HOW DO YOU CHANGE A WELL ESTABLISHED CORPORATE CULTURE?

1. HOW DO YOU CHANGE A WELL ESTABLISHED CORPORATE CULTURE?

2. Overview • What is Corporate Culture? • Recent trends in corporate culture • Why culture change might be needed • Legal implications associated with culture change • How to change corporate culture

3. What is Corporate Culture? In reality, corporate culture is: “ the collective belief systems that people within an organization have about their ability to compete in the marketplace, and how they act on these systems to bring valued-added services and products in return for financial reward.” (Want, 2007)

4. What is Corporate Culture? It is reflected through: - Attitudes and beliefs - Commitments - Behaviours - Competencies - Values - Performance - Dreams - Recognition/Rewards Systems - Assumptions - Innovation - Hopes - Communication Corporate culture is seen through the conduct and performance of management and employees within an organization

5. What do we know about corporate culture? Recent Trends in Establishing Successful Corporate Change • Most current change initiatives for organizations focus on operational and technical changes such as TQM (Senn-Delaney, 2003) • Seek to re-establish the organizational structure with empowerment and self-managed teams • Most change initiatives often ignore the cultural element (Senn-Delaney) • Executives have a growing awareness of corporate culture, partly due to the rise of the knowledge based economy (Wahl, 2005) • Ensuring long term success of any broad based changes and concerns regarding to corporate culture must be addressed

6. What do we know about corporate culture? The Power Of Culture • Managing an Organizations Corporate Culture can lead to a sustained competitive advantage (Jones, et. al, 2006) • Getting Corporate Culture right has great payoffs; more productive employees, greater customer satisfaction, better innovation, stronger confidence to develop new strategies, better hiring and retention (Wahl) • If managed incorrectly, it can stop an organization dead in its tracks, and the “Jaws” of Corporate Culture can chew up the change initiatives • “Everything we’ve learned drives toward one solid conclusion: The rules of governance for effective business enterprises today are being determined by their culture, not their organizational structure.” - James Champy, Reengineering Management (Senn-Delaney, 2003)

7. What do we know about corporate culture? Barriers to Organizational ChangeThe “Jaws” of Corporate Culture We can see on the left many change initiatives such as TQM and restructuring, attempting to pass through the “jaws” of an organizations current corporate culture. However, barriers within the culture such as turf wars, lack of trust, lack of teamwork and sheer resistance to change can leave many of the initiatives chewed up, leading to low results. (Senn-Delaney) “A corporation’s culture can be its greatest strength when consistent with its strategies.” (Business Week)

8. What do we know about corporate culture? Signs of Resistance When Establishing Corporate Culture • Reluctance to accept ideas from other organizations (the "not invented here" syndrome) • Turf issues and power struggles • Groups forming under the protection of a politically strong Individuals that distance themselves from the change process • Senior management having other priorities that prevent sufficient personal involvement and visibility • Lip service and "malicious obedience" • The "observer-critic" syndrome in which all new ideas are challenged • People and groups blaming one another • Organizational hierarchy is very rigid structure • Bureaucracy and it’s inherent resistance to change “Trying to apply improvement methods to an unreceptive culture is like trying to apply a Band-Aid underwater.” • (Senn-Delaney)

9. What do we know about corporate culture? High Performance Corporate Cultures Canada's 10 Most Admired Corporate Cultures for 2006: 1.  WestJet Airlines 2.  Royal Bank of Canada 3.  Canadian Tire Corporation 4.  Tim Hortons Inc. 5.  Dell Canada Inc. 6.  Microsoft Canada Co. 7.  Four Seasons Hotels Inc. 8.  Research In Motion, Limited 9.  Starbucks Coffee Canada Inc. 10.  (Tie) Yellow Pages Group Co. 10.  (Tie) Manulife Financial Corporation (Waterstone, 2006) West Jet Airlines is top of the list. And they have really been one of the greatest examples of Corporate Culture done right. They have successfully maintained a “people approach” attitude at all levels of their organization, and have been one of the few Airlines to show the importance of Corporate Culture within the airline industry as a whole.

