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Cultural Divide

Cultural Divide

Nurturing a corporate culture that supports your business goals is an ongoing, painstaking process. But if you don’t invest the effort, you could be short-changing your company’s bottom line.

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Read this story to learn

  • The payoffs of investing in corporate culture
  • Why many efforts intended to improve corporate culture are doomed to fail
  • Best practices for culture building

Culture is something IT people do not know very much about. At least that’s how META Group senior vice president Jonathan Poe sees it.

Before taking too much collective offence at his remark, though, the IT profession should note that Poe, who is author of META’s November 2002 paper Benchmarking IT Culture, is of course referring to corporate culture and not culture in its more generic sense. Be that as it may, Poe argues that culture, far from being just being a “touchy feely” concept, has a significant impact on a firm’s long-term economic performance.

“It pretty much boils down to the fact that if you have a very productive environment, people generally out-produce the average employee by a factor of four to one,” says Poe, citing among others a 1992 Kotter-Heskett study of 207 firms as a benchmark. “Even when measuring things like stock price, a corporation’s culture and environment can actually do a lot of things to enhance performance.”

The first step towards successfully enduring organisational transformation is to understand the IT organisation’s culture, for in order to change what you have, you have to first understand what you have, Poe says. However, he contends that few IT executives know where to start.

Many pass the responsibility for organisational development to untrained and unadvised lieutenants, Poe says in his paper. However, world-class CIOs do the opposite. They start with themselves and their management teams, ensuring critical mass and leadership for structured and transformational change, he says. To properly advance IT organisation (ITO) productivity and agility in conjunction with the culture of the organisation, growth-oriented CIOs implement structured development methods that start with cultural assessments, the paper continues.

Such surveys enable CIOs to baseline their IT cultures, formulate developmental plans and set appropriate signposts to measure progress. They can then “turbocharge” people, their talents and their relationships to effect rapid transformation. Without this cultural mapping, though, organisational development becomes an ad hoc process with no baseline, no definitive gaps, no concrete plan for rapid evolution and no metrics. Documented baselines also uncover areas of development weakness, uncertainty and unwarranted expectations.

However, it is one thing to benchmark IT culture, another to do anything about correcting poor culture. Poe believes that much of the solution lies simply in clear, visible and consistent leadership: walking the talk and practising the values you are espousing. In addition, in his paper he says that through culture maps, leaders and leaderships teams are able to view IT cultures in the same way and coordinate their actions holistically.

But Poe cautions that CIOs should not expect all of their lieutenants who are performing exceptionally under the current regime to be successful in making the transition to a new culture. “Good leaders think through scenarios and try to make sure resources are properly applied or the right management attention is paid to the kinds of things that are going to slow down the evolution or slow down the collaboration,” he says.

The Benchmarking IT Culture paper also suggests that where many CIOs go wrong is by trying to do it all themselves. According to Poe, very few executives are trained in organisational development, yet fewer than 2 per cent of Global 2000 firms currently employ organisational development specialists to assist CIOs in rapid culture analysis, design, development, deployment and maintenance. However, he predicts that this is set to change.

Because CIOs have normal human biases in perception, partiality and preferences, street-smart executives employ human capital management experts who can test for prejudice, accelerate organic development and complement IT governance, architecture, process and infrastructure. By 2005, 15 per cent of Global 2000 firms will have applied “Digital Darwinism” (the concept that only those most adaptive to change survive) and will have developed specific IT cultures for tightly coupled business-IT alignment. As CIOs find their success to be extremely dependent on high-performance teams, by 2009 more than 30 per cent of Global 2000 firms will employ an IT organisational development specialist. World-class ITOs will employ two or more such specialists — one focused on IT leaders and one on the rest of the ITO, the paper states.

“Even if you are a good people manager as a supervisor or as a director, that’s a lot different than being a CIO, or even a CIO direct report as a manager of managers. In some ways you even have to give up what you’re good at and probably employ more governance and design to make sure you get the results you want. And one of the ways to do that is to make sure you have an organisation development specialist,” Poe says.

Then Again, Maybe Not

Not all CIOs themselves necessarily share Poe’s views. Margaret Wright, executive director information services division, Macquarie Bank, for example, believes there is a place for organisational development specialists, especially where those involved have not had much experience of culture change. However, she believes her own former training in an accounting firm coupled with her experience of working in change management has equipped, and enabled, her to undertake a lot of cultural change herself.

And unlike Poe, Julia Bowen does not view organisational development as a specialist skill and believes that all executive education should encompass it. Bowen was formerly director, programs, at Optus, where she had dual responsibility for IT and for project managing new developments in the organisation (see “Optimising Optus”, CIO May 2001). Optus, she says, saw organisational development as a core competency of management and all its senior executives were formally trained in it.

