© Academy of Management Executive. 1992 Vol. B No.

Changing corporate culture—

or corporate behavior? How to
change your company
Warren Wilhelm, Amoco Corporation

In My View Our awareness of corporate culture, and its importance to the success of a
business enterprise, steadily increased during the 1980s. Books such as Peters
and Waterman's In Search of Excellence, Deal and Kennedy's Corporate Cultures
and Athos and Pascale's The Art of Japanese Management helped us to recognize
the existence of corporate culture. As the decade progressed, this awareness led
us to study culture, both internal and external to our own companies, and to try to
determine the relationship between culture and performance.

Now, in the 1990s, we realize that corporate culture is pervasive, important to

corporate success, and difficult to change. What is confusing, however, is clearly
establishing and defining corporate culture versus employee behavior. The
process of re-energizing workers and increasing their commitment to success has
been erroneously thought of as a "change in corporate culture." It is now time to
differentiate between changing the history, methodology, and accepted behavior
(corporate culture) and less daunting, but still extremely difficult task of
changing employee work behavior.

Corporate culture has been defined as "an interdependent set of beliefs, values,
ways of behaving, and tools for living that are so common in a community that
they tend to perpetuate themselves, sometimes over long periods of time. This
continuity is the product of a variety of social forces that are frequently subtle,
bordering on invisible, through which people learn a group's norms and values,
are rewarded when they accept them, and are ostracized when they do not."
(Kotter and Heskett, 1991)
Recent studies underscore how incredibly difficult it is to change a corporate
culture. Given this, and the overriding worthwhile purpose that culture serves in
guiding the behavior of our business, do we really want to change corporate
culture? Or does corporate culture provide the backdrop of stability, consistency,
and behavioral norms necessary to operate a successful business? Is it really
employee behavior set against the corporate cultural backdrop that needs to be
changed?

Dave Ulrich and Dale Lake in their 1990 book Organizational Capability:
Competing from the Inside Out present a strong case for improving a company's
competitive position by developing employees' commitment to the company's
success. Because all corporations have access to the same technology, capital,
and strategic capability, the authors argue, competitive advantage must come
from employees and their ability to work together. New behaviors such as
improving communication skills, acquiring a broader knowledge of the business,
and willingness to subjugate "empire-building" tendencies for the larger good of
the organization, must be learned and practiced. While not easily learned, these
behaviors are critical in gaining competitive advantage through the organization.

That is not to imply, however, that the entire fabric of corporate culture be
changed. I believe that the most effective way to enhance organizational

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capability is by helping employees learn the new behaviors set against the
existing corporate culture background.

The strengths and competitive advantages of the existing corporate culture can
indeed be maintained while changing employee behavior. In the remainder of
this article I outline the steps required to change employee behavior (see Exhibit 1)
and discuss effective ways to accomplish them.

How Companies Can Increase Organizational Capability

Define A Corporate Strategy

Corporate strategy must be clearly defined before any change in employee
behavior is attempted. Corporate leaders must formulate a vision. In what
direction is the greatest opportunity for growth? How fast should the company
grow? Where is it going?

Once the vision has been clearly and concisely articulated, the corporate strategy
is written as a road map to accomplish the vision. Typically the strategy is written
by the CEO with input from the board of directors, management, employees.

1. FORMULATE CORPORATE STRATEGY

2. FORMULATE COMPLEMENTARY
HUMAN RESOURCE STRATEGIES

3. ALIGNMENT-COMMUNICATE THE VISION,

STRATEGIES AND VALUES

4. ASSESS LEARNING NEEDS

5. PROVIDE LEARNING OPPORTUNITIES

6. ASSESS LEARNING RESULTS

7. PROVIDE MORE LEARNING OPPORTUNITIES

8. MODEL DESIRED BEHAVIORS

9. REWARD DESIRED BEHAVIORS

10. CONSTANTLY REINFORCE BEHAVIORAL

CHANGE
Exhibit 1. Steps to Increasing Organizational Capability.

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customers, and suppliers. The best corporate strategies are expressed in a short
paragraph.

