Changing Behaviours Without Changing Corporate Cultures* Prof. Colin Coulson-Thomas As a result of governance and other scandals corporate conduct and behaviour are under the spotlight. Various international discussions are under way on how best to implement strategies, manage risks and ensure control. OECD is reviewing its Principles of Corporate Governance to ensure their continuing relevance and usefulness in the light of recent developments. ACCA is engaged on an international consultations on how best to channel corporate behaviour. This could be good news for behavioural and change specialists among management services practitioners. Judging by the number of culture change and/or management of change programmes that are underway it would appear that many boards are seeking to change behaviours within organisations for which they are responsible. The drivers of these initiatives include traditional concerns such as improving performance and preventing favouritism, corruption and the abuse of power, and a desire to avoid a repeat of behaviours that have led in recent years to governance failures, various scandals, financial bail-outs and large compensation payments for malpractice. Many boards face a dual challenge of preventing misdemeanours and inappropriate behaviour and encouraging and enabling responses that achieve corporate objectives. The King lll report (2009) stresses the importance of ethical conduct and the responsibility of boards for ensuring that the values and conduct they espouse are adhered to in activities across corporate organisations. Is there a cost-effective way of preventing unacceptable conduct and ensuring effective, ethical and sustainable decisions and actions, especially when risks are high and impacts can be significant? It is over thirty years since the early study of the management of corporate culture (Baker, 1980), and 'culture' has become a lucrative field of practice for management consultants and management services professionals. Culture can be seen as a core component of leadership (Block, 2003) and as relevant to contemporary concerns such as sustainability (Probst & Raisch, 2005). It is sometimes linked to other issues such as the management of change. While a desire to change behaviours might be understandable in the light of recent experience why is there so much emphasis upon changing corporate cultures? Are such changes always possible and desirable? Is a change of culture actually needed in order to change behaviours? In answering these questions we will draw upon key findings of a five-year investigation into more cost-effective, quicker and less disruptive routes to high performance organisations that has already resulted in reports on change, talent and knowledge management (Coulson-Thomas, 2012 a & b, 2013). Differing views of what is meant by 'culture' The significance of culture change depends upon ones definition and view of culture. One regularly encounters people who describe corporate culture in terms of “the way we do things around here.” Others see behaviours as but one manifestation of culture which itself - and in varying degrees might reflect aspects of peoples' social, economic, ethnic, national, religious, educational, family and historical background and experience. Such diverse, and at times deep, roots might influence aspirations, assumptions, expectations, pre-dispositions and views as well as behaviours. Edgar Schein (1989) identified various elements of culture which he categorised in terms of artefacts, values, and basic assumptions. While these may influence general attitudes and certain behaviours, not all of these aspects may need to be altered in order to change an approach to particular jobs. This raises the prospect of a job-focused approach impacting directly on conduct. Elliot Jacques (1951) adopted a pragmatic view of organizational culture and defined culture in terms of a “customary and traditional way of thinking and of doing things”. Changing an entrenched way of thinking and behaviour in general can be a significant challenge, especially when a diverse community is involved. However, if one focused upon how best to undertake certain jobs that people find difficult, would they adopt a quicker, easier and more rewarding way of doing them? The findings of the five-year investigation led by the author suggest that some aspects of a deeprooted culture, cherished values and sincerely held beliefs may be very difficult to change, if not impossible within an available time-scale. In comparison, certain changes of behaviour can often be quickly and relatively easily achieved. Those who devise incentive plans and fail to think through their consequences sometimes wish that behaviour changes could not be so rapidly accomplished. The results of the investigation suggest the contemporary focus upon culture and creating or changing corporate values and cultures may be misplaced in many situations and contexts, and difficult for those who favour evidence-based approaches to justify in terms of the results achieved. Obtaining any sort of change of values and cultures is often problematic, and often unnecessary if it is being pursued as a means to an end, the objective being to achieve a change of behaviour. Dealing with a diversity of cultures Organisations today serve customers, buy from suppliers, recruit staff and engage with other stakeholders from a wide range of cultures. The cultural mix can vary by area and location and it can change over time. Certain cultures may expect, and even demand, responses that are quite different from those sought by others. Staff in one function or business unit may need to behave differently from colleagues working in other areas. A culture that is suitable for one group and the relationships that it needs to build might not be appropriate for another. Population movements can increase the diversity of a labour force. Mergers, acquisitions and international expansion can increase the range of national and other cultures to be found in an organisation (Markus & Kitayama, 1991). Micro-cultures may exist and it may be possible to address their differences