HR & Management

How to implement new culture in a struggling company

8 min read

27 September 2018

Creating new and positive structures within a struggling company requires strategy and care. Brute force, while easy, is the last option any leader should consider.

When a new CEO takes hold of a struggling company, the question he/she faces isn’t whether the business needs to change, but by how much.

From the outside, the need for change is apparent. But implementing change from within is rarely easy or comfortable, particularly when it comes to fostering cultural evolution and dealing with the challenges associated with it.

A company’s culture is like a Jenga tower: sturdy enough if you leave it alone, but easily toppled by the slightest touch of change. Creating new and positive structures within an organisation requires strategy, delicacy, and care; brute force, while easy, is the last option any new leader should consider.

The straightforward approach can be tempting for CEOs tasked with rehabbing struggling companies. As incoming leaders, they can see what needs to be done to push the company back into productivity and have the authority to implement rules, set new structures, and toss out old inefficiencies. So why shouldn’t they demand change?

In an ideal world, issuing orders and expecting an immediate cultural shift would work. In reality, convincing employees to drop their old habits and take to new expectations is usually a long slog.

As Bryan Walker and Sarah Soule write in the Harvard Business Review, “Someone with authority can demand compliance, but they can’t dictate optimism, trust, conviction, or creativity.”

Changing culture in times of turbulence demands a steady hand and careful touch. Any attempts to forcibly impose a leader’s vision will inevitably fail and could even lead to greater unproductivity, resistance, and disengagement from the employees.

Don’t burn the house down

If changing the existing culture is so complicated, why not wipe the slate clean and create a new one? For some CEOs, it may seem more straightforward to let company veterans go and bring in a team of like-minded experienced employees.

However, attempting to change a company’s culture by offloading veteran employees is like burning a house down. You might get the fresh start you want, but you’ll lose the old home’s solid foundation in the process.

Without company veterans, CEOs lose the opportunity to learn about what worked in the former model and have no way to access valuable anecdotal information about the company’s past.

Moreover, by summarily dismissing past employees and declaring long-held practices and structures as insufficient, new leaders risk lowering morale, alienating the company’s remaining employees and send an unspoken or subliminal message that employees’ past work and office culture is worthless enough to dismiss out of hand.

Personality alone won’t win the game

Those in troubled businesses are naturally suspicious of incoming leaders. CEOs can’t expect to enact change through the force of their personality or charisma. Instead, they need to build trust.

CEOs need to develop an internal culture where associates not only understand the mission and strategy but are committed and put forth the extra effort required to realise success. To set the foundation for this positive cultural growth, CEOs will need to establish the following ground rules.

Employees need to be engaged in the change process. While everyone must be aware that previous unproductive behaviours will no longer be acceptable, they should also have a voice in developing new structures and expectations. Most employees only need to feel listened to and valued.

Everyone in the company needs to know and accept that mistakes happen. All too often, employees in troubled organisations are afraid to take risks or claim ownership for decisions. In my experience, companies planning for and expectant of perfection find themselves beaten out by the competition.

I enforce an 80/20 rule in the companies I lead. If we can get it 80% right and move on, we can fix the other 20% along the way.

CEOs should pursue a communication strategy that prioritises consensus and upholds authority. Innovation and positive change can only occur if employees feel comfortable voicing their concerns and sharing their ideas.

However, productive conversations can quickly sour into unproductive chatter. Passive aggression should also be promptly and thoroughly discouraged. A debate is encouraged, but commitment is mandatory. Incoming CEOs need to establish the expectation that while everyone might not agree with them as a leader, they must be willing to wholeheartedly support the group’s decision.

In turn, CEOs must be willing to change their viewpoints if data shows fault with their original plans; otherwise, the team might take their leader’s stubbornness as arrogant dictatorship.

Start a movement, don’t deliver a mandate

Whether for good or ill, CEOs stand as symbols for change. If an incoming leader takes an authoritarian approach to forcing change, employees will attribute the chaos, stress, and negativity to that person. If the leader becomes a symbol of positive change, they can inspire their employees into a movement.

Effective leaders can take advantage of their symbolic position by offering up a vision and clear, actionable plan for the future. When implemented effectively, this vision can redirect skeptical and actively discontented employees into advocates for a positive forward movement.

That movement might start small, but with a little work, those trendsetters can inspire entire teams and functions to follow suit. Change and the pursuit of positive cultural innovation need to become a part of an organisation’s overall mission.

As Soule and Walker said: “To harness people’s full, lasting commitment, they must feel a deep desire, and even responsibility, to change.”

Defining the effective change leader

From the outside, it’s easy to see what needs to be done to change company culture for the better. Convincing others of the change’s value, however, requires more than a good argument.

Incoming CEOs need to bridge old practices and new ideas by engaging employees and bringing them into the change conversation. They need to establish the importance of thoughtful decision-making and accountability.

CEOs need to be the symbol for necessary change, not icons for disruption and uncertainty. Taking the time to craft a subtle approach to change management will ultimately lead to better employee engagement, higher productivity, and greater positive impact.

Robert Logemann is the CEO of Tyden Group.