8 minute read 23 Feb 2017
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How to achieve cultural transformation and implement core values

By

EY Americas

Multidisciplinary professional services organization

8 minute read 23 Feb 2017
Related topics Workforce Advisory Purpose Trust

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Changing an organization's culture — what people think and how they behave — requires clearly articulated beliefs and principles.

An organization's culture determines what employees consider appropriate behavior and how they interact with one another. It influences how individuals, working groups and the organization plan, execute and manage their work. In this way, it helps determine the speed and efficiency with which work is completed. Culture also helps determine how receptive or resistant an organization will be to change. As we see it, the right culture can equip an organization for success in times of growing volatility and accelerating disruption.

The difficulty of change

Having an appropriate culture is vital, but changing the organizational culture is challenging for numerous reasons:

  • Culture includes both formal processes and informal, unwritten rules: Cultural change requires more than reconsidering official processes and procedures.
  • Culture comprises both mindsets and behaviors: Changing culture is as much about changing what people think as it is about changing what they do.
  • Culture is shared: Culture does not belong to just one group within the organization, such as leadership. Cultural change needs to involve everybody.
  • Culture is self-reinforcing: Every time someone acts in a particular way, it sends out a visible and immediate signal to others in the organization.

EY has an approach for culture transformation and core values implementation that addresses the challenges and is centered on the alignment of the organization’s purpose, vision, core values and behavioral statements.

What is purpose?

Purpose is an aspirational reason for being that is grounded in humanity and that inspires and calls to action. Purpose-led transformation is a journey from purpose definition to purpose activation across the organization. EY’s purpose-led transformation approach is centered on aligning leadership and sharpening priorities, transforming at an agile business pace, mobilizing the full culture and unlocking strategic thinking and innovation. Defining the purpose is the first step in the culture transformation and must be translated into the organization’s vision and core values to be carried out effectively.

What is vision?

The organization’s vision is the underlying value of what an organization brings to its customers that provides meaning to its employees. It creates a sense of direction and guidance into the future and is designed to create enthusiasm, inspiration and commitment.

What are core values?

Core values are a set of statements that explain the organization’s beliefs about people, work and non-negotiable behaviors.

Core values can be considered the “moral compass” that guides employees on how they should perform their day-to-day activities thereby enabling the organization to move in the desired direction. Core values are important because they will fundamentally drive employees’ decisions.

As organizations respond to the competitive pressures in a disruptive market, the culture of the organization must align to support the revised strategy and its purpose.

Organizational core values help employees understand how they should treat one another at work and how they should treat customers and clients. They also help employees understand how the organization intends to achieve its vision and increase its effectiveness.

Reasons why an organization might decide to define or refine its core values

An organization might consider a core values refresh and implementation if:

  • It is undertaking an overarching cultural transformation, such as a purpose-led transformation. Defining and implementing core values can help an organization make its purpose more influential in its day-to-day activities.
  • It is considering M&A. Having an agreed set of values can reduce the risk that divergent cultures pose to potential synergies.
  • It has found damaging or disruptive differences in behavior among divisions or geographies.
  • A change of strategy is needed that requires a change to the prevailing culture and behaviors.
  • It has a problem with low morale and performance issues. The organization may wish to implement core values as part of a general cultural change to address such problems.

Example of EY’s core values and supporting attributes

EY values:
  • People who demonstrate integrity, respect and teaming
  • People with energy, enthusiasm and the courage to lead
  • People who build relationships based on doing the right thing

Having an appropriate culture is vital, but changing organizational culture is difficult.

Analyzing the current state and defining or redefining the values

Whether organizations already have defined core values or wish to build on the current values, they first must consider a current-state analysis of the organization’s culture (e.g., values, behaviors and symbols).

  1. The first step is to harvest existing employee data for key cultural insights. For example, many organizations run regular employee engagement surveys. This data source can provide key insights and trends on organizational behaviors.
  2. The next step is to leverage the above data and run several interviews and focus groups, representing different stakeholder groups across the organization. The sessions are designed to elicit how personal values (e.g., trust and integrity) and organizational values (e.g., collaboration, teamwork and performance) are being lived in everyday work experiences.
  3. The current culture is then analyzed to determine if there are differences between the values lived and practiced at different levels or in different functions of the organization. This is essential to understanding where the baseline is so that going forward, the focus can be to drive greater alignment around a common set of values.
  4. If the organization does not currently have core values or needs to add or remove them based on the organizational context, then the next step is to define them. Typically, this would be achieved through workshops involving the leadership, which are informed by the current state analysis. The aim is to build a narrative that supports each of the values that align with the organization’s purpose and vision, and which need to be easily understood by all employees.
  5. Once the core values have been defined, each value needs to be underpinned by several crisp, specific behavioral statements that can be described in a set of observable actions.

Core values are a set of statements that explain the organization’s beliefs about people, work and non-negotiable behaviors.