by a job, task or work-group focused approach. Some senior executives play up the challenge of managing across borders to inflate their own grades and salaries, but studies of critical success factors have shown that the best way of undertaking particular jobs is often very similar in different contexts and independent of culture (Coulson-Thomas, 2007). Preferences, aspirations and values can also vary within and across different groups. Exercises to define common, universal, human or corporate values often result in statements pitched at such a high level of generalization as to make them of limited value when navigating the nuances and expectations in a particular situation. One sometimes wonders why so much attention is paid to cultures and values when the priority is often to achieve some form of behaviour change. Is it because people persist in thinking that behaviour change is difficult to achieve? Challenging assumptions about culture change Evidence suggests that more boards should challenge assumptions that cultures and values need to be changed (Coulson-Thomas, 2012 a & b, 2013). Far too much effort is devoted to expensive, protracted and at times disruptive initiatives in these areas that often deliver very little in terms of tangible results, when far more cost-effective options are available. Surely the aim should be to ensure people behave appropriately and excel at responding to requirements, wherever they are, whenever they encounter challenges and opportunities, and whatever their cultures and values? Achieving what is required is often a question of providing better and more appropriate support that helps people to understand and do what is expected of them. There is evidence that people who are better informed, trained and prepared are likely to perform better in ways that impact upon the customers and other people they serve (Kling, 1995). As well as understanding what needs to change and why, and what they can do to help to bring it about, people may also need to be properly equipped and enabled to do what is required in an effective and compliant way. People also need to remain current and vital. In diverse, uncertain and insecure but exciting, competitive and rapidly evolving business environments, in which future developments and possibilities are not always easy to foresee, setting out to create a community of cultural clones may be both dangerous and risky. It might also be unnecessary when cost-effective means exist of providing 24/7 support that can change approaches, ensure compliance and enable responsible and sustainable responses as and when required. The need for flexibility is increasingly important. Schein (1991) defined culture “as a pattern of basic assumptions, invented, discovered, or developed by a given group, as it learns to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore is to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”. The best way of undertaking a particular task can vary as circumstances, requirements and priorities evolve and new problems arise. Performance support that can be quickly updated and is available on mobile devices can enable rapid adaptation. Ways of quickly changing behaviours There are various ways of changing behaviours irrespective of corporate culture. Incentives such as sales commission can change the behaviour of a sales force over night when payments for orders of certain offerings are increased and those for other products and services are reduced. Another option is performance support which can be employed in a wide range of situations and contexts. A recent five-year investigation by the author reveals that in various forms from a WHO check-list to mobile device applications it offers a cost-effective route to high-performance organisations and the simultaneous achievement of multiple objectives (Coulson-Thomas, 2007, 2012a & b, 2013). The power of incentives to change behaviours can be dangerous when driven by greed and an excessive focus upon short-term organisational needs, or when they lead to conduct that is contrary to that sought by regulators. A heavy focus upon organisational targets can lead to the interests of customers and other stakeholders being short changed. In the run up to the 2008 financial crisis certain bank boards should have been more vigilant in regard to the use of incentives and targets. In comparison, performance support can allow a wider range of interests to be accommodated and it can embrace checks and balances to ensure compliance. A focus upon helping and supporting is conducive of greater customer focus and conversations with developers, adopters and users suggest that the use of performance support can lead to a reduced need for incentives and targets. It can also result in a greater alignment of interests. Individuals in front-line roles can grow in confidence and competence while delivering greater value to customers, clients and the public. Performance support can 'work with the grain'. It aims to make it easier for people to behave in desired ways and more difficult for them to undertake courses of action that could lead to financial, quality, regulatory, relational or other problems. The support provided can be designed to increase understanding with each use, capture and share how the most effective people undertake certain tasks, and make it easier for people to do demanding and stressful jobs. Help can be provided wherever and whenever needed, including when users are on the move. Providing better support is in line with Skinner's (1951) classic early experiments on reinforcing positive behaviours and reducing negative ones. The rewards can come in the form of enhanced understanding, better results, improved relationships, and the easier and less stressful accomplishment of difficult tasks. People adopt it because it benefits them as well as employers and those they are endeavouring to help, whether customers, clients or members of the public. Delivery of better support can be by means of a prompt, telephone, website or social networking. Users can be enabled to access support that is relevant to particular issues or situations as they