Cultural Transformation Survey 2017 Report · CULTURAL TRANSFORMATION SURVEY 2017 REPORT 7 In the...

Cultural Transformation Survey 2017 Report

B U S I N E S S T R A N S F O R M A T I O N N E T W O R K

CorporateLeaders

Contents

Introduction: Changing World - New Challenges 5

Cultural Transformation Outcomes 6

Drivers of Cultural Transformation 8

Leading Cultural Transformation 10

Challenges in Cultural Transformation 12

Conclusion: A Wake-up Call to Action 17

Survey Methodology and Findings in Detail 18

Respondents Profile 19

Survey Responses 20

4 CULTURAL TRANSFORMATION SURVEY 2017 REPORT

CULTURAL TRANSFORMATION SURVEY 2017 REPORT 5

Introduction: Changing World - New Challenges

Corporate culture is the self-reinforcing web of beliefs, practices, patterns and behaviours that become ‘the way things are done around here’. Leaders’ own conscious and unconscious beliefs drive behaviours, and repeated behaviours become cultural norms. Changing a long-established corporate culture, therefore, is very tough. But when the business landscape radically changes, culture must change too.

In today’s Volatile, Uncertain, Complex and Ambiguous (VUCA) world, change is certainly radical. Organisational cultures that are stuck in the same routine, and are unable to respond, will die out. Many have disappeared already: less than half of the Fortune 500 companies from as recently as 2002 still survive today1.

The Center for Creative Leadership (CCL) and CorporateLeaders surveyed 160 VPs and Directors in HR, L&D, Leadership Development and Talent Management mainly in Germany, UK, the Netherlands, France, Sweden and Denmark in April and May 2017. The survey aims to better understand the opportunities and challenges presented by change, and how organisations are responding to it through cultural change programmes. With 88% of respondents from organisations with 1,000+ employees, and 66% from organisations with more than €1 billion in revenues, it provides vital insights into the needs and abilities of organisations to transform ingrained and established cultures in the face of rapidly changing markets.

Of the 160 respondents surveyed, 89% said their organisation is going through or have gone through a cultural transformation in the past 2 years: of these, 75% are in the process of implementing cultural transformation, 15% have implemented cultural transformation and are now monitoring and adjusting, and the rest (10%) are planning to implement cultural transformation.

Of the 11% of respondents who’s organisations are not currently going through or have not gone through a cultural transformation in the past 2 years, 61% plan to in the next 2 years.

1. Capgemini Consulting, 2014, ‘When Digital Disruption Strikes’


Cultural Transformation Outcomes

Organisational culture is comprised of what individuals do behaviourally, and how a collective of individuals behave. The science of behaviour change shows us that it is hard to do – it’s hard to change the way you eat, the way you exercise, the way you relate to others, or the way you work. In the same way, moving organisational culture to become more agile, innovative, or global, for example, requires people up and down the organisation to change the way they do things. This is where leaders and leadership can make a big difference to the outcome.

Figure 1. Most important outcomes from cultural transformation activities

Alignment of culture and business goals

Greater employee satisfaction

Higher employee creativity and innovation

Higher employee productivity

Better processes and systems

Higher ROI

Other cost savings

Lower employee turnover

Change in brand image

Other

62%

55%

48%

46%

40%

30%

25%

23%

22%

13%


In the survey, when respondents were asked ‘What are the most important outcomes from the cultural transformation activities in your organisation?’ the top four answers – alignment of culture and business goals (62%), greater employee satisfaction (55%), higher employee creativity and innovation (48%), and higher employee productivity (46%) – all show that leaders recognise the need to involve and enthuse their employee base for the future.

Interestingly, financial and bottom-line metrics such as lower employee turnover (23%), higher ROI (30%) and other costs savings (25%) came much lower down. In part this is due to the respondent pool being comprised largely of HR, L&D and Talent Management executives. If interviewing the owners of P&L, outcomes would most likely be different.