Concurrent with establishing a corporate strategy, a definition of corporate values

should be written by the CEO and senior management. This gives employees a
guide to acceptable and legitimate organizational behavior and helps put the
corporate strategy into motion. Any contemplated action can be checked against
the corporate value structure to ensure legitimacy in the organization. Illegitimate
actions are likely to cause trouble for the employee and organization as a whole.

Transposing Corporate Strategy into Human Resource Strategy

After the corporate strategy is established, human resource strategies can be
developed. Issues such as organizational design, staffing, performance planning
and appraisal, reward systems, employee development, and career management
need to be addressed. The goal of human resource strategy should be to define
clearly how human resources should be managed to reinforce the corporate
strategy and achieve its desired results.

Specifying the types and organization of people and processes needed for effective
human interaction are hallmarks of a good human resource strategy. Methods
and means of communication and administration of resources are critical process
issues.

McDonald's Corporation implemented an excellent human resource strategy.

Several years ago it became apparent that there would be a shortage of
American teenagers to staff its expanded number of stores. McDonald's set a
specific strategy of hiring retired older workers to fill the gap. This has allowed
McDonald's to continue its growth despite a decreasing population segment
upon which it had formerly relied for most of its employees.

Communicating the Vision, Strategy, and Values

Accomplishing employee understanding and acceptance of corporate vision,
strategy, and values is critical to improving the company's capabilities. Effective
communication from the CEO is an excellent place to start. Employees need to
know where the company is going and how its going to get there. Communication
must permeate through the entire company and include suppliers and customers.

Frequent and repetitive communication is needed which carries a simple message

regarding vision, strategy, and values. The simpler the message, the better.
Slogans are particularly good. Ford's "Ouality is Job One" and General Electric's
"Speed, Simplicity, Self-Confidence" are good examples.

Communication of the corporate vision, strategy, and values must never cease, or
even diminish. New employees need to learn them, older employees should be
constantly reminded, and all employees need to be notified of any changes.

Assess Learning Needs

What must employees learn to increase organizational capability? Examples of
learning needs may include understanding vision, strategy, and values, the
company or business in general, or improving interpersonal, communication, or
performance planning and management skills. Employees may need to develop
coaching and counseling, teamwork, and career management skills.

Eliminating work that doesn't directly contribute to corporate performance results

is essential to competing in today's global marketplace. This must be
communicated and taught to employees.

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Learning needs can be assessed through expert diagnosis, employee surveys, or

by benchmarking (by direct comparisons to other companies). Training may then
take several forms: internal or external classroom, expert coaching during
business hours, observation of other companies' processes, or written and
audio-visual media. Depending on the urgency of the type of learning required,
delivery should be prioritized.

Provide Learning Opportunities

Training opportunities must be easily accessible and available to employees.
Employees are often eager to learn new skills but unsure about how to get
training. Counselors can direct employees to in-house and outside training
programs and classes. Supervisors can also help employees take advantage of
on-the-job learning while coaching them along. The most effective teachers of
corporate classes are often internal managers and executives.

Learning must be a required and rewarded integral part of the employee's job,
not just an add-on or extra job requirement. Increasing organizational capability
requires a "learning organization" which tirelessly seeks improvement through
education. Training others is part of every employe's job.

Assess Learning Results

Measuring employee skill improvements, tracking changes in employee behavior,
and surveying perceptions of learning, are good ways to compare the learning
achieved with the learning desired. Improvements in overall corporate
performance must also be tracked to help assess whether the training is relevant.
New learning needs may also be identified.

Provide More Learning Opportunities

New learning opportunities abound. Remedial learning in underdeveloped areas
and learning in previously unaddressed areas can always be initiated. In
addition, it is desirable to increase the number of employees teaching training
classes, as opposed to organizational outsiders.

Modeling Desired Behavior Enhances Organizational Capability

Behavior models are the single most effective way of causing employees to
change their corporate behavior. Executives, managers, and supervisors must
model the behavior they wish employees to emulate. The tone should be set by
the CEO and senior management so that desired behaviors can percolate through
the organization.

Since behavior patterns are so hard to change, it is an extremely difficult exercise.

Nevertheless, the most effective way to cause large scale changes in corporate
behavior is for each successive level in the organization to model the desired
changed behavior.

