Take your corporate culture off cruise controlPower up the emotive engine in your workplace

Executive summary

Shape your culture, drive your strategy. A variety of forces are coming together to make cultural alignment a priority for most companies. It is no longer just a “nice-to-have.” Leaving your culture on cruise control is a recipe for stagnation and decline. By getting deeper into how cultures work, and by pushing the emotional connections, companies can actively manage their culture to drive critical business outcomes.

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Bring your labor into sharper focus | Introduction

Introduction 1

From marketplace to workplace 2

New urgency for culture change 5

Putting emotion in the culture equation 6

Making it real with emotions 10

Shape your culture, drive your strategy 13

Meet the team 16

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Take your corporate culture off cruise control / Changes come to the workforce

Companies are stuck. Too often, executives develop sophisticated strategies to address opportunities and threats from changing markets—and fall flat. The organization is slow to get on board and put the new vision into practice.

Executives make a point of intervening in a great many areas, from human resources to sales management to financial controls, but they have tended to leave their culture on cruise control.

While the execution of a business strategy can stumble for many reasons, the underlying cause is often a misalignment with the organizational culture. Culture determines the values and habits that shape how the strategy becomes reality. If the new strategy conflicts with entrenched practices, employees will likely struggle to change.

Many leaders understand the alignment problem. Tools to measure corporate culture have been around for some time now, but most of these tools are incomplete or cursory, or cannot connect cultural attributes to business strategy. In any case, it has not been clear just how to shift the culture.

After some initial failures to move the needle, most companies have just given up on optimizing their culture. As a result, the lack of focus on workplace culture can impede attainment of business strategy. Executives make a point of intervening in a great many areas, from human resources to sales management to financial controls, but they have tended to leave their culture on cruise control. However ill fitted to the company’s aspirations they may be, the organization’s norms often continue unchanged. As a result, business performance suffers.

Introduction

CulturePath / Shape your culture. Drive your strategy.

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A solution may actually be close at hand. The world’s leading marketers have spent countless time, energy, and resources working to understand how people make decisions.

These consumers of goods, services, and products also happen to be the same people that report to work every day across the globe. They carry the same sensitivities, hard wiring, and decision-making tendencies around loyalty, commitment, and engagement, whether at work or at home.

What have marketers learned for all their efforts? Emotions tend to be the driving force of human behavior, more than rational calculation. Just look at all the television

commercials about babies or puppies that barely mention the product itself. They are all about storytelling, not argument

Emotional connections are especially important for getting people to change their behaviors because habits are tough to break with reason alone. People have to be inspired to do the hard work. Hence, leaders should appeal to the hearts as well as the heads in their organization.

From marketplace to workplace

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Take your corporate culture off cruise control / From marketplace to workplace

“Emotions,” as the columnist David Brooks recently summarized, “are not separate from reason. They are the foundation of reason because they tell us what to value.”1

Neuroscientists have found this as well. “Emotions,” as the columnist David Brooks recently summarized, “are not separate from reason. They are the foundation of reason because they tell us what to value.”1 You can direct people to act in a different way, but in the heat of the moment, they are likely to lapse into their usual approach. If rational factors get in the way, many people will just find a way to rationalize them away. People need more than just logical reasons.

Up to now, most companies have seen cultural change as a two-part process. First, you navigate the murky waters of your organization by identifying the current cultural tendencies and mapping out how you will get to a place that is more supportive of your strategy. Then, you cultivate the new ideas and behaviors as the basis of the new culture. However, without emotion, these efforts were unlikely to make a difference. It is essential to add a third dynamic: you should also elevate your organization with emotional appeals to move in a new direction.

Imagine a manufacturer that decides to shift from a volume-based strategy of execution toward one that emphasizes innovation. Employees are going to have to make changes in all sorts of processes, but the biggest one will likely involve their comfort level with risk. Execution-oriented organizations tend to be risk-averse because changes are likely to disrupt their finely honed, highly efficient system. Innovation is not possible without a lot of disruption, so people in these organizations have to revamp their largely unconscious mind-set around potential risk.

Rational appeals, monetary incentives, and changes to the performance management system are certainly important. However, leaders should also inspire employees toward the social value they will create with this new strategy —how they can help solve new kinds of problems for people. When employees have purpose and an emotional stake in the company’s success, they will typically push through a new strategy despite obstacles.