That said, a lot of different outcomes occur when changing a culture and it is very encouraging to see ‘alignment of culture and business goals’ cited by the majority as their number one outcome. The alignment to strategy in many organisations is changing and evolving. People need to be able to connect the work they do day-in-day-out with the culture being driven by leaders.

In CCL and CorporateLeaders’ recent series of executive interviews focused on cultural transformation, Sanofi – the pharmaceutical giant, based in over 100 countries – explained that its recent mission to align its employees with the corporate purpose was done to combine this business strategy with a common identity and culture. This meant bringing together multi-level, cross-culture teams, to define a common purpose, common ambition, and common values. A single global tagline was introduced across the business, as well as a new leadership framework, core competencies and values.

All results show that leaders recognise the need to involve and enthuse their employee base for the future.


Drivers of Cultural Transformation

Figure 2. Drivers of cultural transformation

According to the survey results, the biggest drivers of cultural transformation is internal (new CEO) redefinition of the business model/goal/performance levels (47%) followed by maintaining a market position under intense pressure (36%), technology trends (35%), changing the game or redefine the market (33%), consumer trends (32%), and market/legislative conditions (27%).

Internal (new CEO) rede�nition of the business model/goal/performance levels

Maintaining a market position under intense pressure

Technology trends

Changing the game or rede�ne the market

Consumer trends

Market/legislative conditions

Margin pressure

Gaining a technical, talent or market edge/position

Entering new markets/geographies

Competitor consolidation/divestiture

Other

47%

36%

35%

33%

32%

27%

23%

23%

19%

13%

11%


All of these drivers show organisations seeking to adapt to changing times. As the world is shifting fast, senior executives realise that they cannot rely on change through simple restructuring and re-engineering, but rather they need strong corporate cultures that support efficiency, innovation and agility to navigate the turbulent business landscape.

With nearly half of respondents pointing to a CEO requiring a new business model, this correlates with CCL’s findings on the ground. This driver, however does run the risk of employees not assuming ownership – you potentially have an organisation filled with ‘renters’ who do not see themselves as responsible for the success of the organisation, as opposed to ‘owners’. If you have people throughout the organisation with an ownership mentality, the odds of success go up dramatically.

According to the latest CCL and CorporateLeaders Cultural Transformation Roundtable Meeting discussions, at Nokia for example, the recent transformation of the business – from one of the world’s leading mobile phone businesses to a company providing end-to-end portfolio of products, services and licensing – was delivered in parallel with a fundamental change in leadership processes. Top leaders are now encouraged to brainstorm the strategic vision with their teams, rather than simply disseminate it from the top. At Google, too, innovation stems from an ‘ownership mentality’ culture. The constant change that can break inflexible organisations, is actually Google’s source of success. Googlers are given the ‘psychological safety’ to suggest and try out crazy ideas without fear of reprisal if those ideas fail.

If you have people throughout the organisation with an ownership mentality, the odds of success go up dramatically.


Leading Cultural Transformation

Behaviour change is a lot easier for people to envision by taking baby steps, making incremental changes, to something that they are familiar with, compared to doing something radically transformational. This is reflected in the survey results: when respondents were asked which categories best describe their cultural transformation initiatives, 57% indicated their cultural transformation initiatives ‘strengthen/deepen/refine’ the organisation’s existing culture.

Figure 3. Cultural transformation initiatives

Strengthen/deepen/re�ne and make consistent throughout the organisation’s existing, valued culture

Signi�cantly expand the choices people have about how they relate to change and culture (identify, norms, beliefs and behaviour) while expanding the organisation’s agility to perform in or de�ne, its markets

Trade one type of culture (collective identity, beliefs, behaviour) for another

Assimilate, blend or keep separate to varying degrees, disparate cultures to create a strategic entity that operates in ways that ful�l promised synergies

57%

46%

34%

24%

CULTURAL TRANSFORMATION SURVEY 2017 REPORT 111 The leadership competencies can vary depending on the chosen program

Figure 4. Leading cultural transformation

Top management (C-Suite)

Human Resources

Business unit leaders

Dedicated culture management team

Team leaders

Team members

Other

No one

82%

69%

47%

22%

19%

14%

6%

3%

2. CCL, 2015, ‘It’s a New Game: Leading Complex, Continuous Change’

If you have a start-up mentality, as seen in the likes of Berlin, Bangalore or Silicon Valley, the attitude is to change something every day. But large, established firms, have embedded ways of doing things over decades. So it comes as no surprise that nearly 2 out of every 3 are preferring to start with strengthen/deepen/refine. In many organisations that is sufficient. However, in highly VUCA environments, it is not. It may extend the survival time slightly, but in highly disruptive business environments, it will not be enough.

