Leading Culture Change in Global Organizations

But it's not just about knowing when to change. They also need to know how to do this. That's where this book comes in.

"Leading Culture Change in Global Organizations" takes a close look at what happens when leaders try to transform the culture of their business. It asks what works and what doesn't and it provides an array of answers, drawing on the experience of some big-name, global companies that have undergone substantial culture change.

These multinational corporations have successfully adapted their cultures to stay competitive at home and to conquer new markets. And they learned a lot of lessons along the way.

In this book, the authors bring us the success stories, alongside a candid assessment of what went wrong, giving readers a roadmap for best practice when it comes to transforming the culture of organizations.

They explain which steps have the biggest impact on business performance and show the kinds of organizational change that can give companies that all-important competitive edge.

So who's this book for? As the title suggests, "Leading Culture Change in Global Organizations" is primarily for those who are trying to manage organizational change from the top. If you're a CEO, a regional manager or if you're leading your company's charge into new markets, be they national or international, you'll get a lot out of this book.

But it's also relevant to anyone who wants to know more about the importance of organizational culture and its impact on business performance. More and more, those in the middle ranks or at the grassroots are becoming the engines of change. Equally, those on the lower rungs of the ladder need to know how to implement changes coming from above. So this book has value for all, no matter what level of an organization you're at.

But you'll definitely need a head for business to enjoy this book. Its narrative is entertaining, but it's packed with theory and statistics.

The authors have been studying the link between organizational culture and business performance for 20 years and this book is based on two decades of research. They use detailed, organizational surveys to create profiles of the companies they're studying at various stages in their transformation.

These surveys look at 60 items, including goals and objectives, core values, customer focus, team orientation, capability development, and coordination and integration. This analysis highlights the strengths and weaknesses of an organization's culture and shows how they impact business performance. The results give a "before" and "after" snapshot of a company as it undergoes culture change.

This book catalogs the work the authors have done – and the success they've had – working with seven companies as they've transformed their cultures to deal with mergers, acquisitions, overseas expansions, and changing market conditions.

These companies are Domino's Pizza, Brazilian mining giant Vale, GE Healthcare, GT Automotive, DeutscheTech, Swiss Re, and Polar Bank. The authors have been surveying the culture of these companies and advising them on culture change for periods ranging from two years to almost a decade, so there's no questioning their expertise.

Daniel Denison is a leader in the field of organizational culture and leadership. His first book on the topic, "Corporate Culture and Organizational Effectiveness," was published in 1990 and established a link between culture and performance. He is a respected business consultant and is professor of management and organization at the International Institute for Management Development, or IMD, in Lausanne, Switzerland.

Denison's co-authors also work at IMD. Robert Hooijberg is professor of organizational behavior at the institute, Nancy Lane is a research associate, and Colleen Lief is project manager of the IMD-Lombard Odier Darier Hentsch Family Business Research Center.

So keep listening to hear the four key elements of an effective culture, why it's vital to keep frontline staff happy, and how a state-owned Brazilian mining company became a global player.

Before we go any further, let's look at what the authors mean by culture. They draw on a number of writers in the field to define culture as both "the ways we do things around here" and "what we do when we think no one is looking."

So culture isn't only what we see on the outside. It's also what lies underneath – the tacit code or the deep-rooted values that govern an organization's behavior and that of its people. It's an organization's identity.

But what elements do we need to look for when trying to assess the impact of an organization's culture on its performance?

The authors look at four main factors when surveying an organization's culture: having a clear sense of mission and purpose; having a high degree of adaptability and flexibility; knowing how to encourage and engage workers, and behaving in a consistent and well-integrated manner.

When they worked with the organizations profiled in the book, the authors scored them against each of these factors and then helped them to improve in the categories where their scores were low.

These culture surveys form the backbone of this book and its pages are dotted with pie charts and graphs. This way of presenting information won't be to the taste of all readers. We found all the charts and graphs a little hard to take in. But they do give a clear "before" and "after" picture of the organizations involved and certainly show the authors' knowledge of their subject.

Let's now look at some of the authors' tips on ensuring culture translates to the frontline.

Frontline workers are critical to an organization's culture. They may include delivery drivers, flight attendants, receptionists or store assistants. There's no point having a strong culture at corporate headquarters if this isn't replicated in the field. After all, it's the frontline workers who have direct contact with customers and clients.

Too many organizations talk about keeping their frontline staff happy but do very little to achieve this. They need to spend less time talking and put more effort into creating the right environment for their employees, the authors say.

They point to Walt Disney as an example of a global corporation that does an excellent job of supporting its frontline workers.

Even if you've never visited a Disney theme park, you'll be aware that Mickey Mouse is pretty important to the whole visitor experience. But his role is quite straightforward. There isn't much margin for improvisation, which means there's little difference between the best and the worst Mickeys.

