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Jun 29, 2015

For many of us in business, company culture is both an essential and elusive element of a productive workforce.

Culture influences everything: how an organization identifies and solves business problems, recovers from failures and thrives in times of success. It serves as a guiding force for employee behavior, shaping mindsets, attitude and effort.

In fact, Deliotte most recently reported that culture and engagement is the single most important issue companies face around the world.

But we also know that culture can be an intangible entity. This is why Deliotte also cited that 87 percent of organizations view culture and engagement as one of their top challenges. These challenges have financially adverse effects, as a study that we recently completed with Oxford Economics shows that not prioritizing workforce issues (culture included) correlates directly with lower financial performance.

Who leads the charge on change?

So how do you change an intangible thing – and who leads the charge?

Changing a culture happens when you make a connected and conscious effort to align strategy with behaviors. All too often, top leaders tout a cultural change – but their daily actions, discussions, incentives and openness to new ideas remain the same. When the pressure builds, they revert to “command and control” behaviors. These actions may have served them well historically, but their cultural changes go back to square one.

Too often, the executive team lacks the buy-in from those who actually interact with employees on a daily basis, setting objectives and rewarding behaviors of those who are on the front line. The culture change dies where it matters most – with first and second-level leaders.

Here is how culture change must be driven from the lower levels of your leadership structure, and how they should be empowered to lead a broader transformation:

1. Build something exclusive together

Cultural aspirations that make sense for one company may not make sense for another. The key is to understand what you want to be known for to drive probable success, then design backwards from that lens.

If you are creating a safety-focused culture, for example, then its principles should reflect and establish trust, empowerment, continuous improvement and positive celebration to drive the right behaviors.

Building an exclusive culture should reflect also the space to design, test, fail, and experiment. It should also reward and foster an entrepreneurial spirit. This involves engaging all levels of leadership, in order to determine the types of messages that resonate with employees on the ground.

2. Inspire broad belief

If all levels of leadership have an opportunity to shape the culture direction, this also improves your chances of their belief in the cultural direction.

Employees look to the person they trust – often their manager – and ask, “Do you believe in this?” The manager’s ultimate belief in the change is critical to its success.

What is said (and not said) dictates whether the change will influence a broader group of employees.

3. Communicate the “why”

Change endeavors often fail because employees and managers feel that it’s unrewarded, unrealistic or unnecessary.  This happens when organizational communication breaks down.

Leaders are often quite good at explaining the “what” and the “how” but completely miss the “why.” Without the “why,” employees are left to figure out the purpose by themselves. Communicating why a change matters ultimately builds advocates among lower levels of leadership.

However, communication is useless without commitment. To show what commitment looks like, executives should lay out the path for change with clear markers of success – which should be celebrated loudly when reached. They must enforce these metrics with the same diligence they would with any other business KPIs.

Through these cultural milestones, managers can become familiar with how the new culture feels, looks, and sounds.  Clearly identifying and communicating cultural metrics gives managers the space and support to reconfigure their teams and deliver differently in the spirit of achieving cultural milestones.

Our company motto is “Run Simple,” which is designed to simplify business processes for greater agility – and ultimately greater results. As the company talks about simplicity to the public, our employees want to know what it means for our strategy, products, processes and organization as well. They also want know what Run Simple acts like and feels like, so we created “How We Run,” the new way to talk about culture at SAP.

Cultural pillars to build on

What’s important about the campaign is that was created by employees, for employees – using the feedback and ideas from thousands around the world. By involving a large pool of managers into the design of the culture, we arrived at the following cultural pillars:

  • Tell it like it is;
  • Stay Curious;
  • Embrace Difference;
  • Keep the Promise; and,
  • Build Bridges, Not Silos to life.

Our hope is that because of the involvement of many in the initial design of the cultural change, its principles can be understood and adopted by all of our employees.

People don’t fear change. They fear uncertainty, loss of control and an inability to adapt.

HR can lead the way in cultivating an organizational environment that supports change effectively, by aligning change with business objectives, driving communication strategies, assessing employee impact and creating programs to help employees become part of the change.

Change might be scary to some, but it’s often an improvement for all – and HR must take a central role in creating a cultural change that keep the company evolving.