Executing culture change is notoriously difficult: 62 percent of attendees at Criticaleye’s HRD Retreat said that leadership teams often lack the capability to deliver it. The difference between success and failure can lie in the ability of senior executives to set out a clear vision, which will help bring employees along with them, and to build the right organisational structure.

Charlie Wagstaff, MD at Criticaleye, said: “Many leadership teams feel ill-equipped to deal with culture change. The problem is, it’s so difficult to pin down in the first place. What’s clear is, you can’t separate the business change from the culture change. It’s about delivering your new strategy and ways of operating, while making sure you've got the right behaviours in place.”
Criticaleye’s HRD Retreat 2018 was held in association with IBM, Personal Group and Legal & General Investment Management. It featured the following expert panel, answering questions on how to lead organisations through culture change:
Mark Scanlon, CEO, Personal Group: Mark joined the publicly listed company six-years ago. It was trading successfully, but it’s founder had recently left. He presided over the modernisation, diversification and planning for the future that were required. 

Kathryn Pritchard, Chief People Officer, ODEON Cinemas Group: Kathryn joined ODEON three-years ago as part of a turnaround team for the private equity-backed business. Since then, it has been through three stages of culture change: preparation for sale; post-transaction integration; and the purchase, and further integration, of Nordic Cinema Group.

Quintin Heath, HRD, AB Sugar: Quintin took up his position in 2010. In 2017, there was regulatory change in Europe that obliged the sugar manufacturing business to fundamentally shift how it operated. It needed to become more outward-looking and develop closer relationships with its suppliers and markets.

Q: What needs to be in place at the planning stage for culture change to succeed?
Mark: You need to set out on the culture change journey with a clear idea of what you want to achieve. You must create a strategy and clearly articulate your vision, as this will help you to bring your employees with you.

Quintin: One thing that’s really important is the plumbing of the organisation. You have to look at the actions that people take within the business on a day-to-day basis, as these reflect the company culture.

Seventy percent of what people do at work is habit, so you have to get an understanding of what those habits are and then act to change them.

Q: How do you assess whether you have the right leadership capability in place?
Kathryn: I hear a lot of people saying they don’t have the right leaders. For us, there was very little time in phase one: we had to sell the business and make it profitable. We took the leaders we had and created the change we wanted to happen.

We set out with a clear end in mind and people rose to the challenge.

Q: What practical steps have you taken to bring about change?
Mark: The first thing we did was a customer engagement programme (we’ve now had three). We ran a training programme: we changed the values; the appraisal process; and we educated people on how to interact with each other.

We also established a customer service department – we didn’t have one – so there were some real fundamentals that we had to do. That was the what, but we also focused, probably disproportionately, on the how.

Kathryn: We had to get people-orientation and quality into the way we dealt with our colleagues. But we’ve got three hundred sites and very dispersed general managers.
The way we’ve done it is through product. We reviewed all the key products in the HR suite: everything from performance management, bonus schemes, recognition schemes and recruitment. We spent a lot of time getting the design, quality and sentiment of those products right. That gave the message we were taking the change seriously.

Q: Does using formal change agents work?
Mark: Having set the strategy, we profiled all our managers and spoke to them. We then made a list and invited them to be at a certain location at a certain time and not to tell anybody. They were told that they were the advocates we wanted to help us embed the change. There was theatre in that, but if it hadn’t been authentic it would have failed.
Quintin: Back in 2010, the UK business deliberately recruited people to create change. But those people said they found the business very different to the previous places where they had worked and for them it was a really gruelling experience.

The lesson is: when you bring people into an organisation, they need to be supported. As part of this, they need to be encouraged not to disrespect the old. Culture change is a process of blending the old with the new – integrating the new strategy with the traditions of the old organisation.

Q: Why do change programmes fail?

Quintin: In the UK we did work around alignment: held big workshops; changed the values; put them in performance reviews, but when I did in-depth research, I found that little had changed.

However, in China, they did all that work, but also retrained people on the frontline, changed some of the team, put in new KPIs, changed the budgeting process: it was messy, but it succeeded. So, I compare the two: the traditional way, which most of the literature says will fail 70 percent of the time, and the way where you do the values and behaviour work, while at the same time building new processes underneath. In my view, the approach that does both is far more successful. That is what gets people to put the new culture into action.

Kathryn: You don’t just set about culture change, you have a vision and a strategy that you need to achieve, and you are creating a culture in service of those things.
There’s a sense in which the culture change doesn’t succeed or fail. It’s your strategy and business outcomes that are either met or not met. You are delivering a set of business performance metrics to your stakeholders and you either achieve those or you don’t.

Q: How do you know when a new culture has bedded in?
Mark: When you hear the values coming back to you in normal parlance, that’s the moment you know culture change has landed. It’s when people start to go with the flow and add to what you’ve done.

Emma Riddell, Senior Editor, Criticaleye
Next Week’s Community Update will look at The Relationship Between the HRD and the Senior Leadership Team.