Developing a positive culture where people and performance thrive

By Marcella Bremer and Kim Cameron

Do you need your team or organization to be more engaged, innovative, competitive, agile, collaborative and productive? Can you contribute anything to a positive culture at work? Well, you can do more than you might think, as shown both by research and practice! Whether you are a leader, a consultant, or an employee. 

That's what Marc

• Language: English
• Publisher: MARCELLA BREMER
• Release date: Dec 20, 2023
• ISBN: 9789081982566

Book preview

Part 1

WHAT & WHY of Positive Culture

Chapter 1

What is Culture and why does it matter?

What is culture? You probably know more about it than you think. If you go back to your first real job after graduation, what was your first impression? And did that prove to be true? What did you like and not like about working there? Maybe the job itself wasn’t fancy, but how was the atmosphere? How did your coworkers treat you? What stood out? Was there something you had to get used to?

Your answers are all clues about culture. Let me share mine. Fresh out of Rotterdam School of Management, an acquaintance asked if I would be interested in working with the Dutch Army. The Restructuring Project Bureau had to transform the Army on an ambitious timeline. The 40,000 Army staff must be downsized and changed into a modern workforce.

The mandatory military conscription for every man stopped, and the Army had to switch to only professional personnel. Now that the Cold War was over, the focus shifted to flexible multinational peacekeeping and peace enforcing operations anywhere in the world, instead of defending national borders and the enemy from the East. That was huge, after decades as an uneventful hierarchy.

The Bureau had to redesign and downsize units, reorganize processes, negotiate the change with the unions, relocate staff, and communicate this transition to get everyone onboard. They needed an editor to create an in-company magazine to inform the staff. (This was in the pre-Internet days).

My major was Change Management, I loved writing, and I needed to get my career started, so why not? Two days later I met the charismatic general who led the Bureau. After a 30-minute conversation, I was hired in a hurry.

My first deadline would be in a month. After my first week, one of the last conscription lieutenants who graduated as a journalist joined me. We knew no one and didn’t know the organization, but they hoped we could do it. We started from scratch, staying late and hoping the guards wouldn’t lock us in for the night. We published our first magazine and quickly learned their adage Just Make it Work (Arrange That in Dutch) abbreviated to Romeo Delta in army jargon.

The culture was dynamic, hands-on, and driven by results. The hard work was palpable in the corridors where coworkers hurried with files. Office doors were open, and people were making calls, gathering for short meetings and working long hours, and then going to the pub together to unwind. We had short lines and fast response times. We did sports together during lunch breaks to stay fit and keep up with the pace.

We had an extreme results-orientation and worked around hierarchical boundaries if necessary. In spite of this workload, we enjoyed a deep comradeship, in spite of diversity in age, education, gender, and domestic situations. Some of my thirty coworkers were middle-aged officers with families, others were young men fulfilling mandatory conscription time, some were progressive civilians, of whom four editors and the head of Communications.

The culture was open and accepting, as long as you delivered what you promised according to Romeo Delta. There was no slacking. Newcomers were welcomed to alleviate the workload. Next, we focused on commonalities to get things done.

What stood out for me is the excitement of the challenges, the comradeship, and my professional autonomy to Just Make it Work. Romeo Delta!

So, culture makes things work, or the opposite. Lou Gerstner, the former CEO of IBM, concluded, Culture isn’t just one aspect of the game – it is the game. Nothing in business is more valuable than a powerful culture. It took me to age 55 to figure it out, but the thing I have learned at IBM is that culture is everything. [1]

John Stumpf, the former CEO of Wells Fargo, even said, It’s all about culture. I could leave our strategy on an airplane seat and have a competitor read it, and it would not make any difference. [2]

The culture determines what happens, not what is written down. Wells Fargo’s culture apparently stimulated shady sales tactics, and Stumpf had to step down.

As the adage goes, Culture eats strategy for breakfast. You can make plans but what people do on a daily basis is the culture. Most people are intuitively aware of this. A Booz & Company Survey found that a stunning 96% of people believe that culture change is needed in their organization in some form, and 51% think that they need a major culture overhaul. [3]

That is impressive. So, what is this phenomenon that can help or hinder your organization?

