When Deloitte interviewed over 7,000 CEOs and HR leaders, 82% of respondents said they believed company culture could provide a competitive advantage. But fewer than a fifth of those same respondents felt that they had the right culture. And only 28% said they understood their culture.
These stats show why it’s important to track your company culture and find ways to measure it. And it’s especially important when a change to your workplace culture is needed — whether to increase profits, turn a toxic culture into a positive one, or simply to modernize.
When it comes to changing organizational culture, what should you do? And does workplace culture really matter?
What is organizational culture — and why is it important?
Organizational culture encompasses the shared values, beliefs, norms and behaviors that define how a company operates and interacts internally.
It’s how the people who work within that business think, feel and act every day. Culture influences employee engagement, performance, retention and overall organizational success.
A healthy culture aligns employees with company goals, fosters innovation, and enhances adaptability in a rapidly changing business landscape.
It’s also a competitive advantage that attracts top talent, enhances brand reputation, and drives long-term sustainability.
Company culture, most importantly, comes from the top. It often reflects leaders’ priorities, for better or worse. When a leader changes, it’s highly likely that the company’s values, and therefore culture, will too.
Steps for changing organizational culture
To instigate a cultural change, the first thing to do is to assess the current situation. Then, you can implement new processes or structures that will lead to the desired improvements.
It’s not just about telling people what to do. You have to show people. Embody it. Believe it.
As employees’ habits change, their values and attitudes will change as well.
So what steps do you need to take to initiate a cultural change? Here are some key steps for changing an organization’s culture.
Assess current with surveys and feedback
Conducting employee surveys helps you gather insights on how they feel about the company’s existing culture and current levels of employee engagement.
You can also seek feedback through focus groups and one-on-one interviews to capture qualitative data on cultural issues — and your planned cultural shift.
Rachel Goor, CEO of Workrowd, an automated surveying and analytics platform for culture and engagement, says, “The success or failure of any culture change ultimately hinges on employees; if team members aren’t on board, they won’t put in the daily work to make your change stick. The best way to ensure you have buy-in across the organization is to involve people in the process. Collect input from employees via surveys and focus groups before the change, get their thoughts on how things are going while the change is in process, and continue to follow up afterward to identify ways to continuously improve.
”It’s also important to analyze historical data, like turnover rates and employee satisfaction scores.
If you conduct exit interviews, examine past interviews to see if any patterns emerge between data sets. This will give you a starting point for your cultural transformation.
Conduct a cultural audit
Knowing where the company culture is now helps you track the cultural change journey. You can find out where you are now — and what needs to change to get you to where you want to be. That means conducting a comprehensive cultural audit.
Examine existing policies, practices and rituals within the organization. Do these things align with the organization’s values, mission and strategic objectives?
For example, if inclusivity is especially important to your business, does everyone use inclusive language? Is there a guide they can refer to if they’re unsure about something?
If attention to detail is important, do employees keep communal areas like the kitchen tidy, or do they take for granted that someone else will clean up after them, leaving a mess behind after lunch?
Also consider what your cultural strengths and weaknesses are. Do they align with the desired behaviors that will help you change company culture? What areas must change for the cultural transformation to happen?
Define the desired culture
At this stage, it’s time to collaborate with key stakeholders to come up with a clear vision of what the organizational culture should look like.
Use employees’ feedback to assess how they feel and how you can get the most out of them during and after the transition period.
Also consider if there are any parts of the current culture you want to keep. Make sure everyone knows that those things aren’t changing, whether that’s your core values, company goals, mission statement or work environment. That extra bit of stability can be reassuring, especially during tumultuous times such as during mergers or acquisitions, when businesses need to figure out how to combine their identities.
Also consider what’s non-negotiable. When Toto Wolff joined the Mercedes-AMG Petronas Formula One team in 2013, for him, attention to detail was a crucial component. But he was willing to work with those who were unsure, and he listened to their opinions. Check out the example below for more information on Mercedes’ cultural change.
Once stakeholders are on board with what the new culture should look like, put together a culture statement that outlines the core values, behaviors and principles of the business going forward. These should align with the company’s goals and long-term vision.
Don’t forget to inform employees about how the new culture will affect their daily lives and work environment.
