Diagnosing a Broken Culture -- and What to Do About It

Symptoms of a broken organizational culture are clear as day.

You see it in stalled initiatives, deteriorating employee morale or bad customer feedback. As a response, leaders frequently resort to initiatives and events aimed at reinforcing culture. Often, these initiatives are in reaction to external forces. Perhaps the company is investing in new technology, or keen to expand market share, and bolstering engagement and culture is seen as a way to motivate employees to achieve company goals and priorities. Unfortunately, most of the time, these initiatives don’t pan out: According to McKinsey, 70% of transformations fail, and 70% of those failures are because of culture-related issues.

Indeed, Gallup research paints a grim portrait of corporate culture in the U.S., where a recent survey found that only two in 10 employees feel strongly connected to their organization’s culture.

Driving Culture Transformation

Culture-building efforts often start well, and then promptly break down or fail outright during the implementation phase due to insufficient employee support of the culture transformation. Culture-building initiatives are often launched with a leadership “off-site,” during which company executives lock themselves in a room without adequate preparation or structure, to magically emerge a few hours later with a brand-new culture paradigm.

However, developing a sound strategy to revitalize an organization’s culture requires more than an off-site leadership retreat. Leaders must clearly define what culture means and identify its fundamental components, and then create a compelling vision of what the aspirational culture will offer to employees.

Leaders can execute effective culture transformation by following four steps.

1. Define (or redefine) your culture.

Culture is an organizational construct that has been studied to death, but very few can clearly define it. Gallup’s definition is simple: Culture is “how we do things around here.” This definition also implies that culture is nuanced, complex, multidimensional -- and unique to the organization. For example, it might be tempting for a company going through massive changes to retrofit a shiny new culture onto what existed before. Instead, leaders must thoroughly examine their current culture -- the good, the bad and the ugly -- to identify its weaknesses, challenges and unique strengths.

While working with a large professional services firm, we discovered that its culture was highly collaborative. Employees valued inclusion and involvement, and leaders listened to diverse views and made people feel accepted, included and respected. But at the same time, this culture of strong collaboration provoked unintended consequences such as slowed decision-making, increased risk aversion, unclear prioritization and a general lack of agility. The firm’s employees also demonstrated an extreme customer orientation -- clearly a strength, but this also meant that many employees were reluctant to say no to clients when necessary. This behavior often led to unintended consequences such as over-delivery of projects and unrealistic customer expectations. This cultural push-pull made it challenging for the firm to establish a more consistent and productive application of its desired culture. Gallup’s initial review led to a clearer understanding of the firm’s existing culture and informed how it should define behaviors that would help establish its aspirational culture.

Leaders must codify and scale the best of what an organization is rather than copy a predesigned culture archetype. This kind of cultural analysis (what Gallup calls a culture audit or diagnostic) must identify an organization’s cultural DNA -- its intrinsic positive, negative and neutral attributes. The insights from this culture audit should help shape the organization’s aspirational culture and inform leaders of key cultural drivers and values that must be communicated and experienced daily across the organization.

Leadership actions:

• Conduct interviews, surveys and focus groups to better understand your organization’s cultural DNA. See your culture in action by immersing yourself in your customers’ world by visiting store locations, branches and contact centers. Identify your organization’s strengths by understanding where and how it operates at its best. A clear understanding of your culture’s strengths can provide more valuable insight than just a root-cause analysis of failure. A large engineering firm that Gallup advised saw 30 of its senior leaders conduct up to 10 employee interviews using a standard set of questions. The resulting 300 employee stories offered a vibrant and unfiltered view of the positive attributes of the firm’s culture -- both today and in the future.
• Convene a collaborative session with leaders and cross-functional managers to refine the company's purpose and core values, and to define specific behaviors (values in action). This is where companies can involve large numbers of employees across various levels and functions of the organizational structure. A retail client that Gallup worked with held sessions that included janitors and store clerks as well as executives and mid-level managers. Culture is the implicit way employees at all levels work, collaborate and perform. Having only the leadership team define and drive culture is an approach that is both narrow-minded and short-sighted. Indeed, employees are more motivated to promote initiatives they have had a role in shaping.