Change programmes that are only bottom-up and do not have the senior support are going to hit a glass ceiling; if only top-down, it is not going to reach the entire organisation and the uptake will be limited. If it is middle-out and it does not go up or down, then it will end with the middle layers feeling thwarted by the lack of commitment of support.

In the survey, whilst it is reassuring that cultural transformation is being led from the top – the vast majority of the survey respondents (82%) identified the C-Suite as leading its cultural transformation – it is a point of concern that so few team leaders (19%) and team members (14%) are being seen to lead the change process.

Organisations able to achieve transformational change, or respond to a VUCA world, are responding bottom-up, top-down and middle-out. Successful change initiatives require all three layers in order to change the ‘way we do things around here’. As CCL’s Bill Passmore says: “Tapping the collective intelligence of the organisation helps the overall change process be faster and more effective — and requires engagement.”2

Organisations able to achieve transformational change, or respond to a VUCA world, are responding bottom-up, top-down and middle-out.


Challenges in Cultural Transformation

When CCL released a series of global trend reports, capturing insights from 25,000 leaders across 4 regions and 7 countries, it found that leaders worldwide lack vital skills needed to build collaborative relationships3. While 91% of regions rated “building collaborative relationships” as a Top 1 or Top 2 capability leaders need, only 18% rated it as a Top 1 or Top 2 proficiency of their leaders. Such a significant gap is a cause for concern. As CCL research on ‘becoming a good boss’ shows, individuals are promoted into leadership roles because they are strong individual contributors4. In many organisations, the ability to build collaborative relationships with peers and external stakeholders simply is not practiced or rewarded.

3. Bill Gentry, Stephen Young, Shannon Muhly Bendixen, 2016, Global Trend Report

4. CCL, 2016, ‘New Book Provides Roadmap to Become the Boss Everyone Wants to Work For’

What leaders must do is help employees and managers to recalibrate their expectations. This is the world we live in now – change is a constant.


In this Cultural Transformation Survey, CCL and CorporateLeaders therefore sought to identify some of these levers and challenges:

Change fatigue - cited as the number two biggest challenge in building organisational cultures by 55% of the respondents after reinforcing new behaviour to attain change (56%) - is something CCL sees a lot of. Similarly resistance from managers / senior team / staff is high (44%). Leaders currently have their heads down and are worrying about the changes that are constantly buffering their organisation, but are not conveying it to their employees in a way that they can connect with and that would allow them to be more resilient.

What leaders must do is help employees and managers to recalibrate their expectations. This is the world we live in now – change is a constant. According to David Altman, COO at CCL, there is no ‘getting back to normal’. The message from leaders must be: “let’s get ourselves in shape as individuals and as an organisational culture to embrace the opportunities and to manage the challenges of constant change in the dynamic world that we live in. Let’s equip ourselves together to become more resilient to accommodate that”.

Figure 5. Biggest challenges in building organisational cultures

Reinforcing new behaviour to attain change

Change fatigue (workers are asked to follow through on too many changes at once)

Lack of direction, alignment, commitment from senior team

Lack of resources (budgets, time, sta�, technology or systems in place)

Resistance from managers / senior team / sta�

Short term focus on top line growth

Geographic / cultural misalignment / communication

Inexperience across leadership or key executors

Incorporating innovation into the business culture

Measuring the impact of good corporate culture

High growth / re ghting

Changing business and digital environment

Getting an outside-in perspective from customers or experts

56%

55%

47%

46%

44%

39%

35%

33%

32%

28%

26%

24%

18%


As Figure 6 shows, changes in leadership styles and skills are needed to influence the behaviours. Training and coaching are clearly identified as proven ways of instilling the skills to effectively lead their organisations, establish a clear vision and empower staff to effect change.

