Companies today are responding to a complex array of business dynamics---expanding markets, rapidly developing products and technologies, strategic alliances, mergers and acquisitions, fluctuating capital resources, lean venture capital and global competition. Deciding how and when to initiate or revise change strategies has become a significant challenge for corporate leaders trying to mold new organizations that are prepared to flourish in future markets.
Recent studies and news reports validate the risks and unintended consequences associated with rapid and continuous culture change. Many culture change efforts, even those that looked good on paper, are not yielding the desired results. However, increasing failure is being linked primarily to factors that have not previously been prominent: mergers failing to effectively integrate different cultures, new processes failing to produce expected levels of performance, cost reductions often sapping the morale and productivity of the workforce and strategic initiatives struggling because of inadequate levels of both organizational commitment and sustained leadership.
Juggling the responsibilities of fostering growth, controlling costs, enhancing stakeholder value, and delighting customers, it is easy for executives to lose sight of the first link in their company value chain—their workforce. After all, it is people who make a business operational, who truly serve customers, implement work processes and ultimately bring the organization to life. Employees who are committed to the company’s success are an enormous strategic asset….or one not fully utilized.
There is always a delicate balance between controlling operational expenses, reducing training and development costs and continuing to provide excellent service to new and existing customers. During the past few years, a lot of emphasis has been placed on cutting costs (i.e. outsourcing, voicemail vs. a real person, contract vs. full time employees, long hours and double duty for the surviving workforce) rather than focusing on providing excellent customer service through sustained leadership, key employee retention and ongoing employee training. Often, the Net Asset Value of an existing or new customer is forgotten. Once that customer quits using your product or service, it is very expensive to get that customer to return or replace the customer you lost. The airline companies may learn this lesson very soon with the many small fees they charge for basic services that used to be free (checked bags, meals, pillows etc.). The question is: how much will the customers tolerate before deciding to leave that company and seek other alternatives? What is the potential damage to your company’s brand equity?
The following principles can be applied to both private and public companies. They are applicable to large, medium and small organizations. The primary objective is to implement the organizational culture change initiative in an efficient manner with a minimum of disruption to customers and employees.
CRITICAL ELEMENTS OF CULTURAL COACHING AND LEADERSHIP DEVELOPMENT:
Cultural coaching encompasses the restoration and communication of systemic values, shared understanding of the organizational objectives, and the mutual commitment that are the foundation of an organization’s identity. People embrace culture change when there is a clear vision and strategy, when they are enrolled and trained as key contributors, and when they truly believe they are being led into a better future. There are three critical elements that must be included in a successful culture coaching transformation:
- A Compelling Case for Action: The organization’s leadership, managers and employees must have a thorough understanding of the current conditions of the organization as it exists today. Whether culture change is precipitated by a crisis, by new leadership, or by poor operating results, there must be a data driven process to determine the case for action. This is normally accomplished by conducting an analysis of the organization’s leadership skills, their customer retention, employee retention and operating cost processes (the costs of doing right things wrong and wrong things right) plus the commitment of inspired leadership on the part of senior and middle management. The analysis is a basic “MRI” of the organization’s current infrastructure (processes, people & systems).
- Inspired Leadership: Must be initiated and sustained throughout the entire organizational transformation. It is often easy for senior executives to provide inspirational leadership at the beginning of the change effort, but this leadership must be sustained throughout good times and bad. "Initiating sponsors" and "sustaining sponsors" must be appointed and held accountable for the objectives and results of the initiatives. Performance management systems, bonuses and other financial incentives must be adjusted to reinforce the objectives of the change process. Approximately 70% of all organization change efforts fail because of a lack of executive sponsorship and the failure to align performance systems with objectives. Leadership alignment and behavior/bonuses must support the compelling case for action.
- The Current Organizational Capacity for Major Change: This element is often overlooked with the strong push to change too many things quickly. Often called the “Let’s hurry up to screw up” change mindset. Organizational capacity is comprised of both systems capacity and people capacity. Systems capacity is easier to measure and manage during the transformation while people capacity will often have a strong emotional component that must be managed and reinforced. The intent is to integrate both systems capacity with people capacity and define a current conditions starting point. Executives need to select the “vital few" critical elements that must be fixed, improved and communicated during the first year. If you try to change too many things too quickly, you can burn out your employees and thoroughly confuse your customers.
BENEFITS OF CULTURAL COACHING:
The dynamic of constant change in today’s business world requires cultural coaching to strengthen organizational cohesiveness and responsiveness. This flexible culture demands a process of continued leadership development and continued focus on both external customers and internal employees. Companies whose employees are bonded together by trust and mutual respect will be confident and resilient—able to focus outwardly on customers, markets and opportunities. They will hold together under pressure, and they will be fast, flexible and dominant competitors. As naturalist Charles Darwin noted, “It is not the strongest of the species that survive, nor the most intelligent, but those most responsive to change.”
Our main focus at The Frontier Group is to help our clients achieve their objectives on becoming resilient, responsive, engaged, customer-focused and operationally strong organizations.
Michael Yates is a Vice President and Executive Coach for The Frontier Group.
