The most invisible but impactful element of the organisation is culture–and arguably one that helps sustainability as well as consistent and superior performance. It’s not just difficult to define but also to explain in a meaningful way, and at the end of the day, is an aggregation of many things. Culture is underlying and what is visible or observable are symptoms, and maybe some behaviours, or how things happen in the organisation. It is then the job of leadership to make meaning out of these visible symptoms/signs and take action to reinforce or correct certain things. However, changing culture is often difficult and unsuccessfully attempted. The difficulty often lies in changing things (processes, leadership, ways of working, people bahaviours and rewarding mechanisms). This is particularly so if the organisation has been successful in the past. Here are a few primary causes (and there can be many more), which seem to be relevant in this context. These are more from a leadership and people perspective and do not illustrate the challenges from a financial, process or system perspective.

It’s easier to talk about problems than do something about them. Most people can fairly accurately talk about symptoms, and some even get to the root cause of issues. Collectively or individually, it’s most likely that the people in the organisation often are well aware of the problem, or at least part of the problem. It is however quite amazing that nothing happens as a consequence. This could be due to many reasons–the voice is not heard, symptoms ignored and /or the analysis of the root cause is faulty. However, it appears that most of the time organisations and leaders do not know “how” to deal with the problem. So they know the “what” but not the path to get there. It’s also feasible that the “how” is linked to difficult choices and a different way of doing things, so it does not automatically happen. And many leaders may believe that by talking about the problem enough, it will somehow go away. Unless there is differentiated action to address real issues, this is unlikely to happen.

Most People/Leaders see themselves as being outside the problem. It’s often quite enlightening to see people talk about challenges in their organisation. It is as if they are analysts or consultants. They refuse to believe that their own actions, behaviours and contribution is also part of the success and culture of the organisation. It is as if they are not part of the organisational dance but standing aside watching other people dance. It’s good to step back once in a while and take a detached view. It is also imperative to accept that each employee (and particularly senior leaders) leave a mark by how they behave and do things on the fabric of the organisation. This defines culture more often than not, and unless there is personal responsibility to see and do thing differently, the collective change at an organisational level will not happen.

The wrong behaviour is being rewarded and not reprimanded/corrected. This is perhaps the most contentious area. Leaders often give confusing signals to people  down the line. There are either not enough motivators for change, and not enough communication around the consequences of changing or not changing are. The rewards (or reprimands) often have nothing to do with behaviours the organisation is trying to drive. There are overt and covert reward mechanisms in organisations–e.g,who gets more face time with the leader in a particular group. While leaders may deal with overt and apparent reward mechanisms (pay, promotions, appraisal ratings etc), they are often negligent of the more subtle recognition mechanisms and what message it is passing to the organisation at large. It is quite difficult to get even the stated reward mechanisms right while implementing–bringing objectivity and fairness. On top of that if there are too many covert signals as to what is ‘really’ valued –or not–it confuses the organisation and creates mistrust and lack of behavioural direction.

The subtle signals are ignored. Organisations and culture don’t change by themselves, at least in a planned way. There are of course examples of crises which force change. While implementing change however, signs of support or resistance can be often ignored, By not acknowledging support, this is likely to go away and enthusiasm fade. By not dealing with conflict and resistance in a timely and direct manner, it can grow, and even become a roadblock. The ability to pick the signs, and more importantly act on them is critical. Change managers and leaders are so taken up by their own vision and what they want to drive that other perspectives can be missed sometimes. Also, differentiating between the more apparent (vocal) signs vis the ones which are less apparent may be important to direct action. The trick therefore is to not just pick the right signals and all of them, but also interpret meaningfully, assess the impact and act.

Change Orientation, Managing Culture, Managing Culture Design & Change Bimal Rath

This is an interesting time to think about compensation, and related areas, given the fact that most companies are more worried about costs and how not to compensate rather than the other way around. However, this is actually a good time to revisit some of the principles and test whether they stand the test of time and economics. Here are some random thoughts–hopefully in keeping with the times.

a) Given good economic growth in last couple of decades and the hiring spree of companies, talent often has been overpaid just to be attracted or retained. At an individual level, this may give the illusion of value creation –i.e., because someone is willing to pay me more, I am more competent. This may not be true and in fact, is most likely an outcome of labor market economics, and general business sentiment. When the chips are down, as somewhat now, the wheat will be separated from the chaff, and hopefully a sense of balance will prevail–what am I really worth?

b) On the other side, it is a good test for companies. How much am I willing to pay just for marginal value creation? When competition and tough times really hit, the question of the worth for every single asset paid for (or costing the corporation) is raised–same applying to human capital as well. And underperforming assets have to be dealt with.

c) The usual framework for most employees will change and rather than discussions on salary, other elements will take over. Job security, performance measurement and opportunities for sable growth will be much discussed–as is quite evident in language of managers and employees now, as well as the media. This will take the pressure of management and HR leaders who will hopefully have opportunity to have a more balanced view of other HR functions rather than just hiring/retaining at any cost and sometimes even being blackmailed by talented employees.

d) Most of the younger workforce, and that’s plenty in India, have not really seen tough times. They will get great exposure to “cost cuts”, “asset rebalancing” and may similar phenomenon which should be good for the industry to mature well in the long run. A workforce which sees only white and has not experienced black or even grey is not rounded enough to be a major player in the global economy.

e) B-school students and their prospective employers will also see beyond the sheen of management education. My view is that most companies will strengthen their talent management systems overall and will be better off in the medium run while also setting a more realistic way forward for acquiring, grooming and nurturing talent, which will be healthier for professionals as well as companies.

f) Finally, employees will take a more holistic view of compensation, not just material rewards but development, company brand, learning and overall well being. It has been the attempt of many HR professionals to get there but given the boom over the last few decades, has been almost impossible… Perhaps this economic downturn will support that thought process and the external forces will bring about a much needed change.

Compensation & Benefits Bimal Rath