Nowadays, a common challenge for executives and entrepreneurs – having picked all the low hanging fruit – is how to utilize organizational culture in optimizing the company’s performance to serve its strategic goals in the best possible way, preparing for the “new-normal”. But often it pays even more to learn how to walk, before you run and check if the culture that you have in your organization allows you at all to conduct a meaningful business! Stumbling upon some of the most common derailers is not that difficult.
Hofstede Insights MultiFocus Model™ for Organizational Culture
To help our clients worldwide boost their business performance through modifying cultures of their organizations we use the predictive analytics packed in the Multifocus Model™ for Organizational Culture (MFM™), derived from the scientific research performed in the 1980’s by late prof. G. Hofstede, plotting organizational practices upon six autonomous axes: effectiveness, customer (or in a broader sense – stakeholder) drive, formal controls application, focus of interest (or informal controls), approachability and management philosophy*. The lage data-base of analyzed companies, institutions and other units, built over the latest 30 years allowed us to observe certain interesting traits and tendencies stretching across industries and geographies, regarding those situations, when culture would ultimately hinder the organization’s ability to be successful, that is that they wouldn’t be able to deliver their promises and implement the strategy. When navigating your business, it is advisable to be aware of the locations of the no-go zones.
Each of the MFM dimensions is depicted on a 0-100 scale, where 0 means the lowest score noted in the data base, and 100 – the highest. Even though the model we use is not normative (i.e. does not prescribe which culture is “good” or “bad” for your organization) the no-go zones – that are resulting directly from analyzing the data-base we have gathered over the decades so far, tells you that no other company or organization scoring on the given dimension in the indicated sector would be (strategically) successful. Certainly, your business may be that first one, scoring there AND still deliver your strategy in a sustainable way. In such a situation the zones are being adjusted. And we at Hofstede Insights perform that update regularly. We call the zones “internal normative windows”. Internal – because it is not the strategy, type of business, industry or the external environment that make the business unsuccessful, but the way the organization is operated, the collective practices functioning within the business.
To learn more about the dimensions or read the article: Culture is Money.
Before we briefly go through the characteristics of the derailers – let us first have a look at the possible sources of the problem – or – the catalyzers. There the Big Four rules:
- Letting culture (just) happen!
Despite the fact that culture doesn’t need to be created, as it exists in every organization by default – if you neglect it and don’t actively manage it, it can rather easily lead your productivity into undesired areas. It can become a clear derailer. Existential crises (like the one we have been experiencing since the early months of 2020), connected with prevailing insecurity, unmanaged anxiety and fear as well as extreme short-sightedness – if they get imprinted into the behavioral organizational patterns and internal tendencies, they can in mid- and long-term become destructive or even lethal for organizations.
- Delegating the responsibility for culture.
“We really have other things to focus on and to do now! Allow the specialists to earn their salaries” Such statements can be another path into a no-go cultural zone. Culture is a strategic tool. One should not delegate business aspects that are fundamental for the organizational well-being! For instance, the balance sheet, P&L or culture – for that matter.
- Adding lack of clarity and transparency in internal communication to the duo above would increase the anxiety, fear and confusion that have a tendency to amplify the cultural push towards the no-go areas.
- Suboptimal leadership practices on the different hierarchical layers are another catalyzer for derailing the company’s culture. They might be rooted in the leaders’ personality but also in inadequate experiences, skills or misjudgment and lack of reliable data.
Organizational Culture Derailers
Organizational Effectiveness is a dimension essential from the strategic point of view, as it relates to the very core of the organization’s operations: what is the essence of value producing to the stakeholders and the external world. Either through a high goal orientation (drive, energy, sense of direction, clarity and risk taking) or through means orientation i.e. meticulous and very prudent implementation of prescriptions, standards, tasks or orders. Our research clearly indicate that extreme means orientation is a direct derailer for a company culture: no organization audited so far (since mid 1990’s), scoring 35 or below on the (D1) Effectiveness was successful or – able to deliver their strategy. The window is rather large, 35 out of 100 points of the scale, and that shows that it is relatively easy for an organization to end up in that area. What behavioral indicators and tendencies are associated with that? Definitely a very short-term orientation. What matters for the associates and the management is what is happening NOW. Internal kingdoms, with harmful competition among them and living on the self-glory of past successes among the managers is a commonplace. As is potential corruption and misappropriation of resources by all associates. This is not an environment where any sense of direction is clear or common.