Creating culture change

cultivatethe new ideas and behaviors at the basis of the new culture

identifythe current cultural tendencies and map out how you will get from there to a place that is more supportive of your new strategy

elevateyour organization with emotional appeals to move in a new direction

First Next Finally, you need to

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CulturePath / Shape your culture. Drive your strategy.

Workplace culture is getting renewed executive attention for a variety of reasons. The millennial generation, raised as digital natives, is becoming the mainstay of the workforce and challenging established notions about employee identity.

In general, they care more about meaningful experiences than careers, so they are quicker to notice—and publicize—mismatches between a company’s aspirations and what it actually does. They are also less inclined than older generations to go along with corporate directives, and they often resist the prodding of outdated performance management systems. However much they love their devices, as ad executive Kevin Roberts recently pointed

out, engaging millennials often takes “big data plus big emotion.”2

Beyond millennials, the talent that comprises an organization today is more diverse than ever before. Disparate expectations and work styles need to be acknowledged and culture initiatives are an ideal way to bring them together, harnessing their benefits, and aligning for the common good.

New urgency for culture change

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Take your corporate culture off cruise control / New urgency for culture change

Also contributing to challenges here are competitive pressures on compensation and staffing, greater regulatory compliance for the workforce, and the uptick in mergers of companies with often conflicting cultures. A company’s larger purpose can easily get lost in the paperwork. So it is no surprise that 86% of executives surveyed for Deloitte’s annual Human Capital Trends report put culture as important, one of the highest of all HR-related challenges.3

Beyond millennials, the talent that comprises an organization today is more diverse than ever before. Disparate expectations and work styles need to be acknowledged and culture initiatives are an ideal way to bring them together, harnessing their benefits, and aligning for the common good.

A better handling of culture can have benefits beyond implementing a business strategy. A strong, sustainable culture that respects and inspires employees also helps create a powerful employment brand and can have positive effects on the bottom line. Engaged employees are more productive and loyal, and much more likely to recommend the company to their talented friends.

86%of executives say culture is important—one of the highest of all HR-related challenges.3

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CulturePath / Shape your culture. Drive your strategy.

Besides an innovation culture (one with a high tolerance for mistakes), a company could have, say, a safety culture (oriented to compliance) or a customer-centric culture (empowering employees to provide extra service).To capture these types, an analyst would look at a range of foundational attributes.

These include:

Collective focus—how much do you emphasize collaboration and teaming over individual initiative?

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Risk and governance—how important are compliance and structure in shaping people’s behavior?

External orientation—how much do employees attend to customers or the outside environment instead of internal dynamics?

Change and innovation—how readily do people embrace ambiguity and go after new opportunities, instead of sticking with what they know?

Many organizations are still trying to define, or understand, their cultures, but others have performed at least an initial cultural assessment. Up to now, these assessments have typically focused on common cultural types.

Putting emotion in the culture equation

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Take your corporate culture off cruise control / Putting emotion in the culture equation

Culture is not just about where a company fits into the common cultural types. It is also about how well it encourages people to be flexible, willing, and adaptive to meet new challenges—regardless of the strategy selected.

These metrics place companies in different positions on a continuum such as flexibility vs. control or internal vs. external facing. These assessments can suggest where a culture needs to go to align with a new strategy. To continue with the innovation example, the company should loosen up its operational controls and encourage employees to pay more attention to the needs of customers.

These are all measures related to how a company chooses to operate and define success. A company can land at any point in each continuum, with the goal that its cultural type fits with its strategy. However, for a sustained and significant change in culture, leaders need to target more than these unbiased marks. In practice, this involves adding new attributes to the cultural analytics, ones that gauge emotions. These new metrics can provide leaders with much better visibility into how people actually experience their organizations.

The attributes are not about rationality at all—otherwise courage would seem to be the opposite of commitment and inclusivity to run counter to shared beliefs. Rather,

the attributes are a gut-level involvement in what the company may need to be effective. Generally, the further along a company is on these measures, the better the long-term outcome for the business. If the culture gets low marks for instilling courage, commitment, a sense of inclusion, or shared beliefs, then leaders will likely have a harder time mobilizing people to adjust to any strategic direction—even when that is not so far from where the organization is already going.

