Organisational Culture Transformation: All You Need to Know

What is organizational culture transformation?

Organizational culture transformation takes years of consistent effort across all levels of the organization, from the chief executive to line managers and general staff.

The AIHR Academy defines organizational culture transformation as the process whereby an organization realigns its to its cores values and strategy.

The International Council of Management Consulting Institutes defines organizational culture transformation as the process whereby an organization adapts norms and behaviors within the scope of the organization's core values to align these with a new business strategy or direction.

What is Organisational Culture?

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An organization's culture is a mirror reflecting both current leadership's values and the echoes of past leaders, embedded in structures and rules. Leaders, past and present, shape a company's DNA through values, behaviors, and ingrained policies.

It is the organization's DNA, the way an organization smells and behaves with visible and invisible elements. Corporate culture is the host of visible manners and rituals named artifacts, invisible espoused values, and basic assumptions by which a company differs from its environment.

Schein (1988) saw organizational culture as an iceberg. Above the surface lie easily observed artifacts: technology, language, and behavior. These offer clues, but the heart lies deeper. Values, what the organization "ought" to be, shape underlying beliefs, which eventually solidify into unconscious assumptions. Aligning espoused values with these core assumptions forms a unifying philosophy, creating shared identity and purpose. The Edgar Schein Model is illustrated below:

Source: Mulder, P. (2013). Organizational Culture Model by Edgar Schein.

Denison (1990) views organizational culture as a two-way street: a foundation of values and principles shaping management practices, and those practices reinforcing those very principles. Harrison (1993) likens organizational culture to an individual's personality: a unique blend of beliefs, values, work styles, and relationships that gives each company its distinct "climate or feel."

Quinn (1988) defines organizational culture as the set of values and assumptions that underlie the statement: "This is how we do things around here." Culture share the common characteristic of providing integration of effort in one direction while often precluding the possibility of moving into another direction.

What are the benefits of a strong organizational culture?

Many benefits can be derived from a vibrant and healthy organizational culture, and some of these are briefly explained below.

A notable paper presented by the Organisation for Economic Cooperation and Development (OECD) Global Anti-Corruption & Integrity Forum (p5) , notes that regulators around the world are focusing their attention on corporate culture to help them nip the vice of corruption in the buddy.

Culture is the unsung asset," declares the NY Fed (p.6), shaping what a firm produces and how it runs. It's the hidden driver of an organization's value proposition. State Street Global Advisors sees strong corporate culture as a rising intangible value driver, boosting a company's ability to execute its long-term strategy

The report presented by EY from surveyed FTSE 350 company board members found that:

86 percent of respondents said that culture is one of the key drivers of a company's strategy and performance.
92 percent said that their financial performance has improved as a result of their investment in culture transformation.
32 percent of respondents said that their investment in culture has positively impacted regulatory issues/legal actions.

A research done by Culture Q shows that:

Winning cultures boost employee engagement: Companies with strong cultures see a 20% increase in employee ratings of collaboration, work environment, and mission alignment. This fuels motivation and keeps everyone on the same page.
Strong leadership makes all the difference: In winning cultures, 86% of employees feel heard by senior leadership, compared to just 70% in weaker cultures. This builds trust and confidence.
Confidence blossoms in strong cultures: A whopping 90% of employees in winning companies have faith in their leaders, setting the stage for success.
Culture champions outperform: 13 perennial Fortune 100 Best Companies to Work For boast sky-high returns—nearly triple the Russell 3000 and S&P 500 averages. Their secret? Investing in a winning workplace culture.

The study done by Korn Ferry Consulting shows that if your organizational culture is aligned with your business strategy, it accelerates your growth, improves employee engagement, reduces risk and builds your brand.

Martins & Martins (2003) show that shared values within a company breed cohesiveness, loyalty, and—crucially—lower turnover. Shared purpose unites your team, keeping them committed and rooted.

What are Organisational Culture Transformation Triggers?