1.1 What is culture?

Culture happens when people get together. It entails the shared worldview, values, beliefs and behavioral norms of the organizational members. Thus, it determines what they see, how they think, feel, decide, and the way they do things around here. People are not always aware of those values, beliefs and behavioral norms, they simply copy the others and adapt to fit into this collective context and to be accepted.

There’s a lot of academic research on culture, and we’ll look at some to better understand our organizations. We’ll discuss the best-known culture models and their developers. For instance, Hofstede and Schein, who define culture as follows:

Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values., Geert Hofstede [4]

Culture is the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic ‘taken for granted’ fashion an organization’s view of its self and its environment., Edgar Schein [5]

As you can see from these definitions, culture is rather holistic, it permeates everything. That’s probably why it has a bad name. It seems elusive as there is not one button to push and a crucial part of culture is invisible and therefore often dismissed as soft.

But culture produces hard results as it affects performance, retention, innovation, agility, competitiveness, profits, and so on. It can keep your organization stuck, or give it wings. This is the business case for working with culture, this is why it matters.

Tony Hsieh, the famous CEO of Zappos, even put it this way: For organizations, culture is destiny. [6]

1.2 How deep does culture go?

So, how deep does culture go? It is more than the popular working definition: The way we do things around here. It is the whole of organizational identity, beliefs, competencies, behaviors, and environment/effects.

Culture is partly visible on the outside. When you enter a building, you get a glimpse of corporate culture from what you see – how the office looks and what people are doing and how they treat you. But it’s not the whole story.

The biggest part of culture is not visible: How we think and feel about things around here. It reflects the identity of the organization, the assumptions, shared values, and priorities, what is okay, and what is not. It holds the past, present, and future potential of the organization.

Culture as an Iceberg

Culture as an Iceberg

In the often-used iceberg metaphor, you can see the visible behaviors above the waterline and the beliefs below. Both are important, and if you want to change the culture, you need to work with both beliefs and behaviors (We’ll get back to this).

Thinking about culture, does a typical behavior in your organization come to mind?

Is there a typical belief that people share, about coworkers, bosses, competitors, customers, suppliers?

To explore your culture, it can be helpful to finish a sentence. In our organization, we always... We never...

If you write down what comes to mind, without thinking too much, you’ll get a list to work with later on. This is an exercise to fill a paper with as many behaviors and beliefs as possible without judging or criticizing.

In the Army Bureau culture, we would have finished those sentences as, We always deliver what we promise, and we make it work. We never let down our colleagues, they can rely on us.

Schein’s onion model

Edgar Schein, emeritus professor of the MIT Sloan School of Management, developed the famous onion model of culture with three levels, from visible to outsiders to very implicit and invisible.

Culture consists of:

Artifacts, visible manifestations of culture: symbols and behaviors that you can see, hear and feel. Think of the office furniture, dress code, logo, actions and interactions, the structure, mission statement, procedures, etc. An outsider can observe this level, and it can be changed. It is palpable and what people do.

Espoused values, statements of culture: the shared values of the organization members, the standards, rules of conduct, the strategy and priorities. The heroes in corporate stories, who are role-models. Rituals. An outsider has to ask the insiders to understand the meaning. It is harder to change. It is what people say and explain.

Assumptions, tacit or even unconscious beliefs of culture. Here we find the deeply embedded, self-evident, often unconscious assumptions about the world, the organization, about leadership, competition, and so on. These are often hidden, also for the insiders, but they influence decisions and behaviors. They are the hardest to change. It’s the subconscious, hidden identity, and worldview.

Can you identify typical artifacts in your situation, whether it’s your organization, sports club, sorority, family, or another group that you are part of?

In the Army Bureau culture, there were military artifacts, of course. But other than that, there wasn’t much decorum or status symbols. Doors were open and people accessible, regardless of their ranks.

Saying the phrase, Romeo Delta, was a ritual that outsiders didn’t understand without an explanation. It confirmed the espoused value of making sure to get things done, no matter what happened.