2. Align your workforce.

Leaders often spend more time drafting and redrafting purpose statements and core values than rallying the organization around these essential constructs. Our latest research shows that while only 43% of leaders strongly agree that they feel connected to their organization’s culture -- a rather worrying statistic that brings to light a problem many companies need to address -- far fewer individual contributors, 20%, feel the same. We also found that only one in four U.S. employees strongly agree that they can apply their organization's values to their daily work, and only about one in three strongly agree that they believe in their organization's values. If values are intended to clarify culture, leaders must first define what those values mean.

Gallup research shows that employees’ interactions influence their views of organizational culture during each stage of the employee experience life cycle. As a result, cultural alignment seeks to embed culture into each of these stages, from recruiting to hiring, onboarding, engaging, performing and developing.

Leadership actions:

• Align culture explicitly to your organization’s strategy and future direction. Connect individual goals to organizational purpose, vision and future strategies. Design behaviors and competencies that help employees individualize culture. Gallup helped a retail organization create a new purpose statement. The organization held workshops with seven of its key functions to connect the purpose statement to specific Objectives and Key Results (OKRs) aligned with the newly redefined purpose statements. These OKRs enabled leaders to focus on the value of the company’s work in relation to its purpose rather than to disconnected and siloed priorities and performance expectations. The next step was to integrate the purpose and values into each stage of the employee experience -- from hiring and onboarding to managing and developing.
• Exhibit the desired behaviors to demonstrate leadership commitment to them and their importance to the organization’s culture, purpose and vision. By modeling desired behaviors, leaders set an example that brings them to life and makes them real for employees, shows they are authentic and meaningful, and reinforces leadership’s strong belief in them.
• Ensure that the culture can adapt to the new realities of work. Many employees now work in a hybrid format and only come to the office a few days a week. Those days in the office offer excellent opportunities to foster collaboration and provide meaningful cultural experiences like recognition, celebration and knowledge sharing.

3. Drive adoption.

A strong culture is vibrant, visible and almost incandescent in how it inspires and engages employees. In these organizations, coaxing or forcing employees to embrace the culture isn't necessary.

Driving employee adoption of culture requires more than plastering office walls with posters displaying your organization’s purpose or values, throwing pizza parties, giving away swag, or allocating a culture budget. Rather, it requires actions that link culture to your organization’s mission and brand, and that bring culture to life in the hearts and minds of your employees through behavioral change, processes and systems, and even policies. For example, celebrating a team’s achieving an important goal in a way that reinforces the organization’s culture makes it real and establishes a connection with the team’s performance is infinitely more meaningful than corporate slogans or platitudes.

For example, outdoor retailer Patagonia wrote an employee policy handbook with the whimsical title Let My People Go Surfing. It describes how much the company values and supports a culture of flexibility -- which is also consistent with Patagonia’s brand. The handbook encourages employees to take time off to “catch a good swell, go bouldering for an afternoon, pursue an education, or get home in time to greet the kids when they come down from the school bus.”

But expressing the organization’s commitment to culture is more significant than crafting clever employee policies. Patagonia’s founder Yvon Chouinard and his family recently transferred their ownership to a charitable trust. Chouinard noted in a letter to employees that the company was “going purpose instead of going public.”

While highly compelling, Patagonia’s cultural traits (and eccentricities) can’t simply be copied and pasted by other organizations. Leaders must know what traits will work in the context of their own culture, and then work hard to anchor them in the hearts and minds of employees. Indeed, to drive adoption of the desired culture, leaders must find their own unique way to communicate a change narrative that creates a shared understanding of the past, reasons for the culture transformation of today and a compelling vision for the future.