For instance, is it more important that they get everything done, or that tasks are performed at a high level? Getting that straight will affect not only how employees feel about their work, but also how customers perceive the business — and long-term business results.
It’s important that the new culture resonates with the marketplace as much as it does with employees. HR has to increasingly partner with marketing to help with this. In the current online world, where bad reviews can go viral, this is particularly important.
Create a culture change team
To help drive the change, assemble a diverse group of employees who are on board with the cultural change and have a range of expertise. This may mean moving some existing employees into new areas or hiring a consultancy that specializes in cultural change.
Make sure every team member has a clear role and responsibilities, and assign someone to lead them.
The more diverse the team members are, the better. They’ll be able to clearly communicate what’s going on to more people, improving the employee experience and helping take some of the pressure off your leadership team.
Communicate the vision
It’s important to craft a compelling narrative that communicates why the cultural change is happening and the benefits it will bring. This will help get employees on board with the change efforts.
To explain the new strategy, develop a communication plan that outlines the key messages, target audiences, and channels for delivering the vision. And ensure that leadership actively participates in communicating the vision to demonstrate commitment.
Remember that employees follow the example of their leaders. That means if leaders come in with a negative attitude toward the culture change, their employees will too.
If leaders are open, honest and accessible, employees will feel more comfortable at work and more able to talk to them. Simple things like this can make a huge difference when it comes to employee engagement.
Make sure line managers are on board and have answers to employees’ questions.
In an interview with Tribal Impact, Liz Brenner, Head of Enablement Communications & Change Management at ServiceNow, said line managers should be “well-prepared, well-versed, and understand what’s happening.
They can even conduct meetings with their teams to walk them through the changes and how they will affect them specifically. Provided line managers are prepared, they’ll be able to offer more in-depth answers than they would in a larger meeting with every employee.
However, it’s still important to keep employees in the loop through regular all-hands meetings, email updates, or catch-up calls as well.
This further helps bring them along on the journey.
The less information they’re given, the more likely they’ll be to resist the new strategy and want things to stay the same. This may increase turnover rates and increase hiring costs.
Some questions employees will want answers to include:
- Why is this happening? And why now?
- How will it affect my role?
- How will it impact my daily life?
- Why should I want the change to happen?
Clearly communicating the answers to these questions in a positive way will improve your retention rates and employee experience.
Implementing cultural change initiatives
For anything to be successful, it needs a good plan. Culture change is no different.
Achieving the desired culture requires detailed timelines and milestones. You also need to know who’s responsible for specific initiatives and driving the new behaviors you want everyone to adopt.
Providing people with relevant training and resources equips them with the right skills and knowledge required for employees to adopt — and accept — organizational culture change.
Be sure to monitor the progress of your new culture in real time. That way, you know whether the changes are working and can identify any hurdles before they become significant. You can also spot positives sooner.
Measuring cultural change
Once the new culture has been defined and implemented, it’s time to measure the organizational change. How do you do that?
Define KPIs that are relevant to the change and aligned with the desired cultural outcomes.
Also make sure to continuously track KPI data so that you can gauge company progress. These KPIs will help you communicate the cultural change success so far and adjust strategies that are less effective.
Revisit employee surveys
Once meaningful change has been implemented, collect feedback regularly from employees in the form of things like surveys.
Send another survey, conduct another focus group, or do more one-on-one meetings. This will give you valuable insights along the way so that you can assess how well things are going and how employees really feel about what’s happening.
You want to encourage open communication as much as possible — and act on any feedback they provide on your cultural change initiatives to ensure your retention rates don’t take a hit.
The less in control employees feel, the less satisfied they’ll be. Even if they have no control over what comes next, listening to their feedback can make employees more satisfied, happier, and engaged in their roles — and more likely to stay.
In addition to quantitative data, use observational metrics to assess the impact of cultural change in real time.
This could come in the form of assessments at regular intervals to see the impact of cultural shifts. Focus groups, one-on-one interviews, and even exit interviews can help you collect more qualitative data.
A combination of qualitative and quantitative data will provide you with the most comprehensive view of what’s going on within the business.
2 examples of change in organizational cultural
Now that we’ve explained how to implement changes to the organizational culture, let’s look at a couple of businesses that have changed theirs.
