A collection of articles written by Customer 1st

Organisational Cultural Change: What Is Needed and How Do We Make It Happen?

10th June 2011

Organisational culture has attracted wide attention from practitioners and academics during the past few years. Why is organisational culture so important, and why is it still so difficult to define?

Perhaps it is because it is intangible; you cannot touch it or see it, but you certainly feel it and experience it within organisations. Organisational culture could be described as an atmosphere. Many consider it as a means by which senior managers influence employees' attitudes and behaviours. Where the culture is right, everyone works together, and the staff will say, "This is the way it happens around here."

I believe that the culture in an organisation is especially important for customer service. Organisational culture can act as a mechanism to enhance service performance, a notion supported by a number of writers on service management. Examples include "Putting the Service-Profit Chain to Work," found in Harvard Business Review, 1994, and "Assessing the Service-Profit Chain," found in Marketing Science, 2002.

In essence, the service-profit chain suggests that to enhance profitability in organisational performance, managers must concentrate on what is happening inside the organisation, and in particular, concentrate on establishing a customer-focused culture.

In the 2009 Institute of Customer Service literature review, "Organisational Culture Change," Barbara Caemmerer, University of Strathclyde, discusses the link between the internal and external organisational environment to illustrate the connection between input and output as suggested by the service-profit chain.

Importance of the Internal Organisational Environment

Barbara states that, "If a service-oriented, customer-driven culture can be established through the introduction of meaningful service values, and employees are supported in the delivery of these values—e.g., through underpinning IT systems, training and reward schemes—this has a positive impact on employee satisfaction."

The reason for this connection is that employees in such service-oriented cultures are more likely to see an alignment between what their managers expect of them and what their customers want: a good service performance. Barbara also describes another link in the service-profit chain: greater employee satisfaction leads to higher employee retention and productivity.

Importance of the External Organisational Environment

Barbara also describes the link from the internal environment to the external, saying that, "Higher employee retention and productivity are linked to the delivery of better services to the customer, which leads to an increase in customer satisfaction. Satisfied customers are more likely to become loyal to the organisation. This is expressed through repeat purchasing behaviour, lower price sensitivity, and a higher tolerance to potential future service failure."

By establishing loyalty, customers are less inclined to switch to another service provider. These customers may also turn into great ambassadors for the organisation, which means that they act as multipliers of positive messages about the organisation.

How Can We Achieve Organisational Change?

Research in social development suggests that employees in an organisation have the innate desire to conform to group norms and contribute to team efforts. If newly introduced organisational cultural values and behaviours are accompanied by the appropriate recognition and rewards, then the organisation's cultural values can become part of the employees' value system over time.

In the Harvard Business Review article "Control in an Age of Empowerment," the authors argue that where integrated management practices support clearly formulated cultural values via rewards and meaningful performance measures, higher employee satisfaction and better job performance tends to result.

I am sure other organisational factors and practices exist that may positively influence organisational culture change management. Senior managers and team leaders must make an effort to cascade the right sort of change to their teams, and they must believe in the change and lead by example; otherwise, the change will not happen. I think that, in general, employees perceive CEOs as symbolic characters, while middle managers and team leaders are viewed as the most influential change agents. These managers' proximity to employees, as well as the opportunities they have to identify conflicts and translate corporate messages into what they mean for employees, is important in the change of organisational culture.

Employees need to participate fully and feel involved in the planning of organisational culture change because this enhances acceptance of the new cultural values. Discussions with teams need to occur regularly to track progress towards the achievement of the new aims, and feedback should be provided continuously on how performance can be improved. To be effective, all management practices need to be aligned with the overarching aim of the change process.

One critical management practice is the effective agreeing, setting, and monitoring of service performance targets that align with the new cultural values. By using tools such as balanced scorecards, performance dashboards, and action plans, employees gain a clearer idea of their responsibilities and their contributions to the development of the new organisational culture.

To reinforce behaviour according to the desired culture, reward systems and training schemes also must align to the long-term goals of the cultural change programme. (And I stress long term, as one cannot achieve meaningful cultural change overnight). As owner of an online customer service training company, I have a particular interest in the learning and development aspects of cultural change. The right training schemes help to establish a clear vision of the new organisational culture and send messages about what is expected of employees at all levels.

Communication and building awareness are critical management practices to facilitate organisational culture change. Creating a customer-focused culture needs to be communicated simply and with enthusiasm to motivate and inspire the people who deliver services to customers.