Our tacit assumptions had to do with Army camaraderie; it went without saying to always look after colleagues. Another one concerned the ranks: we felt safe under the wings of our charismatic general who would cover us if needed.

Edgar Schein’s Onion Model

Edgar Schein’s Onion Model

The logical ABCDE levels

Another way to comprehend the depth of culture are the logical levels of reality, developed by Gregory Bateson and adapted by Robert Dilts. [7] I adapted these levels to understand culture in more detail. Culture can be seen as a circle that runs deep and ripples wide.

Identity – Who are we? Why are we here? Self-image, our mission, and purpose as an organization.

Beliefs – What do we Believe? What do we value and prioritize? Shared values, norms, convictions, assumptions and feelings in our organization.

Capabilities – What are our Competences? Skills, resources, planning and people of an organization – our shared potential.

Behavior – What do we Do? Services, processes, products and structures of an organization. Actions and interactions. This is mostly visible.

Environment or the Effects of our behaviors – What do we effect? Looking at our building, our market, our clients? What outcomes do we create?

The Logical Levels

The Logical Levels

In short, culture entails:

A, we Are – Identity;

B, we Believe – shared values, norms, feelings;

C, we Can – the capabilities, people, and resources that make up our potential;

D, we Do – our actual behavior (action and interaction), services and processes we follow;

E, we Effect – our results, what we bring about.

In the Army Bureau culture, our identity was the wake-up squad for the armed forces. We believed in transforming the Army to a modern, flexible force that contributed to national and international peace and defense. We believed in camaraderie and getting-things-done. Trust and reliability were crucial and daily affirmed by delivering what you promised. We developed our competencies on the go and what we worked hard and creatively bypassed obstacles. We didn’t need supervising from the general to work hard because we believed that we could never let colleagues down. The Army were our 40,000 coworkers. The effect was that we made our deadlines and the Army was reorganized.

On the inside of the circle are the invisible elements: identity, beliefs, and capabilities (the potential things we can do even if we don’t actually display them).

The D-level of behavior is visible on the outside: The way we do things around here. This produces effects that can be seen and measured on level E. If not enough people change certain behaviors, then there is no organizational change.

The D-level of doing is crucial, but so is the B-level of beliefs. If people don’t really believe in the change or if it somehow conflicts with their world view, there won’t be long-term, sustainable (culture) change. People are bound to go back to old habits when the reward is taken away, or the boss is no longer looking. That’s why we must always work with the inside and the outside of culture, above and below the waterline.

Ken Wilber’s Four Quadrants

This is nicely reflected in Ken Wilber’s Integral Theory that describes four areas to change human systems. [8]

Internal, individual—personal values and beliefs (top left quadrant) lead to:

External, individual—personal actions and behaviors (top right quadrant)

Internal, collective—cultural values and beliefs (the bottom left) lead to:

External, collective—social structures, systems, processes, behaviors as a result of the culture.

In an organization, the values, beliefs (top left), and behaviors (top right) of individuals influence the values and beliefs of the collective. This collective culture (bottom left) results in the behaviors and outcomes of the collective (bottom right).

If we want to develop a positive culture, we need to engage all four quadrants.

1.3 Why is culture so crucial?

As culture runs so deep and wide, it is about everything. It impacts most aspects of organizational life. You can see that in the diversity of reasons why my clients work with culture.

Some are doing okay (they survive) but want to achieve the next level and thrive. Some need to merge and have to learn to work together. Some display symptoms such as attrition, high absenteeism, or conflicts between departments that call for a culture check-up. Others need to respond to a new competitor or new technology to stay in business.

The commonality in these different reasons is change or adaptation. The way we do things around here is no longer effective and it must change to keep the organization healthy. In that case, it is wise to work with culture, so culture doesn’t work against you.

Maybe you hear an inner or outer voice saying:

Culture? How people think and feel? Let’s get back to business. Give them training to inculcate efficient behaviors if we must to increase performance. But let’s not get into this soft stuff.