Four crucial components

To be effective, the core values should be one of four main components that support the culture:

  • Purpose
    An organization’s aspirational reason for being, which explains why it exists.
  • Vision
    An articulation of the organization’s aspirations, i.e., what it is working toward, not what it is doing now.
  • Core values
    A representation of the core beliefs and principles that should be manifested in the behaviors of every employee.
  • Behavioral statement
    A description of the required behaviors that support the core values.

Implementing core values — making them “sticky”

Once defined, the actual process of implementing the core values involves a project that comprises several stages: lead, align and engage, together with sustainability.

  1. Lead —  The first stage in sustainably implementing core values is about getting the leadership to commit both to implementing and promoting the values and to modeling them through their own behavior. This stage is often the most demanding as it involves working with organization’s leadership during numerous exploratory sessions and having a courageous, bold dialogue about the values. The attitude and actions of the leadership — “the tone from the top” — are a vital factor in the establishment of any cultural change, because leaders provide an example that is followed throughout the organization. Not only must the leaders embrace the core values, they must be daily advocates for them and must manifest them in their own behaviors. For leaders to not only buy in to the core values but to also adopt and demonstrate them is one of the main challenges.

    These conversations with leaders provide an opportunity to build leadership “value stories” to support the culture narrative — these are key to helping everyone in the organization to understand how the core values apply to them.

  2. Align —  The second stage is to understand how far current operations align with the core values and to identify the steps required to bring them into alignment. The align stage involves carefully working through the organization’s relevant policies, processes and procedures to see where these might not align or support the core values, and to identify what must change so that employees, in their day-to-day work, can fully express the values.

    To facilitate a true cultural shift, it is important to identify high-impacted processes and to align these with the organization’s core values. The high-impacted processes are, typically, those that will have a direct effect on employees.

    The organization’s HR processes require careful consideration. For example, the recruitment and onboarding process may need to change so that during the hiring process, candidates who are chosen have personal values that align with those of the organization. At the most basic level, this could mean (re-) defining personality tests based on the core values and desired behaviors, establishing cultural-fit interview questions and core value onboarding materials, etc.

    It is also important, at this stage, to set disciplinary policies and procedures for challenging behaviors that do not agree with the values. Consistency in rewarding the right behaviors and in challenging the wrong behaviors is crucial to any program of cultural change.

  3. Engage  The third stage is to drive awareness of the core values throughout the organization, to explain the journey the organization is on, and to encourage the adoption of new behaviors and new mindsets. Employees at all levels must understand how they can meaningfully live the core values in their day-to-day activities. The aim of the engage stage is to get to the point where the employees’ minds and hearts are engaged and employees are fully aware and equipped to exhibit the desired behaviors in their day-to-day work.

    One important component of the engage stage is the design and execution of the engagement strategy. The engagement strategy is built on the organization’s culture journey and a narrative that is applied to the design of the interventions. The aim is make the core values “real” for everyone by implementing interventions that are focused on engaging the mind as well as the heart.

    Examples of interventions are culture lectures, animated core value infographics, town halls and roadshows, value stories and experiences from employees for employees, core value recognition programs and core value quizzes and games.

The role of middle management is often overlooked in cultural transformations, but they play a critical role in making the decisions and statements of the leadership meaningful for employees at all levels.

Engage: core values ambassadors

An important step in the engage stage is the identification of core values ambassadors — employees from all areas and functions who are highly engaged with the organization and who are interested and receptive to change. These ambassadors form a network that:

  • Acts as the voice of the organization — telling us what works and what does not
  • Helps design and implement the engagement strategy
  • Provides role models and influences other employees to act as coaches on the ground

It is particularly important to include members of middle management as core values ambassadors. The role of middle management is often overlooked in cultural transformations, but middle managers play a critical role in making the decisions and statements of the leadership meaningful for employees at all levels.

Sustainability

Continual measurement of the culture is needed to ensure that it continues to improve.

The aim of the implementation process is to define and establish core values that will serve the organization for the rest of its existence. However, the completion of the initial implementation in no way marks the end of the work that needs to be done. Continual measurement of the culture and of how the core values are being translated into action is needed to ensure that the culture continues to improve and that the desired outcomes from the cultural transformation are delivered.

The reward will be that employees are more aware of the organization’s purpose and how they can contribute to achieving it.

A challenging but rewarding process

Implementing core values is a complex and challenging process. It requires an effort from the whole organization — an effort that must continue long after the initial implementation is complete. This may seem like a great deal of work, but the reward will be a strong, purpose-led organizational culture that creates competitive advantage and value by achieving its objectives and long-term vision in this volatile, uncertain, complex and ambiguous environment.

Summary

Implementing core values isn't easy, but the reward is a strong, purpose-led organizational culture that brings a competitive advantage.

About this article

By

EY Americas

Multidisciplinary professional services organization

Related topics Workforce Advisory Purpose Trust