Culture is not just about where a company fits into the common cultural types. It is also about how well it encourages people to be flexible, willing, and adaptive to meet new challenges—regardless of the strategy selected. Once measured and understood, companies can work to improve their marks here. By moving the needle on these new yet critical indices, a company can better rally employees to any new direction. This makes culture a competitive asset that can help differentiate a company in the marketplace. By actively managing their culture, companies can get superior returns and outlast their rivals in the marketplace.

Foundational attributes can help a company to determine what culture path it is on

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CulturePath / Shape your culture. Drive your strategy.

CulturePath dimensions, such as external orientation, risk & governance, collective focus, and shared beliefs, were identified as providing key insights into behaviors of high-performers and focus areas for the culture change.

Core

Differentiating

Collective focus

Change and innovation

Risk and governance

External orientation

Commitment

Inclusion

Courage

Shared beliefs

Differentiating indices:

Measure the emotional

connectedness between an

organization and its workforce.

Entities exhibiting these

traits achieve distinguished performance.

Core indices:Represent foundational cultural elements. Organizations often make strategic choices and define success with these indices.

The Deloitte CulturePathTM framework

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That is why it is important for leaders to get started today on the detailed work of understanding the current culture and aligning it with the business strategy. This new thinking around culture can serve as a wake-up call for executives who have given culture a “bye” when it comes to major initiatives. While most executives are used to monitoring and adjusting a variety of financial indicators, now they should also establish and manage a cultural dashboard that puts them firmly in the driver’s seat when it comes to executing on a strategy. As the organization’s culture journey moves forward, the following should remain top of mind among its leaders and champions:

• Consider the association of culture and strategy as the linchpin for outstanding business results

• Uncover and manage the emotional connections that are instrumental in impacting certain mission-critical areas of your business operations

• Actively encourage the desired behaviors that will drive an optimal culture

A variety of forces are coming together to make cultural alignment a priority for most companies. It is no longer just a “nice-to-have.” Leaving your culture on cruise control is a recipe for stagnation and decline. By getting deeper into how cultures work, and by pushing the emotional connection, companies can actively manage their culture to drive critical business outcomes.

Take your corporate culture off cruise control / Putting emotion in the culture equation

Research shows that “mission-driven” companies have:

higher levels of retention, and they tend to be first or second

in their market segment4

40%

30%higher levels of innovation4

Active management vs. cruise control Cultures change slowly, and it can take years before the new behaviors become second nature.

CulturePath / Shape your culture. Drive your strategy.

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Besides an innovation culture (one with a high tolerance for mistakes), a company could have, say, a safety culture (oriented to compliance) or a customer-centric culture (empowering employees to provide extra service).

To capture these types, an analyst would look at a range of foundational attributes. These include: Collective focus—how much do you emphasize collaboration and

teaming over individual initiative? Risk and governance—how important are compliance and structure in shaping people’s behavior? External orientation—how much do employees attend to customers or the outside environment instead of internal dynamics? Change and innovation—how readily do people embrace ambiguity and go after new opportunities, instead of sticking with what they know?

Once the desired culture is understood, it is time to make it real. Cultures, after all, do not appear out of thin air. Leaders shape the culture with their words and actions. These efforts then gain momentum with a variety of structures, policies, and processes that directly affect how employees operate.

Making it real with emotions

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Take your corporate culture off cruise control / Make it real with emotions

Over time, employees can refine and sustain the new culture through their own behaviors. A multiplier effect takes hold as well, with leaders at the business unit, team, and other levels, all modeling the behavior that the C-suite themselves are championing.

At most companies, this work begins with direct appeals to the organization. From inspiring presentations to social media campaigns conducted internally and externally, typically executives explain and justify the new direction.

From there, it is all about adjusting and managing the “knobs and levers” that drive actions and performance. The company should align its processes around the desired culture, especially leadership role modeling, performance management systems, hiring guidelines, and choices on what to communicate broadly to the organization. Leader roles and expectations need redefining, or decision-making streamlined across the organization. Any individual rule can be ignored or manipulated, but the overall thrust of these dictates—if enforced—will guide people’s habits over time. The goal is to match the behavioral motivations with the vision

because however appealing the vision might be, if there is a conflict, the behavioral norms will usually win.

