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Organizational Cultural Assessment

Building The Culture of Choice

The Culture of Choice: Assess, Design, and Align Culture

"Culture is one of the most precious things a company has, so you must work harder on it than anything else."
- Herb Kelleher, CEO Southwest Airlines

Culture is the 'operating system' of an organization. It is the living, dynamic interplay of all of the shared beliefs, values, norms, and practices that are operating both consciously and unconsciously within an organization. Culture guides what people consider important and how they think, act, feel and work.

Certain aspects of culture are not directly perceptible, but nonetheless they drive and are reflected in the actions taken by an organization. Unless these beliefs and attitudes are surfaced and addressed, they can allow well-intentioned people to inadvertently undermine the continued success of the organization. Instinctive and reflexive responses to events and challenges may actually sabotage organizational progress. Cultural 'antibodies' can consistently undermine needed organizational change efforts leading to the conclusion that change is impossibly difficult.

Being successful means having a strong, integrated culture that supports your vision, strategy and goals. Our research shows that organizations that get financial results have the following characteristics:

  • Develop a deep and subtle understanding of the market
  • Embrace change and adapt quickly when the market changes
  • Balance a focus on the long-term with rapid continuous adjustment of its strategy
  • Make sure all employees understand its strategic priorities
  • Value and understand its customers
  • Encourage innovation and risk taking
  • Utilize technology as a strategic advantage
  • Seize opportunities
  • Continuous learning
  • Streamlining its organization structure
  • Continuously challenging and improving its processes
  • Avoid bureaucracy

Our research also shows that successful companies know that they must attract and retain the best employees and build employee loyalty.  They also have the following characteristics:

  • Involve employees in decisions that impact them
  • Build trust
  • De-emphasize hierarchy
  • Build effective work teams
  • Encourage focus on the collective good of the entire organization
  • Share information openly
  • Communicate meaning and a sense of purpose that inspires
  • Attract and retain the most talented employees
  • Build commitment
  • Behave ethically
  • Show appreciation and recognize employee performance
  • Promote based on merit, capability and achievement

Culture is known to be important but it is also considered as being complex and difficult to measure. The HCG High Performance Culture Assessment allows an organization to objectively and quantitatively identify and assess its internal context at a deep level. This 'snapshot' of organizational culture can help evaluate whether the current culture supports and drives the actions necessary to achieve the organization's goals. The understanding of these results can be also used to inform and guide merger and acquisition opportunities, reorganizations, hiring and succession decisions, growth strategies and corporate renewal.

The HCG High Performance Culture Assessment

The HCG High Performance Culture Assessment consists of 100 statements describing all aspects of an organization's culture. Participants from throughout the organization are asked for their level of agreement on each statement. Open-ended questions solicit responses on key issues and problems.

The HPCA is interactive and dynamic. It automatically asks participants to provide comments on those clusters of items where they have given consistently strong ratings. This allows detailed information on specific aspects of culture to be gathered.

All responses are confidential and anonymous which promotes candid and honest responses.

It takes about 15 minutes for each participant to complete the HPCA and since it is web-based, it can be done at any time or place where there is access to the Internet.

Because the HPCA is easily administered, a large number of employees can economically and efficiently participate. Rather than questioning a few selected employees, the broad-base participation of the HPCA provides reliable data about what is going on throughout the organization.

The Differences Between the High Performance Culture Assessment and Employee Attitude and Pulse Surveys

The HPCA surveys an organization's whole culture, not just a segment of culture. Although it may appear easier to look at a limited few aspects of culture or to solicit employee opinions, sustainable organizational change can only come about when like root causes are surfaced and dealt with. The HPCA looks at causes and provides an understanding for not only what is happening but also why it is happening in your culture.

Psychologists and anthropologists developed the HPCA and the anthropological orientation of the HPCA makes unlike assessment instruments with a more limited focus. It is designed to look at the culture as an integrated whole.

