ORGANISATIONAL CULTURE
Reasons for changes in
organisational culture
Key definitions /concepts (1)
• Static culture: a culture that does
not change (evolve or deliberate
change) in response to the changing
external environment
• Dynamic culture: a culture that
evolves in response to changes in the
external environment and/or a
different business strategy / model.
Key definitions /concepts (2)
• Bonus culture: a culture in which
importance of financial rewards is
emphasised and celebrated.
• Toxic culture: when a workplace
culture evolves on its own with little
attention given to relationships and
employees aren’t held accountable
for rudeness or disrespect.
Why change culture? To improve business
performance
• Declining profits and
sales
• Inadequate returns on
investment
• Low quality or
standards of customer
service
Why change culture? To respond to
significant change
• Market changes (growth,
competitors)
• Political & legal environment
• Change in societal views
• Change of ownership (e.g.
takeover / merger)
• Change of management or
leadership (e.g. a new CEO)
• Economic conditions (e.g.
downturn)
Classic symptoms that the organisational culture
may need changing (1)
• Internal fighting; management
criticism ("us & them mentality")
• High levels of voluntary staff
turnover & hard to retain top talent
• Greater absenteeism
• Processes become more bureaucratic
Classic symptoms that the organisational culture
may need changing (2)
• Innovation is no longer valued
• Evidence of declining customer service
• Leadership show double standards or
decision-making becomes inconsistent
• Communication becomes more closed
and restricted
Examples of a complacent culture that
needed to change?
• Kodak: too late to embrace the
rapid shift from film to digital
photography
• Nokia: long-time dominant
market leader in mobile phones
failed to spot fast-moving
challengers
• Sony: silo mentality arising from
market leadership reduced the
incentive & energy to innovate
Examples of businesses going through
organisational change
• Royal Mail: regulatory change and potential
privatisation force a substantial change programme
• NHS: political pressure for “modernisation” & high
profile care scandals (e.g. Staffordshire)
• BBC: pressure from frozen licence-fee income,
restricted commercial activities & fallout from Jimmy
Savile scandal. A culture claimed to be driven by
“silos” and “empires” & rigid hierarchy.
• RBS: significant retrenchment following
nationalisation
• Santander UK: restructuring & rebranding to
integrate three separate financial services takeovers
Depends on factors
• Organisation culture evolves naturally,
but the pace and nature of change will
very much depend on the evolving
circumstances of the organisation.
• Managing that cultural evolution is one
of the primary tasks of an organisation’s
leadership. Do the leaders have the
necessary expertise / experience?
Some possible evaluation points
• Organisational culture is not an entity or a
“thing” that is independent from business
strategy; it can’t simply be changed by pulling
different levers.
• The culture of society (and work in particular) is
changing all the time – regardless of whether a
firm wants to change its culture.
• A decision to make a planned change to
organisational culture should derive from a
clear shortfall in business performance or a
decision to change business strategy.
Background Slides,
Examples and Other
Activities
Organisational Culture is Under Attack…
Many new CEOs state their intention of
“changing the culture”
Project Transform
“My message to those people is
simple: Barclays is not the place
for you. The rules have changed.
You won't feel comfortable at
Barclays and, to be frank, we
won't feel comfortable with you
as colleagues."
Another great case study in
cultural change
Evaluation Points on Culture change
Source: Booz & Co Perspective on Organizational Culture Change
Culture change & DNA
“Understand the DNA of the
company and what,
culturally, led it to be in a
failed position. Behind all
financial failures is
organisational failure”
Source: Archie Norman, interviewed by Boston Consulting Group
Visit the tutor2u BUSS4 Organisational Culture
Blog for more resources