Again, it must be borne in mind that these are largely HR respondents, so traditional HR models and responses are coming to the fore here. The top three answers reflect an HR-centric mindset: Conducting leadership training and coaching (71%), establishing a clear organisational vision and purpose (60%) and empowering staff to effect changes (52%).

Figure 6. Addressing cultural transformation challenges

Conducting leadership training and coaching

Establishing a clear organisation vision and purpose

Empowering sta to eect changes

Setting clear behavioural change goals

Involving sta as change agents

Creating alignment

Storytelling

Organising peer-to-peer or peer-to-leader coaching or feedback sessions

Identifying the critical areas of misalignment between the current and desired cultures

Developing informal peer networks and motivators

Forming centralised teams

71%

60%

52%

50%

48%

45%

44%

36%

30%

26%

18%


However, CCL also believes that education and training can help individuals and teams develop mindsets, toolsets and skillsets to address the VUCA world. According to David Altman, we know from our research and the research of others that seminal events in people’s lives do not happen in a classroom – it happens in the experiences they have of change, of hardship, of rotational assignments. Humans learn the most through experiences and how we reflect on them. From CCL’s perspective, we achieve more through in-job experiences that can help people learn while they are doing their job, embedding leadership development and personal development into the everyday lives of people.

Figure 7. Effectiveness of tactics in implementing cultural transformation initiatives

HIGHLY EFFECTIVE

EFFECTIVESOMEWHAT EFFECTIVE

NOT EFFECTIVE

NOT APPLICABLE

Leadership coaching and mentoring 8% 35% 38% 8% 11%

Leadership and staff training 8% 33% 43% 8% 8%

Implementing specific changes to realign the organisation’s culture to its business and talent strategies

5% 33% 40% 11% 11%

Conducting organisation-wide values workshops 9% 26% 28% 14% 22%

Influencing the organisation’s culture through external partners

1% 7% 28% 32% 32%

From CCL’s perspective, we achieve more through in-job experiences that can help people learn while they are doing their job, embedding leadership development and personal development into the everyday lives of people.


The importance and value of leadership training and coaching came out clearly in the survey results: a resounding 81% rated ‘leadership coaching and mentoring’ as highly-to-somewhat effective in implementing cultural transformation; 84% also rated ‘leadership and staff training’ as highly to-somewhat-effective. Compare this to only 36% for ‘Influencing the organisation’s culture through external partners’ and the message is clear: it is leadership that matters most.

The CCL perspective on leadership is that leadership is happening whenever you see evidence of 3 things:

Direction – that the collective knows where they are going

Alignment – that we have pulled together our technical resources, human resources and IP, are aligned in support of that direction

Commitment – that we are willing to put aside individual or team interests in support of a higher purpose

Whether you are in a command and control, hierarchical organisation, or one that is decentralised, if you see evidence of direction, alignment and commitment, then leadership is happening. When you do not have high levels of either of those three things, then there is a leadership gap, and many organisations struggle with that. An organisation might have direction and commitment – everyone knows where they are going and are pulling together to achieve it – but the processes and the systems and the way the organisation is set up is chaotic – in that instance, it doesn’t matter how clear the direction and commitment is, because those are preventing you from getting there.


Conclusion: A Wake-up Call to Action

Cultural transformation today is as hard as it ever was, but the need to do so has never been more urgent. Markets, consumers, employees, demographics, politics, technology – all are changing and disrupting with a greater speed than anyone can anticipate.

These survey findings should initiate deeper and more substantive dialogue about the role of culture in the current climate. By surveying this number of senior leaders across countries and industries we have highlighted a number of issues that organisations ought to be dealing with day-in-day-out. But many are not. This should prompt dialogue in their boardrooms and beyond.