The 35 aspects of culture identified in HPCA provide a systematic framework for defining the culture the organization needs to achieve its business goals and strategy. It enables the organization to see how its culture measures up to the characteristics of successful companies.

Distinguishing features of the High Performance Culture Assessment are:

  • Web-based allowing a large number of people to quickly and anonymously participate 
  • Provides both quantitative and qualitative results in a integrated reporting framework 
  • Results are normed and compared to other companies in our database 
  • Provides a baseline for comparison of future assessments

Culture and the Bottom Line

The impact of culture on the bottom line is clear. Harvard Business School professors John Kotter and James Heskett studied over 200 companies for several years and found that culture has a significant impact on a firm's long-term economic performance. They also found that the role of culture in determining financial performance is becoming even greater in today's faster-changing, more competitive business environment.

Analysis shows that cultures that are aligned with the demands of their business environment consistently outperform more organizations versus those that are not. They report the following:

  • 571% higher gains in operating earnings
  • 417% higher returns on investment
  • Stock prices increased 363% (The New Corporate Cultures: Deal and Kennedy, 1999).

HCG research shows that there is a direct positive relationship between the return to shareholders and cultures that are more people-focused, develop a high performance ethic, become more nimble and entrepreneurial and are more competitor-focused.

How is Culture Shaped and Transmitted?

The basis of an organization's culture are the assumptions, values and operating procedures of the founders, the qualities and characteristics of the people who join the organization, and the responses of the organization to events and challenges.

Culture is perpetuated and transmitted by:

  • The formal statements of philosophy and values of the organization
  • Its performance and promotion systems, the organization's design and structure
  • Its systems and procedures (how things get done)
  • The criteria used for recruitment, selection, and termination

Leaders play a critical role in the development of culture. Leaders shape culture by the behavior they model, by what they pay attention to, by what they measure and control, and their reactions to critical incidents and crises that threaten survival and test values of the organization.

Culture is also transmitted in the informal history of the organization that is shared in stories and legends about key people and events that have affected the organization.

Consciously or Unconsciously Building Your Culture

The challenge of every organization is to appreciate its existing culture and constantly modify it to respond to its internal and external challenges. The elements of a culture that may have been effective and essential at one time could become the very elements of culture that are ineffective and unsupportive at another.

Successful organizations are constantly responding to changing business events that demand adaptation and propel cultural change. Some of these are:

  • Attracting and retaining talent 
  • Mergers, acquisitions, joint ventures & alliances 
  • New technologies, products or services 
  • Executive turnover 
  • Succession planning 
  • Organizational renewal 
  • Managing growth 
  • Globalization

Culture cannot be ignored and assume it will take care of itself. As companies grow, cultures become:

  • More bureaucratic 
  • More inwardly focused 
  • More political 
  • More impersonal 
  • Less focused on the entrepreneurial leader 
  • More stressful
  • Less fulfilling

Culture must be examined and renewed for it to remain vital and supportive of the organization's vision and goals. Leaders must adapt to each wave of change and transform the organization again and again if it is to flourish.

Why Culture Assessment?

Can a fish describe water?

Organizational culture is not an espoused list of values developed by a group. These are ideals. What you strive to be as an organization and what you think you endorse may be different than the beliefs and values that are actually being played out. It is critical that you determine who you really are before you can decide who you want to be.

Looking at an organization from the inside cannot give you an accurate, objective view of the organization. Our research shows that senior management consistently has a rosier view of the organization than that of other people within the organization. It is very difficult to effectively lead an organization with an idealized, distorted view of its nature.

HCG's High Performance Culture Assessment provides a precise, quantitative measurement of culture that is objective and free of bias and embellishment.

Senior Management's Distorted View of the Organization's Culture

Senior management can be kidding itself when it comes to corporate culture. A recent study of organizational culture conducted by HCG shows a startling disparity between the perceptions of senior management and other employees.

The research shows that senior management focuses its attention on the external environment and has an idealized picture of what is going on internally. This research shows that generally senior management tends to see the culture as an egalitarian society with a high level of ethics and respect for individuals, where there is little pressure to conform, a high level of participation in making decisions, freedom to express ideas and be yourself, a high level of teamwork and risk taking is encouraged.

