October 01, 2018

What Creates an Organizational Culture?

Mary Kuniski, MBA

Mary Kuniski, MBA
CEO & Executive Coach/Golden Professional Coaching LLC - A Marshall Goldsmith Stakeholder Centered Coaching Company

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Leaders at all levels are facing enormous challenges in achieving and sustaining planned operating results. Challenges are emerging from every business arena. Executives need to be cognizant about globalization, political opportunities, economic change, tariff negotiations, additional costs due to enforced regulations, and tightened accounting governance so that incidents such as Enron, World Com and the banking crises never occur again.  The CEO and his/her staff have one primary responsibility and that is providing shareholder value, yet this obligation has become even more difficult than in the past. CEOs are typically driving an organization’s culture and its associate's sense of trust and well-being.

The way things are done in a company from recruitment, rewards, punishments, team building, achievement of goals and objectives, meeting management, handling conflict, dealing with competition and more are all a reflection of the organization’s culture. Yet, one wonders how does a corporation change the establishment's culture when the business has become so challenging even for the best leaders.

Culture is the framework within which businesses operate and the binoculars through which others view an organization. If we view a business as a system of interacting and interrelated parts, then culture simply creates, defines and supports that philosophy. However, it is extremely unwise to consider that culture is only defined by what companies do today. This can lead to costly and painful problems for the company later. Cultural change efforts that focus only on the what are doomed to failure before the change ever begins. The greater question is why do organizations do things the way they do? One has to ask the question, is there a particular benefit of doing things in a certain way. Are we doing things this way because we have always done them that way and now the technology has changed to offer a better way? Culture can sometimes be described as an anxiety-reducing agent. Because of this phenomena, company cultures are extremely resistant to change.

Consider businesses that failed due to their inability to change their culture. IBM is a great example from the 1980s when the company ran into serious financial difficulties. Up to that point the company was unwilling to change the ways in which it was approaching the market even though the market was rapidly changing around it. Consider your own business. Are you willing to change even if it means breaking tradition?

To determine your readiness for change, take a few minutes and evaluate the organization’s characteristics. Consider each characteristic and how deeply rooted the current business practices are in the organization. Ask yourself, why do we do things the way we do on a particular trait. Then rate the need to change from one to ten. One should be an urgent need to change, while ten would represent no reason to change. Next, rate the ease of change from one to ten – one being the most difficult and ten being the easiest.

Organizational Cultural Characteristics



Now compare the total score on the need to change to the total score on the ease of change. If the two scores are close together, your company’s ability to change should not be difficult. However, if you honestly evaluate each characteristic you will often find a behavior that needs to be addressed.  Unfortunately, what we often see is that there is a perception of cause and effect and that is enough to cause a behavior to become a cultural value. Assuming that the behavior and the result occur together often enough, the behavior will be taken for granted. Team members will no longer question the behavior because it is the culture and that is how their world works. Other cultural values will arise to support and enable the behavior and in the end, a simple behavior leads to an interlocking network of beliefs, assumptions, and values. Attempting to change any piece is extremely difficult because every other piece attempts to pull it back into place. Suffice it to say that cultures do not change easily.

Making a company cultural change takes hard work on everyone’s part but starts at the top. Initially, leadership needs to gain awareness across the company about the need for change. Doing so requires a solid communication plan and a management team that is locked arm-in-arm. The communication should be designed to create a desire in the enterprise for change. Many times this means educating the employee community about why change is needed and ideas that can help improve business but require acceptance. Once acceptance begins, workers need to be supported with training and education on policies, procedures, and systems changes. Knowledge of what is new must be tested regularly for the first year or more until change becomes the new culture.

Comments? You can contact me directly via my AdvisoryCloud profile.

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