Why culture change initiatives fail
Across the UK, business leaders are facing the same strategic challenges – how to boost and sustain productivity and innovation to get ahead of the curve.
Lost in translation
Leaders are struggling to reconcile the need for financial savings with the drive for significant performance improvements.
At the root of these demands is a loaded phrase: culture change.
But how do leaders inspire and drive a fundamental change to the way their organisation thinks? How do they create a culture which promotes and prioritises the engagement of its people? And crucially, how do they design and implement a programme that embeds lasting change?
The challenge is not new. But in today’s climate of economic retrenchment, finding its solution has never been more pertinent or more valuable.
For many years, businesses seeking advice and guidance have turned to external advisers. They have sought the expertise of those in the practice of business transformation to assist in the design and implementation of culture change. Our thesis followed their line of thought.
We proposed that large consultancies with a breadth of experience across global enterprise would deliver long-lasting culture change programmes for their clients. Our hypothesis was that specialists in human resources would unlock the potential in organisations by creating tirelessly engaging cultures. We were surprised by the findings.
We asked 160 CEOs and C-suite level business leaders, including 42 FTSE CEOs, to describe their experiences of engaging consultants to assist with culture change programmes. We sought opinions across three main areas: the nature and quality of advice received; the perceptions of companies providing advice; and the degree to which advice is or isn’t implemented.
The survey revealed the overwhelming majority of companies had used management consultancies in their business – a resounding 80%. A quarter of these firms cited employee engagement as the reason for their engagement, and our findings confirmed that nearly two thirds (64%) of this latter group feel their organisations require a change in culture.
But from here, the research begins to prove our thesis wrong. The problem stems from the issue of employee engagement. Our findings reveal less than half (46%) of employees are engaged by the recommendations made by management consultants. As a result, only half of these recommendations are fully implemented, and in turn, only 50% of surveyed FTSE companies claim a return on investment. Even when there is evidence of comprehensive implementation, over a quarter (27%) of our respondents said initiatives didn’t lead to lasting change within their organisations.
Overall, CEOs feel disillusioned. Despite spending millions of pounds on culture change programmes by management consultancies, hardly any companies are achieving lasting results. The reports they receive are heaving with statistics and recommendations, but many are ultimately consigned to the dustbin. These leaders are reluctant to estimate the actual cost of a programme’s failure but there is no mistaking their resounding disappointment. The upshot is that 48% of CEOs have now lost faith in traditional management consultants’ ability to deliver organisational change.
The problem is clear. But the buck does not stop with recommendations being made by the consultancies themselves. The real failure is occurring at the point of implementation, coupled with a crippling lack of employee engagement. This combination of elements is preventing the change in culture that UK business desperately needs. There is no denying that those requiring culture change need a better way to ensure they achieve change that lasts, but the current model of consultancy is broken.
What do CEOs mean by culture change?
“It’s a new way of thinking in an organisation that is aligned with the strategic goals of the organisation and based on the shared values of a company’s employees. Changing a company’s culture is one of the hardest things you can do in business; it has the power to make or break a company.”
FTSE CEO, May 2013
Methodology Research was conducted with Vision Critical in May 2013, with a sample of 160 respondents including 42 FTSE CEOs, 56 UK CEOs and 62 C-level personnel (UK chairman, presidents, principals, and board members, of whom 16 work for FTSE listed companies).
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Lost in Translation: Why Culture Change Initiatives Fail
But how do leaders inspire and drive a fundamental change to the way their organisation thinks? How do they create a culture which promotes and prioritises the engagement of its people? And crucially, how do they design and implement a programme that embeds lasting change? Foreword by Prof Dominic Swords, Henley Business School June 2013. Sponsored by UnipartDownload File