Culture: Making the Case for Change

A pandemic can expose a firm’s fundamental flaws, so why not start fixing them now?

This special COVID-19 issue of Briefings is available online and at selected newsstands.

Even though no one was buying cars during the coronavirus outbreak, the automaker CEO thought he recognized an opportunity. The company was scheduled to unveil a new slate of hybrid vehicles in two years, but if the company could move that slate up by one year, it could potentially capitalize on the pent-up demand for new cars. The vehicles were already designed; now it was a matter of getting everyone else to wind down the existing product lineup and embrace working on the new vehicles. The CEO, realizing that this was a chance to show off the company’s agility, signed off on the plan.

It didn’t quite work out. First, everyone wanted to know who was in charge. Then the finance people couldn’t work with the engineers. At the same time, the marketing employees were livid that they would miss out on bonuses tied to the existing product line. And while the CEO endorsed the plan, he didn’t do anything to actually motivate anyone else to pull it off. In this hypothetical example, the global pandemic wasn’t keeping the company from pulling off the transformation—it was the firm’s own culture.

Corporate leaders have been increasingly attuned to their organization’s culture—and how inflexibility, bad incentives, toxic behavior, and poorly defined values can hinder future growth. A global Korn Ferry study identified that “driving culture change” ranks in the top three global leadership development priorities. Yet 72 percent of corporate leaders say their organizations struggle to get their culture right. Experts say sometimes it can take a crisis to force change and make leaders rethink their assumptions on supply chains, customer demand, employee safety, and everything else.

“Many organizations already recognize that what got them to this point will not get them to the next, and a left-field event like this will result in people asking ‘What can we do better?’” says Sharad Vishvanath, a Korn Ferry senior client partner and head of the firm’s Transactions and Transformation practice in the Asia Pacific region.

Organizational culture, as leadership experts define it, is a company’s collective values, beliefs, and behaviors. Those, in turn, determine how people perform. If a large proportion of people adopt new behaviors consistent with a shift in strategic direction, the culture can change. Even under perfect conditions, cultural transformations are tough to pull off, of course, but experts say there are four actions leaders can take now, as a crisis situation ebbs and flows, to shift corporate culture.

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Recognize the weak points.

All organizations have an Achilles’ heel. Sometimes it’s obvious, such as too many people having to sign off on projects, which can slow down innovation. Other times it’s subtle, such as leaders being unwilling to share credit or rewards, which can eventually create dissatisfied employees. So-called cultural “derailers” usually revolve around several common elements, from the CEO’s actions all the way down to how workers get paid. This may require a governance review to enable faster decision-making, or new workforce models such as temporary “gig economy” contracts to allow the business to scale up and down more flexibly. Exploring these trouble spots might create some uncomfortable conversations. “It may be intuitive and nuanced work, but it requires an unequivocal exploration—by the time the smoke comes under the door, the damage has been done,” says Tim Nelson, managing director of Korn Ferry’s Australasian practice.

Focus on the culture tenets that matter most.

Every industry and business will face different challenges and opportunities after the pandemic subsides. It’s critical for leaders to prioritize aspects of organizational culture. For example, a pharmaceutical business may be dealing with massive supply chain disruption in the short term but will also face clear growth opportunities in the near future. The firm may need to dial up flexibility and collaboration, cutting across business siloes and markets, to find alternative supply partners and be ready for the next spike in demand, Vishvanath says.

A bank, on the other hand, may need to double down on risk management and the long-term horizon to effectively manage the growing potential for bad debt. This might lead them to invest in resources to help manage stressed assets.

Build capabilities quickly.

Strong organizational cultures typically have a clear focus on people—clients and teams—rather than products and tasks. This might be a good time to take a hard look at talent and work out what people will need to adjust quickly to the new behaviors required. But it’s important to use data, not instinct, to make these assessments. Companies can conduct assessments and figure out which employees exhibit high potential, then start enrolling them in leadership development programs.

Set up centers of excellence to manage the “new normal.”

The outbreak will likely accelerate many changes already underway, particularly with remote working. But experts say there almost certainly will be new routines once workers return to the office. A manager may recognize she doesn’t need to physically monitor individual performance, trusting her team to work on its own. Another leader may realize he can cancel half the meetings he used to schedule because he can get all the information he needs from employees over Slack or WeChat.

These simple things could significantly impact workplace culture, so experts suggest creating a system—such as a center of excellence—that can spread these new practices company-wide.

Above all, leaders need to embrace a culture shift. For example, if a CEO wants to create a culture of transparency and accountability, he or she had better be available to answer questions from stakeholders. Or if a firm wants its workers to collaborate more, it needs to create a system where team efforts are recognized and rewarded. “Leaders need to have a very clear view on what the culture is, versus where it needs to be, and then make changes to bring that alignment into being,” says Mary Chua, a Korn Ferry senior client partner and leader of the Rewards and Benefits practice for the Asia Pacific region.