Customer Focus – the second MFM™ dimension – would find its no-go zone with an extreme internal drive. In organizations that consider customers (or – broader – the stakeholders) as nuisance and disturbance, where the associates and the entire organization simply knows better what their customer needs and wants and – without a question – would not welcome any improvements in the way they work, as “excellence would not need improvement”. This is an organization where people keep covering themselves using different masks and screens – for instance the ethical norms that most often are used as excuses for doing something. Or NOT doing something. That zone corresponds to scores on D2 ranging from 0 to 30. It is a pretty large part of the entire scale, as well.
Use of Formal Controls (in respect to time, money and quality) being the third MFM™ dimension plays nowadays a still increasing role in determining the business reality for lots of organizations. The interesting fact is that it is not the extremely high strict formal control that is derailing the organizations’ cultures! On the contrary – the no-go zone is stretched between 0 and 15 points, corresponding to an extremely easy-going type of culture. Why? Because that zone is directly associated with a total chaos: lack of any type of coordination of the associates’ activities, absence of meaningful processes in the organization and waste of vital resources e.g. money freely flowing through the company in question.
When we look at the Focus of Interest (the fourth dimension of the OC model) we observe a very interesting phenomenon: an exceptionally large no-go zone, stretching from 0 to 45 points! This clearly reflects the changes occurring in the modern economy. In order to cope with the accelerated development and progress, organizations not only need to be attentive and agile in regard to the surrounding ambiguity but also take into account the ever-changing market demands and generational shifts on the labor market. And that requires them to move the focus of their interest more and more from people, units and the loyalty bonds connecting them, to the professional direction: excellence, diversity, learning and development. Companies that lag behind in those fields find it difficult to survive nowadays, that our observations only confirm.
The fifth MFM™ dimension covers Approachability in the organization, being the extent it is open or closed in a psychological, physical and informational manner, towards its employees and the outsiders. The Hofstede Insights data confirm that when you pass the point of 70 on the MFM™ scale, then the environment you are creating is directly harmful to the core of your business activities. This is a sharp no-go zone in any industry. Simply because the members of the organization in question would not have sufficient information needed to perform their – even basic, tasks and thus the processes would get paralyzed. Not to even mention the fact that the atmosphere would be too toxic to enable any meaningful work or collaboration. It is not by accident, that the flow of information and knowledge through organization is so often called its blood system. The body and especially the brain are not capable of functioning when deprived of oxygen carried by the blood...
The final dimension of the Model describes the Management Philosophy adopted for the organization – where the emphasis is: on treating people as the real assets and caring for them to enable them to grow for the benefit of the organization or purely on the output of their work – where only the productivity, results and performance matters. Beyond the level of 75 points the atmosphere is closing towards a labor camp where people are treated as simple, replaceable cogwheels of a larger system, where they don’t really matter. A naturally expected developments here would be frequent burnouts because of unnecessary excessive pressure – actual or perceived, high rotation (if people don’t leave, they feel imprisoned either because there are no job opportunities elsewhere or because it is a matter of real human bondage). Such a situation is by no chance allowing to conduct a healthy operation in medium or long term.
Well, as our studies show it is not difficult to end up in one or more no-go zones, if not for the entire organization, then at least in regard to some of the business units, departments or teams. And what then? Certainly, it is necessary to get away form those zones promptly. However, it is easier said than done… But actually, this is a must – otherwise the existence of the business is gravely endangered!
How? If you want to change it, you need to understand it! This sentence is a ground of any steps to be taken in such a situation. Mapping the organizations culture in order to figure out the actual situation and the true roots of the problems is always the first step. However often when you have realized that the organization ended up within the internal normative window on any of the dimensions it may be already too late – organizational inertia works often very destructively, as in a case of a plane diving too close to the ground: no matter how hard the pilot tries pulling up the nose of the plane – getting some altitude could be impossible… Thus, it is better to deploy the predictive analytics of the Hofstede Insights MFM™ and regularly check up your operational “altitude” – running a Culture Acid Test is simple, quick and painless and can be extremely helpful. Prevention is always cheaper than repair!