At the same time, Wright is a strong advocate of mentoring and concedes that most people in senior IT roles have not necessarily got there because of their management skills. In fact, she believes that skills and culture go hand in hand and that a high-performance culture in an IT environment requires:

  • A combination of technical excellence, business knowledge and strong analytical skills;
  • A striving for excellence and a keenness to learn;
  • A keenness and ability of senior people to mentor and build the skills of the people below them; and
  • A strong management focus (which she thinks is lacking in most IT organisations).

“I think you often may need to bring in people to work with the staff, perhaps using the business people as mentors,” says Wright, who is currently writing a book around the management challenges of changing culture and getting IT to deliver to the business effectively. In cultivating a high-performance culture she also thinks that if people are not performing it is very important to tell them straight away and admits she is not a big fan of just hiring excellent people and then letting them get on with it.

“Some people who might be okay now might not be in two years time because you have left them to it. It’s bit like the Enron case. If you have really good people — and Macquarie Bank hires really good people — then it’s your job to push the boundaries on that, get them out of their comfort zone and build up skills in areas where they perhaps don’t have them when they start,” Wright espouses.

And according to Wright, a lot of IT people feel they are accountable for problems and will try to fix a problem at all costs rather than escalate it; they do not want people to know there is a problem, and second, they want to feel that they are fixing it. However, most IT problems need to be resolved almost immediately and often the people above can help resolve them faster, she says. Consequently, when she joined Macquarie Bank three years ago one of the first things she did was to ask her staff to tell her when there are problems, which she says is not the way that culturally most people like to work.

The benefit, she adds, is that while the bank did not have a lot of problems — at least compared to others — it now has very few incidents, chiefly because people are on to them straight away — and they escalate them. In addition, rather than the “hero” culture of fixing everything as it goes wrong, they now question why it went wrong and how they can prevent it happening again.

That is one of Wright’s metrics for measuring cultural success, alongside the obvious one of delivering projects on time and on budget. However, the measure she feels that IT in general often misses is whether business requirements have actually been met. She thinks some culture change is required in better understanding exactly what the business is trying to do and whether there is the appropriate balance between customer service and in questioning if what the business is asking for is actually value for money.

“Often you have to work with the business [people] to change their attitude as well,” she reflects.

Wright also believes in flexibility in aligning your culture with the business you are working with. In Macquarie Bank, for example, there are different business streams such as investment banking and retail that all have a different focus, and which in turn require almost a different culture and focus within the IT team to deal with each of them, she says.

“I think we’re very demanding in Macquarie Bank. We expect creativity and excellence, but I actually think a lot of this isn’t really about IT. It’s about management and understanding what are the specific management skills you need to bring to bear in an IT organisation,” Wright says.

Cultural issues took up a great deal of Wright’s time in her first 12 months at Macquarie Bank, but she says this has since receded. While she felt there were a lot of cultural strengths initially, especially around the use of technology, there were other things she felt that IT did not do so well as new things she wanted to do.

“It wasn’t as if there were glaring problems, but I wanted to be outstanding operationally, for example, because I felt that if we achieved that we’d get a lot more support from the business. It also meant that I would no longer have to worry about it and we could focus on other things and be even more strategic.

“I find that in a lot of organisations when new people come in, they throw out the baby with the bath water. They might be technically excellent and do some really good things, but they might be expensive. Then the next person comes in, cuts costs and completely reverses what’s previously been done,” says Wright. “You have to be careful that you don’t lose the good stuff. Otherwise it’s just like a seesaw. I was keen to avoid that and wanted to make sure that I took the best of what we already had but also fix the things that I thought needed resolving.”

For Bowen, a high-performance IT culture is one in which there is a clear and agreed set of goals about what you are trying to do, and unambiguous leadership and support from the management team for getting it done. Unfortunately, she feels that the application of such basic management practice is not necessarily common. “If they know what they’re doing and why, then most professionals are self-motivated to get there. But that key thing is missing from a lot of organisations. There’s a long history of accepting mediocrity that we have to get over,” she says.

In fact, Bowen is a firm disciple of driving a delivery culture through IT and concurs with Commonwealth Bank supremo David Murray’s now famous comments at last year’s World IT Congress about IT failing to deliver on promises. But she also thinks that recent cutbacks in IT expenditure are a result of people, not technology, failing to deliver, which is the reason CIOs have such a fast churn rate.

According to Bowen, a high-performance culture is vital in an IT organisation, but says that outsourcing has also failed to deliver in this respect because the people usually do not change — they just nominally change employers. “It comes back to IT people not knowing why they’re doing what they’re doing,” she says.

