Thursday, May 16, 2013

How Does Organizational Culture Change – With Case Study and Clear Illustration

A company’s culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. In this article, we will know how an organization culture changes and more things about “culture,” “organization,” and “change” plus a case study on Enghouse Systems Ltd. to demonstrate how the company CEO turned the culture to another direction for the better.



3 Levels of Organizational Cultures

Organizational cultures exist on three levels.

First, on the surface level, are the reflections of an organization’s culture that can be seen, heard, or observed, such as symbolic artifacts (e.g., dress codes and office layouts, and workers’ and managers’ behaviors).  Change programs can involve creating a culture (in new companies or those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures. Understanding that all companies have a cultural center is often an effective way to jump-start culture change.

Next, just below the surface, are the values and beliefs expressed by people in the company. You can’t see these, but by listening carefully to what people say and how decisions are made or explained, those values and beliefs become clear. 

Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or desired culture, and devising detailed plans to make the transition.

Finally, unconsciously held assumptions and beliefs are buried deep below the surface. These are the unwritten views and rules that are so strongly held and so widely shared that they are rarely discussed or even thought about unless someone attempts to change them or unknowingly violates them. These beliefs are difficult to change, so most managers focus on the parts of the organizational culture they can control such as observable surface-level items: workers’ behaviors and symbolic artifacts, and expressed values and beliefs, which can be influenced through employee selection.

How to Change the Culture of an Organization: Case Study of Enghouse Systems Ltd.

To change the culture, improvised and new elements must fit together as a mutually reinforcing system and changing minds will need to be put in play. This should start from the top management then cascade to every member of the organization with the use of leadership and change management tools, such as role definitions, measurement and control systems.

For example, Claudette MacKay-Lassonde, Chairman, President and CEO of Enghouse Systems Ltd. (a small software and services company located in Markham, Ontario), wanted to transform the corporate culture as she observed that employees lacked productivity and they have been showing disinterest in their work.

The company thus experienced loss of profits. In spite of having a good product line and services in developing software for businesses, Enghouse Systems Ltd. suffered a $3.2 million loss and was threatened to hit bankruptcy in 1994. The CEO reinforced the company’s vision and mission, tightened financial controls, changed the office design and layout, changed dress codes, and added benefits and perks for employees. Three years later, Enghouse turn to a profit.

Specifically, she initially conducted surveys and interviews on staff members and found that their ability to propose and implement change in the company was low. The interviews suggested that marginal regard for input had caused the staff to become discouraged and had reduced motivation for process improvements.

Although Enghouse before the change in culture espoused teamwork as a core value, feedback from the management indicated a low level of trust among managers resulting to lack of collaboration among the leaders. The company was viewed as focused on the past and present while lacking a strategic plan for the future.

With this, she imparted the road map of the company to responsive stakeholders to have a strategic direction, continuously drive enablers of teams and drew of full capabilities of the talented staff, introduced radical transparency, communicated horizontally in conversations and stories.

She fueled executives in the organization to express not only verbal support but also lead the change by changing their own behaviors. In addition, members of the organization were taught what is expected of them, and they learned how to actually practice the new behaviors when they were defined.

Training has been very useful in both setting expectations and imparting new behaviors. Shifting a culture that has to some extent moved away from the values established by its founder is always a challenge. It requires time but it can be done if there’s commitment, right planning and proper execution.