Many compelling business pain points necessitate the need for organizational culture transformation, and some of the reasons are briefly outlined and explained below:

When your work environment contradicts your goals, you're stuck in a culture-strategy deadlock. This misalignment holds back performance, leaving you vulnerable to nimble competitors.
Corporate Governance Scandal: When a corporate scandal occurs, and stakeholders seek reasons and root causes, the trial often leads back to problems with the organization's culture. This tarnishes the image of the organization. So, organizational culture transformation is prompted by the need to spruce up the employer brand and redefine the corporate identity of the organization.
Low Employee Engagement Index: The low employee engagement score is a clear signal of low staff morale and disgruntlement.
New hires and high-potential employees are fleeing, draining your talent pool and leaving performance gaps.
The pandemic forced a digital shift and hybrid work models, demanding a cultural transformation to bridge physical distance and fuel collaboration.
Vision Shift: New leadership brings a fresh vision, necessitating a cultural overhaul to align values and practices with their ambitious goals.
Merged Cultures, Clashing Performance: Post-merger friction between diverse teams is sabotaging progress. Cultural integration is needed to unlock the combined potential and create a unified winning team

Organisational Culture Transformation: Key Success Factors

The process of organizational culture change is very complex and multi-faceted and can not happen overnight; it takes time, ranging from 3- 5 years of concerted and coordinated effort across the entire organization. Any attempt to change organizational culture in less than three years is an exercise in futility.

1. Identification and Clarification of the Organization's Vision, Mission, Values, and Strategic Goals.

Every successful culture springs from a clear, inspiring vision that guides every decision and action. To audit or build a thriving culture, start by articulating where your organization stands and where it aspires to be. Precisely define your vision, mission, values, and goals. This not only reveals strategic inconsistencies but also sets the compass for the culture needed to achieve those objectives. For instance, a company aiming for top-tier customer service while valuing both employees and customers must foster a culture that champions inclusivity, dedication, and service excellence.

2. Develop the Culture Narrative/Manifesto.

Unmasking cultural misalignments is the heart of a cultural audit. We need to pinpoint areas where reality clashes with our ideal. That's why crafting a crystal-clear picture of the desired culture becomes our first crucial step.

3. Leadership Alignment and Commitment.

Leadership and culture are indivisible, and leaders must own the culture. Think of culture and leadership as two sides of the same coin. In Edgar Schein's words (2004, p22), "Leaders are culture creators. Every group or organization needs leaders, and every leader creates a culture, whether intended or not."

Antony Jenkins, the former Group CEO of Barclays, UK, from 2012 until July 2015, has this to say, "The board should positively champion the desired culture all the time. The behaviors board members exhibit set the tone for the whole organization. Every action you take will be acutely observed".

In agreement with the above line of reasoning, Thomas Wescott says that the Board should hold the CEO and senior executives accountable for doing this. If the Board realizes that the CEO or some other senior executives are not exhibiting the desired behaviours, the Board should descend its axe ruthlessly on the resisters. It is the responsibility of the Board to monitor and assess the culture of their organization regularly, and executive management is accountable for driving the culture.

Cameron (2004) is of the view that top leadership are key to championing change programs, communicating the vision, and driving strategic initiatives. It has been argued that a leader or champion should be assigned to each strategic initiative.

The Scottish Social Services Council (2012), stresses the importance of having leadership at all levels of an organization as key to making successful culture change happen. Cameron (2004) has this to share. While current leaders should be seen as organizational change champions, it is important to consider future leaders who will need to be prepared to lead the organization when the culture change has been put in place. The future leadership competencies required to dive into culture transformation must be identified and developed among future leaders.

Various activities can be done to ensure leadership alignment, and these include, among others, team building and 360-degree leadership capacity assessment. Against this background, the leadership team needs to be responsible and accountable for driving the cultural transformation journey individually and collectively from the outset.

4. Define and Clarify your Strategic Direction.

A culture transformation strategy needs to be grounded in your business strategy. Organizational culture and strategy go hand in hand, and a misalignment between the two spells doom for your organization. A culture transformation journey should start with a clear articulation of your organizational strategy. According to Peter Drucker, culture eats strategy for breakfast. You need to align your organizational strategy with your purpose and culture.

Purpose: Articulates why your company's work matters to the world

Strategy: outlines what the organization needs to do to succeed.

Culture: determines how work gets done.

Any culture transformation project must begin with a clearly communicated strategy that is aligned with the desired culture.

5. Baseline Assessment of your Current Culture.

This has to be done to identify the gap between your desired culture and your current culture. This helps you to identify the challenges, opportunities, and strengths of your existing culture. The culture diagnostic instrument you can use is called the Organisational Culture Assessment Instrument (OCAI), which Kim and Cameroon have developed. It assesses the six dimensions of organizational culture: dominant characteristics, organizational leadership, management of employees, strategic emphasis, interrelationships and criteria for success.

