Organizational culture is the invisible backbone of every company, shaping the way employees think, behave, and operate. It serves as the foundation upon which an organization’s identity, values, and daily practices are built. In today’s rapidly evolving business world, the ability to successfully transform organizational culture has become a critical success factor.
What Is Organizational Culture Change?
Organizational culture consists of a set of values, norms, behaviors, and practices that define and shape how an organization functions. It impacts all aspects of an organization’s operations, including strategy, structure, processes, and overall effectiveness. According to Gartner, organizational culture change is a process in which an organization encourages employees to adopt behaviors and ways of thinking aligned with its values and goals.
Cultural change may be necessary when a company needs to adapt to evolving market conditions, customer expectations, technological advancements, or after a merger between two organizations with different cultural backgrounds. It is a long-term process that requires the engagement of all organizational members, as well as careful planning and efficient change management.
Main Challenges and Problems in Organizational Culture Change
Transforming organizational culture is one of the most difficult tasks for leaders. McKinsey research indicates that as many as 70% of transformation efforts fail, with 70% of those failures attributed to cultural issues. What are the main challenges in this process?
Employee Resistance
Leaders often express their frustration with cultural resistance: “My senior assistants understand this, but frontline employees refuse to change,” or “There’s progress, but most people are just waiting for my tenure to end.” Employees may fear change that disrupts their core values, beliefs, and work habits.
Complexity of the Process
Organizational culture cannot be changed simply by declaring it. It is not a top-down decision that can be implemented overnight. Culture change is a multifaceted, multi-directional process that must be carefully planned and sustained to be truly transformational.
Deeply Rooted Habits
Organizational culture evolves over many years, embedding itself deeply in corporate values. The stronger the culture and the more widely accepted its values, the harder it is to introduce change.
Ineffective Change Approach
As Michael Beer from Harvard Business School points out, significant cultural change only happens when companies rethink how they manage, lead, and achieve strategic goals. Many leaders attempt to change attitudes and culture directly, rather than focusing on altering how work is done and how specific business problems are solved.
Models and Frameworks for Organizational Culture Change
Over the years, researchers and practitioners have developed various models and frameworks to facilitate effective cultural transformation.
Kotter’s Eight-Step Process
According to research by Prosci, Kotter’s Eight-Step Process has demonstrated significant results in transforming organizational culture. Studies show that 78% of participants reported a positive impact on organizational culture after implementing this model.
ADKAR Model
General Electric successfully transformed its organizational culture by implementing the ADKAR model developed by Prosci. This model focuses on individual change and contributed to a 76% increase in employee engagement and a 43% productivity boost within one year of implementation.
Cultural Cascade Framework
A literature review on public administration in the United States identified nine critical steps that lead to lasting cultural change. These nine steps form the Cultural Cascade Framework, which includes defining vision and values, aligning leadership, implementing new decision-making mechanisms, establishing two-way communication, adjusting policies and budgets to reflect the new culture, hiring and promoting based on values, conducting training, and creating data-driven systems based on new norms.
Skills-Based Approach
One of the most critical aspects of a skills-based approach to cultural change is the immediate connection between newly acquired soft skills and measurable progress on difficult business challenges. Teams that learned and applied such skills to real-world business issues created momentum for cultural transformation.
Successful Organizational Culture Change Case Studies
Ford
When Allan Mullaly took over Ford in 2006, he encountered a culture of internal competition rather than collaboration on strategic goals. Instead of attempting to change attitudes and culture directly, Mullaly organized cross-functional meetings to identify and solve key business problems. By focusing on modifying work processes to address real business challenges, he inevitably shifted collaboration norms—thus changing the culture.
Becton Dickinson
Michael Beer and Russ Eisenstat collaborated with Becton Dickinson’s leadership to develop an effective way to change culture by first reaching agreement—through practical means—on what the company should do and how it should be done. Their Strategic Fitness Process (SFP) became a powerful tool because it not only changed how work was performed and with whom, but also increased commitment to drastic changes and built trust essential for such engagement.
UNIQA Insurance Group
UNIQA Insurance Group sought to enable employees to respond quickly, learn from mistakes, and collaborate across traditional boundaries. UNIQA and Accenture developed an unconventional approach to encourage employees to experiment and learn from failures. The “Train the Trainer” program built employee capabilities and confidence to train others. Participants led 15 groups of up to 12 “experiment leaders,” who initiated their own experiments and shared their findings with their teams. These micro-experiments—ultimately numbering in the hundreds, if not thousands—contributed to cultural change in alignment with UNIQA’s strategic ambitions.
SEB
As described in Harvard Business School’s case study “Leading Culture Change at SEB,” teams that learned and applied new skills to real business challenges created momentum for cultural transformation. Members of SEB’s first training program team noted that the strategies they learned helped them overcome a key strategic challenge they had struggled with for years. Another SEB team reported that training led to increased customer acquisition and market share growth.
The Role of Leadership in Organizational Culture Change
The engagement and personal involvement of leaders, including senior management, are critical success factors in cultural transformation. Partial commitment or delegation of cultural change to lower organizational levels may lead to minor improvements in specific areas but will not drive a broad cultural transformation.
Research indicates that authentic leadership mediates the relationship between flexible cultures and job satisfaction. In innovation-driven cultures, authentic leaders are more likely to foster innovative behaviors among employees.
H. Kraemer emphasizes that changing organizational cultural values should be achieved through leadership that both models the desired values and fosters their internalization among employees.
Key Success Factors in Organizational Culture Change
Clearly Defining What Should Be Retained
The first fundamental step—beyond knowing which aspects of culture should change—is determining which elements should remain. Then, concrete steps should be taken to ensure that this culture remains a reality.
Data Collection
Instead of relying on intuition, organizations should conduct regular culture assessments to gather evidence on employee experiences across the company. For quantitative measures, customized surveys should be developed to assess cultural aspects intended to be preserved.
Skills-Based Learning Approach
Applying new skills to meaningful challenges during the learning phase helps convert skeptics into advocates and ensures lasting cultural change.
Coordinated Actions
The theory of coordinated action for functional cultures suggests that group-wide coordinated efforts—encompassing the entire process of interpreting the environment, identifying better cultural alternatives, and implementing them—are necessary for executing the four-step transformation model.
Leveraging Technology
Properly utilized technology unlocks new ways to deliver and reinforce cultural change initiatives. Organizations can use communication platforms and collaborative tools to inform employees about desired cultural changes and facilitate meaningful discussions.
Conclusion
Organizational culture change is a complex and long-term process that requires the engagement of all organization members, from leadership to frontline employees. Research shows that companies successfully implementing change management models are 3.5 times more likely to achieve better outcomes in organizational culture development than their competitors.
Culture is a unique construct within each organization; it integrates and disciplines work through consolidated standards, rules, or principles. It reinforces a sense of group unity amid numerous ventures and existing threats. Given the constant evolution of business environments, corporate culture must provide adaptive mechanisms that allow organizations to adjust to new conditions.
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