Leadership actions:

• Communicate the purpose and culture of the organization through a well-defined change storyline; ensure that there is uniformity in how it’s presented by crafting a single, compelling strategic narrative and that the description of key cultural attributes is clear, credible and compelling to all employees. In addition, ensure that key attributes of the organization’s purpose and culture are integrated into day-to-day communications, both formal and informal. For example, communications about an employee promotion should emphasize how it will foster and support key cultural values like integrity, safety or customer focus.
• Consider how shifts in specific policies or expectations can drive desired culture change. Gallup recently worked with a leading healthcare insurer to help drive the adoption of specific behaviors, focusing on customer engagement and breakthrough innovation. These were core behaviors aligned with a range of initiatives such as employee engagement, innovation accelerators, upskilling, internal mobility, DEI, individual development plans, and recognition. Over a period, the company implemented 15 projects that delivered an investment net present value of $60 million and a 26-times increase in the generation of innovative ideas. A focused effort to drive culture can yield tremendous financial and mission outcomes.

4. Sustain your ecosystem.

To ensure culture change sticks, leaders need to recognize that culture is a living, breathing ecosystem that must be continually nurtured and evolved. Organizations must build systems, structures and rituals to maintain a consistent focus on positive cultural behaviors. The absence of a supportive ecosystem will only frustrate the efforts of leaders and managers: Structural and systems support is essential to ensure that culture will continually thrive.

Enhancing specific systems and processes can help enable the culture to achieve its full potential. For example, an organization’s decision-making process must consider the impact of decisions on its culture and core values. Policies and procedures must enable culture rather than become barriers and obstacles to culture adoption at scale.

Even as companies define their culture, align structures and systems, and drive the adoption of specific cultural behaviors, the manager’s role in sustaining the ecosystem must be considered. Managers indeed balance the need for cultural cohesion and fostering individualization. In many ways, organizational culture is a very local phenomenon, and the manager is the conduit through which employees experience their employer’s culture.

Leadership actions:

• Ensure systems, structures and processes continually support culture change. A client going through a merger worked with Gallup to create new team structures and hierarchical roles, and then developed a process to foster a consistent culture that values what each of the merged companies brought to the new organization. Another client that was transitioning to a primarily matrix structure needed to manage the operational changes required by the new structure -- but also worked with Gallup to promote the necessary relational, cultural and mindset shifts.

• Use storytelling to reinforce desired cultural behaviors. Stories illustrate your organization’s values and how it fulfills its purpose. Unfortunately, many leaders might not be naturally gifted storytellers and will benefit from coaching to become more authentic and effective communicators.
• Redesign recognition processes to reflect and promote your culture. A major automaker recently engaged Gallup to help design a peer-to-peer recognition system that celebrates the specific behaviors experienced in everyday employee interactions. Gallup also worked with the automaker to nurture the connection between these interactions and the company’s purpose and values through coaching performed by all managers with their teams.
• Build managers’ knowledge of cultural behaviors and enhance their ability to coach employees on them. Managers are also uniquely positioned to help employees navigate the organization’s culture. Through ongoing strengths-based culture conversations, managers can help employees see how they can “live” their culture every day.
• Ensure the use of appropriate feedback mechanisms, outcome metrics and other evidence to measure progress. This might include employee engagement surveys, culture pulse surveys or ongoing listening strategies.

Embracing and Driving Culture Change

Culture transformation can be complex.

Without clear accountability, culture-building efforts can easily fall by the wayside -- specifically when culture is outsourced to HR and not owned by business leaders.

Edgar Schein, considered the foremost expert on organizational culture, perhaps best expresses the challenge for leaders: “The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.”

Having a coordinated approach to culture transformation can yield rich benefits. Gallup finds that employees who feel strongly connected to their organization’s culture are 3.7 times as likely to be engaged and 5.2 times as likely to recommend their organization as a great workplace. Reinforcing the employee connection to culture also delivers genuine business impact: Our research shows that just a 10% improvement in employees' connection with the mission or purpose of their organization leads to an 8.1% decrease in employee turnover and a 4.4% increase in profitability.

By implementing the four steps of culture transformation, leaders can bring to life and maximize the value of their organization’s culture.