This is all to the good, but it is where most companies stop, so they often miss out on the emotional connectors. To get at these connectors, it is vital to focus on what we call the “value events.” These are the handful of underlying actions that tend to drive a disproportionate amount of value for a company. On the list might be the sales process, research and development decision-making, succession management, or the annual planning meetings.

Once you have focused on the value events for your company, you can concentrate on your emotional messaging around the key behaviors for these events. This is not something that senior leaders can simply delegate to Human Resources with some detailed verbiage. Employees need to not just see, but also feel the change start with the leaders. Any big push will likely warrant dedicated cross-functional representation to keep the various efforts coordinated and on track—combined with a great deal of personal attention by the executives.

The company should align its processes around the desired culture, especially leadership role modeling, performance management systems, hiring guidelines, and choices on what to communicate broadly to the organization.

Companies need to align their processes around the desired culture

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Change happens through the heartTo help people feel the change—and to be part of it, companies can draw from the work of consumer marketers. Suppose you want to change the behaviors in the sales process so people cooperate instead of acting like lone wolves. Like the puppy dog commercial for a famous beer company, you can use stories and images such as a 19th-century barn-raising. These send not just the literal message of teamwork and mutual sacrifice, but also the emotional resonance around community and collaboration. Images help connect to the all-important subconscious through pathways that rational messages and incentives cannot touch.

CulturePath / Shape your culture. Drive your strategy.

Beyond general images, companies can make an emotional connection to their workforce in three main ways:

In all three cases, it is important that the messages be true for the company and its leaders. No company or leader is perfect—in fact, the most powerful stories often involve leaders or organizations struggling to overcome bad habits, but everything has to have a solid foundation in reality.

Higher purposeEvery company, from health care to entertainment, serves a goal greater than maximizing shareholder returns. By highlighting the value that employees create for society, leaders can inspire them toward the changes in behavior needed to increase that value. People’s actions can be attributed to multiple motivations, not just self-interest. The workplace can tap into the social and community allegiance felt and shown by its employees. Pride in the mission helps lead to commitment to the organization as a whole. If the new strategy better matches larger social concerns, that is a plus, but it is not necessary.

Examples from the topLeaders can do far more than just make rational appeals. Their stories and actions have a power far beyond their directives. Leaders need to go out in front and model the new cultural attributes. It is important to talk about how they are making that change—and how it is not so easy. They should reveal something of themselves and show some vulnerability.5 As consultant and screenwriter Robert McKee points out, stories especially “fulfill a profound human need to grasp the patterns of living—not merely as an intellectual exercise, but within a very personal, emotional experience.”6

ParticipationHere is where the employees come in. By linking the deeds of individuals at any level to larger goals, leaders can give meaning to even the most ordinary action. Every behavior becomes charged with the organization’s higher purpose—and employees are typically more committed and engaged. The culture campaign becomes something of a movement, not just one more corporate initiative. With committed and engaged employees, companies can be more productive and profitable.

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Take your corporate culture off cruise control / Shape your culture, drive your strategy

We have translated this new thinking on corporate culture into something leaders can use to help change their companies. Through our years of experience advising clients on improving workplace culture, combined with our analysis of corporate cultures and leading-edge research from academic think tanks, we have developed CulturePathTM.

We have translated this new thinking on corporate culture into something leaders can use to help change their companies. Through our years of experience advising clients on improving workplace culture, combined with our analysis of corporate cultures and leading-edge research from academic think tanks, we have developed CulturePathTM.

This solution analyzes a client’s data to measure its cultural attributes—emphasizing

the new indices—and assesses how well they support the desired strategy. Once the company defines the desired new culture, it can launch a campaign with changes to leader behaviors, performance mechanics, and emotional appeals—with a focus on the value events. Many of the impactful levers are rooted in communication—explicitly connecting with employees and ultimately reaching the subconscious from which behavior often flows.

Shape your culture, drive your strategy

CulturePath / Shape your culture. Drive your strategy.

A large pharmaceutical manufacturer was struggling through a turnaround.The company had shifted its strategy without building up the organization’s capacity to handle the growth that would result. While revenues were strong, the lack of focus was badly hurting the bottom line. Turnover was high among the leadership as well as the employees. The culture analysis highlighted low scores on the index for courage.

