May 27, 2014

Strong Need for GCC Companies to Use Corporate Culture to Reap More Powerful Business Results

With the competitive gap between GCC companies and competitors in Europe, North America, and the Far East remaining stubbornly present, corporate leaders in the region need a more holistic approach to business success – one that places strong emphasis on organizational culture. In fact, 84 percent of respondents to a recent survey believe that culture is a critically important element in the achievement of organizational goals.

The development and enrichment of a culture of success is especially relevant to the leaders of large companies in the GCC. These corporate magnates have ambitious goals. They are setting in motion plans to expand and compete against best-in-class companies from around the world at a time when the corporate landscape is becoming ever more complex, connected, and competitive. They are also seeking to attract, develop, and retain the best and the brightest employees at a time of considerable turnover in their staff. That’s right. Many of their most experienced people are retiring and growing numbers of young people with non-traditional attitudes and motivations are entering the job market. Still, most leaders of GCC companies have already begun the work needed to achieve their goals. However, as some have already discovered, their strategic initiatives are not always sufficient to bridge the competitive gap between GCC companies and other international competitors. According to management consulting firm Strategy&, a critical missing element is a rigorous approach to harnessing the emotional energy of their organizational culture.

Culture – An Underexploited Tool

Culture plays an equally important role – along with strategy and operating model – in determining a company’s outcomes; finding ways to capture and use the motivating energy that culture can generate is therefore essential.

“Organizational culture is a powerful force that influences and drives the collective norms of the people who work within a company,” explains Per-Ola Karlsson, Senior Partner with Strategy&. “And, although it is slow to change, it has enormous impact. Culture must not be mistaken for a company’s values – these aspirational statements that appear on posters and screensavers, but often bear little relation to how employees feel or act on a day-to-day basis.”

Karlsson added, “Depending on how culture is wielded, it can enhance or hamper employee behaviours that are critical to a company’s success, such as accountability, creativity, and customer-centricity. It can also enhance or undermine a leader’s ability to create change and make it stick.”

In effect, the 2013 Global Culture and Change Management Survey of 2,219 executives, managers, and employees – conducted by the Katzenbach Center at Strategy&, formerly Booz & Company – revealed that 84 percent of the respondents believe that culture is a critically important element in the achievement of organizational goals.

The survey also found that culture is a force that is significantly underexploited. Less than half of the survey’s respondents reported that their companies did a good job of utilizing culture in the achievement of organizational goals. Furthermore, respondents that reported unsuccessful change initiatives also noted that cultural considerations had not been a priority in those efforts.

These findings suggest that GCC leaders who deliberately consider and proactively use their organization’s culture can improve the results of their strategic initiatives and raise performance levels. They can also gain a step in the race to close the performance gap with their local, regional, and global competitors.

An Enabler of Change: Organizational culture is a double-edged sword.
“A culture that is well aligned with a company’s strategy and the employee behaviors it requires can generate feelings of pride in the workplace and a genuine desire to achieve peak performance,” said Jon Katzenbach, Senior Executive Advisor with Strategy&. “However, a misaligned culture, especially one that is long-established, can feel like an overwhelming obstacle to change – amplifying deep-seated but counterproductive beliefs and behaviors that are not consistent with the company’s current or future interests.”
Therefore, to create the kind of lasting behavioral change needed to achieve strategic goals, leaders must examine the culture within their organizations and identify which of its traits can be used to accelerate and sustain change, and which can’t.

A Structured Diagnosis

“Although it can be difficult for companies to clearly define “how we do things around here,” it is possible to conduct a structured diagnosis of an organizational culture”, said James Thomas, principal with Strategy&. “When properly conducted, such a diagnostic holds up a mirror to the company. It illuminates the cultural traits that characterize the company and rigorously determines the critical few behaviors needed to deliver on the company’s strategic goals.”

“The choice of words in how you articulate the critical behaviors is crucial,” stated Thomas. “Leaders should seek to describe their ‘critical few behaviors’ in ways that employees will acknowledge and want to emulate because of the results they imply and the positive feelings they generate. The description of behaviors should be worded in a way that resonates across the company and with employees at all levels.”

Sustaining Change

Once the critical behaviors have been identified, the real challenge begins: To get more employees to exhibit more of those behaviors, more often.  To achieve this, leaders of behavioral efforts often must work in unfamiliar ways.

“First, the change cannot be imposed from the top down only; it also needs to bubble up from within the organization and spread across it through informal and social networks,” said Thomas. “Second, behavior change requires willingness on the part of the leadership team to experiment, which also assumes a willingness to accept and correct missteps when they occur. There are too many unknowns in behavior change to expect a flawless implementation of a fixed plan.”

To create and institutionalize behavioral change, leaders must use a combination of programmatic, interactive, and sustaining mechanisms:

  • Programmatic mechanisms: These are operational tactics that create the formal infrastructure that supports new behaviors. They include process redesign, revamped policies, and training, among other “hard” tactics.

  • Interactive mechanisms: These are soft tactics that depend on informal and social interactions within an organization. Although the emotional component is sometimes more daunting to leaders, it is typically the most powerful and effective means of implanting new behaviors within a culture.

  • Sustaining mechanisms: Finally, to reinforce desired behaviors and help establish them permanently, sustaining mechanisms – such as measurement and feedback systems, ongoing communications, and sound program management systems and skills – are needed. Existing cultures can exert a strong pull back to old behavioral norms. Sustaining mechanisms counter this force by showing that progress is being made and that new behaviors are having a positive impact on performance and results, and by continually reminding employees of what they should be doing and why.

“Using culture and changing employee behavior across large organizations is challenging work that offers attractive rewards. Leaders of GCC companies who use their cultures to spread behaviors that support their strategic goals will obtain an advantage in the race with their global competitors”, concluded Thomas. “More importantly, they will fully realize the benefits of their previous investments in structure, business processes, technology, and talent. By taking some simple steps to understand and work with their organizational cultures, GCC leaders will gain the key to unlocking the emotional commitment of their employees and greatly accelerating the behavioral changes needed to achieve and sustain world-class results.”