The mechanistic mindset

This response is based on the mechanistic-materialistic view of organizations as machines that can be managed. In this view, leaders are the engineers that program and control the machine in a top-down way and measure material inputs, resources, money, products, and profits. It’s almost as if what we cannot see does not exist, even though invisible processes cause palpable effects. We’ll look at this mindset in paragraph 1.7, but for now, I have a simple question: Do you believe that electricity exists? You probably do. Even though you can’t see it, you can switch the light on. Culture is just like electricity. It is not completely visible, but it is the switch to organizational performance, innovation, change-readiness, employee retention, and engagement. It can either help or hinder organizations.

For some people, this makes intuitive sense. It corresponds with what they know from experience. Like the 84% of the participants of the Katzenbach Center study who believed culture was critical to business success! [9] That is a convincing majority.

But if you’re feeling skeptical or if you have to sell the importance of culture to critical others, let’s look at some scientific evidence. Many researchers have worked hard to analyze, understand, and measure organizational culture and its effects.

Is the mechanistic mindset recognizable?

Does your organization feel skeptical, dismissive, or open about culture?

Regarding culture, what are you afraid of?

What do people believe and value? What are criteria that should be met before your organization is willing to work with culture?

Culture determines organizational performance

Is there proof that culture determines performance? A landmark is the ground-breaking study of Professors John Kotter and James Heskett in their book Corporate Culture and Performance. [10] They studied at the corporate cultures of over 200 companies (including Hewlett-Packard, Xerox, ICI, Nissan, and First Chicago) and tracked their economic performances over an 11-year period. What they found is fascinating. They describe how shared values and unwritten rules can enhance economic success or, on the other hand, lead to failure to adapt to changing markets.

Organizations with strong company values increased their revenue on average to 682% over 11 years. Companies without a strong culture grew to just 166%.

Net income grew by 756% compared to a 1% and stock prices grew to 901% compared to 74% for the companies lacking a strong corporate culture.

Heskett [11] says that effective culture can account for 20-30 percent of the differential in corporate performance when compared with culturally unremarkable competitors.

Several other researchers looked into organizational performance, using a balance of financial and non-financial indicators [12]. Financial indicators are profits and revenue, for instance. Non-financial factors are job satisfaction, the error rate, quality and customer satisfaction.

Organizational culture was found to directly impact the non-financial factors that contribute to organizational performance.

Kim (2005) demonstrated the positive relationship between factors such as job satisfaction, organizational commitment, and performance.

Organizational culture is indirectly related to financial performance indicators because variables such as employees’ skills, and productivity may interfere.

Job satisfaction

Let’s look at job satisfaction as a measure of how happy individuals are with their workplace and career. Pearman (1998) shows that job satisfaction influences personal development and teamwork and is thus critical to an organization’s success. According to Engleza (2007), satisfied employees show more productivity. Akerlof (1988) found that satisfied employees have more commitment and loyalty toward their organization.

That’s nice, but what culture type do you need to enhance job satisfaction and thus organizational performance? The answer is a supportive, people-oriented culture where people participate in decision making, and training and coaching. An example is the Collaborate Culture type that we will discuss in Chapter 3.

Error rate

Errors also affect organizational performance. They may cause a high lead time and faulty products. Research shows that a reduction in errors is due to the implementation of an effective organizational culture (Dellana, 1999; Al Halifa, 2000; Kozlowski, 2000; Gregory, 2006).

Cultures that encourage open discussions can improve understanding and develop effective error management. In cultures that consider errors a natural part of learning employees are more likely to learn from their coworkers’ errors.

Quality and customer satisfaction

Product and service quality is often defined as conforming to specifications and meeting customer expectations (Beverly, Diane & Wang, 2002). The higher the quality, the higher an organization’s performance in the long term. Cultures that focus on people, learning and development, have a direct effect on quality according to Zu, Robbins and Fredendall (2010), Yilmaz and Ergun (2008) and Hartnell (2010).

A people-oriented culture aims to involve both customers and suppliers in their daily activities (Hartnell, 2010) that helps to receive feedback from customers and maintain good relationships.

