Former GE CEO Jack Welch once famously said, “The soft stuff is the hard stuff.” The business adage rings true for HR professionals trying to initiate culture change in their organizations. HR leader Norm Sabapathy, speaking at a mega session June 21 during the Society for Human Resource Management 2016 Annual Conference & Exposition in Washington, D.C., gave some tips for overhauling a corporate culture.
“I know a lot of people think culture is a mushy, fuzzy concept,” said Sabapathy, who is executive vice president of people at Cadillac Fairview Corp., an owner and operator of commercial real estate in Toronto. “But, increasingly, research is showing that people really do care about culture.”
So much so, in fact, that senior executives are finally starting to pay attention—which presents a tremendous leadership opportunity for HR, Sabapathy said. The notion of “culture,” loosely defined as the beliefs and behaviors that govern how people act in an organization, emerged in the 1980s and is now believed to be a major determinant of a company’s success or failure.
Sabapathy cited a mountain of evidence indicating that culture is a top-of-mind issue for today’s executives and that companies with positive cultures have better performance, productivity and profits than those without. For example, the Deloitte Global Human Capital Trends 2015 report found that culture and engagement were the top issues of concern to more than 3,300 business and HR leaders from 106 countries. And companies on Fortune’s list of the best places to work—known for their strong cultures—have stock performance that is double that of other organizations.
“For me, the No. 1 reason why any organization should care is that it has been proven that culture, if you have a strong one, is positively correlated with business results,” he said.
Speaking of numbers, here are Sabapathy’s 10 tips for driving a culture change that will stick:
- Define a set of desired values and behaviors. Have your leaders clearly described the values and behaviors they’re seeking? “No MBA speak,” Sabapathy advised. “Make sure people can really understand and relate [your culture] to day-to-day behavior.” That means coming up with behavioral descriptors for each value you define and articulating how those would translate into actionable behaviors at all levels—from secretaries to middle managers to executives.
- Align culture with strategy and processes. Look at your mission, vision and values and consider how they line up with your HR processes, including hiring, performance management, compensation, benefits and the promotion of talent. “Think about how recruiting and talent management build your culture into your future,” he said. “Are your succession plans really creating the leaders you want?”
- Connect culture and accountability. “Each of us in this room can think about companies that have struggled to deal with culture,” Sabapathy said, citing Enron and WorldCom as examples. It is easy, particularly in difficult times, to forget the values you set in place to define your company.
Sabapathy shared a story from his days at a former employer, Maple Leaf Foods, that illustrated how embracing accountability can help companies weather disaster. Twenty-three people died after eating the company’s cold cuts that had been contaminated with bacteria. “We took immediate and public responsibility for the crisis, against the advice of our legal counsel and technical counsel,” he said. “We never pointed fingers.”
The company settled with the families within three months, a North American record, he said. A year later, Maple Leaf’s brand score had increased, employee engagement went up five points, and stock more than quadrupled. “It was a great example of taking an investment we made in culture that was years in the making and applying it effectively in a tragedy,” he said.
- Have visible proponents. For culture change to stick, it must be a priority of the CEO and board of directors. “Show the board a framework for understanding organizational culture and its impact on performance,” Sabapathy said. Work with the board to create a standing performance objective for the CEO that evaluates culture.
- Define the non-negotiables. When contemplating a culture change, look at your current culture and call out which aspects you want to retain. “HR has a critical role to play in figuring this out,” he said. Determining what’s not up for debate is particularly important during mergers and acquisitions, when leaders of two or more organizations must figure out how to blend identities.
- Align your culture with your brand. Culture must resonate with both employees and the marketplace. “I’m seeing an increasing partnership between HR and marketing in this regard,” he said. “Figure out how to activate the brand across multiple stakeholder groups.” This is especially relevant in our current online world, where today’s bad customer experience can become tomorrow’s viral sensation.
- Measure it. “We all know that what gets measured gets managed,” Sabapathy said. “I think we’re really deluding ourselves if we don’t admit that many people still see culture as this fuzzy thing.” Help demonstrate the effectiveness of your efforts by implementing employee surveys, talent analyses that identify gaps between desired and actual behavior, and assessments of ethics hotline usage.
- Don’t rush it. Changing a culture can take anywhere from months to several years. “It doesn’t happen overnight,” Sabapathy said. “It really depends on accessing the true gap between the culture you have and the culture you need to have.” Start by making sure there’s a clear rationale for why the company should change, he advised.
- Invest now. Don’t wait for staff and resources that may never come. “It takes years of investment to get to that point where [your culture] just automatically becomes part of how you behave and act,” so begin whatever way you can. Culture change is not a one-and-done exercise, so there is always more work to be done. “It’s fluid and it changes over time,” he said. “If you’re in HR, you should feel good job security.”
- Be bold and lead. You don’t have to be in a position of influence to have influence, Sabapathy said, adding that “When we step up, it encourages others to step up as well.”