By comparison, the research indicates that employees often see the organization very differently. To them, the organization is characterized by top-down decision-making, censored information, pressure to conform, limited autonomy, unethical business practices, and a hierarchical organization dominated by those with the right pedigree. It's no wonder that management is often seen as making decisions that seem ill conceived if not absurd.

Culture and Leadership

Leadership is about achieving results. Leaders must know what needs to be done and how to get it done in their culture. Effective leaders are Contextually Grounded. Having a clear, objective awareness of cultural issues is necessary not only to understand what is going on in an organization, but even more importantly, to identify what the critical issues are for the leaders of the organization. Knowing the strengths of the organization allows leaders to effectively support and leverage them; knowing the challenges allows leaders to address and transform them.

There is no generic pattern of leadership that will be successful at all times in all situations. Our research on Leadership Effectiveness shows that those leaders who have a realistic view of what is happening in their organization and respond appropriately to that situation are the most effective in getting things done within the organization.

It is also important to understand the mutually supportive relationship between culture and leadership. Leaders play a large role in defining and shaping an organization's culture. At the same time, they are also products of the cultures in which they work. Culture, in turn, is the developmental contest that identifies, nurtures and rewards those who are its leaders.

Mergers and Acquisitions Due Diligence

"Cultural issues present the toughest obstacles to successful integration." – Chief Executive, June 2000

CEOs who have been involved in merger activity report that no factor is more critical to Merger & Acquisition success than assessing and knowing the cultures of the companies before the merger. Yet, according to a Hay Group study, only 28% of their CEO respondents said they had actually conducted an objective assessment of the culture of the companies involved. There is a perception that culture is too amorphous and complex to quantify and objectively assess.

The HPCA provides a quantitative measurement of culture that can be as scientific and precise as measuring any other aspect of the corporation.

Including cultural assessment as part of the M&A due diligence process allows a company to clearly identify the culture of the organization they are considering and to determine if and how the cultural differences could be managed after a merger. Understanding the two merging organizations' cultures is critical to being able to successfully weave them and their employees together quickly, so that the interruption to productivity and customer service are minimized.

Attracting and Retaining the Best People: Loyalty is driven by culture

The critical resource in today's competitive world is talented people. Finding and keeping the best people needed to succeed is the biggest challenge facing business today. Despite the enormous costs associated with turnover, few companies have a comprehensive strategy to safeguard their most valuable resource.

Attracting and retaining talent is integral to business success and survival. It is not solved just with higher salaries and more perks. The solution involves shaping the whole organization to create an environment where people want to join and stay. The challenge is to create the Culture of Choice.

Messing with Success: Why Culture Change is So Hard

The Differences Between the High Performance Culture Assessment and Employee Attitude and Pulse Surveys

"It must be considered that there is nothing more difficult to carry out, nor more doubtful to success, nor more dangerous to handle, than to initiate a new order of things." — Niccolo Machiavelli, The Prince

By utilizing the results of the HPCA and identifying the gaps between the existing culture and the ideal culture, we are able to tailor a focused change program that is client-specific and results-oriented. We work with the leadership of an organization to identify the quick wins, symbolic actions and substantive actions needed to create the Culture of Choice.

Culture change is often perceived to be difficult even when there is a clear and urgent need to change. Cultures are products of their success-what becomes part of a culture are the practices and policies that have worked in the past. Because something has been successful, there is a natural reluctance to tamper with it. The HPCA helps an organization determine what is still helping them to be successful and objectively informs them of aspects of culture that may be hindering its current success or increasing the risk of failure in the future.

The Organizational Culture Assessment was transformational for Zuora.  The focus on the specific attributes that have proven correlation to high performance companies was particularly helpful.  We got a 98% response rate from the entire company and shared the results with everyone.  More importantly, it gave us a clear, actionable direction

Tien Tzuo
CEO - Zuora