The business world is filled with many success stories. Organizations that started up and grew well beyond their own expectations, creating a culture that sustained the business’s ongoing success. There are also those who became victims of their own growth; starting up and growing larger than anyone could have imagined, but in the end not sustaining any sort of success over time because they created an organization with poor culture to sustain it. Let’s discuss what causes these organizations to grow out of control, how this can be avoided, and what drivers can create an impact on company culture.
Recent history has shown incredible success stories of organisations starting up and growing well beyond their own and the market’s expectations, and at the same time creating a poor culture that in the end does not sustain ongoing success.
The hard lessons learned can also apply to most companies that undergo change. Recent events at Facebook, Uber, and investigations such as the Royal Commission into Banking have shown that society is demanding that companies must act responsibly with corporate cultures that respect their employees, business partners, and customers rather than simply operating to be as profitable as they can be.
What causes a poor culture to emanate from these organisations?
Most people tend to point the finger at a leader which may be true in some cases, but organisations must consider several drivers and causal factors to truly understand and address the problem.
The business drivers for culture change are typically growth (both in terms of size and complexity), the rate of change, market turbulence, and type of business.
When a company is growing rapidly, it can outpace its ability to manage the associated risks and still maintain the culture that got them there in the first place. The challenge for leaders is to keep their business growth while also managing the associated risks.
The rate of change is also a critical factor in determining how well an organisation can manage its culture. In order to keep up with the competition, organisations must continually find new ways to improve and this often means change. However, if this change is not managed effectively or occurs too rapidly for employees to adapt, it can create chaos and a poor culture.
Market turbulence is also known to impact company culture. When business conditions are uncertain or changing rapidly, this can add stress to employees and make them feel like they are not in control. This can lead to them feeling anxious or insecure, which often manifests in poor company culture.
What drivers can create an impact?
Drivers can impact how an organisation reacts to change. For example; customers and stakeholders place expectations on how organisations should operate.
Regulators can impact how organisations operate or deliver their offerings. Competitors also influence how organisations operate in providing their services and of course, the organisation’s people can by their level of the engagement determine how effective they are.
What causal factors can impact culture?
Causal Factors are key systems and processes that significantly influence the way an organisation operates. Dr Robert A. Cook from Human Synergistics identified 7 Causal Factors that influence culture, and this has proven to be one the most robust models in existence.
Executing effectively against these 7 Causal Factors will promote a more constructive culture.
1. Mission and Vision – shapes how effective is the way things are done in the organisation.
2. Organisational Structure – determines how well-structured is the organisation is in supporting people to achieve its goals.
3. HR Practices – influences how people are valued and motivates staff to perform;
4. Reinforcement Systems – incentives for people to perform well-aligned to organisational outcomes.
5. Job Design – ensures people are working effectively and to their potential.
6. Communication – sends signals to organisational members about what is important and valued across all layers and functions that support the achievement of outcomes.
7. Leadership – supporting teams and fostering collaboration across the organisation to ensure effective performance.
When organisations fail to execute properly in one or more of these key areas then this has an impact on the ideal culture of the organisation. For example, poorly designed reinforcement systems in the banking industry rewarded individuals to act inappropriately towards their customers to meet organisational outcomes.
Using this model as a diagnostic tool, we can identify aspects of the organisation’s operation that require further focus and support.
What evidence is there supporting this approach?
Human Synergistics has extensive benchmarking from many Australian/New Zealand organisations supporting this approach.
What recent experience does ChandlerWoods have in this area?
Recently ChandlerWoods has assisted a large tertiary institution in diagnosing people issues stemming from acquisitions and significant growth of the business over an 18-month period.
Partnering with the client, ChandlerWoods conducted a People and Process Audit that pinpointed and prioritised key issues with Organisation Structure, Job Design and HR Practices.
Applying solutions to these areas mitigated significant risks for the organisation and helped to position it for sustained growth.
Contact us today to discover how we can help your organisation succeed through quality talent and people management.