Symptoms of a struggling organizational culture are often glaringly obvious. You might observe stalled projects, a dip in employee morale, or negative feedback from customers. In response, leaders frequently initiate programs and events aimed at reinforcing company culture. These efforts are often reactive, perhaps triggered by new technology investments or a push for market expansion, with culture initiatives seen as a way to motivate employees. However, these initiatives often fall short. According to McKinsey, a staggering 70% of transformations fail, and in 70% of these failures, culture is a significant contributing factor.
Indeed, Gallup’s research paints a concerning picture of corporate culture in the U.S. A recent survey revealed that only two in 10 employees feel a strong connection to their organization’s culture. This disconnect highlights a critical need for a more effective approach to culture transformation, starting with a thorough Organizational Culture Diagnosis.
Driving Culture Transformation Through Diagnosis
Culture-building efforts often begin with enthusiasm but falter during implementation due to a lack of employee buy-in for the culture transformation. Frequently, these initiatives are launched with a leadership “off-site” – executives retreating to devise a new culture paradigm without sufficient groundwork or structure.
However, truly revitalizing an organization’s culture demands more than a leadership retreat. Leaders must first clearly define culture, identify its core components, and then create a compelling vision of the desired culture and its benefits for employees. A critical first step in this process is organizational culture diagnosis.
Leaders can drive effective culture transformation by following four key steps, beginning with a deep dive into understanding their current state through organizational culture diagnosis.
1. Define (or Redefine) Your Culture Through Organizational Culture Diagnosis.
Culture, though extensively studied, remains vaguely defined for many. Gallup offers a straightforward definition: Culture is “how we do things around here.” This definition underscores culture’s nuanced, complex, multidimensional, and uniquely organizational nature. When undergoing significant changes, companies might be tempted to impose a new culture onto the existing one. Instead, leaders must first conduct a thorough organizational culture diagnosis, examining the current culture – its strengths, weaknesses, and challenges – to understand its unique DNA.
In our work with a large professional services firm, our organizational culture diagnosis revealed a highly collaborative environment. Employees valued inclusion and diverse perspectives, and leaders fostered a sense of acceptance and respect. However, this strong collaboration had unintended consequences: slower decision-making, increased risk aversion, unclear priorities, and reduced agility. The diagnosis also highlighted an extreme customer orientation – a strength, but one that led to employees being reluctant to decline client requests, resulting in over-delivery and unrealistic expectations. This internal tension hindered the consistent application of the desired culture. Gallup’s initial organizational culture diagnosis provided a clear understanding of the firm’s existing culture, informing the definition of behaviors needed to establish its aspirational culture.
Leaders must codify and amplify the best aspects of their organization’s inherent culture, rather than simply copying a generic culture template. This organizational culture diagnosis, what Gallup terms a culture audit, is crucial for identifying an organization’s cultural DNA – its inherent positive, negative, and neutral attributes. Insights from this audit should shape the aspirational culture and guide leaders in identifying key cultural drivers and values to be consistently communicated and experienced across the organization.
Leadership actions for effective organizational culture diagnosis:
- Conduct interviews, surveys, and focus groups to gain a deeper understanding of your organization’s cultural DNA. Immerse yourselves in your customers’ world by visiting locations and contact centers to observe culture in action. Identify your organization’s strengths by understanding peak performance scenarios. Understanding strengths from your organizational culture diagnosis provides more valuable insights than solely focusing on failure root-cause analysis. For instance, an engineering firm advised by Gallup had 30 senior leaders conduct up to 10 employee interviews using standardized questions. The 300 employee stories offered a rich, unfiltered perspective on the firm’s positive cultural attributes, both present and future.
- Organize a collaborative session with leaders and cross-functional managers to refine the company’s purpose and core values, and to define specific behaviors (values in action). Engage employees across various levels and functions. A retail client Gallup worked with included janitors, store clerks, executives, and mid-level managers in these sessions. Culture is intrinsically linked to how employees at all levels operate and collaborate. Limiting culture definition and driving to leadership alone is narrow and short-sighted. Employee involvement in shaping initiatives fosters greater motivation for promotion.