Bowen’s solution is not to set too ambitious a target in a culture change program so that you do not over-promise and under-deliver, and to keep talking, as she puts it. Too many organisations do a big kick-off, but afterwards there is a not a lot of consultation either within the group or externally, and if you do not involve everyone the change will not happen, she says.

“You also have to brutally honest with your staff, because if you lose their trust, you’ll never get it back. But it’s also scary being honest because any change always hurts, even if you’re moving to something better, and it takes a leap of faith,” she admits.

Currently undertaking a little consulting and playing a lot of social golf, Bowen estimates that at Optus, cultural issues accounted for 90 per cent of her time and while there coined the term: “Yes you can’t”.

“Optus had a ‘yes’ culture where you don’t say ‘no’, but I allowed people to kill projects [for example]. That was a huge cultural change, because when I took over they didn’t have that space,” she says.

Honesty Is the Best Policy

Dennis Furini, chief executive of the Australian Computer Society and a former CIO, also believes honesty and involving the staff and keeping them informed is essential in an IT environment if you are to nurture a high-performance culture. Not least, he admits, this is because the truth often gets out anyway, so it is better coming from you and as such can take the heat off things.

While general manager information systems and communications with Australian Water Technologies (AWT), a trading subsidiary of Sydney Water Corporation, Furini found that putting out a weekly newsletter and speaking to all of his 200 plus staff in small groups every three months helped generate team spirit.

In addition, he advocates IT organisations charging their clients, whoever they may be, for services (see “Chargeback for Good or For Evil”, page 84). This, he says, puts a stop both to work being done solely on a “who shouts the loudest basis” or IT just doing jobs for their mates. Like Poe, he also considers it important to benchmark yourself regularly and have someone independent look at your organisation and how you work.

“We took [culture] seriously at AWT and used to measure our success on the profitability of the business, which not everyone can do. We benchmarked ourselves and found we were very competitive. We achieved AS9001 certification and also provided customer service training for all our staff because we needed to have a service culture and be able to take it on the chin if they [our customers] didn’t understand what we were saying,” Furini says.

While there may have been a bit of initial cynicism among his staff towards developing such a culture, Furini found that they came around as they saw the results come in. He concedes, though, that as a profession, IT does not always measure and monitor project delivery too well and that while larger organisations are getting better at changing and developing their IT culture, a lot still needs to happen in smaller organisations.

Cultural Evolution

Investing in corporate culture requires an infusion of time, energy and commitment — resources that can be far more scarce that money

1. The Loyalty Factor Like a tax cut in an election year, improving the work environment scores lots of popularity points. Take-home meals, onsite childcare and elaborate fitness centres are just a few of the perks companies offer to foster an employee-friendly culture. Benefits should not be confused with culture, however, and many companies wrongly assume that better benefits automatically lead to employee satisfaction. When smart organisations implement culture-enhancing programs, they do so with the goal of improving specific aspects of the working environment.

2. The Quick-Fix Myth One of the biggest misconceptions about corporate culture is that good cultures just happen — that some companies luck out. While this may provide a convenient excuse for those not inclined to put effort into culture-building, it also masks the hard work and serious planning that go into tailoring a culture to the business. Many senior executives who perceive a performance problem are disappointed when training and culture-building activities don’t yield the quick fix they expected. They shuttle their employees to the nearest ropes course or to customer service training and can’t understand why it doesn’t make a difference. The problem is that companies are just giving their employees “smile training”. Executives send workers off to learn new behaviours, but the employees return to an office culture that doesn’t support those new behaviours.

3. The Right Cultural Fit Corporate cultures are not one size fits all; the effectiveness of a given culture depends on the company’s business goals. “There is no right culture,” according to Robert Goffee, co-author of The Character of a Corporation: How Your Company’s Culture Can Make or Break Your Business (Harper Business, 1998). “Culture is appropriate only in terms of what you are trying to do in the business. You must think carefully about the kind of culture that you want and need.” The process of finding the culture that best fits a business is long and difficult, and often that culture can be developed only through trial and error.

4. Building Business Knowledge Although determining the right culture can be a difficult task, many companies have built successful cultures around the simple concept of encouraging employees to develop a deep knowledge of and enthusiasm for the business.

5. Following Through Once senior managers have a clear vision of what the company’s culture should be, they must be prepared to commit the resources required to nurture and sustain it. It’s easy to say that your company values initiative, creativity and teamwork, but when those attributes are exhibited, do you reward them?

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More about Australian Computer SocietyAustralian Water TechnologiesCommonwealth Bank of AustraliaEnronIT PeopleMacquarie BankMeta GroupOptusSydney WaterSydney Water

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