3 Signs It’s Time for an Organizational Culture Change

Signs Your Company Needs a Change in Culture

According to Deloitte’s recent Global Human Capital Trends survey, 82 percent of executives surveyed believe that culture is a potential competitive advantage. That is, when culture is done right, it can drive performance and productivity within an organization and act as a secret weapon.

However, based on our experience working with hundreds of successful companies across industries, we’ve seen how hard it is to recognize that it’s time for organizational culture change. After all, the signs can be subtle, and if you’re used to the typical dysfunction that can happen within an organization, it can be hard to identify a specific sign that it’s time for a change.

Here are three clear signs it’s time for an organizational culture change:

Financial performance is less robust than usual

If your profits are falling and you can’t identify an obvious reason — that is, there’s been no major change in the economy or your competitors or target audience — look to your culture. A positive company culture can’t create revenue by itself, but there is a relationship between a company’s performance and its culture. A study by Great Places to Work reveals that the 13 companies that have appeared on Fortune’s annual 100 Best Companies to Work For list every year have also seen higher average annual returns, with cumulative returns as high as 495%, instead of 170% (Russell 3000) and 156% (S&P 500). This confirms further research from Glassdoor that found that being named a Best Place to Work is associated with a modest .75% stock jump.  

Troubleshoot it:

If you suspect your culture is affecting your profitability, it’s time for an organizational culture change. However, the worst thing you can do is to start randomly changing things about your culture and hope that it has a positive impact. Instead, start with facts. Collect data on employee engagement and your current company culture. Then strategically consider how you can leverage your strengths and improve your weaknesses to boost employee engagement and enhance your financial performance.

Something’s wrong, but employees won’t give feedback

No one wants to get bad news, but in a healthy company culture, employees can send, receive, and understand the information that enables them to do their jobs, including constructive feedback that managers need to hear. If that information isn’t being passed up the chain — even when you have the sense that something is wrong — it’s time for an organizational culture change.

Troubleshoot it:

Employees silo information when they think it’s a risk to share it. This means that intentionally or unintentionally, your management and leadership team have communicated to your employees that no news is good news, and bad news isn’t worth sharing.

To fix this problem, you’ll need to create a communication plan that your leadership team can support and then implement consistently with employees. If your employees are particularly disengaged or disillusioned with communication within your organization, it may take a long time before they’ll begin to trust that you mean what you say. However, since communication serves as the backbone of your company’s ability to get things done, it’s a critical effort to focus on.

It’s frequently difficult to reach a consensus

Every organization needs to have a diverse group of employees who know how to push back on ideas. Open communication is a critical part of figuring out the most innovative and tested solution to a challenge (for more tips on idea sharing and testing, check out this webinar recording). However, if you find it’s nearly impossible to reach a consensus in which everyone can move forward, you likely have a mission and value alignment problem. The problem could be that each employee comes to the table with a deep body of experience and practical knowledge, but they don’t have any guiding values for how that experience and knowledge should be put to use to deliver on company goals. Or maybe it’s that there aren’t clear goals in the first place. In other words, it is experience and knowledge in a vacuum.

Troubleshoot it:

On a day to day basis, when you’re working on a solution for a big picture problem, bring out your company’s mission and values statements and read them as a group. Make checking a decision’s alignment with your mission and values a regular part of problem-solving so that there’s always a clear goal for the way in which you’re trying to solve the problem. It’s not simply “the best solution” you’re aiming for, but the best solution that furthers the unique goals of your organization.

Beyond the day to day problem-solving moments, encourage a widespread organizational culture change by screening for mission and value alignment during the hiring process and organizing team-building and staff appreciation efforts around mission and value-focused themes.

 

Want to dig deeper? Click here for 37 warning signs your culture is heading down the wrong path.

 

Don’t stop with these three scenarios. After all, each of the ten measurable qualities of high-performance cultures can reveal culture-related issues within an organization. It’s up to you to be on the lookout for signs it’s time for an organizational culture change so you can make a plan before there’s a long-lasting impact on your company.

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