2. Align Your Workforce with the Diagnosed and Defined Culture.
Leaders often dedicate more time to drafting purpose statements and core values than to mobilizing the organization around these fundamental concepts. Our recent research indicates that while only 43% of leaders strongly feel connected to their organization’s culture – a concerning statistic – even fewer individual contributors, just 20%, share this sentiment. Furthermore, only one in four U.S. employees strongly agree they can apply their organization’s values to their daily work, and approximately one in three strongly believe in their organization’s values. If values are meant to clarify culture, leaders must first define their meaning based on the organizational culture diagnosis.
Gallup research demonstrates that employee interactions significantly shape their perception of organizational culture throughout the employee lifecycle. Cultural alignment, therefore, aims to embed the diagnosed and defined culture into each stage, from recruitment to hiring, onboarding, engagement, performance, and development.
Leadership actions for cultural alignment:
- Explicitly align culture with your organization’s strategy and future direction, informed by your organizational culture diagnosis. Connect individual goals to organizational purpose, vision, and future strategies. Design behaviors and competencies that enable employees to personalize the culture. Gallup assisted a retail organization in creating a new purpose statement. Workshops across seven key functions connected this statement to specific Objectives and Key Results (OKRs) aligned with the purpose statements. These OKRs shifted focus to the value of the company’s work in relation to its purpose, rather than siloed priorities and performance expectations. The subsequent step integrated purpose and values into every stage of the employee experience, from hiring to development.
- Model desired behaviors to demonstrate leadership commitment to them and their importance to the organization’s culture, purpose, and vision, as identified in your organizational culture diagnosis. Leading by example makes values tangible, shows authenticity, and reinforces leadership’s conviction.
- Ensure the culture can adapt to the evolving realities of work. With hybrid work models, office days become crucial for fostering collaboration and meaningful cultural experiences like recognition, celebration, and knowledge sharing, all within the framework of the diagnosed culture.
3. Drive Adoption of the Diagnosed and Defined Culture.
A robust culture is vibrant, visible, and inspiring. In such organizations, persuading employees to embrace the culture, identified and refined through organizational culture diagnosis, becomes effortless.
Driving culture adoption goes beyond office posters displaying purpose or values, pizza parties, or culture budgets. It demands actions that link culture to the organization’s mission and brand, bringing it to life through behavioral changes, processes, systems, and policies. For example, celebrating team achievements in a way that reinforces the organization’s culture, revealed through organizational culture diagnosis, creates a meaningful connection between culture and performance, far exceeding corporate slogans.
Patagonia, the outdoor retailer, exemplifies this with their employee policy handbook, Let My People Go Surfing. It highlights their commitment to a culture of flexibility, consistent with their brand. The handbook encourages employees to take time off to “catch a good swell, go bouldering, pursue education, or greet kids from the school bus.” This policy embodies their diagnosed and defined culture in action.
However, expressing cultural commitment is more profound than clever policies. Patagonia’s founder, Yvon Chouinard, and family recently transferred ownership to a charitable trust, emphasizing “going purpose instead of going public.”
While Patagonia’s cultural traits are compelling, they cannot be directly replicated. Leaders must identify traits that resonate with their unique culture, as revealed through organizational culture diagnosis, and then diligently embed them in employees’ hearts and minds. To drive adoption, leaders must craft a unique change narrative that creates shared understanding of the past, the rationale for culture transformation, and a compelling future vision, all grounded in the insights from the organizational culture diagnosis.
Leadership actions for driving culture adoption:
- Communicate the organization’s purpose and culture through a well-defined change storyline. Ensure narrative uniformity, clarity, credibility, and compelling cultural attribute descriptions for all employees, based on the organizational culture diagnosis. Integrate key purpose and culture attributes into daily communications, both formal and informal. For instance, promotion announcements should emphasize how the promotion fosters cultural values like integrity or customer focus.
