How to change your company culture – with steps

Company culture is the shared values, beliefs, behaviours and practices within an organisation. 

Having the right organisational culture for your business is important for adapting to new challenges, supporting innovation and growth, and attracting and retaining the best talent. If your enterprise is struggling in any of these areas, it might be time to change your company culture.

In this article, we’ll explore what establishes the need for a company culture transformation and how you can effectively initiate these changes to create a more positive workplace environment.

Why should you change your company culture?

Strategy is only part of a successful company. Culture is critical, and improving business operations and employee satisfaction are the main factors behind why companies change their culture.

A study by Flair HR revealed that 35% of employees reported a significant change in their organisation’s culture over the last two years, with 54% reporting this as positive.

Still, it can be difficult to determine when a cultural change is needed. Here are some circumstances where it might be appropriate:

• Realigning with the business’s values

Company culture is meant to represent your business’s ambitions and core values. If your internal culture starts to stray away from this, attracting new talent and retaining current employees can become a challenge. A misaligned culture can lead to poor employee morale, reduced productivity and a lack of innovation. For example, if your company promotes a “family-first” culture, it’s important to reflect this in your workplace, such as offering carer’s leave for employees looking after young children or elderly relatives.

• Adapting to changing market conditions

Organisations need to be agile and be able to readjust to the ever-evolving business landscape. The pandemic, Brexit, and the war in Ukraine have all created new challenges. A dynamic internal process – for example, an adhocracy model – encourages employees to adapt quickly, embrace opportunities and contribute fresh ideas to stay competitive in a fast-paced business environment.

• Improving employee performance

Culture has a huge impact on employee performance, with research from Gartner reporting that cultural connectedness can increase employee performance by up to 37% and retention by up to 36%.

For example, a market culture that recognises and rewards hitting KPIs with bonuses encourages employees to maintain high performance, while the family-like atmosphere of a clan culture keeps the work environment productive but also fun and engaging for staff. 

• Creating a better environment
  

A toxic work environment negatively impacts employee wellbeing, increases staff turnover and poses a reputational risk to a company that can impact investment and talent retention. 87% of UK employees reported that a negative work culture had affected their mental health, while 61% had resigned from a job due to workplace culture issues.

It’s important to address certain issues, such as poor communication, lack of recognition and inadequate support, to start implementing improvements. Once these are tackled and more positive social norms like transparent communication and collaboration are in place, you can create a stronger workplace environment where productivity and satisfaction remain high.

6 steps to change your company culture

Changing a company culture is a complex process that needs strong leadership, clear communication and active contribution from everyone in order to be achieved.

We walk you through the process, step-by-step. 

Step 1. Get employee feedback: Set up employee focus groups or surveys to gain feedback. This will help you to gather insights from employees about how they feel about your culture and current levels of engagement.

Step 2. Assess the current organisational culture: Conduct a cultural audit of your workplace. This includes evaluating existing policies and practices, and determining whether they still align with your company’s values, mission and objectives.

3. Define your desired culture: Now it’s time to come up with a clear vision of what your organisational culture should look like. Remember to consider your employees’ feedback and if there are any parts of the current culture you don’t want to change, whether it be your core values, mission statement or work environment. You can also hire a culture consultant to help you in this stage.

Step 4. Communicate the cultural change: Make employees aware of your cultural change, as this will affect their daily lives and work environment. It’s important to communicate effectively why this change is happening and why it is beneficial. You can also share meaningful company culture quotes to get them on board with this change.

Step 5. Implement culture change initiatives: Cultural change doesn’t happen overnight. For change to successfully follow through, it needs a plan with detailed timelines and milestones – project management software can be invaluable here to manage stakeholders. It also involves providing the relevant training and resources to give employees the skills and knowledge to adopt your new organisational culture.

Step 6. Measure your cultural change: Once your new culture has been implemented, you should regularly monitor how well it’s doing. You can set relevant Key Performance Indicators (KPIs) or SMART goals, conduct regular employee surveys and use observational metrics (for example focus groups or 121s) to monitor and measure your new culture’s progress and success.

Companies that successfully changed their culture

Companies with successful cultures don’t always start that way. Even big names have faced challenges, needing to transform their approach for a better company culture. Here are some prime examples of the most successful cultural changes in business.

1. IBM’s upgraded performance management system

IBM, like many, used to rely on annual performance reviews for their performance management practices. 

But traditional performance reviews just don’t cut it anymore. Research by The Corporate Executive Board (CEB) revealed that only 5% of managers are satisfied with annual performance reviews, while the Society for Human Resource Management reported that 95% of employees are dissatisfied with their company’s evaluation process.

IBM underwent a significant business transformation in 2018, which included scrapping the old ways of performance management. Instead, IBM sought to create a new system, gathering employee feedback to influence its development. From there, IBM’s “Checkpoint” (named by its employees), was created.

Instead of the usual 1-10 rating system, Checkpoint facilitates open communication and feedback between employees, regardless of their rank. Performance strategy is also aligned with five key dimensions – business results, client success, innovation, skills and responsibility to others.

As for current employee satisfaction, 81% of employees would recommend working at IBM, according to Glassdoor.

2. Aetna’s restoration to health

Back in the early 2000s, international medical insurer Aetna faced an abundance of problems. Customer loyalty was declining rapidly, reputation was damaged by lawsuits and the company was losing around $1 million per day.

The reason? The company’s poor culture. With its inflexible environment and inability to adapt after merging with US healthcare, they were in desperate need of a positive transformation.

When John W. Rowe was appointed as CEO of the company, he didn’t merely impose new strategies. Instead, he involved employees in identifying its problems and planning what kind of culture was desired. Once this was set in stone, Rowe aligned the new strategy of the organisation, named “the new Aetna”, with its historical values.

However, based on reviews from both Glassdoor and Indeed, employee satisfaction seems to be mixed. While most were satisfied with the company’s benefits and perks, others cited poor management, lack of training and high turnover for their poor rating.

3. Microsoft’s reboot from competition to collaboration

In the early days of Microsoft, its company culture was notorious for its overly competitive environment. 

During the dotcom bubble of 1999, it became the world’s most valuable company with a market capitalisation of $583 billion. By 2000, this had dropped to $230 billion.

This swift downfall boiled down to a major cultural shift in the company. Focus had shifted from innovation to revenue, causing internal competition between employees, strained relationships and less collaboration between teams. Managers would also engage in “stack racking”, where they would rate employees on their performance, causing those at the bottom to be placed under performance review or fired completely.

Satya Nadella stepped in as CEO in 2014, bringing a new vision to the company. By adopting a growth and “fail fast” mindset, Microsoft prioritised customer feedback and employee input, fostering an environment where everyone was heard and considered. Now, Microsoft encourages a culture of open communication, continuous learning and collaboration where employees feel motivated to contribute to the company’s success.

Microsoft has a 4.3 out of 5-star rating on Glassdoor, with 86% of employees recommending it as a place to work and 82% having a positive outlook on the business.

Conclusion

Companies undergo cultural transformations for many reasons. Whether it’s to stay ahead in a competitive market, respond effectively to customer needs or improve its internal environment, cultural change is essential for adapting to new challenges and achieving sustainable growth.

That said, changing your company culture isn’t an easy process. It takes time, commitment from leadership and active participation from every level of the organisation. 

Successful cultural change involves thorough planning, clear communication of goals and consistent reinforcement of desired behaviours and processes. 

With this, businesses can create a positive workplace culture that truly reflects their values and goals, boosts employee engagement and enhances their competitive edge.