The good news from the survey is that while transformation is hard, it is possible. The ‘way things are done around here’ are hardwired – but they can be rewired. With 71% already conducting leadership training and coaching (more than 10% higher than the next most popular intervention), and 82% of cultural transformation being led by the C-Suite, these are positive signs – large organisations are beginning on this journey. The question remains whether they can change quickly enough before they are outflanked by more nimble competitors.


Survey Methodology and Findings in Detail

The Center for Creative Leadership and CorporateLeaders surveyed VPs and Directors in HR, L&D, Leadership Development and Talent Management mainly in Germany, UK, the Netherlands, France, Sweden and Denmark. The survey was conducted via an online survey tool in April and May 2017 and received responses from 160 executives.


Respondents Profile

Where are you located?

What is your role in the company?

What is the total number of employees in your company?

Germany

United Kingdom

Netherlands

France

Sweden

Denmark

Belgium

Switzerland

USA

Other

20%

19%

19%

13%

9%

4%

4%

3%

2%

7%

HR Director/VP

Leadership Development Director/VP

Talent Management Director/VP

HR Manager

Learning & Development Director/VP

Learning & Development Manager

CEO/Managing Director

Leadership Development Manager

Commercial Director/VP

Talent Management Manager

Training Manager

Training Director/VP

Other (please specify)

32%

9%

8%

8%

7%

6%

6%

4%

4%

2%

2%

1%

11%

Less than 100

100 - 1,000

1,000 - 10,000

10,000 - 50,000

50,000 - 100,000

More than 100,000

2%

9%

31%

36%

8%

14%


What is your company’s total annual revenue?

Which industry does your company primarily work in?

Less than €50 million

€50 million - €500 million

€500 million – €1 billion

More than €1 billion

8%

14%

12%

66%

Manufacturing

Healthcare and pharmaceuticals

Financial services

Telecommunications and media

Transportation and logistics

Automotive

FMCG

Chemicals

Professional services

Aerospace and defence

Construction

Energy industry

Extractives (mining, oil and gas)

Other (please specify)

12.5%

11.3%

9.4%

7.5%

7.5%

6.9%

6.3%

5.0%

4.4%

3.8%

3.8%

2.5%

1.9%

17.5%

Survey Responses

Is your organisation going through or have gone through cultural transformation in the past 2 years?

Which stage of the cultural transformation journey is your organisation in?

Yes 89% No 11%

We are in the process of implementing cultural transformation

We have implemented cultural transformation and are now monitoring and adjusting

We are planning to implement cultural transformation

75%

15%

10%


Is your organisation planning to transform its culture in the next 2 years? (Respondents who selected “No” to question “Is your organisation going through or have gone through cultural transformation in the past 2 years?”)

What is driving cultural transformation?

Yes 61% No 39%

Which of the below categories would best describe your cultural transformation initiatives? (Select all that apply)

Strengthen/deepen/re�ne and make consistent throughout the organisation’s existing, valued culture

Signi�cantly expand the choices people have about how they relate to change and culture (identify, norms, beliefs and behaviour) while expanding the organisation’s agility to perform in or de�ne, its markets

Trade one type of culture (collective identity, beliefs, behaviour) for another

Assimilate, blend or keep separate to varying degrees, disparate cultures to create a strategic entity that operates in ways that ful�l promised synergies

Other

57%

46%

34%

24%

5%

Internal (new CEO) rede�nition of the business model/goal/performance levels

Maintaining a market position under intense pressure

Technology trends

Changing the game or rede�ne the market

Consumer trends

Market/legislative conditions

Margin pressure

Gaining a technical, talent or market edge/position

Entering new markets/geographies

Competitor consolidation/divestiture

Other

47%

36%

35%

33%

32%

27%

23%

23%

19%

13%

11%


How effective have your past cultural transformation initiatives been?

