A Quick and Actionable Guide to Changing Company Culture Through Values
The majority of leaders know how important a strong company culture is for sustained performance of their organization. However, only 15% of US executives say that their culture is where it needs to be.
Many organizations also seem to struggle to align their core values with their culture, which could be one of the reasons for their inability to drive the right kind of culture.
A value-driven culture is easier to sustain, communicate and scale than one that is just based on how current employees behave. Values can also be a great tool for changing and shaping a company culture, when used right.
I was inspired by an article Linda Le Phan recently wrote in this blog about creating a value-driven culture and wanted to write a sequel in the form of a concise and actionable guide to help leaders that are looking to change their culture.
This guide combines our own experience from helping companies create a more innovative culture, as well as the thoughts and insights of others in the field.
Why values are helpful for shaping culture
To understand why values can be so helpful for shaping culture, we must first understand the most common problems that are present in both culture change and value initiatives:
- Inauthentic or generic values
- Inability to apply the new culture and values to practice
- Difficulties in communicating what the culture is and what the values mean in practice
These are all symptoms of the same challenges in choosing the right values and finding the right ways to bring them to practice.
Good values are authentic and set the company apart from others. Coming up with company values should be a deliberate choice.
A good rule of thumb is that the opposite of your values should also be viable choices for other companies.
For example, many organizations that are looking for new innovations have purposefully chosen “risk-taking” or “failing fast” as their core values. On the other hand, there are also businesses where the opposite values are a great fit. After all, you probably wouldn’t want your airline or a nearby nuclear power plant operator to have those same values.
What’s more, some values are simply a necessity for every organization. Patrick Lencioni, a renowned author and pioneer in leadership and business, refers to these as permission-to-play values.
Let’s take integrity, which by the way is the core value of 55% of Fortune 100 companies, as an example. The opposite of integrity is to be dishonest or corrupt, which really isn’t a choice any organization could make.
When core values are distinctive, meaningful and actionable, they serve as a simple and effective way to summarize, communicate and reinforce the culture. They draw in the right kind of people and repel the wrong ones.
Making change happen
One of the classic mistakes many companies do is that once they come up with a set of core values, they simply pass over the responsibility for implementing cultural change to HR, which often lacks the tools and the authority to make real change happen.
Implementing cultural change is, on paper, quite a simple and straightforward process. You simply have to repeatedly reinforce and communicate the new culture and its core values until change happens.
In practice, it’s often quite a difficult and painful process which might require tons of concerted effort changes across the board and throughout the organization.
Here are, however, a few practical things that can help you succeed in making cultural change happen.
1. Reinforce values in the decision-making
The first step to getting the new culture and values to stick is to make decisions that are consistent with the values, then using the values to communicate why those decisions were made.
For instance, if you have to make a decision like starting a new business line, where you might not have the data to be certain of your choice, you should leverage use your company’s values to guide you to come up with the right decision, and then use the same values for communicating about the decision.
By reinforcing the importance of values in decision-making, everyone will understand that the new values aren’t just something you hang on the wall, but that the leadership is dead serious about practicing what they preach.
As an added bonus, that way the organization will be able to make more consistent decisions across all levels of the company, even without the top management being directly involved.
2. Reinforce values in hiring and firing
As mentioned, a strong culture will draw in the right kinds of people and repel the wrong ones. However, before you get there, you might have to focus on reinforcing your values in all hiring and firing decisions to kickstart the process.
As Reid Hoffman and his guests discussed in a recent Master’s of Scale episode, you should always hire primarily for cultural fit.
The reason is quite simple: smart people can usually learn the technical skills needed to succeed in a given job, but they are quite unlikely to change their personal values.
Employees without the right values will most likely end up making the wrong kinds of decisions and dilute your culture. The employees with the right values will, however, thrive in this environment and thus further reinforce the values and the culture you’ve worked so hard to establish.
So, make sure to test for cultural fit when hiring and don’t hesitate to fire people who can’t adapt to the culture and core values. Please note that this might mean not hiring the most qualified or experienced candidate, but the best fit instead.
3. Reinforce values in rewarding and compensation
Rewarding and compensation systems are a key factor in driving employee behavior in every organization.
Your values should very much be reflected in the way you reward, compensate and promote people. By doing that, you’ll help remind people that it’s in their benefit to adapt their behavior or leave, both of which are good outcomes.
For example, if humility is one of your key values, make sure to promote the person who’s great at their job but doesn’t see the need to hold themselves on a pedestal, as opposed to the star performer who just can’t keep quiet about themselves for one second.
An easy way to celebrate your new values, show people how serious you are about them, and remind them of these frequently is to have monthly awards for people who’ve gone above and beyond their duty to act according to your values. Recognizing and celebrating the good work that employees have done and sharing their stories will without a doubt inspire others throughout your organization people and help them remember what the values really are about.
For example, if the aforementioned “fail-fast mentality” is one of your core values, the awardee could share their story and what they’ve learned from their failure, and could receive a small reward that reflects the value, such as a day-trip to try out a new innovation from some interesting company.
4. Reinforce values in the day-to-day work
In addition to the general company policies, you should also make sure that the day-to-day processes and working practices of the organization are in line with the values.
For instance, if “fail-fast mentality” is again one of your core values and any idea an employee comes up with must go through a multi-stage analysis and acceptance process before it can be tested, you can be certain that people will start to get frustrated and become skeptical of the values.
Ensuring that this alignment and reinforcement happens throughout your organization typically means lots of follow-up and accountability changes all over the organization, which inevitably requires a ton of work.
However, if you let employees across the organization participate in identifying and addressing these issues and inconsistencies, for example through an idea challenge, it’s also a great opportunity to share responsibility and get people to take ownership for implementing the new values.
5. Communicate often and use stories
It’s been shown that effective leaders repeat their message more than once and in the case of cultural change, it’s more than likely that you have to do it over and over again.
So, communicate often and use every opportunity you have to reinforce the message with your communication.
What makes values so useful for communicating about cultural change is that they’re quite simple and easy to remember, which is always crucial for getting your point across.
And remember to use stories to make your point. People remember stories best and are often inspired by them. Success stories are also a great way to show that you’re making progress, which further helps drive momentum for change.
However, you should always remember that even though communication is key, actions speak louder than words. That’s why I’ve listed only one point about communication and four points regarding practical things to change.
To give yourself the best chance to get the message across, you should always aim to combine your communication with a specific action. This is why practices such as the monthly award mentioned above can be so powerful.
In essence, culture change is simple. You simply have to live by the values you’ve chosen in everything you do.
That doesn’t necessarily, of course, mean that it’s always easy or fun, on the contrary. It takes a lot of work, some of which can even be seen as unnecessary or redundant.
However, in the end, it’s more than worth the effort. A strong culture reinforced with the right systems will continue to pay dividends long after the tenure of the current leadership.