The key deliverable for this phase is a culture gap analysis that articulates the current culture and targeted culture.

6. Articulate a Clear Vision for Organisational Culture Change.

After defining your desired culture, you need to set up your vision and mission. Culture begins at the top, with the chief executive painting a vision of the future and articulating a compelling need for changing how work gets done in order to produce different outcomes. Fernandez and Rainey (2006 p169.) state that 'the process of convincing individuals of the need for change often begins with crafting a compelling vision for it'. Cameron (2004) asserts that clarity on what the change will mean in practice will enable staff to feel an integral part of the process and to share the vision and objectives of the culture change transformation.

7. Develop a Culture Change Communication Strategy.

A clear vision needs to be effectively communicated in order to gain buy-in from all parties involved. Some resistance will most likely meet transformational change as it means a fundamental shift in the underlying principle of 'how things are done around here'. This resistance needs to be handled sensitively, as people will have anxieties about changes to their working patterns. Cameron eloquently states in his book "Positive Leadership" (2004, p9) that "explaining why the culture change is necessary and beneficial is probably the most vital step in generating commitment." It's like building a bridge of understanding, connecting the "what" of the change with the "why" that resonates with employees.As part of the culture transformation journey, you need to run a culture sensitization program prior to the commencement of the journey. Over and above that, you need to identify culture change champions who would act as ambassadors of culture change.

8. Assess your Current Culture.

This has to be done to identify the gap between your desired culture and your current culture. Kim Cameroon and Robert Quinn (page 3), developed the culture diagnostic instrument called the Organisational Culture Assessment Instrument (OCAI). Kim Cameroon and Robert Quinn developed the Competing Values Framework that corresponds with four types of organizational culture ( adhocracy, clan, market and hierarchical

It assesses the six dimensions of organizational culture: dominant characteristics, organizational leadership, management of employees, strategic emphasis, interrelationships and criteria for success. This exercise results in the profiling of your current culture and desired culture and the identification of areas of weaknesses, strengths and opportunities for improvement.

9. Create an Actionable Culture Strategy.

Once you define the characteristics of your desired organizational culture, you need to develop a culture strategy to execute it. The culture initiatives should be aligned with your organization's strategic objectives. Cameron (2004) and Fernandez and Rainey (2006) stress the need to identify strategic initiatives - the processes that need to be abandoned, existing processes that need to be improved and new initiatives that need to be developed. Strategic initiatives are the activities that an organization will need to carry out, which form a core part of the cultural shift. The misalignment between your organization and culture spells disaster for your organization.

10. Identify and Build Capabilities Required to Sustain the New Culture.

11. Train and re-train your organizational sponsors.

In line with this endeavour, your organization can roll out training programs to build and strengthen the competencies that support the new culture through different methods.

Leadership change competencies capacity building training
Role modelling of the required competencies by the leadership team
Mentoring and coaching
Development of an organizational competency framework that supports the new desired culture to ensure enduring culture resilience.
Train your organizational culture agents and sponsors.

12. Identify Quick Wins and Celebrating Success.

In support of the new culture change, you need to set short-term goals, achieve them and recognize them. You must endeavour to portray such quick wins in a positive light, and this ensures people's commitment and reduces resistance to further developments. Your reward strategies have to be redefined in such a way that they recognize and reward people who demonstrate new behaviours in line with your desired culture. To celebrate quick wins, you can do the following:

Social Media Celebrations: You can leverage your social media platforms like Facebook, LinkedIn, Twitter, and YouTube to celebrate your short-term wins.

Story Telling: You can also harness storytelling to celebrate your short-term wins.

13. Embed and Reinforce the New Culture.

To reinforce the new cultural attributes, your organization needs to undertake the following activities:

Structural Alignment: This calls for a reconfiguration of your organization's policies, procedures, processes, information flows, decision-making, performance metrics and incentives in support of the new culture. For instance, the performance management system should be redesigned in such a way that it promotes a performance-driven culture within the organization. Also, the recruitment policy might need to be revisited and designed in such a way that it caters to organizational culture fit during interviews and the onboarding of new employees. Moreover, you can redesign your organizational structure so that you facilitate quick decision-making, communication, knowledge transfer, and other critical elements that hardwire the behaviours, habits and mindsets essential to a culture transformation.