HIGHLY EFFECTIVE EFFECTIVE SOMEWHAT

EFFECTIVENOT

EFFECTIVENOT

APPLICABLE

Conducting organisation-wide values workshops

9% 26% 28% 14% 22%

Leadership coaching and mentoring 8% 35% 38% 8% 11%

Leadership and staff training 8% 33% 43% 8% 8%

Implementing specific changes to realign the organisation’s culture to its business and talent strategies

5% 33% 40% 11% 11%

Influencing the organisation’s culture through external partners

1% 7% 28% 32% 32%

What are the biggest challenges you face or have faced in building your organisational culture? (Select all that apply)

Reinforcing new behaviour to attain change

Change fatigue (workers are asked to follow through on too many changes at once)

Lack of direction, alignment, commitment from senior team

Lack of resources (budgets, time, sta�, technology or systems in place)

Resistance from managers / senior team / sta�

Short term focus on top line growth

Geographic / cultural misalignment / communication

Inexperience across leadership or key executors

Incorporating innovation into the business culture

Measuring the impact of good corporate culture

High growth / re ghting

Changing business and digital environment

Getting an outside-in perspective from customers or experts

Other

56%

55%

47%

46%

44%

39%

35%

33%

32%

28%

26%

24%

18%

7%


Overall, how are you addressing these challenges? (Select all that apply)

What are the most important outcomes from the cultural transformation activities in your organization? (Select all that apply)

Who is/are leading cultural transformation in your organisation? (Select all that apply)

Conducting leadership training and coaching

Establishing a clear organisation vision and purpose

Empowering sta to eect changes

Setting clear behavioural change goals

Involving sta as change agents

Creating alignment

Storytelling

Organising peer-to-peer or peer-to-leader coaching or feedback sessions

Identifying the critical areas of misalignment between the current and desired cultures

Developing informal peer networks and motivators

Forming centralised teams

Other

71%

60%

52%

50%

48%

45%

44%

36%

30%

26%

18%

6%

Alignment of culture and business goals

Greater employee satisfaction

Higher employee creativity and innovation

Higher employee productivity

Better processes and systems

Higher ROI

Other cost savings

Lower employee turnover

Change in brand image

Other

62%

55%

48%

46%

40%

30%

25%

23%

22%

13%

Top management (C-Suite)

Human Resources

Business unit leaders

Dedicated culture management team

Team leaders

Team members

Other

No one

82%

69%

47%

22%

19%

14%

6%

3%

CCL - Europe, Middle East, Africa www.ccl.org/emea · Brussels, Belgium · +32 (0) 2 679 09 10 · [email protected]

Center for Creative Leadership® and CCL® are registered trademarks owned by the Center for Creative Leadership. ©2017 Center for Creative Leadership. All rights reserved.

B U S I N E S S T R A N S F O R M A T I O N N E T W O R K

CorporateLeaders

2017

The Center for Creative Leadership, a top-ranked global provider of executive education, offers what no one else can: an exclusive focus on leadership education, research and unparalleled expertise in solving the leadership challenges of individuals and organisations everywhere. For over 47 years (27 years in EMEA), we’ve equipped clients around the world with the skills and insight to achieve more than they thought possible through an array of leadership programs, customised products, digital learning, Coaching, Assessment, Tools and Support with nearly 750 faculty and an associate network of 1,000 members in North America, Europe, The Middle East, Africa and Asia. CCL® has consistently been ranked as one of the top 10 providers of leadership solutions by the Financial Times and Bloomberg. For the fourth year in a row, CCL ranks No. 4 overall in the Financial Times worldwide survey of executive education.

CCL is redefining the field of leader development beyond individuals to embrace the leadership development for you, your business and the world that together set direction, obtain alignment and commit to imperious change results. CCL believes that organisations need to bring leadership development and capability to the next level of maturity while implementing strategic imperatives. Organisations who can successfully navigate these turbulent waters will be success in managing complex changes they face.

For more information call us today at +32 2 679 09 10, or visit: www.ccl.org/emea

About CCL

CorporateLeaders is an exclusive independent network that inspires business and leadership by providing a trusted forum for executives to network, exchange ideas, share lessons learned and drive business forward in an ever changing environment.

We focus on providing exclusive membership services, intimate and content rich networking events, research, content, leadership development and advice on business transformation with the executive needs and experiences at its core.

For more information visit: www.corporate-leaders.com

About CorporateLeaders

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