10. Corporate Culture Discussion Question “Can you give us an example of a company that has used these 7 Tenants to Change Corporate Culture” 1. Asses the Organization’s Culture: Our example is of Enbridge, an oil and energy distribution company that operates in Canada, United States and South America. Enbridge has been doing well in the past few years, almost doubling their employees to 5000. However, they found they had a very high turnover rate, and that current employees felt there was very little growth opportunities within the organization. So the HR department teamed up with an external consulting firm to try and address these issues. 2. Recruit Senior Level Support: The consulting company created a pilot project that would take a segment of Enbridge employees and put them through a career development workshop. They took this to the board of directors and had immediate support.

11. Corporate Culture Discussion Question 3. Set real goals and formulate strategies: The workshop consisted of 4 half day sessions and two 1-hour one on one sessions with a career development consultant. The workshop aimed to set goals for employee career growth, and helping to establish long term retention within Enbridge. 4. Communicate, train, empower, gain commitment: The concept was to have employees at all levels “buy in.” This was extremely important. 71 Employees from the Finance Department, including the Vice President, ran through the workshop over a six week period. They felt it was important for the VP, managers and supervisors to run through the workshop first, so when the time came for their employees to run through the program, they would be there to support them. 5. Monitor changes and remove obstacles: Since it was a pilot project, there were some kinds in the process, but initial satisfaction from employees was extremely high. Since the project completed in September, there is little empirical data at this point in time, but they will be monitoring if and when there are promotions and lateral movement from the employees that completed the workshop.

12. Corporate Culture Discussion Question 6. Reward Success: Enbridge is already gearing up for their next batch of employees to go through the workshop, and by 2010 they hope to have a great majority of their employees complete the program. Once this is done, Enbridge is planning to have an internal “Enbridge Career Day” where all employees can look at positions all over the organization in order to help reaffirm that there is room to grow within the company. 7. Refreeze the organization: If the project is successful, Enbridge will continue to put new and current employees through the program.

13. Why Change Could Be Needed • First off the majority of organizational change projects fail (result of a 1500 businesses in 15 countries study shows 60 % fail. (IBM Global Study: 2008) • Major obstacles of implementing change are centered around corporate culture. • Large majority of managers of the 1500 businesses studied say changing the mindsets and attitudes of employees was the biggest challenge when implementing corporate change and restructuring. (IBM Global Study 2008) • In today’s economy, changing corporate culture often seems necessary.

14. Why Change Could Be Needed Younger Generation Taking Over Workforce • The “20 something's” are forcing change into corporate culture • (Padmanabhan, June 2008.). • They are gung ho, greatly educated, and innovative, more so now then ever before • Different then they were even ten years ago. • Therefore it is important for corporate culture to incorporate and utilize this younger generation and the skills and ideas they offer an organization.

15. Why Change Could Be Needed Rapidly Changing Age of Society • Changing corporate culture is the only way to solve the biggest long term challenge facing businesses “The rapidly changing age of society” (Fackler 2007) • Generation X • Early retirement has been a result of corporate culture favouring the “young blood.” • Corporate culture needs to find a way to deal with the loss of older employees, pay for their retirement, and work on retention as this age group is still valued in the workforce.

16. Why Change Could Be Needed

17. More Diverse Workforce Why Change Could Be Needed • Now more then ever we are seeing a more diverse workforce. Managers are seeing its importance and taking it upon themselves to hire diverse employees. • Specifically from the 4 groups of minorities discussed in class. Women, aboriginal, disabled, and other. • This diversity goal is more important now then in the past and must be a goal of an organizations corporate culture. • Has many benefits and can lead to competitive advantage. • There has recently been a great increase in the number of women business leaders in the last decade, they are becoming “game changer”, some are redefining corporate culture in a way to make big business more appealing to women. (Female 'Game Changers' In American Business, Pomeroy, March 2007.)

18. Merging Cultures Why Change Could Be Needed • When two firms merge, cultural differences can create some major obstacles to achieve integration benefits (Stahl, Voight, 2008.) • There is also an opportunity for value creation if the different cultures can effectively be combined. • Corporate culture merging must be effectively managed in order to achieve this integration success. Managers and owners need to take it upon themselves to realize its importance and try to do everything they can to ease the change.