Further analysis indicated that a culture of blame was keeping people from speaking up about areas of concern. Insecurity was driving many of them to offer only a “safe” performance—not their best efforts, which would likely include some risk-taking that might help the company get better at its new scale of operations. Without a change in the culture, the company’s new structure and policies might fail to take hold—undermining the turnaround.

To help close the gap between culture and strategy, the company focused on behaviors—especially how people decide on new initiatives. A key component was “share your story,” a series of forums held by leaders. In open lunches and office hours, senior executives talked about the company’s mission and its challenges, and

the behaviors that needed to change. Their stories included details on how they had taken chances to move the company in a new direction—despite risks to their personal standing in the company. This program, in particular, helped break down barriers and provide empowerment to employees, putting

Our approachIllustrated through case studies

CulturePath / Shape your culture. Drive your strategy.

them on a path to meeting the new strategy. Trust and courage were shown to be not just welcome, but positive contributors to the organization’s success.

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Another multinational manufacturer was developing a new strategy to help improve its competitiveness and jump-start growth.CulturePath revealed issues with employee commitment to the company. People were holding back from doing more than their specific job description, and that was limiting the collaboration and joint accountability needed to take the company to the next level.

In response, the company’s leaders launched a new “ownership culture” based on stronger commitment from employees. They delivered workshops focused on specific action points within the value events where people were prone to lapse back into old ways and avoid taking responsibility. These and other personalized efforts were seeded throughout the company, with expectations that the changes would go viral over time. Embedding and fostering this kind of behavior into an organization’s culture ensures long-term sustainability of the respective values and thus overall organizational success.

Take your corporate culture off cruise control / Shape your culture, drive your strategy

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CulturePath / Shape your culture. Drive your strategy.

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Alyson DaichendtManaging Director, Human CapitalDeloitte Consulting LLP adaichendt@deloitte.comAlyson leads the Engagement and Culture offerings for the Human Capital practice, including CulturePath, Deloitte’s culture change solution. She has led work in culture transformation, organization strategy and effectiveness, talent, and leadership development. Alyson has helped clients with strategic planning initiatives and leadership development activities, and led the integration of people and processes to meet large scale organizational objectives, in a variety of industries on a global scale.

Meet the team

Sonny ChhengPrincipal, Human CapitalDeloitte Consulting LLP schheng@deloitte.comSonny is a principal in Deloitte Consulting LLP’s Human Capital practice. He has more than 15 years of experience working with clients across industries to develop and implement organization and talent solutions that deliver the business benefits of transformation efforts. He has advised clients on business issues, including M&A, strategy changes, cultural transformation, and technology implementation.

Marc KaplanLeader, Organization Transformation and TalentDeloitte Consulting LLP mkaplan@deloitte.comMarc is the national leader for Deloitte Consulting LLP’s Organization Transformation and Talent service line. He focuses on the organizational strategy and people implications of Life Sciences clients and is an advisor to many senior leaders in Life Sciences companies. In his more than 15 years of professional service, Marc has led many strategic transformation projects to address business strategy shifts and the resulting talent, organizational design, and change management needs.

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Take your corporate culture off cruise control / Endnotes

Endnotes

1. “The Social Animal,” by David Brooks, Ted Talk March 2011. http://www.ted.com/talks/david_brooks_the_social_animal

2. “The Future of Engagement is Big Data Plus Big Emotion,” by Kevin Roberts, Advertising Age, October 10, 2014. http://adage.com/article/guest-columnists/future-engagement-big-data-big-emotion/295350/

3. “The New Organization: Different by Design: Global Human Capital Trends 2016,” by Deloitte, 2016. http://www2.deloitte.com/us/en/pages/human-capital/articles/introduction-human-capital-trends.html

4. “Becoming Irresistible: A New Model for Employee Engagement,” by Josh Bersin, Deloitte Review, Issue 16, January 2015. http://dupress.com/articles/employee-engagement-strategies

5. “Why Should Anyone Be Led by You? What It Takes to Become an Authentic Leader,” by Rob Goffee and Gareth Jones, Harvard Business Press, 2006.

6. “Storytelling That Moves People: An Interview with Robert McKee,” by Bronwyn Fryer, Harvard Business Review, June 2003. https://hbr.org/2003/06/storytelling-that-moves-people

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