Transforming Company Culture: The 5-Phase Plan

Transforming Company Culture: The 5-Phase Plan

By Veronica Perry, reporter at Grow Wire
8-minute read

In short:

  • Company culture has a direct impact on your business’s growth, though it can be challenging to change.

  • If you’ve decided to tweak your company’s culture, first prepare for barriers and appoint team members to help lead the charge.

  • Aim for a mix of tactics to encourage employee participation, then track the results. Shifting organizational culture requires transparent and flexible leaders who are comfortable with ambiguity.


Company culture can either help or hinder organizational growth. Hit your stride, and you’ll see major returns in morale and revenue.

When it comes to actually implementing change, there is no one size fits all approach. Making positive changes to an existing organizational culture can be challenging; however, there are specific strategies and leadership characteristics that can make the process easier.

Here’s a primer on how to assess, approach and improve your company culture.


What is company culture?

Before we dive into why company culture is essential to business growth, let's first define it. Culture is basically a sum of all unspoken behaviors that influence employee decision making within an organization. 

👉 Culture is basically a sum of all unspoken behaviors that influence employee decision making within an organization.

An organization's culture is defined by the behavior it does and does not tolerate and the way in which shared values help to regulate norms. How members of an organization talk about their behavior (in other words, which behaviors they reinforce and don't) determines whether particular behaviors persist. 


How important is company culture?

Organizational culture affects every aspect of the business, from development and relationship growth to employee productivity and morale.

There are measurable returns on a positive company culture. A 2019 study Grant Thornton calls the “Return on Culture Report” found that executives who classify their culture as “extremely healthy” are 1.5 times more likely to report average revenue growth of more than 15% for the past three years. They’re also 2.5 times more likely to report significant stock price increases over the past year.

👉 A 2019 study found that executives who classify their culture as “extremely healthy” are 1.5 times more likely to report revenue growth for the past three years.

And in a 2017 meta-analysis of business strategy, Gallup found that workplaces with highly engaged employees, or those who enjoy working there, boast 10% higher consumer ratings and 20% more overall sales. 

Studies link healthy company culture to increased revenue, stock prices, consumer ratings and sales.


Step 1: Evaluate your current culture

As a manager or leader, it’s helpful to evaluate your company’s current culture before making moves to adjust it.

In a recent guest lecture to professional students at the University of Southern California (USC), author and businessman Paul Levy said all organizations should keep two questions in the forefront of their minds at all times: “What you are doing and why you are doing it?"

Think about your organization’s culture: 

  • Which behaviors are considered normal? Which are considered abnormal? 

  • Which behaviors garner positive reinforcement, and which are discouraged? 

  • How do employees normally interact with one another? Are interactions respectful? 

  • How do they talk about their roles? Their teams? Leadership and the organization overall? 

  • How does your company maintain its culture when onboarding new employees? How are new employees treated and integrated, and how do they complete knowledge transfers and learn expectations?

In evaluating your company culture, consider how, if at all, employees celebrate wins.


Step 1a: Look for signs of workplace toxicity 

Businesses face a variety of challenges related to culture, some more critical than others. As opposed to common organizational challenges, critical challenges are those that disrupt productivity, decrease morale and impede collaboration. Critical challenges can compound to breed workplace toxicity.

👉 As opposed to common organizational challenges, critical organizational challenges can compound to breed workplace toxicity.

Some common causes of workplace toxicity are: discrimination, poor communication from management to teams (and vice versa), unclear expectations, impatient or unempathetic leadership and lack of incentives, accountability or recognition.

As a manger, you can identify workplace toxicity via the following characteristics:

  • Excessive conflict among employees (caused by gossip, outright or subtle bullying, etc.)

  • Frequent incongruence between management’s expectations and teams’ output 

  • Excessive attrition

  • Negative attitudes or lack of enthusiasm from team members

  • Conflicting feedback from key decision makers

  • Frequent emotional breakdowns of employees

  • General feelings of dysfunction and disorganization

If you said “Yep, that's my workplace” to any of these characteristics, you may need to make some calculated changes to your company culture. 


Step 2: Prepare for barriers

When preparing to address the symptoms of workplace toxicity, first examine potential scenarios that pose barriers to changing organizational culture. These include:

  • Employees don’t understand how the change will impact them and thus react negatively

  • Employees are not actively involved or engaged in the change process 

  • Leadership fails to delegate to experienced personnel to carry out the change

  • Repeated, failed attempts at changing in the past lead to a decline in employee enthusiasm

As a manager, it's almost impossible to completely avoid barriers; in fact, you’ll likely face one or more as you implement change. You can mitigate some barriers with proactive communication and thorough follow up. But the two most critical factors to avoiding them are planning and preparation. 


Step 3: Identify who will carry out the change 

Ideally, everyone in the company would play a part in carrying out a change in culture. However, management is responsible for setting a standard of acceptable behavior and enforcing the consequences of unacceptable behavior to ensure success. 

Team managers should identify colleagues who are actively engaged in the company to lead the charge. Wise picks include employees who have been with the company for a considerable amount of time and deeply understand its vision and those who exhibit motivation and enthusiasm about the company. 

👉 Identify colleagues to lead the charge. Wise picks include employees who have been with the company for a considerable amount of time and those who exhibit motivation and enthusiasm.