- Consider policy or expectation shifts to drive desired culture change, informed by the organizational culture diagnosis. Gallup worked with a healthcare insurer to drive customer engagement and breakthrough innovation behaviors. These core behaviors, identified through diagnosis, aligned with initiatives like employee engagement, innovation accelerators, upskilling, DEI, development plans, and recognition. Over time, 15 projects yielded a $60 million net present value and a 26-fold increase in innovative ideas. Focused culture efforts, guided by organizational culture diagnosis, can yield significant financial and mission outcomes.
4. Sustain Your Ecosystem, Nurturing the Diagnosed Culture.
To ensure lasting culture change, leaders must recognize culture as a living ecosystem needing continuous nurturing and evolution, building upon the foundation laid by the organizational culture diagnosis. Organizations must establish systems, structures, and rituals to consistently reinforce positive cultural behaviors. Lacking a supportive ecosystem will hinder leadership and management efforts; structural and system support is crucial for sustained cultural thriving.
Enhancing specific systems and processes can unlock the culture’s full potential, as defined by the organizational culture diagnosis. Decision-making processes must consider the cultural and core value impact. Policies and procedures should enable, not hinder, culture adoption at scale.
Even with defined cultures, aligned structures, and driven adoption, the manager’s role in ecosystem sustainment is critical. Managers balance cultural cohesion with individualization. Organizational culture is often a local phenomenon, and managers are conduits through which employees experience employer culture, particularly the culture revealed through organizational culture diagnosis.
Leadership actions for ecosystem sustainment:
- Ensure systems, structures, and processes continuously support culture change, building on the insights from the organizational culture diagnosis. A merging client collaborated with Gallup to create new team structures and roles, developing a process to foster a culture valuing contributions from each merged company. Another client transitioning to a matrix structure addressed operational changes and partnered with Gallup to promote relational, cultural, and mindset shifts necessary for the diagnosed and desired culture.
- Use storytelling to reinforce desired cultural behaviors. Stories illustrate organizational values and purpose fulfillment. Leaders can benefit from coaching to become more authentic and effective storytellers in communicating the diagnosed culture.
- Redesign recognition processes to reflect and promote your culture, aligning with the values identified in the organizational culture diagnosis. A major automaker engaged Gallup to design a peer-to-peer recognition system celebrating everyday employee interactions embodying the desired culture. Gallup also coached managers to nurture connections between these interactions and the company’s purpose and values.
- Enhance managers’ knowledge of cultural behaviors and their coaching abilities, enabling them to guide employees in navigating the organization’s culture, diagnosed and defined. Through ongoing strengths-based culture conversations, managers can help employees embody the culture daily.
- Utilize appropriate feedback mechanisms, metrics, and evidence to measure progress, including employee engagement surveys, culture pulse surveys, or ongoing listening strategies to monitor the health of the diagnosed culture.
Embracing and Driving Culture Change Through Organizational Culture Diagnosis
Culture transformation is complex. Without clear accountability, culture-building efforts can falter, especially when outsourced to HR rather than owned by business leaders. Starting with a robust organizational culture diagnosis is paramount.
Edgar Schein, a leading expert on organizational culture, encapsulates the leadership challenge: “The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.”
A coordinated approach to culture transformation, beginning with organizational culture diagnosis, yields significant benefits. Gallup data shows employees strongly connected to their organization’s culture are 3.7 times more likely to be engaged and 5.2 times more likely to recommend their organization as a great workplace. Reinforcing employee culture connection delivers business impact: a 10% improvement in employee mission or purpose connection leads to an 8.1% decrease in turnover and a 4.4% increase in profitability.
By implementing these four culture transformation steps, initiated by a thorough organizational culture diagnosis, leaders can unlock and maximize their organization’s culture’s value.
Drive culture transformation through organizational culture diagnosis:
Author(s)
Vibhas Ratanjee is Senior Practice Expert, Organizational and Leadership Development, at Gallup.
Ed O’Boyle is Global Practice Leader and Executive Consultant at Gallup.
James Rapinac contributed to this article.
