Get to the front line to work out the critical few behaviours that transform culture

Dec 06, 2018

0 comments

by David Lancefield Partner in PwC's Strategy&

Email +44 (0)7712 140560

by Sarah Isted Partner

Email +44 (0)7834 251 939

Accepting change, or the need for it, is never easy. Especially if you feel it’s being presented to you in a “top down” fashion.

That’s perhaps why, when a client of ours recently presented a 50-page “case for change” to its middle management team advocating the need to improve customer service, few of the people in the room were sold on the idea. When it became obvious, some weeks later, that these managers were not actively supporting the change, the response from senior management was to present more analysis. Still, nothing changed.

Yet when we encouraged the middle managers to go to their customer contact centre, the results were quite different. They began by listening carefully to the issues raised by their customers. Then they encouraged their team members to come forward with ideas for how they can do things better. This created a buzz, especially when they captured the ideas visually around the contact centre. We also encouraged senior management to experience the change in culture for themselves. The results were palpable: raw emotion, greater enjoyment.

The result flowed through to financial results too, which showed an improvement in customer retention rates, a 70% increase in productivity, and a 20% reduction in the number of overdue invoices. This “experiment” became the catalyst for a programme of culture change across the organisation.

The lesson was that being presented with hard data appeals to the rational brain but not the emotional one. Speaking directly to customers, however, gave these managers a visceral understanding of the customer service challenges the company faced. In the words of neuroscientist Donald Calne, the big difference between emotion and reason is that emotion leads to action, while reason leads to conclusions.  The emotional jolt the middle managers experienced through talking directly to disgruntled customers was enough to open their eyes to the need for change, and committed them to action.

Personally experiencing and understanding an issue, hearing the gripes of those on the front line, and learning first-hand how transformation will bring meaningful change, is a key ingredient in any transformation. All too often, it can be overlooked. It’s about addressing the cultural side of the transformation, not just issuing the marching orders and communicating the mechanics of how it will work – especially to middle management. To put it another way, if you can’t show managers the problem, then show them a live example of the solution (e.g. through site visits), or tell them a story that will move them emotionally, then you may fail to make your case.

Building your case for change around an emotional experience, and employing the purposeful connection, makes questions like “what’s in it for me?” far easier to dispel, and breeds life into an informal network of “change champion” managers, to speed you on your way to a successful transformation.

When you transform the culture of your organisation, you are changing the way people act and interact. These people are filled with emotion, responsive to experience, and driven by purpose. And harnessing these three powerful levers is the often overlooked secret to a successful transformation. The way your middle managers and frontline buy in to change is about to undergo a paradigm shift.

So what empirical basis do we have for saying this? And what does it mean for leaders managing a transformation in the UK in particular?

A recent global study by the Katzenbach Center, our Strategy& centre of excellence in organisational culture and leadership, looked at the relative importance of organisational culture and cultural change, in the context of rapid change and transformational needs.

Over half of organisations surveyed (more than 2,000 of them, and most in financial services, software & services, energy, telecoms and the not-for-profit sector) had seen their cultures change. Fifty-six per cent of UK respondents have seen their company’s culture change over the past five years, while 72% feel their culture must change significantly, or a fair bit, over the next three years in order to succeed, grow, and retain the best people. This compares with 82% of respondents across Europe.

Combined with our own quantitative insights, a challenging picture is emerging for organisations hoping to successfully transform their culture. UK organisations have an especially high hurdle to jump: a quarter of UK organisations who attempted a transformation in the past five years failed to follow through. While culture is on the agenda generally, it is less prioritised in the UK. In Europe, 82% of respondents felt that culture must change “significantly” or “a fair bit” in order to succeed, grow and retain the best people. In the UK the proportion was 72%. When a culture change was attempted, it failed more often in the UK than globally on average (31% for the UK; 23% globally; 15% for the US).

Here was a key finding for us: When engaging in cultural change, lack of middle management and frontline involvement was a particularly big issue in the UK (29% vs. 10% globally).

Why the different read-out for the UK? One clue may lie in the way it seems many UK organisations tackle culture change: incrementally. Seventy-six per cent of UK respondents said they fixed problems as they appeared, compared with 68% globally. Eighty per cent pursue small, incremental changes, compared with 71% globally. In other words, there is a tendency in the UK to pursue small incremental improvements over large revolutionary change.

Does this hint at an unwillingness, or lack of confidence, to tackle culture change head-on? Could it be an element of the famous British reticence at play here? It was also noticeable in the UK findings that cultural change is more often triggered by a change in leadership or a financial event in the UK (52%) than anywhere else (45%, global). In other words, cultural change often seems to come when it’s forced on an organisation in the UK by an external event, than developed organically.

There are solutions here. While a number of approaches are helpful to review what’s going wrong - culture diagnostics, governance reviews, talent management frameworks - making practical changes requires the emotional engagement of managers, which does two things.

One, it provides a tangible experience for how those in the business should adapt their behaviour to work within a new system of incentives and processes that’s being proposed. No matter how well aligned your business is on paper, in reports and policies, you won’t align your teams behind new ways of working unless they experience them, and the implications for how they need to operate. The power of experience also activates what London Business School professor Dan Cable calls our “seeking systems”, leaving us more “motivated, purposeful and zestful”. 

Two, it generates a sense of purpose. This is important because if we seek the connection between what we are doing and the effect it’s having then we are more likely to feel a sense of purpose in the enterprise. This reflects what Wharton professor Adam Grant calls the “purpose connection”, meaning providing an emotional experience that creates buy-in from those in the middle of the business. It’s about improving belief, engagement, commitment, and results.

We think these two aspects are crucial in narrowing a culture gap that the Katzenbach Center survey exposed: only 48% of non-managers believed culture was a priority on the leadership agenda, compared with 70% of C-suite respondents. This culture gap, even more pronounced in the UK (88% vs 57%), is creating a gulf in trust and priorities between leaders and their employees. 

There are five actions, informed by the quantitative insights in our survey, that every organisation should take to help narrow that culture gap:

  1. Address where your culture and operating priorities clash, and align them. 
  2. Challenge and foster healthy debate and real feedback from people across departments to gain a true understanding of the culture at your organisation. 
  3. Identify the ‘critical few’ behaviours that will help shift your culture.
  4. Show your people that you’re committed to evolving your organisation’s culture by demonstrating the critical few behaviours yourself.
  5. Commit to culture as a continual, collaborative effort to create sustainable change and seek to measure your success in achieving this change.

Do get in touch if you’d like to discuss how we can help you. 

With thanks to Jeremy Grant for his editorial input and Thijs Kramer for his research and analysis.

by Sarah Isted Partner

Email +44 (0)7834 251 939

by David Lancefield Partner in PwC's Strategy&

Email +44 (0)7712 140560