Customer satisfaction is closely related to quality. It is a measure to what degree the services or products meet the customer’s expectations (Kotler, 2002). Taylor and Baker (1997) found that a satisfied customer is likely to engage in repeat purchases.

There is a positive relationship between a people-oriented culture and customer satisfaction (Hartnell, 2010, Zu, 2010, Gregory, 2009). Such a culture values teamwork and attention for people.

The evidence is clear: culture plays a major part in organizational performance. Culture shapes the behaviors that produce the collective results of our organization.

Recruitment

It’s no surprise that culture influences employee recruitment, engagement, and retention as well. The Talent Board’s research [13] indicated that 41% of all candidates search for information about a company culture before they apply. Culture is a screening tool in recruitment, especially in our social media era where inside information is easily shared online. Through websites such as Glassdoor employees publish information, what is it really like to work here? In the old days there could be a gap between a company’s image as projected by marketing and PR and every day organizational reality. Today’s organizations can’t hide or fake much.

On top of that, candidates behave more like consumers, especially in job markets with a shortage. An appealing culture gives organizations an advantage as it attracts and retains the right employees. It works just like a magnet.

Google [14] is famous for its culture. The company regularly researches what makes people productive and happy, and implements what works well.

Other famous examples are Southwest Airlines’ culture of customer service and fun, Apple’s culture based on love of innovative technology, and Zappos’ culture based on the WOW-philosophy to dazzle their customers. Zappos believes that their random acts of kindness and fun traditions, their mission, and attitude towards customers create a culture that is a key driver of their growth.

Most of the companies in the Fortune Best Places to Work list have a strong focus on culture, which makes it easier to recruit and hire. Culture humanizes an organization with personality and communicates who they are, why they do what they do, how, when, and where.

In addition, people tend to hire people who are like them because it’s easier to trust and like people who resemble you. This way, they further reinforce the culture.

Employee engagement

According to Bersin by Deloitte [15], 95% of employees say that culture is more important than compensation. That aligns with the changing mindset of highly-educated professionals, amongst whom many Millennials, who no longer operate on an industrial-age paradigm. In our developed economies, we’ve risen to the upper levels of Maslow’s Hierarchy of Needs. With many material needs secured, we don’t work for just a paycheck; we want to contribute. As Daniel Pink showed, what drives people is mastery, autonomy, and purpose. They want to learn and become better at what they do, enjoy professional autonomy and contribute to a meaningful purpose. [16]

The annual employee engagement and satisfaction surveys may lead to improving some perks and work conditions, but real engagement is built daily by how people work together: through culture. One intervention to boost engagement won’t fix the issue.

You might have heard of the infamous Gallup research [17] that claims only 13 percent of the global workforce is highly engaged. More than half the workforce would not recommend their employer to their peers. Gallup also calculated that engaged people are 30% more productive.

This is why employee engagement and culture are currently the number-1 challenge around the world (study by Deloitte) [18]. An overwhelming 87 percent of respondents believe the issue is important, with 50 percent citing the problem as very important.

However, the study also describes how ill-prepared organizations are. Only 12 percent believe their organizations succeed to drive the desired culture. Most executives cannot define their organization’s culture, much less figure out how to disseminate it through the company. Luckily, you read this book, so you will be among those who know what to do.

The five keys to engagement according to Josh Bersin by Deloitte [19], are meaningful work, hands-on management, career and growth opportunity, a flexible and humane work environment, and trust in leadership. That aligns with Pink’s mastery (learning and development), autonomy (flexibility) and purpose (meaningful work). It also corresponds with other research that showed that supportive, people-oriented and entrepreneurial culture types are the best to engage people.

Great Place to Work® [20] found the same when they studied organizations. A great workplace has a high level of organization-wide trust. There’s evidence that high-trust cultures are a strategic advantage as their stocks do 2-3% better than the market average, turnover rates are 50% lower, and they consistently show higher levels of innovation, customer satisfaction, organizational agility, and employee engagement.

Retention

Employee retention is vital to keep knowledge, skills, and best practices onboard. The recruitment and on-boarding process are costly, and if turnover is high, it weakens the culture.