Reward Desired Behavior

New behaviors need to be recognized and extravagantly rewarded. Companies
should go overboard with reward and recognition for several years to reinforce
the changed behaviors in the organization.

Behavior models are Congratulations for jobs done, high visibility for the employee displaying the
the single most desired behavior, internal and external media coverage, or recognition through
effective way oi informal company networks can all be used. Desired behavior can be rewarded
causing employees to publicly, through financial rewards, promotions, and desirable assignments.
change their corporate
behavior. The extinction of undesired behavior must also be encouraged. Lack of recognition
and reward for undesirable behavior may be used. This process may take several
years but it is one of the most effective ways to discourage and eliminate

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undesired behavior. Punishing undesired behavior can have an unwanted

kickback effect which may serve to reinforce rather than eliminate the undesired
behavior.

Similarly, employees shouldn't be disciplined for exhibiting once acceptable

behavior that management now wants extinct. This is unfair, especially in the first
few years of change.

Impatience with behavioral change must be guarded against. Change takes

several (three to ten) years and assumes constant and massive reinforcement,
without which the changes will not occur at all. While slow, the process of
rewarding only desired behavior will gradually cause the extinction of undesired
behavior.

Constantly Reinforce Behavioral Change

Constant reinforcement, so much it will seem like overkill, is necessary to produce
the kind of behavioral change that enhances organizational capability. Constant
public recognition and praise, selections for promotions and desirable
assignments, being a representative of the corporation to a broader public
audience, and opportunities to broaden knowledge and skills are good examples
of effective reinforcements for behavioral change.

Change takes several Reinforcement of change should be done at all levels, by all employees.
(three to ten) years Continuous prominent public information about improved corporate performance
and assumes constant results are particularly good reinforcements for behavioral change.
and massive
reinforcement, without Obstacles to Increasing Organizational Capability
which the changes Obstacles to corporate behavioral change are numerous. In particular, companies
will not occur at all. must guard against subversion:

• Employees regard the CEO or senior management as uncommitted or unclear

about corporate vision, strategy, and values.
• Employees view the CEO or senior management as insincere or uncommitted to
changed behavior.
• Company veterans see the required changes for corporate behavior as a
short-term "program" which shall pass and they will outlast.
• Management cannot or will not change its behavior. The CEO should eliminate
these pockets of resistance by changing out individual employees.
• Management is unwilling to extravagantly reward desired behavior.
• Management continues to reward undesired behavior because it is too difficult
not to.
• Employees, suppliers, or customers perceive that the company is losing its
determination to change. This typically occurs one to three years after initiation
of new behavior. This time frame is a critical test for whether management
changes can succeed.

Summary
The road to enhanced competitive ability by improving organizational capabilities
is filled with obstacles and potholes. Yet it is an approach which will provide
corporate advantage over the competition. Increasing organizational capability is
so difficult that it automatically brings an advantage over competitors since they
cannot easily copy the behaviors.

Enhancing organizational capability is a long-term process which requires several

years of unrelenting effort to change employee behavior. And to assure the
continuance of increased competitive advantage, behavior which increases it must
be continually reinforced.

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Even with all of these difficulties, however, the payoffs are so enormous that the
effort is more than justified.

About the Author Warren Wilhelm is head of organization and management development for
Amoco Corporation, headquartered in Chicago. He is responsible for the
professional development of the corporation's managers and executives. He also
has responsibility for corporate organization development, coordination oi all
training and development activities corporatewide, and for developing
enhanced capability in the corporation's human resource management function.

Prior to joining Amoco in 1989, Dr. Wilhelm was for eight years founder and
president of an international human resource management consulting firm
based in Denver. His consulting clients included Hewlett-Packard, GE, United
Technologies, New York Life Insurance Company, and IBM. He was a full time
university professor for five years, and has a total of eleven years experience as
an industrial practitioner and nineteen years as a consultant.

Warren Wilhelm holds an undergraduate degree in psychology and economics

from Union College, and masters and doctoral degrees in business
administration from the Harvard Business School. His expertise includes human
resource management, organization and management development, career
management, and corporate culture change.

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