After it’s clear who the key changemakers and enforcers are, it's important that leadership clearly define expectations of them. Questions at this stage include, “To what extent will team leaders regulate the behaviors of employees?” and “How often will management talk about the change with the employees?”.

Charge specific team members with assisting management in carrying out a company culture change.


Step 4: Get to Work

If your company exhibits signs of a toxic work culture, it's likely that it has affected employee morale. 

To tackle this piece of the puzzle, you can:

  • Make change easier - break it down into steps and celebrating milestones

  • Identify shared company values to boost inclusion

  • Incentivize and reward behavior in line with the desired culture (giving kudos to changemakers via email, catering lunch to celebrate a milestone, etc.)

  • Allow employees an avenue to voice their opinions and feedback

To better understand how to cultivate a sense of purpose and urgency among employees, managers can reference the case study of Dr. Reddy’s, an India-based pharmaceutical company. When an overrun of procedures produced measurable slowdowns for the company, CEO G.V. Prasad took a first step at altering culture: He instated a simple, missional slogan, “Good health can’t wait.”

👉 The CEO of Dr. Reddy's took a first step toward altering culture by instating a simple, missional slogan: “Good health can’t wait.”

Leadership worked solely off that slogan for some time. They chose projects that could be completed quickly, redesigned product packaging and reframed the role of sales reps in one business unit to better educate doctors.

After proving the slogan’s efficacy, leadership unveiled it to broader teams, along with a new brand identity and website. Employees were asked to make commitments of their own to “Good health can’t wait.” As a result, many rallied around the four-word charge, one proudly “breaking company rules” to develop new products in a fraction of the time. 

You can adjust company culture by adjusting expectations, like maximum call times for phone representatives.


Other catalysts for change include celebrating wins (like the speedy production of Dr. Reddy’s medicine). Change pay structures to reflect your company’s mission if you have to, or switch up seating charts to help teams work together (or apart). Consider the actions you reward: If customer service agents are heralded for short call times, adjust the standard to allow for time actually resolving issues. 

👉 Celebrate wins. Change pay structures if you have to, or switch up seating charts. Adjust call time standards to allow for time actually resolving issues. 

Simpler rewards include T-shirts and pizza lunches, though don’t assign them the same value as helping employees understand the “why” behind what is expected of them. Offer a mix of motivators to encourage culture change: Campaigns that reinforce expectations by praising positive behavior, coupled with incentives such as employee luncheons, can go a long way. 


Step 5: Track the Results

It's important that management periodically gather employee sentiments, listen to grievances, validate experiences and offer support during a company culture change. However, in a 2017 survey of over 80 companies from diverse sectors, less than half indicated they track employee engagement at all. (Those who did track engagement most frequently used surveys to gather data.)

There are a variety of ways to track employee engagement during a change, such as:

  • Surveys and focus groups 

  • Regular check-ins and meetings with individuals and teams

  • Personally reflecting on what has and hasn’t changed in company culture

Tracking results is helpful because, through the lens of contingency theory, there is no one size fits all approach for organizational change, especially not in an area as complex as culture. 

👉 Tracking results is helpful because there is no one size fits all approach for organizational change.

To summarize a remark from Levy: The plan can be absolute perfection, but the implementation will never be. 

That’s why successful businesses don’t pretend to have it all figured out. Instead, they are constantly engaged in experiments with their teams. Make time to reflect and determine how your change process can consistently improve.

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Leadership during a company culture change

During this time, it’s important that management remain flexible. Some employees may have their own ways of motivating others but yield the same result as your leadership style

👉 Some employees may have their own ways of motivating others but yield the same result as your leadership style.

In the USC lecture mentioned earlier, Dr. Brad Shipley, an expert in organizational justice, said that in order to influence company culture, leaders must have both technical know-how and social savvy. 

“True leaders have the enthusiasm, skill and ability to create the community and the culture that allows for organizational changes to take place,” Shipley said. 

Levy, whose case study of the Beth Israel Deaconess Medical Center (BIDMC) is one of the most downloaded on Harvard Business Review, advised that in times of change, the secret to leadership is to “lead as if you have no authority.” Instead of giving orders, Levy recommends asking employees to problem-solve on their own while encouraging staff to maintain transparency and flexibility. 

👉 Instead of giving orders, Levy recommends asking employees to problem-solve on their own while encouraging staff to maintain transparency and flexibility. 

“Be open and transparent about what's going on [while enacting a company culture change],” he said. “Why would you hide things from the team that needs to get things done?”

Levy pointed to his time consulting for BIDMC, during which he kept a blog detailing challenges he faced as the hospital’s new CEO. He mentioned that leaders constantly encounter problems and objections to businesses functions, especially when a change is taking place. He suggested using general questions when colleagues present organizational dilemmas, such as: “Why do you think this [issue] is happening?”, “Who else have you talked to about the problem?” and “What actions are you taking?”. 

“True leadership empowers others to learn from the problem,” Levy said, adding that those experiencing the problem firsthand often have greater insight into the solution. 

👉 “True leadership empowers others to learn from the problem,” Levy said.

Levy's No. 1 advice on leadership during change: Be comfortable with ambiguity. 

“Be very comfortable with ambiguity,” he continued. “There is nothing certain in any organization. Life is full of challenges and unforeseen events. With even the best of teamwork and analysis, it's not going to work out the way you planned.”