19. Today’s Rapid Changing Business Trends Why Change Could Be Needed • More and more companies today are trying to improve their corporate culture in hope of becoming global leaders in an era of such rapid change (Corporate Culture Changes Companies' Future, Jin, May 2007.) • Customer needs are constantly changing and are high priority, therefore corporate culture needs to simultaneously change as well to reflect customer needs. • Businesses today are aware of the importance of being flexible, adaptive, and innovative in meeting the changing demands of today’s business society (Building a Climate for Innovation Through Transformational Leadership and Organizational Culture, Sarros, Cooper, Santora, 2008.) • Technology has been a driving force of corporate culture chance over the last 20 years (Tools for Leading Business Change, Potts, September 2008.). It continues to spark change and will there is no sign of it slowing down anytime soon.

20. Legal Implications of Cultural Change A) Managing cultural change within the workforce • Proactive actions are imperative • Effective and open communication between staff and managers (Lewis, 2006) • Integrated HRM representatives within the organization to ensure proper actions are taking place (Best Practices, 2008) • Key Point: Change in employee roles must be communicated and justified as to not be interpreted as forms of constructive dismissal

21. Legal Implications of Cultural Change 2. Micro View within the Workplace • Managers must understand the impact of change on their employees and the workplace (Chreim, 2006) • Managers must ensure that they do not alienate employees when implementing change programs • Example: An organization encourages “round-table intellectual discussions” over lunch breaks, which can lead to non-work related offensive topical dialogue (i.e. politics)

22. Legal Implications of Cultural Change B) Example: • Effective Communication and Integration – AstraZeneca Merger • 1999 Merger between pharmaceutical companies Astra AB and Zeneca Group PLC • The Culture and Communication task force facilitated the change management of the new organization, utilizing several forums to communicate the “whys” and “hows” of the integration. Key issues included training, organizational development and communications.

23. Legal Implications of Cultural Change

24. Legal Implications of Cultural Change B) Example Continued: The Culture and Communication team typically met bi-weekly by conference call. Leaders in the integration office met with the business issue team leaders at least weekly. The entire group (all teams) met every three weeks to ensure sharing occurred and to develop presentations and recommendations for the senior leadership team. In naming integration team members, a careful eye was maintained to ensure a fair representation by each company, in addition to gender, race, and other demographic dimensions. This structure ensured that the decisions made were representative of the new organization as a whole (Best Practices, 2008).

25. Legal Implications of Cultural Change C) Working Together with Unions • Downsizing and restructuring is the most common and pervasive workplace change initiative faced by unions; initiatives such as contingent compensation were reported by less than 25% of unionized companies in Canada (Kumar, et. al, 1999) • Companies must work with unions during change implementation processes to ensure legally justifiable actions take place (Kumar)

26. How To Change Corporate Culture We have created 7 steps that should be that we deemed necessary to effectively change an organizations corporate culture through our research. When an organization is trying to change their corporate culture, they cannot pick and choose the steps they want to implement though...we believe that all 7 steps are required for success. Furthermore, it is imperative that these 7 steps require the involvement and contribution of both the company’s HR department and senior level management.

27. How To Change Corporate Culture It is important to note that the benefits top-down change provides also comes with costs; Top-down change gives management control to implement changes but can result in lack of commitment from staff as they are not involved in the changing process. So change will also require the company to use a Bottom-up change approach as well. Although this requires managers to give up some of their power, successful change really needs to involve the employees at all levels of the organization.

28. How To Change Corporate Culture (1)Assess the organization’s culture: So the first step we have is for the organization to assess the current culture: determine what’s wrong, identify values and behaviours critical to success, and what needs to be changed. A thorough evaluation is needed because it may not be necessary to change every aspect of the organization’s culture, only those things that aren’t working. This is where H.R. job analysis can be very important. (Flanagan, 1995), (Jones et. al) (2)Recruit senior level support: The second step that the organization must take is to recruit senior level support. Regardless of where the idea for change originates, the process needs to start with top management, because they are the ones most responsible for monitoring and introducing the change. These are also the people who have the most power over where the organization is headed and employees look to them for guidance. (Simonelic, 2006), (Flanagan), (Jones et. al)