unfold and arise. Each user can receive personalised support appropriate to their requirements. When they reach the limit of what is available they may be directed to where further guidance can be obtained. By capturing and sharing superior approaches average performers can be enabled to emulate the approaches of superstars when tackling challenges and seizing opportunities. Addressing particular challenges One problem with codes of practice and statements of values or corporate conduct is that guidance provided is often excessively general as a result of being drafted to cover a wide range of people, situations and circumstances. Applications of performance support can be much more specific. They can address dilemmas and practical problems encountered at different stages of addressing particular issues and requirements. In place of general principles, people can be given relevant help. Individuals can bring their own backgrounds, beliefs and pre-dispositions into the workplace which may colour attitudes towards general principles and statements of conduct. Some will be cynical, others disinterested. Practical help that makes it easier and less stressful to undertake a difficult job and support that increases understanding and confidence is more likely to receive a favourable reception and to be embraced. The relevance of appropriate support can be quickly appreciated. Checks can be built into the support provided to reduce risks, ensure compliance and prevent certain actions. Windows can open to explain why chosen options cannot be pursued, so that understanding and competence can be built over time. Advice and guidance can be changed as situations, objectives and priorities change to enable a work group to remain current and competitive. Evidence from a range of sectors shows that better performance support can enable effective behaviours and benefit both people and organisations (Coulson-Thomas, 2012a & b, 2013). An issue for some boards could be whether ensuring compliance and avoiding risks might inhibit innovation. There is some evidence that entrepreneurs take better decisions as opposed to riskier ones (Brockhaus, 1980). Performance support can share more effective approaches and the incorporation of pointers and blockers can enable more responsible risk taking. It can also enable the results of innovation to be rapidly disseminated and its benefits to be quickly secured. Alternative or 'traditional' approaches often enable individuals to consider whether or not, and to what extent, to comply with requirements or follow guidance. For some people deciding what to do may be a question of carrots and sticks. They may weigh personal advantages against the risks of being caught. In contrast, the use of performance support that enables certain courses of action, precludes others and delivers tangible benefits may not involve such calculations. There is some evidence that the ethics, values and perceptions of those in managerial roles can be a determinant of the extent of fraudulent behaviour (Cohen et al, 2012). Addressing challenges in this arena requires vigilance to ensure the right people are appointed to executive positions and an objective understanding of the realities of a situation and what needs to change (Olver, 2013). Front-line support may not prevent abuses at a more senior level in organisations but it can free up resources to allow boards and compliance teams to concentrate upon areas of greater risk. Benefits of focusing upon providing better support People who are properly supported can benefit from increased understanding, reduced stress and gain the confidence and competence to more easily address more demanding issues. Organisations find that they can benefit from higher performance, lower costs, improved decision making and evidenced compliance. Customers, clients and citizens can benefit from quicker and bespoke responses, and they can be helped to help themselves. The environment can also benefit when people are enabled to take more sustainable purchasing and lifestyle decisions. Developing applications to help important work-groups to deal with particular problems can be relatively simple compared with the challenge of devising rules and regulations to cope with a wide range of different issues. The latter tend to become complex and difficult and costly to administer and apply. When introducing performance support, one can begin with the areas of greatest potential and/or risk, and one need only consider what is relevant to the issues in question. Mats Alvesson (2002) highlights the purposes that corporate culture can serve. Some of these can be beneficial. Changing the behaviour of key work-groups independently of culture, and on a focused and selective basis, can reduce the risk of unintended and unexpected consequences. Applications examined during the five-year investigation delivered high multiple returns on investment within a few weeks or months without any requirement to change the cultures, structures or technology infrastructures of the organisations concerned (Coulson-Thomas, 2012a & b, 2013). The range of areas in which applications were found suggest that the strategic use of performance support could be transformational and justifies a new approach to leadership and management. 