There’s a ton of research but let’s see one example. John Sheridan [21] investigated the retention rates of 904 college graduates hired in six public accounting firms over a six-year period. Those organizations had different cultures with a significant effect on the rates at which the new hires quit their new jobs. These cultural effects resulted in over six million dollars in human resource costs between firms with different cultural values...

Innovation

Innovation is an important topic as it influences organizations’ long-term success in dynamic markets. Innovation calls for learning, risk-taking, experimenting, and creativity. These behaviors are enhanced or inhibited by different organizational cultures. A Spanish study (Naranjo, Jimenez, Sanz, 1995) [22] showed that an adhocratic culture type is the best innovation and performance predictor. This culture type values innovation, entrepreneurship, individual freedom and autonomy, flexibility. We will look at this culture type in Chapter 3.

Rune Ellemose Gulev [23] found that interpersonal trust, self-direction and purpose, and a feeling of safety and job security are helpful to stir innovation. Creative breakthroughs are seldom achieved alone. Interpersonal trust facilitates the sharing of knowledge and people don’t fear negative judgments from coworkers or leaders. Culture makes the difference to innovation, for good or worse.

John Kotter [24] describes the failure of Kodak to keep up with technology that eventually led to their bankruptcy, while competitor Fuji succeeded. Kodak’s culture had become complacent, especially the leaders. Kotter observed: Of course all the people buried in the hierarchy saw the oncoming problems and had ideas for solutions but made no progress. Their bosses and peers ignored them. Even though Kodak’s culture used to be open, curious, and innovative, it was muted by managers who thought they knew better. They managed the business as usual and missed the boat.

If you need to implement a new software building approach, culture matters too. IT-consultant Christiaan Verwijs [25] states that implementing Scrum (the agile IT-development method) is not a matter of changing your method but changing your culture. You can go through the motions and push people to use Scrum, but it won’t last when you don’t embrace Scrum’s underlying values and beliefs. Such as valuing mistakes as an opportunity to learn and putting the team’s collective intelligence above that of individuals. If the culture stays risk-averse, no one will volunteer to share helpful mistakes.

Mergers & Acquisitions

The failure rate for mergers and acquisitions sits between 70 percent and 90 percent, according to a recent Harvard Business Review report [26]. There are many reasons why, such as mismanagement of risk, price, strategy, cultures, or management capacity.

In my experience, culture is a major reason. Many mergers look great on paper. But the reality may be different. Think of the troublesome mergers between Daimler-Chrysler, Novell and WordPerfect, HP and Compaq, and much more. Looking back on the merger between AOL and TimeWarner, Richard Parsons, president of TimeWarner admitted, I remember saying that life was going to be different going forward because they’re very different cultures, but I have to tell you, I underestimated how different... It was beyond certainly my abilities to figure out how to blend the old media and the new media culture. [27]

It is surprising that most organizations check their cultures after they have merged, instead of in advance. I once consulted with five mental health care organizations who had merged into one regional organization. It was complex because of their differences in size and culture, and their prejudice about each other. As they’d been working in the same region for a long time they had labeled each other. The organization with 1200 staff were called the bureaucrats (which indeed described their culture). Two other organizations of about 400 people each were called the hippies because they appeared (too) relaxed. The remaining two were non-descript, which was even worse. The others felt indifferent about them.

During our culture work after the merger, the different health care professionals discovered that they had more in common than they had assumed so that built some unity. But they also shared substantial distrust of the board who had decided on this merger. Many couldn’t identify with the huge organization after the merger, so much so that they didn’t care what logo they wore as long as they could help their patients. The new organization didn’t create an engaging, shared culture after the merger.

Organizational change

Organizations face continuous challenges that make change necessary. Change has become a core competence in many markets, but organizations are notoriously bad at it.

You have probably heard of the 70% failure rate of organizational change. Even though this exact number is debated [28], everyone agrees on the complexity of change processes and how often change fails or doesn’t meet expectations and objectives.

I have seen the waste of time, money, energy and motivation that that causes. It can also damage people’s belief in their competence to change, reinforcing limiting beliefs such as "Nothing will ever work