Cultural transformation: role and tasks of executive management

By Sabine Walter
20 Aug 2023

The last few years have shown that companies - regardless of their size - are under much greater pressure to change in shorter cycles and sometimes more profoundly. The triggers for these transformations are manifold: new technologies, market changes, shortages of raw materials, shortages of skilled labour, wars, pandemics or changing social requirements. In order to be able to react more quickly to such triggers and remain competitive in a volatile environment, many companies are scrutinising their culture and initiating cultural changes. Depending on the size of the company and the existing culture, these transformations can sometimes take years. Success depends on various factors, including to a large extent on the managing directors. They play a key role in cultural transformations. You can read about the tasks associated with this role in this article.

Management tasks in transformation processes - organisational development | executive coaching
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Management Summary

In order to remain competitive in a volatile environment, companies need to make cultural changes. Managing directors have a key role to play in the success of this transformation. The following tasks are associated with this role:

  • Initiating transformation
  • Develop a cultural vision together with managers and employees
  • Communicate elements of the future corporate culture
  • Exemplify cultural values
  • Give feedback and hold others accountable
  • Measuring success
  • Developing yourself and others
  • Be consistent
  • Review processes, systems and structures
  • Ensure cultural fit of the strategy
  • Making progress visible and appreciating it

The abundance of tasks makes it clear that managing directors are very challenged when it comes to further developing the culture of a company. This implies that all the tasks associated with change also take up a lot of time in the day-to-day work of managing directors. Plan for this time.

What constitutes a corporate culture?

The culture of a company is defined by the sum of all behaviors in that organization.

  • How do we work together?
  • How are decisions brought about, made and communicated?
  • How are decisions made implemented?
  • How easy is it to deal with change?
  • How is management organised?
  • How much room for manoeuvre is there?
  • Who takes responsibility?
  • What qualities and achievements are recognised?
  • How do we deal with mistakes; how do we learn from them?
  • How are conflicts addressed and resolved?
  • How do we communicate? What is said? What is kept quiet?

All this and much more is culture. That's why every company has a culture - just not always the one you want.

In order to develop the desired culture, managing directors initiate a cultural change. They want to establish new values, behaviours and norms in order to better master business challenges.

Only few Managing Directors are aware of what this transformation also requires of them.

Cultural transformation: tasks of the Managing Directors

Even if the transformation of a company can only succeed with everyone, managing directors play a key role in this process. These tasks are associated with it:

Initiation: kick off the transformation



Example

The first task of the MDs is to initiate the cultural transformation by clearly communicating the goal and reason for the change within the organization.

You don't have to say the words "cultural transformation". Instead, choose a formulation that is understood by everyone.

"We are increasingly realising that the way we work is preventing us from adapting quickly to new market conditions. That's why we want to scrutinise our way of working together and redefine it if necessary. To this end, we will ...".

You can find more on "Communication in change processes" in our Articles on change communication.

Develop the desired corporate culture

We recommend that the executive management works out the core elements of the desired corporate culture together with managers and employees. This joint process later promotes acceptance of what has been developed.

In family businesses, shareholders can also be actively involved in this goal-setting process. If they are not, it is important that they agree with the result.

Elements of a cultural target image are usually: Mission statement, values and Management principles with the resulting Behavioural anchors. It is important that all elements create a harmonious overall picture.

Communicate elements of the future corporate culture

Once the core elements of the corporate culture have been defined, it is the task of the management to communicate them. Supplement this top-down communication with a multi-level communication concept that includes employees and managers. For example, they can explain what they understand by the respective values, why they are important and how they live them in the respective teams.

Exemplify cultural values

It is a critical success factor in this cultural change process that you as a manager exemplify the elements of the desired culture. The key question is: "Do you as a manager behave in a way that is defined by the values and leadership principles?"

If your behaviour is not in line with the defined target culture, not only you but also the target culture will lack credibility and the transformation will fail.

Only if the management lives the new culture with the corresponding behaviours can it keep its managers and employees committed and address inadequate behaviour and demand change.

For cultural transformations that we support, we recommend that managing directors look for sparring partners who provide them with continuous, honest feedback on their behaviour. This can also take the form of regular work shadowing. A 360° feedback process can be used to take stock.

Give feedback and hold others accountable

If you notice that desired behaviour is being violated, it is your job to address this. At the same time, you should reinforce behaviour that is in line with the defined values and management principles by praising it.

Regular performance measurement

In addition to individual feedback, it is the task of executive management to introduce instruments that enable regular measurement of success. These include "culture checks," "360° feedback," "employee surveys," "employee appraisals" or "supervisor feedback".

All of these results provide a good overview of where the organisation stands in relation to the desired culture. The results also make it possible to derive measures to continue the change process in a targeted manner.

Developing yourself and others

Since a cultural transformation always implies work on the behavior of all people involved, it is important that this development process is accompanied by further training measures. Mentoring, coaching and training programs are proven instruments for which a budget must be planned and made available.

Be consistent

If you as the managing director notice that managers repeatedly fail to behave in accordance with the values and management principles, it is up to you to draw the consequences and, if necessary, fill new management roles.

This consequence is fundamental if the transformation is to succeed. However, it will only be accepted if you exemplify the desired behaviour.

Scrutinising processes, systems and structures

Example

In addition to behavioural changes, the structures of the company must be brought into line with the desired culture.

If cooperation is one of the corporate values, it is advisable to scrutinise the company's target and remuneration processes. To what extent do they support or undermine cooperative behaviour? Do individual targets and bonuses still make sense or is it time to introduce a standardised profit-sharing scheme?

Structure creates culture. It is therefore elementary to align processes, systems and structures with the desired corporate culture. You can read more about this in our interview with Bernd Kratochwille, Head of Corporate Human Resources der BLANC & FISCHER Corporate Services GmbH & Co. KG.

Ensure cultural fit of the strategy

Example

In addition to the structures, the corporate strategy must also match the culture.

If sustainable action is part of the cultural cornerstone, this must be reflected in the strategy and in concrete measures. Otherwise, both will lack credibility and cultural change will not succeed.

Emphasising and appreciating progress

As cultural development usually takes place over several years, it is important to continuously emphasise progress. It is the task of the management to recognise successes and progress, but also to make it clear what still needs to change.

Managing director knowledge: How to explain strategy clearly

Conclusion

Cultural transformation is a top priority. Time must be scheduled for it.

Changing a company's culture also demands a lot of time from the managing directors. Depending on the company, this can be 30%-40% of working time. You should plan for this time.

Because: Culture does not change along the way, and cultural change is not the task of external consultants. Cultural change is the result of many behavioral changes by all members of an organization, exemplified by the managing directors and supported by appropriate structures, processes and systems. Initiating cultural change, setting an example and ensuring that it is firmly anchored is a top management's job.

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