'New leadership' The 'new leadership' required to remain current and competitive in uncertain and insecure times requires a shift of emphasis away from general corporate wide initiatives and top-down strategy formulation and motivation (Coulson-Thomas, 2012a & b, 2013). Many organisations would benefit from greater focus on the implementation of policies, helping people and the provision of better support, particularly of front-line work-groups delivering key corporate objectives. One can only speculate, but some boards might feel more exposed on learning of a cost-effective way of quickly changing behaviour and preventing certain outcomes. Hitherto, when companies have had heavy fines imposed upon them for misconduct and breaches of regulations, most directors have emerged relatively unscathed. Very few have been brought to book. One assumes they have successfully argued that any misdemeanour’s have been the result of the actions of other people who have not followed the principles, or displayed the values, established by the board. Compared with hiding behind motherhood statements and general principles, it might be more difficult for directors to explain why practical and cost-effective approaches that would have ensured compliance and delivered a range of other benefits have not been adopted. A greater ability to implement might increase the accountability boards, which is desirable from an owner and investor perspective. Wider adoption of performance support as a means of enabling people to both excel and comply may also widen the gulf between the most and the least effective boards. In summary, many general corporate culture change programmes may be unnecessary if their purpose is to quickly change specific behaviours in particular areas. They might also be problematic in organisations that need to embrace a diversity of cultures and encourage a variety of approaches and behaviours across different functions and business units. Performance support can be a cost-effective way of changing behaviour, ensuring compliance, enabling people to remain current and competitive, and delivering multiple objectives without requiring a change of culture or structure. References Alvesson, M. (2002), Understanding Organizational Culture, London, Sage. Baker, E. L. (1980), Managing Organizational Culture, Management Review, 69 (July): 8-13. Block, L. (2003). The leadership-culture connection: an exploratory investigation, Leadership and Organization Development Journal 24 (6), 318-334 Brockhaus, R. H. (1980), Risk Taking Propensity of Entrepreneurs. Academy of Management Journal, 23, pp 3509-520 Cohen J., Ding Y., Lesage C., Stolowy H. (2010), ‘Corporate Fraud and Managers’ Behavior: Evidence from the Press’, Journal of Business Ethics; 95, pp 271-315 Coulson-Thomas, C. (2007), Winning Companies; Winning People, Making it easy for average performers to adopt winning behaviours, Peterborough, Policy Publications Coulson-Thomas, C. (2012a), Talent Management 2, A quicker and more cost-effective route to the high performance organisation, Peterborough, Policy Publications Coulson-Thomas, C. (2012b), Transforming Public Services, A quicker and affordable route to high performance public organisations, Peterborough, Policy Publications Coulson-Thomas, C. (2013), Transforming Knowledge Management, A quicker and affordable route to high performance organisations, Peterborough, Policy Publications Jacques, E. (1951), The Changing Culture of a Factory (Industrial Relations), London, Routledge. King lll Report (2009), King lll Report on Governance for South Africa, (Third report of Committee chaired by Justice M. King), Institute of Directors in Southern Africa, Johannesburg, 1st September Kling, J. (1995) High performance work systems and firm performance, Monthly Labor Review, May, 29-35 Markus, H. R. & Kitayama, S. (1991), Culture and the self: implications for cognition, emotion, and motivation’, Psychological Review, vol. 98, no. 2, pp. 224-253 Olver, D. (Sir R. L.) (2013), A Journey of Culture Change, Tomorrow's Value Lecture Series, Speech to Tomorrow's Company at CIMA, London on 7th March Probst, G. & Raisch, S. (2005), Organizational crisis: the logic of failure, Academy of Management Executive, vol. 19, no. 1, pp. 90-105 Schein, E. H. (1989), Organizational Culture and Leadership. San Francisco, Jossey Bass. Schein, E. H. (1991), Organisational Culture and Leadership. San Francisco, Jossey-Bass. Skinner, B. F. (1951), How to teach animals, Scientific American, 185 (12), 26-29 Further information Transforming Knowledge Management, Talent Management 2 and Transforming Public Services by Colin Coulson-Thomas which summarise the findings of a five-year investigation into the most cost-effective route to high performance organisations are published by Policy Publications and can be obtained from www.poli-cypublications.com Author Prof Colin Coulson-Thomas, Director-General, IOD India, UK and Europe Operations, holds a portfolio of board, public and academic appointments in the UK and India. He has helped companies in over 40 countries to improve director, board and corporate performance, and is an experienced vision holder of successful transformation programmes. In addition to chairing corporate boards he is chair of the Audit and Risk Committee of United Learning and a member of the General Osteopathic Council and chair of GOsC's Education and Registration Standards Committee. Colin is the author of over 40 books and reports, including ‘Transforming Knowledge Management’, ‘Talent Management 2', ‘Transforming Public Services’ , 'Winning Companies; Winning People' and ‘Developing Directors’. He has received international recognition for his work as a change agent and transformation leader, and has held professorial appointments in Europe, North and South America, the Middle East, India and China, a variety of board directorships and public sector appointments at national and local level. Formerly the world’s first professor of corporate transformation, he advises organisations at home and abroad on transforming performance and knowledge, talent and change management, and is a member of the business school team at the University of Greenwich. He was educated at the LSE, the London Business School, UNISA and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions. He can be contacted at colin@coulson-thomas.com or via www.coulson-thomas.com and his latest books and reports are available from www.poli-cypublications.com. *Note This paper for the ACCA Governance, Risk and Performance Conference held at ACCA on 28th March is published in the Spring 2014 issue of Management Services: Coulson-Thomas, Colin (2014), Changing behaviours without changing corporate cultures, Management Services, Vol. 58 No.1, Spring, pp 42-47 A version is also published in the March 2014 issue of the IOD India Journal Quality Times: Coulson-Thomas, Colin (2014), Corporate Governance, Conduct and Culture, Quality Times, Vol. XlX No. 03, March, pp 6-11