But the people who sweep the streets at Disney have a much more critical job. Hundreds of them will come into contact with visitors every day. If someone wants to know where to buy a disposable camera or where to pick up a hamburger, it's likely they'll ask a street sweeper. So the sweepers' behavior and attitude is just as important, if not more important, than Mickey's.

Walt Disney recognizes the vital role its street sweepers play and treats them accordingly. They are carefully selected, well trained, well rewarded and offered opportunities to progress. In return, the street sweepers are highly engaged, do their jobs well and are good ambassadors for the company.

Similarly, Domino's Pizza depends on its frontline workers for its success. According to the authors, the taste of the pepperoni, the cheese, or the anchovies is less important than the behavior and attitude of the person who makes or delivers the pizza.

The authors track Domino's transformation over a number of years, from the moment its leaders began to focus on their people, through building employee loyalty and engagement by valuing workers, to including them in decision-making and strategy building.

They describe how Domino's leaders changed hiring processes to focus more on attitude over skills – skills could be learned, but attitude was more difficult to change.

Company leaders introduced drug testing for delivery drivers, brought in new software to prevent theft, and placed a ban on hiring former employees who've been fired. They also set goals to halve employee turnover, which had been incredibly high.

Their hard work and focus on the frontline paid off – in the shape of a more engaged workforce and a marked increase in profitability.

We think Domino's provides a powerful example of the importance of valuing workers on the frontline. It's a lesson any business can take to heart.

Let's now look at one of the book's most interesting case studies: the example of the Brazilian mining company Vale.

The authors describe how Vale transformed its culture over years, going from a government-owned iron-ore company to a privately owned conglomerate and then expanding into the developed world. We like the fact the authors included a company based in an emerging market – it adds another dimension to the book.

Around the time of its privatization in 2001, Vale's culture was extremely fragmented. The company was made up of a string of mines that operated like individual fiefdoms, its business groups were run independently and they didn't share back-office operations such as finance, purchasing, logistics, accounting, and HR. On top of that, the decision-making process was informal. Relationships with suppliers were based on little more than a handshake.

Roger Agnelli, who took over as CEO a few months after privatization, made it his mission to create "one Vale" – a single company with a uniform culture.

He first had to move the company towards a more centralized model that would get rid of the individual fiefdoms. To do this, he standardized practices in human resources, finance, supply chain and other areas. He formalized contracts to replace the handshake and brought in regular performance appraisals and financial audits.

These changes helped introduce a more professional culture and mindset across the board. This mindset would be essential to the company's success as it expanded to Australia, China, Indonesia, and Canada.

The company also put its managers, including those at lower levels, through Vale's Corporate University where they received technical, geological and leadership training. The university was key to transforming Vale's culture at all levels of the organization.

Vale's global expansion wasn't without its difficulties, as you'd imagine. The authors do a really good job of describing these challenges and explaining how the company's leadership overcame them. We particularly like the section on communication and language barriers – something many companies face when moving into foreign markets.

The authors sum up the lessons learned by Vale as it transformed itself, in less than a decade, from a decentralized, state-owned organization with a top-down culture to one that was centralized, professional, global, and with an empowered workforce.

First, put your own house in order by making sure you're financially fit and able to compete against more established rivals. Second, strike the right balance between professionalism and empowerment. Standardizing and centralizing the appointment of managers brings professionalism, but those living and working in overseas markets must be empowered to make decisions based on their local expertise. Finally, CEOs and other leaders must have a remarkable sense of vision that sees beyond immediate obstacles.

The Vale case study provides an interesting contrast to the authors' analysis of GE Healthcare's expansion into China. The GE example gives readers some great tips on how to build a business in an emerging market, particularly when the culture is so markedly different from your own.

We liked the description of how GE Healthcare's general manager in China put up Chinese poems on both sides of his office door that were easily visible to the workers who passed by. He wasn't Chinese, but he'd spent 25 years working in China, spoke Mandarin and wanted to show he was in tune with the local culture.

Throughout the book, the authors make some great observations about how to export an organization's culture to new and different markets. They give a run-down of best practice and provide a catalog of lessons learned, helping others avoid the mistakes made by those who've gone before.

We think these lessons could be helpful to businesses of any size, but be aware, this book focuses on multinationals, as the title suggests, so the challenges these companies overcome will be on a different scale to those faced by smaller enterprises or start-ups.

The book is also quite academic in its style, with countless pie charts and graphs, as you heard. The authors include colorful anecdotes and narrative to lighten the tone, but if you're more interested in stories than statistics, you might find yourself skipping some pages.

Despite this, the authors do a great job of getting their message across: culture is complex, it affects business performance, and it has to change with the times.

"Leading Culture Change in Global Organizations" by Daniel Denison, Robert Hooijberg, Nancy Lane and Colleen Lief is published by Jossey-Bass.

That's the end of this episode of Book Insights. Thanks for listening.