It was inevitable that Twitter’s culture would change when Elon Musk took over in October 2022. Within a few weeks, many people had left the platform. In 2022, the number of Twitter users peaked at 368.4 million. That number is estimated to decline to 335.7 million in 2024.
In an article for The Atlantic, former Twitter employee Rumman Chowdhury said, “Messy as it was, Twitter sometimes seemed to function mostly on goodwill and the dedication of its staff. But it functioned.”
When Musk took over, content moderation became lax; block lists disappeared; and the site crashed during the Super Bowl.
What was it like on the inside for employees trying to deal with these things?
In the article, Chowdhury put it this way:
“From the announcement of Musk’s bid to the day he walked into the office holding a sink, I watched, horrified, as he slowly killed Twitter’s culture. Debate and constructive dissent was stifled on Slack, leaders accepted their fate or quietly resigned, and Twitter slowly shifted from being a company that cared about the people on the platform to a company that only cares about people as monetizable units. The few days I spent at Musk’s Twitter could best be described as a Lord of the Flies-like test of character as existing leadership crumbled, Musk’s cronies moved in, and his haphazard management — if it could be called that — instilled a sense of fear and confusion. ”
It goes to show that company culture can change — fast.
Loud voices can dominate and, if they bring enough “yes” people along with them, it can mean that those who challenge ideas for the greater good get shown the door.
As a result, the company culture moves from being populated by employees who care about the work that they do (even if it’s a little messy) to people who only care about one thing: money.
And when the culture lacks a consistent mission beyond revenue growth, employee mental health and retention rates both suffer.
Mercedes-AMG Petronas Formula One team
Let’s look at a more positive example.
When Toto Wolff joined the Mercedes-AMG Petronas Formula One team in 2013, he came from a background that differed markedly from many of the other people who work within the sport. And he found it wasn’t what he wanted it to be.
As Wolff explained on a High Performance podcast:
“There was an old ‘Daily Mail’ on the table from the previous week and coffee cups still had the dried coffee. I couldn’t believe this was the Mercedes Formula One team. You may say how do dry coffee cups or an old ‘Daily Mail’ impact on the performance of a Formula One team? But it shows an attitude. It shows attention to detail. And I think this is most important for a high-tech team. And all these soft factors that many will ignore because it’s not data, it’s not aerodynamics, it’s not vehicle dynamics that make a car faster, but all that is part of the values of a team. And if everybody around is moving in the same direction, if everybody acknowledges that attention to detail is important, then eventually the wheel is going to gain some momentum.”
The team had been through many different leaders and names over several years. So, while it had won previous championships, employees felt dejected and morale was low.
When it was time for the first town hall meeting after Wolff took over, he insisted things would be different. He promised to look after the team and make the most of the huge brand.
Not everyone was immediately sold. After the meeting, one employee told him, “Nice words,” and then left.
But Wolff was determined to prove that employee wrong. He meant what he said.
He enjoys looking after people and working with them. He also values discussions with competent people and isn’t afraid to admit when he’s wrong.
When he hits resistance, he tries to convince. On the occasions he can’t convince someone, things end. But he gives everyone a chance to develop and agree on a path forward.
While the Mercedes-AMG Petronas is a Formula One team, it’s also a business. And a lot of sports psychology also applies to business. They both require perseverance, fortitude, open communication, and the ability to work as a team. It’s the combination of these things that makes for powerful teams in any walk of life.
Mercedes-AMG Petronas won eight constructors’ championships in a row after Wolff took over.
And even though the team has been less successful in its championship endeavors the last couple of years, Wolff has stayed true to his word. The team’s winning streak may be over, but he’s not firing people en masse or placing the blame on any one person’s shoulders (like some of the other teams).
Instead, he’s moved employees around, listened to their feedback, and prioritized empathy. It’s often these challenging times that really test a company’s culture and whether leaders are true to their word.
Company culture starts at the top
The bottom line is this: When employees understand the changes that are happening — and why they’re happening — they’re more likely to get on board.
This can lead to higher employee engagement, greater employee well-being, and the increase in productivity and revenue that inevitably comes from high-performance teams.
Leadership plays a huge role in the formation of a strong culture and whether employees want to be a part of it. One person can change that corporate culture for better or worse.
Sometimes all it takes is a small change to the business model to result in more, or less, buy-in from employees, which can then impact the current culture and if you achieve the desired culture.