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Changing the culture

Organisational restructuring can bring with it a wealth of issues, one of which is a change in culture. Andrew Mayo offers advice on how to manage cultural adaptation in a way that improves, rather than compromises, business strategy and employee behaviour.

In the May 2011 issue of F&M, I discussed the management of change, and I shall now expand this further, specifically to study the area of culture and cultural change.

Most organisational leaders would love to have a coherent, consistent, unifying culture that epitomises the kind of company that they and their stakeholders would love to see.

It is indeed a worthwhile ambition. Many of the world’s greatest companies are associated with a distinctive and long-lasting culture that is independent of any individual, even the CEO. Many of them of course were originally shaped by influential and powerful CEOs in their early years, as companies such as Google and Facebook are today. Porras and Collins in their famous research entitled Built to Last found that one of the characteristics of sustained success was the strength of the culture, reinforced by a policy of internal promotion. People share the same sense of ‘what is OK and what is not OK’, and have a common language – all of which tends towards more efficient working and less destructive politics.

Yet the modern world presents many obstacles to such continuity. Organisational restructuring, through acquisition and divestment, dilutes and merges cultures. Each new CEO wants to make their mark by doing things differently. True, research by Spencer Stuart in the US and Europe shows that 70% of CEOs are inside appointments. But some of those will have been brought in shortly before as CEOs in waiting, and any outsider cannot avoid bringing in their own ideas of what makes an organisation effective.

There are often good arguments for consciously seeking the new broom. A self-reinforcing culture can lead to stagnation, complacency and arrogance – and these are indeed dangers. The board of IBM brought in their first ever external CEO in the 1990s, Lou Gerstner, deliberately to shake up the company, and he did a remarkable job – despite having no prior IT industry experience. However cultures that have developed as dynamic and innovative in themselves do avoid the risks.

Adapting – or in some cases revolutionising – the culture is necessary at some time for all organisations. No culture gets changed by the visionary speech. It needs systematic, disciplined and shared effort. This article looks at one route to success.

This is an extract from the Finance & Management Magazine, Issue 193, November 2011.

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