In Aesop’s Fables is the story of a fox that tried in vain to reach a cluster of grapes dangling from a vine just out of reach above its head. The fox lept high with all his might but after several unsuccessful attempts gave up and said to himself, ‘‘These grapes are sour, and if I had reached them I couldn’t have eaten them anyway.” It’s the source of the phrase ‘‘sour grapes.” It also illustrates the distressing mental state of conflict or anxiety when people’s actions are inconsistent with what they believe. The fox’s willingness to stop trying clashed with his knowledge that the grapes were tasty. By changing his attitude toward the grapes he rationalized his behavior. The tension individuals feel in the financial recovery of a business motivates them to either change their behavior or change their belief to avoid the distressing feeling. The implication of this in situations from post-recession recovery to life-saving turnarounds is that, to be successful, it’s critical that the organization go beyond behavioral compliance with recovery actions to commitment, through genuine belief, to a new way of doing business.
There is a direct link between management’s ability to gain that commitment and the underlying culture of the organization. Corporate culture is the belief system of a company revealed through the collective actions, behaviors, and rituals of the individuals within it. It is not enough to have the right product, operations or qualified management to succeed in a recovery. Every company going through radical change must have the right culture and it’s the responsibility of management to bring the culture into alignment with the new vision and priorities of the company. If the workforce believes in the overall purpose and direction of the change, they will be willing to modify their individual behavior to serve that purpose. If they don’t, they will resolve the conflict between what’s being asked of them and what they truly believe by rationalizing their old behavior, slowing or possibly dooming the change. The key then is to enable the workforce to see that the pain and inconvenience of change is far more attractive than to rationalize and remain in the current operational state.
To feel comfortable about change and to carry it out with enthusiasm, people must understand their role in the unfolding drama of the turnaround and believe that it’s worthwhile and in their best interest to play a part. It isn’t enough to tell employees that they’ll have to do things differently. Anyone leading a major change program must take the time to think through the “story” behind the change, what makes it worthwhile and explain it in such a way that it creates an attraction more compelling than the status quo. For everyone involved, their contributions must make sense to them at an individual level.
Support for the changes must not only come from management but also from leaders in the informal groups with which people identify. The support of informal organizational leaders, those people who exercise influence without positional authority, and the groups that surround them must be earned if the desired change is to have a deep and permanent influence. If influential individuals complain that “we’ve heard this a thousand times before and nothing happened,” others will be inclined to rationalize the current behavior and avoid the needed change. Change must be understood and made meaningful to groups at every level of the organization to achieve sustainable traction.
Many change programs make the error of exhorting employees to behave differently without teaching them how to adapt general concepts to their individual situation. The company may urge them to be more “customer-focused” but if little attention was paid to customers in the past, they will have no idea how to act now or what successful “customer focused” actions looks like. Likewise, new reporting structures, management and operational processes, measurement procedures and financial and non-financial reward systems must be consistent with the behavior that people are asked to embrace. When a company’s goals for new behavior are not reinforced, employees are less likely to consistently adopt them.
Financial distress is not just about wrongdoing at the top. Rather it’s about failed performance at all levels of the organization. Therefore, changing the culture and thereby the minds and belief systems of individuals must be at the core of any turnaround effort. When companies are unable to change their cultures, they cannot expect to be successful in responding to the radically changing business conditions associated with a financial recovery. Company management needs to proactively engage in a deliberate culture building process and not let it evolve on its own. It is critical that the desired values, behaviors, performance standards and leadership requirements for a successful recovery be communicated clearly and often. To change behavior throughout an organization, it isn’t enough to ensure that people at the top are in line with the new ways of working; role models at every level in the company must consistently “walk the talk.” In any recovery situation, culture transformation is a necessary prerequisite to sustainable change. Management must realize that changing corporate culture is not one thing they do in revitalizing a company, it is everything they do.