29. How To Change Corporate Culture (3)Set real goals, formulate strategy and vision, align: The third step the organization must take is to formally establish the goals, strategy and vision of the change. This should be kept as simple as possible, so that it’s more easily communicable to others. It was suggested that you should be able to explain in less than 5 minutes the vision of the change. If it’s hard to understand what the change is trying to achieve or how it will be done, it can become easy for the change process to lose purpose and meaning. All of this has to then be aligned with the company’s abilities and vision. (However, change is 1% vision, 99% implementation). (Simonelic), (Flanagan), (Wilhelm, 1992) (4)Communicate, train, empower, and gain commitment: The fourth step in the change process is for the company to begin implementation of the change, and “unfreeze” the old culture. This will be achieved through communication of the change to employees, but doesn’t end with simply informing them about it. A company’s success in implementing change hinges on whether or not employees actually believe in, and go along with it. So it’s important at this point to provide any training that might be necessary. This task will fall on the HR department. (Simonelic), (Flanagan), (Wilhelm), (Jones et. al)

30. How To Change Corporate Culture (5)Monitor change and remove obstacles: The fifth step in culture change implementation is to monitor the change, and remove any obstacles. Planning, and implementing the change isn’t enough. An organization must constantly reassess their efforts and make sure that there is compliance with the program. If there isn’t, they need to analyze why it’s not working. This could involve re-evaluating some parts of the program, or providing more training. Move quickly to build momentum and defuse resistance, be persistent, constantly reinforce; identify roadblocks. But this can only do this through frequent monitoring; performance reviews useful to see if change has worked. (Simonelic), (Flanagan) (6)Reward success, celebrate short term wins, and reinforce the change: The sixth step in the change process is to reward success, celebrate short term wins, and reinforce the change. This is just to continue ensuring that the process is followed start to finish. People need to see and feel success as it occurs; you can't just wait till the end or they’ll feel like they aren’t doing anything. This will ensure continued motivation to ensuring the plan’s success (Simonelic)

31. How To Change Corporate Culture (7)Refreeze the organization: Finally, the seventh step in the process is to “refreeze” the organization with its new culture. This is done by acknowledging the success of the process, and communicating it to everyone in the organization. The refreezing process also means that whatever policies have been brought about should now be mainstay in the organization. Culture is informal, so it may sound counterintuitive to formally declare its existence; however, only through formal recognition can a healthy culture be acknowledged and put in place. (Simonelic)

32. Dealing with Uncooperative Employees If an employee refuses to follow the culture change program, and continues to be a roadblock to its success, sufficient steps must be taken to get them onboard. This could be done through a one-on-one session addressing their concerns, and the benefits of the change process should be reinforced. This employee might feel their position in the new culture is not secure, or that they do not have the proper training necessary. An organization should make it clear to the employee that all of the necessary training will be provided. In order to overcome potential insecurities, the employee could also be asked to sit in with other employees who are working with the change program, and have seen some benefits; being involved in an open discussion, and being shown some positive experiences from co-workers may be the push the employee needs to get onboard!

33. Dealing with Uncooperative Employees If they still are not cooperative, a change of position might be necessary, or the organization could see what the employee does not feel like they are receiving from the culture change program, and try to provide it. The Human Resource department could sit down with the employee, and identify what the source of hesitation in the employee is; it is possible that the culture change program could be adjusted in a way that will help recognize the employees needs, and still work in the organization’s best interests. Finally, it may not be desirable, but for employees who refuse to acknowledge the culture change plan, may require disciplinary action or dismissal. However, it is important to note that measures such as this should be avoided whenever possible, and should only be used as a last resort; these actions may have a negative impact on other employees, may create legal implications, and can be counterproductive to the change initiatives.

34. In conclusion... ...the success of an organization’s culture change program relies heavily on the support of, and activities of its Human Resources department within all aspects of the organization. The Human Resources department can facilitate the integration of change agents, align their offerings with corporate strategy and give the maximum support via ‘culture embedding mechanism’s that fall into their authority (e.g. recruitment, talent management, staff profiling, etc.).

35. Any Questions?

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