Culture is your organization’s DNA. One way to define organizational culture is “how work gets done around here.” We like to think of it as the human glue that makes your organization unique. Your culture is deeply embedded in your people’s values, assumptions, behaviors and attitudes. Organizational culture shapes how people within an organization work together and how they perceive their work environment.

Your company culture also correlates directly to your organization’s performance. A positive workplace culture most often leads to increased business value. Korn Ferry research shows that 91% of executives said that improving corporate culture is likely to increase their organization’s value. Nearly 80% ranked culture among the five most important factors driving their valuation.

A strong organizational culture that is deeply aligned with your organization’s strategy, vision and goals offers a variety of benefits.

• It helps attract and retain top talent: Employees want to work for organizations with a vision that connects to their purpose. The clearer an organization’s vision and values, the more likely it is that an employee will stay with the organization.
• It increases employee engagement: Employees who feel connected to their organization are more likely to be motivated to perform at their best. A robust company culture creates a sense of belonging and pride in employees, boosting their morale.
• It drives decision-making: Organizational culture shapes how employees behave and make decisions. When employees share a common set of values and beliefs, they’re more likely to make decisions that align with the organization’s strategic goals. A strong culture ensures that everyone is working together toward the same goals and that their actions support the organization’s mission.
• It improves teamwork: Culture can build trust and accountability in teams. Employees who share common values and beliefs are more likely to communicate openly and work together more effectively.
• It enhances customer satisfaction: A strong culture can build a customer-centric mindset in employees. Engaged employees who buy in to the organizational culture are more likely to deliver superior customer service.
• It drives innovation: A healthy workplace culture can foster creativity, which can lead to employees brainstorming new product and service ideas. Employees who feel safe in an organization are more likely to think outside the box and devise innovative solutions to problems.
• It strengthens the organization’s reputation: When the people in an organization reflect its values, it builds a positive image in the community and market. This image can differentiate the company from the competition and attract new customers and employees alike.

Cultural transformation is shifting an organization’s assumptions, values, behaviors, structures and more. When an organization identifies cultural beliefs, norms or practices that no longer have relevance or are no longer serving the company’s goals, it may decide to create a new culture. As part of this process, the organization may create a new vision or purpose to better mesh with its strategic goals and values.

A cultural transformation often occurs when an organization needs to align with new conditions, either external or internal. For example, a fundamental shift in company culture may be required to respond to internal concerns, such as low employee morale or high turnover. A cultural transformation could be a response to an external event, such as the social justice movements that spurred greater interest in diversity, equity and inclusion. Or a culture change could be spurred on by changes in the market or evolving customer expectations.

Given how embedded culture can be in an organization and its people, it can be incredibly challenging to change a workplace culture. And it can be hard to know where to start. The key is understanding that cultural transformation begins at the individual level.

To shift company culture, leaders should address four key elements that influence how people act.

1. Mindsets: Individuals must have the right mindset before they can drive the right behavior. To change people’s mindset, leaders must take a set of steps. First, they must articulate the organization’s aspirations and goals. Then they must reinforce those goals through strategic business decisions. The organization’s processes and systems must enable the new goals, and leaders must influence others about their new mindset. That requires more than words and marketing materials like posters and mousepads: leaders must also show their commitment to the new mindset through their actions.
2. Abilities: Your people must have the ability to behave in the way you desire. To understand what abilities you need to support your workplace culture, you must first assess the gaps in your organization. Next, define the abilities that must become core practices for each group and build a development journey to embed these abilities in your people. Strategies to use include experiential learning, role play and feedback loops. As you implement the learning plan, conduct ongoing pulse checks to measure how well these abilities are being developed.
3. Structures: Your new company culture may require you to rethink your organizational, departmental or team structures. Different structures may enable the decision-making, communication, knowledge transfer and other critical elements that hardwire the behaviors, habits and mindsets essential to a culture transformation.
4. Systems: Even the best-trained people can’t adjust to new ways of working if they don’t have the processes and systems needed to support culture change. For example, to encourage change, you should ensure your performance management reflects your new cultural vision. Use incentives to motivate the desired behaviors and actions and evaluations to assess how well people are responding.

Having the right workplace culture is critical to improving organizational performance. But only a third of executives say that their organizational culture fully aligns with their business strategy.

The problem is that there is no one-size-fits-all approach to developing or changing a company culture. And many approaches to sustaining culture change aren’t effective. Here are some of the problems that organizations commonly face when trying to embed a new culture.

• Change resistance: Many people don’t like change, especially when they perceive that change could be a threat to their work. Some employees may not see any problems with the status quo. Others may be afraid of the unknown and what it may mean for their role and responsibilities.
• Ingrained behaviors and attitudes: Organizational culture is often deeply entrenched in people’s attitudes and behaviors. The longer the values and norms have existed, the more difficult it is to change. People must want to make the effort to consider a new culture before they’ll be willing to let go of the existing company culture.
• Lack of clarity: Sometimes organizations pursue culture change for the sake of change. Some organizations begin change journeys without a clear strategy or plan. Rudderless change can lead to confusion for employees and a lack of focused effort toward facilitating change. If leaders and employees alike don’t understand and align on the need for change or the desired outcomes, they can become frustrated and more resistant.
• Lack of resources: Culture change requires a significant investment of time, effort and resources. The resources necessary to drive change may be in short supply, particularly if the culture change requires significant funding, new technology or expertise.
• Lack of leadership: Before embarking on a change initiative, the CEO and top team must be aligned on the need for the change. They must consistently communicate about the vision and goals of the cultural transformation plus model the behaviors they want to see. Failing to commit to consistent behaviors can undermine culture change efforts.
• Short-term focus: Organizations may focus too much on short-term goals and outcomes rather than committing to a long-term vision for culture change. This short-term focus can make it challenging to sustain change efforts and can result in limited progress. After seeing little progress, people may be less motivated to support the change and may abandon it altogether.

Without employee engagement, cultural transformation doesn’t happen. If employees don’t embrace the new workplace culture from the top to the bottom of the organization, the new organizational culture will fail.

Here are some additional reasons why employee engagement matters for cultural transformation:

• Increased likelihood of success: The more engaged employees are, the more likely they’ll be to embrace change. To embed a new organizational culture in an organization, employees have to actively participate and support the change. Engaged employees are more likely to adopt new behaviors and embrace new ways of working.
• Improved morale: During a cultural transformation, employees may feel uncertain or anxious about what change will mean for them. When organizations prioritize employee engagement and communicate about the change, they reduce employee anxiety and build a more supportive environment.
• Greater innovation: Organizations that lead successful efforts offer opportunities to receive employee feedback. The more employees are engaged, the more willing they’ll be to share their ideas about the organizational culture. Their feedback can be invaluable as organizations can respond to employee sentiment and suggestions that can strengthen their change efforts. Moreover, if employees feel that their voices are heard and that they have a role in shaping the culture, they’re more likely to invest in the change.
• Stronger collaboration: Communication is a two-way street. When organizations engage employees in dialogue about change, employees feel more invested in the change process. They’ll be more motivated to support the change, and their enthusiasm can be contagious.
• Increased employee retention: Cultural transformations can lead to uncertainty and fear. However, engaged employees have a more positive outlook on their work as well as their organization. A more positive, accepting organizational culture can lead to happier employees and lower turnover.