PHOTO
CEOs basically know that culture is important, but not much action is taken reflecting this concern. What are they missing?
The biggest challenge for most CEO’s lies in not knowing where to start with the topic of culture. It is a ‘big, buzzy, and fuzzy’ topic with few details. The lack of numerical and tangible data available for CEOs leads to challenges in understanding where their biggest organisational cultural challenges lie in—in terms working of practices not being aligned with (newly) formed strategies, how to go about transformation and to which extent they themselves need to be involved.
Another big challenge is the lack of awareness in how national culture reinforces certain practices and their meaning. Words currently being used in many parts of the financial world, such as compliance, have very different interpretations with regards to what compliance means and how compliance is implemented and maintained on a behavioural level.
A third big element of non-action lies in not being able to visualise to which extent there is sufficient trust inside an organisation. For cultural transformation to take place, it is important that trust levels are at an adequate level.
Why is company culture fundamental for an organisation to perform well?
Company culture is important as a ‘unifying’ factor to ensure the greatest possible focus within an organisation in terms of peer pressure to ‘fit in’. As with the example given above, if organisations only focus on policies and strategies, but not on the quintessential question of ‘how’ and enable that ‘how’ to differ according to both function and location, you end up with not having any identity.
It is the lack of a sufficiently unified identity which causes both waste, in terms of becoming overly reliant on systems, and lack of adaptability due to the “we have always done things like this around here” or going overboard and want everybody to be the same. A delicate balance needs to be struck between ‘feeling part of one organisation’, yet being able to work in a way which supports your function.
Organisational culture is a tool. A tool which we define as ‘the way in which people relate to each other, their work and the outside world, compared to other organisations’.
This means two things:
1.That the main question with organisational culture is whether or not it is functional (supports the strategy);
2. That the observation whether or not an organisation’s culture is functional and moves with time. If there are significant changes in the outside world (e.g. regulations, recession), in the nature of work (e.g. digitisation) or in the consistency of the workforce (e.g. lay-offs, rapid growth), the organisational culture alignment with strategies in place will change.
In other words, enabling a type of peer pressure to ‘behave’, which supports the strategy of an organisation is the ultimate goal for organisational culture, whatever the strategy might be. The group dynamics will ensure proper behaviour, and that will go beyond typical HR policies on behaviour. Failure to actively lead this behaviour, and instead be led by it with negative consequences is extremely costly (examples, like fixing Libor rates, forgoing safety procedures on drilling rigs, or being creative in interpreting numbers).
From your experience working with large institutions and banks around the world, what is the main roadblock in changing their culture?
For most large institutions, their failures in turning their much reported ‘bonus-cultures’ around, is a multi-level problem. Another similar problem lies in the relationship between having to deal with very complex legacy IT systems and the need to innovate in order to face the rise of fintech. In both cases, the problem starts at the very top. And that is their boardrooms.
If the strategic focus set by a board is to maximise short- term shareholder interests, then executive teams will naturally set the tone in terms of using their own behaviour to exemplify this, even when deep down they know that it might not be in the best interest of an institution’s overall stakeholders (shareholders, boards, employees, society, customers, providers, etc.).
Once boards give space to executive management teams to focus on a longer time horizon, then it makes sense for these management teams to behave in a longer-term way. Long-term-oriented behaviour, which tends to lead to more sustainable behaviour, then becomes an embedded way of working throughout an organsiation, not anymore dependent on a few enlightened individuals.
In practical terms, once it has become clear that a management team can focus in a longer-term way, then they should themselves become involved in either participating in, or publicly promoting, the importance of cultural transformation.
It cannot be stressed enough, that if an executive management team is not personally involved in a transformation process, it will most likely fail.
What is Hofstede’s strategy in implementing a cultural transformation exercise? What are the essential elements?
There are a few lessons we adhere to:
Lesson 1: Create a dedicated change group, sponsored from right at the top—this change group gets certified in our methodology in order to ensure the client owns the change, and not we as consultants.
Lesson 2: In order to change a culture, you need to know the culture and what needs to change where—this point is particularly important in terms of measuring culture in various parts of an organisation—the work of IT units is very different from the work of e.g. clerical staff/this means that any change required has to be relevant for daily work.
Lesson 3: Continuous communication on the project progress to ensure buy-in into the importance—as described earlier, communication needs to be aimed at both the function and, in global contexts, take into account the nationality of the receivers as things like the words you use, the person who sends the message, the frequency with which you communicate, all will be impacted by national culture.
Lesson 4: Ensure full buy-in at executive level by making management team members co-responsible for aligning culture and strategy—should there be a gap between the culture measured and the optimal culture set by looking at the strategic goals, then it is the management team’s responsibility to take the decision which is to be changed (typically strategy is easier to change than culture). It also means that we measure to which extent leaders walk the talk/does their behaviour reinforce existing practices or does it show the need for change.
Final lesson: As a supportive culture is business critical to strategy execution it is a never-ending journey and as such requires constant monitoring—if the environment changes, or when a strategy changes, cultural transformation is critical.
The very positive experience in working with Noor Bank and in working in the Middle East, is the commitment shown at the top. If the top indicates that changes are needed, participants show case importance and diversity is welcomed in terms of the approaches used through different parts of the bank, change in any Middle Eastern bank can be achieved at a really fast pace due to the urge for perfection which is shown throughout the Middle East.
About Hofstede Insights
Hofstede Insights is a global cultural advisory, started in 1985 with the support of one of the pioneers in comparative cultural anthropology, Prof. Dr. Hofstede. Headquartered in Helsinki Finland, we have over 130 associate partners in 60 countries.
Our unique competitive advantage is the combination of strategic and management experience with a data-driven approach to visualising the impact of culture on individual and organisational level, with instruments grounded in academic research.
The ability to enable people from different backgrounds to work more effectively together is instrumental in enabling future success. This is at the core of what we do - to leverage differences and make a sustainable impact.
Source: Hofstede Insights
“THE PROBLEM STARTS AT THE VERY TOP. AND THAT IS THEIR BOARD ROOMS.”
— Egbert Schram
“FOR CULTURAL TRANSFORMATION TO TAKE PLACE, IT IS IMPORTANT THAT TRUST LEVELS ARE AT AN ADEQUATE LEVEL.”
— Egbert Schram, CEO, Hofstede Insights
© 2019 CPI Financial. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