Values Alignment.

The process of values alignment has to be done through a values alignment workshop. The idea behind values alignment is to instil the espoused values and behaviours into the executive team and employee population. During the workshop, the participants should be given the opportunity to explore their own most important values and practice the concept of values-based decision-making.

Mission Alignment.

The employees need to be aware of and aligned with the vision and mission of the organization. This is done through a mission alignment workshop. The mission alignment workshop should give employees the opportunity to explore their sense of purpose or mission to see if the role they are currently performing matches their skills and talents and aligns with their passion. The workshop should also enable employees to get a clear line of sight between the work they do each day and the mission or vision of the organization.

14. Develop the Culture Monitoring and Evaluation Framework.

Your organization needs to develop measures of success that would be used to measure the success or failure of your culture transformation. Without measuring your efforts, it's impossible to know whether your cultural transformation has been successful. You should develop your corporate culture scorecard that articulates the following key elements.

Parameter	Description
Priority Target Area.	Identify the key culture strategic priority area.
Action Plans	Define the key initiatives you would take to operationalize the culture change initiatives.
Business Key Performance Indicators.	Define the key performance metrics you would use to measure the success/failure of the transformation.
Accountability Framework.	Assign duties and responsibilities to people responsible for driving the transformation.
Baseline Target.	Define your minimum required performance.
Stretch Target.	Define your desired performance.
Timeframe.	Define the time period within which the project should be completed.

What are the frequently asked questions about organizational culture transformation?

No	Question	Answer
1.	How long will it take to complete the culture transformation program?	3- 4 years and anything less than 3 years is going to be half-baked and is destined to be a dismal failure.
2.	Should it be done in a hurry?	No. culture formation takes years and therefore it follows that cultural transformation cannot be done overnight because behavior change takes a much longer time because it needs to be applied effectively in many different situations before it becomes the norm.
3.	Should everyone be involved?	A company, or division, culture is the sum total of behaviors demonstrated by the individuals within that organization. If true culture transformation is to occur then every single individual must be included, involved, and expected to learn, and then grow into the new cultural norm.
4.	Should the CEO play a leading role in the transformation?	The CEO as the leader of the company should be clearly seen to be a champion of this transformation, if it's company-wide; and strongly supportive if it's divisional. The body follows the head, so if the "head" has not fully "bought in" this will become apparent, and significantly weaken any transformation efforts.


3.	To what extent should the senior leadership seen to be involved in this process?	Without senior people being seen front and center, clearly owning the transformation, it will not take hold. Within a division, it must be the leader of that division, within a company, the leader of the company and the executive team.
4.	Is culture transformation an HR baby?	HR plays a coordination role and the transformation should be a combined effort of line managers and all the employees.
5.	When will the results of the transformation be realized?	The first results are usually seen within two to four months of launch, if done properly. There are always the "early adopters". From there, the rest of the population will come on Board, so at the end of one year some good momentum should be seen.
6.	What should happen to people who do not support the transformation?	Give them time. Not everyone learns, adapts, or applies at the same pace. If, after 18 months or so they still show clear resistance (vs. just a slow "get it" factor) they should be asked to leave. They need to find an organization with a culture they can fully support.
7.	Should it be tied to compensation and performance appraisal?	Some aspects of culture transformation will have either discrete measurable or assessable components (e.g. enhanced leadership competencies). These could, and should be linked to performance management. Similarly the recruitment and succession planning decisions should reflect the behaviors expected from the cultural transformation.
8.	Should I involve customers? Suppliers?	Absolutely. They will be affected (presumably positively!) by it and would probably greatly appreciate being included. By so doing, they may also be able to contribute to its success, as well as gain some valuable insights for their organization.
9.	How would the success/ failure of the transformation be measured?	You need to develop a corporate culture scorecard for measuring the success/failure of the transformation.
10.	Should we measure the impact?	Without a doubt, the impact of the culture transformation efforts should be measured. Doing so provides a yardstick to track progress, creates a winning spirit as progress is made, and provides an excellent basis for a Recognition program.

Given this background, it is apparently clear that organizational culture transformation can not be done overnight, and any attempt to execute organizational culture transformation in a hurry is bound to be a failure and a mere waste of resources. Organizational culture transformation requires concerted effort and coordination from the top leadership team. Unless you change your underlying assumptions, old habits will prevail, and change will not stick.