Peter Finkelstein MDDirector of Action Learning, Stanford Graduate School of Business, California

Changing the Culture in your Organization

Mgt 101: Organizational Alignment

2

Executive Leadership• Behavior• Information• Symbolic action

Strategy• What work are we in ?• How will we succeed ?• What’s our vision ?

Strategy• What work are we in ?• How will we succeed ?• What’s our vision ?

Critical Tasks• What specific tasks have to get done to implement the strategy?

Critical Tasks• What specific tasks have to get done to implement the strategy?

Culture• What are the norms, values, attitudes, and behaviors needed?

People• Do people have the nec- essary competencies?• Are they motivated?

People• Do people have the nec- essary competencies?• Are they motivated?

Formal Organization• Structure? Controls?• Rewards? Careers?

Fit Performance

How do we needpeople to behave in order to successfully execute our strategy?

How do we needpeople to behave in order to successfully execute our strategy?

3

Where Does Control Come From?

4

“Control comes from the knowledge that someone who matters to us is paying close attention to what we do and will tell us when we are doing well or poorly.”

Culture is a social control system

Nothing can stop a cultural trans-formation quicker than a CEO whopermits a high level executive—evena very successful one—to disregardthe new behavior model.”

Nothing can stop a cultural trans-formation quicker than a CEO whopermits a high level executive—evena very successful one—to disregardthe new behavior model.”

Lou GerstnerWho Says Elephants Can’t Dance?Harper Business, 2002, p. 208

This approach:• Fits our intuition• Makes us feel good• Doesn’t work very well

As individuals we have

Values Interests NeedsPersonality

Expectations Goals Attitudes Feelings

These shape our

Consistentchoices and behavior

Which lead to

Personality Attitudes Behavior

This approach is• less intuitive• more useful to managers• more powerful

We work in settings with

Which get us focused on

Which shape our

Strategies StructuresReward systems Leaders

Specific tasksSubunit objectivesSalient information Coworkers

Expectations ChoicesInterpretations Behavior

Attitudes Behavior Context

Attitudesand

Behavior

Attitudesand

Behavior

Personality

Valuesand Beliefs

What we actually observe

What our intuition says that drives behavior

Demographics

These can be managedonly through selection

These can be managedonly through selection

Attitudesand

Behavior

Attitudesand

Behavior

Personality

Valuesand Beliefs

What we actually observe

What our intuition says drives behavior

What we don’t “see”because of our focuson the individual

Rewards

Roles

Background

OrganizationalCulture

SituationalPressures

Demographics

These can be managedonly through selection

These can be managedonly through selection

These can be managedby designing the contextThese can be managedby designing the context

When we watch people behave, we tend to “see”their behavior as being “caused” by somethingabout their personality or dispositions. Whenwe explain our own behavior, we are far more conscious of the pressure of the situation (e.g.,deadlines, rewards, the opinions of others.)

In general, we are not sensitive to how powerfullyour behavior and that of others is shaped by thesituations we are in.

When we watch people behave, we tend to “see”their behavior as being “caused” by somethingabout their personality or dispositions. Whenwe explain our own behavior, we are far more conscious of the pressure of the situation (e.g.,deadlines, rewards, the opinions of others.)

In general, we are not sensitive to how powerfullyour behavior and that of others is shaped by thesituations we are in.

Visible 90%

Not Visible 16%

Visible 90%

Not Visible 16%

QuestionWhat proportion of a group of normal adults would voluntarily deliver what they believed to be a fatal electricshock to another human being?

QuestionWhat proportion of a group of normal adults would voluntarily deliver what they believed to be a fatal electricshock to another human being?

Learner

TeacherExperimenter

Much of what we accept as “true” or “important”in organizations comes only from a consensus of others. To “know” what is important we oftenrely upon information -- from our own pastbehavior (e.g., what we are vested in), our peersand other group members (e.g., approval anddisapproval), and clear signals from those ofhigher rank (e.g., what’s rewarded and punished).

Much of what we accept as “true” or “important”in organizations comes only from a consensus of others. To “know” what is important we oftenrely upon information -- from our own pastbehavior (e.g., what we are vested in), our peersand other group members (e.g., approval anddisapproval), and clear signals from those ofhigher rank (e.g., what’s rewarded and punished).

