the dividend) in reaction to a hostile takeover attempt by Kraft Heinz, he didn’t really believe that such short-term decision making was a good idea. He told a conference of chief executives and institutional investors that “We had to make some practical compromises…which I frankly would not have done”. Essentially, he did what he had to do to see off the takeover threat, but normal service will be resumed shortly.

These examples shed light on the fact that behaviours in organisations can be remarkably difficult to shift and leaves us questioning what it really takes to change an organisation’s culture.

Beliefs drive behaviours

What’s going on in these cases, in fact in all organisations, is that behaviour is derived not from the current value statements or from the latest proclamations of “deep-rooted change” by the CEO – that’s not how cultures work – but from the shared beliefs and long-held assumptions within the organisation. These unspoken assumptions exist for good reason – they enable smooth cooperation across large organisations, often spanning international boundaries without the need to check on motivations or decision-making mechanisms beforehand. They bind together large organisations through shared myths and habitual patterns of work and oil its wheels.

Despite enabling cooperation on a large scale, there are three important weaknesses to this facet of how organisations work:

A fish doesn’t see the water it swims in

Firstly, such foundational beliefs are not visible to those within the system and therefore are not questioned – it’s just normal to think that way. They say that a fish doesn’t see the water it swims in. Psychologists call it ‘familiarity blindness’.

If you work in an environment where the sole focus is selling more cars than Toyota and breaking into the US market, then cheating emissions tests will seem reasonable to you (as will testing diesel emissions on monkeys to prove that diesels are not dangerous). Similarly, if you work in a bank where the primary orientation of everyone around you is personal enrichment, then gaming the rules for individual gain will seem clever, as opposed to cheating.

It’s difficult to understand anyone thinking that January’s President’s Club dinner in London was appropriate, but clearly enough people did for it to continue for decades.

Herein lies the difficulty faced by whistle-blowers. Being social creatures, human beings tend towards conformity not wanting to speak out against the group, even if you know something is wrong (see Solomon Asch’s fascinating experiments to see this at work). In addition, we all have a tendency to gravitate to like-minded people, forming tribes with strong social bonds that can override a broader search for truth and improvement.

This is how we do things around here

Secondly, the downside of this uniformity is… well, uniformity – and the larger and more hierarchical the organisation, the stronger the tendency towards conformity. A paucity of challenge and differing views usually leads to problems remaining unresolved and with decision-making being pushed upwards (hands-up if your leadership team is over-loaded), alongside a conspicuous lack of creativity and initiative-taking. How often do you see a recruitment process that emphasises being a bad fit with an organisation’s culture? Yet isn’t that precisely what is needed?

We have written before about the benefits of cultivating doubt and of learning to ‘Disagree well’. Much of the challenge lies in deliberately seeking different views to your own and being able to manage the friction that results in a constructive way, without letting it escalate into something more negative.

The Shape of Water

The third challenge is that attempts to change culture are usually done at the level of collective behaviours and individual beliefs, whereas it should be the other round. Acknowledging, and then tackling, an organisation’s, or even a society’s collective beliefs that anchor behaviours in place is a powerful, and possibly the only, way to shift company culture in a meaningful and sustainable way.

“The ability to perceive one’s own culture and to evolve the culture adaptively is the essence and ultimate challenge of leadership.” ~ Edgar Schein

A current example can be seen in the greater female representation on FTSE boards achieved through public and regulatory pressure, but the absence of a corresponding improvement in the gender mix at senior executive levels demonstrates the lack of a fundamental shift in the underlying cultural norms and beliefs. Something to consider on International Women’s Day.

True change requires four things to be in place:

1.       An open and honest assessment of what really lies at the heart of a culture. If the Army really wants to tackle high levels of bullying and harassment (as it did in 2015), then a belief that warriors will always misbehave in barracks or that low-level prejudice is acceptable has no place.

2.       A willingness to tackle the ‘sacred cows’ in an organisation. No subject can be off limits and leaders should tolerate being made to feel uncomfortable – here lies learning. This takes courage, confidence and an eye for the longer-term health of the organisation.

3.       A sustained effort by the leadership of the organisation, where they not only maintain an ongoing focus, but personally enact change in their behaviours to match what they are asking of others.

4.       A clear, concise and aligned idea of what is needed in terms of identity, mindset and behaviour. Once defined, all aspects of the business and how it is lead should be passed through that filter to ensure alignment. Change will never happen if the reality of working in an organisation does not match the desired culture. This must be done at speed and scale to ensure it is not drowned out by other more pressing agendas or kicked into the long grass by vested interests.

This is not easy and many leaders will not have the bandwidth, the political capital nor the courage to take such a fundamental and long-term view for their organisation. However, we hope positive examples and a growing readiness to discuss underlying drivers of behaviour will encourage more to take the plunge.

[For UK-based readers, we hope you’ll appreciate the water-based theme.]

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Coode Associates supports and advises companies on leadership and organisational effectiveness and alignment, identifying Purpose and Values and on culture-shaping more generally. If you’d like to speak with us, we’d love to hear from you: info@coodeasssociates.com.

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