Information is the key!

Since much of what we accept as “true” or “important”in our organization comes largely from a consensus ofothers who matter to us, culture can be affected by:

• Management Actions - that set goals, focus our attention, and help us interpret events.• Participation - which can lead us to feel responsible and to justify our actions.• Information From Others - especially those who matter to us and tell us what’s really important.• Rewards - such as recognition, approval, and pro- motions that are targeted at specific attitudes and behaviors

• Management Actions - that set goals, focus our attention, and help us interpret events.• Participation - which can lead us to feel responsible and to justify our actions.• Information From Others - especially those who matter to us and tell us what’s really important.• Rewards - such as recognition, approval, and pro- motions that are targeted at specific attitudes and behaviors

Think of yourself and your team as “signalgenerators” whose words and actions areconstantly being scrutinized and interpretedby others, especially those below you.

• Calendar management - spend time• Ask questions• Follow-up• Public statements• Meetings• Agenda control• Summarization• Ceremonies, symbols, language• Physical settings

• Calendar management - spend time• Ask questions• Follow-up• Public statements• Meetings• Agenda control• Summarization• Ceremonies, symbols, language• Physical settings

YOU = YOUR CALENDAR *

* Calendars never lie. Your calendar knows what you really care about—do you?

The levers needed to shape the culturewithin your business are low-cost andlargely under your control.

“Remember, culture is nothing more than the behavior of theleaders.”

Larry BossidyFormer CEOAllied Signal/Honeywell

Nothing can stop a cultural trans-formation quicker than a CEO whopermits a high level executive—evena very successful one—to disregardthe new behavior model.”

Nothing can stop a cultural trans-formation quicker than a CEO whopermits a high level executive—evena very successful one—to disregardthe new behavior model.”

Lou GerstnerWho Says Elephants Can’t Dance?Harper Business, 2002, p. 208

Commitment is enhanced by designing systemsthat encourage people to make choices and getinvolved. For example:

• Emphasize intrinsic rewards as well as extrinsic• Obtain step-by-step choices• Encourage the development of social relations• Publicize the individual’s activities among peers, families, clients, and friends• Use group approval and feedback• Make the commitment process a serious one.

• Emphasize intrinsic rewards as well as extrinsic• Obtain step-by-step choices• Encourage the development of social relations• Publicize the individual’s activities among peers, families, clients, and friends• Use group approval and feedback• Make the commitment process a serious one.

Since much of what we accept as true or important inorganizations comes from a consensus among peoplewho matter to us, we are always looking for clear, consistent information. Whenever there is inconsistency or noise in the signal, our natural inclination is to wait until the uncertainty is resolved. This means managersmust help manage the information flow to ensure:

• Relentless communication from superiors

• A minimum of contrasts and inconsistencies which can undermine shared interpretations

• Vivid illustrations of the desired attitudes and behaviors needed in the new culture.

• Relentless communication from superiors

• A minimum of contrasts and inconsistencies which can undermine shared interpretations

• Vivid illustrations of the desired attitudes and behaviors needed in the new culture.

1. What do people in your organization really want as rewards for their efforts?

2. Who controls these?

3. What do people have to do to:• Get senior management’s attention?• Get approval from their colleagues ?• Get promoted?

4. Are these consistent with the critical tasks and the norms needed for execution?

1. What do people in your organization really want as rewards for their efforts?

2. Who controls these?

3. What do people have to do to:• Get senior management’s attention?• Get approval from their colleagues ?• Get promoted?

4. Are these consistent with the critical tasks and the norms needed for execution?

[What is really rewarded within your organization?]

23

Can the leaders who brought you column A bring you column B?

These important themes come up time after time:

• Need for true understanding• Better real dialogue/dx• Care for nurses=care for patients• Need for a valid psychology….• Teams/Meetings• Removal of fear• Getting beyond slogans (“Be the..”•Time, time, time (reflection)

• Need for true understanding• Better real dialogue/dx• Care for nurses=care for patients• Need for a valid psychology….• Teams/Meetings• Removal of fear• Getting beyond slogans (“Be the..”•Time, time, time (reflection)