Culturally compatible HR strategies - human resource

HR policies can be used to support an organization's culture, or to help realign it to address new business needs.

Organizations must consider their internal and external realities when formulating human resource strategies. Successful HR strategies fit current realities and can be realigned when realities change. Culture - the shared basic assumptions and beliefs developed by an organization over time(1) - is one of the key components of any organization's internal realities. The following approach to defining and evaluating culture explores how human resource strategies and programs can be fashioned to support or change the desired culture. In other words, how to make human resource strategies "culturally compatible."

DEFINING AND EVALUATING AN ORGANIZATION'S CULTURE

To define and evaluate an organizations's culture, conduct a survey that asks key parties-at-interest to determine what they believe the existing culture is and what they believe it should be. Then compare the answers. The following topics should be included in the questionnaire:

* Performance: Is it defined as meeting organizational goals or as satisfying customers? Are results attributed to a few key individuals or to all employees? Is the focus on short-term results or long-term success?

* Information and resources: How are they managed and allocated? Who gets to know what? How much autonomy are employees given?

* Operational philosophy: Does the culture value balanced risk-taking or safety at all costs? Is management close control or leadership? Are managers taught to care only about their own units or are they concerned about overall results?

* Human resources: Are employees viewed as costs or assets?

The questions should be designed to draw out the values and philosophies of respondents and assess how appropriate those beliefs are for the organization at a given time. Each question should ask respondents 1) what the culture is, 2) what they believe it should be, 3) why a gap (if any) exists between what is and what should be, 4) the importance of closing the gap and consequences of failing to do so, and 5) what is required to close the gap and how this can best be done.

Selecting the right people or constituencies to provide input is critical to the success of the assessment. Be aware that if only those with vested interests in the existing culture determine who participates in the evaluation, the status quo will have the best chance of emerging as the "ideal." Key executives will almost certainly participate, since they have the broadest viewpoint and are the ones who must accept the need to change. But if the assessment is intended to identify subcultures and recognize variations between how constituencies view the organization's culture, the sample must be broader and representative, reaching both horizontally across functions or businesses and vertically through management levels.

Before beginning the cultural assessment, clarify and communicate the organization's vision or mission to ensure that it is widely understood. Scan the current environmental realities to confirm that the vision or mission is still viable. The communication process will strengthen the vision or mission, since publicly articulating a guiding philosophy strengthens belief in it.(2) Respondents evaluating the culture will then be able to base their input on the best available information. However, make sure respondents know that responses to the questionnaire should express their actual values, rather than values they believe to be "politically correct."

INTERPRETING THE RESULTS

The completed questionnaires provide a basis for a constructive dialogue on the key gaps between what the organization's culture is and what it should be. At this point there is often a tendency to try to identify an "ideal" culture that can immediately be adopted. Other organizations cited as having effective cultures may be contacted, outsiders familiar with current trends or supposed "best practices" may be brought in, and so forth. While all of this "benchmarking" activity is an honest attempt to gather more information and may be productive, the real issue is how well an existing - or alternative - culture fits the organization's current internal and external realities. The search for an ideal, one-size-fits-all cultural profile is misguided.

Popular culture often assumes that the "correct" choice will be apparent on careful examination. But it is not clear that any one culture will be effective for all organizations, or even for a specific organization at a particular point in time. Respondents must understand that there are no "superior" answers on the questionnaire and that the critical goal is to arrive at an appropriate balance of viewpoints.

To illustrate this point, compare two very different organizations: a major utility, long recognized as relatively innovative and effective in serving its customers, and a large software firm, a leader in software packages and processing services supporting a high technology application. These examples show how the gaps between what is and what should be are identified and how this knowledge can be used to determine what is appropriate and effective for the organization, as well as what needs to change. The process of comparing the two organizations illustrates how one organization's "ideal" culture can differ from another organization's.

FORMULATING STRATEGIES TO FIT OR SUPPORT THE CULTURE

Human resource strategy is like a hologram; it consists of interrelated functional strategies that must be carefully integrated to form an effective whole. The functional components most often defined are selection and staffing, organizational and human resource development, and rewards. Another possible component of HR strategy encompasses how workplaces and employee roles are designed, although this functional strategy often does not fall completely within the purview of HR.

The utility and the software firms will almost certainly require different human resource strategies to meet their critical needs. Since their respective strategies must operate in [TABULAR DATA FOR TABLE 1 OMITTED] very different cultures, it seems reasonable that they attract, retain and motivate different kinds of people and use different systems to do so.

THE UTILITY

The culture of the utility is reasonably well-suited to a regulated monopoly. Maintaining consistent performance is viewed as more critical than continuous innovation, both because of the utility's primary mission and because mistakes can be extremely costly. As a result, policies and procedures that emphasize error avoidance are usually preferred, even when they result in some redundancy of resources or somewhat higher costs. Those values are reflected in the strategy of the organization.

If the utility were to compete directly with unregulated private sector organizations, its culture might not be as appropriate as it was when competition did not exist. The critical needs for effecting cultural change would be:

1) Increased sensitivity to satisfying customer needs.

2) Increased emphasis on doing what will benefit the entire organization, even though short-term interests of a unit may be in conflict.

3) More emphasis on cost management, without substantially increasing the risk of error or decreasing product quality or reliability.

4) Increased appreciation of employees' potential value and a stronger belief in investing in them when a high payback is likely.

HR strategy and fit to desired culture: staffing. The utility has operated with a relatively closed internal labor market, "growing its own" technical and managerial talent. Employees have typically been socialized to the organization's way of doing things and rewarded for following the "script."

Although this approach ensured employees were well-oriented to the vision, mission and objectives of the organization - and probably encouraged reliable execution of policy - it also may have created an internal-oriented, rather than a customer-focused, point of view. A new staffing strategy might be required to change it. One way of promoting a customer focus would be to hire people with experience in organizations where organizational survival depends on satisfying customers.

Development. All four of the critical needs are changes that can be met, at least partially, through revisions in the utility's current training and education programs. Management education should be used to sell managers on the idea that human resources are assets, since managers make the investment decisions and are typically responsible for assisting employees with their career progression.

Rewards. The utility has always used a time-based "step-rate" pay increase program. Because there has been little focus on merit or performance pay, there has been little in the rewards program that encouraged employees to do more than "follow the script." The "pay increases come first" attitude revealed in the cultural assessment needs to be broken down - probably by changing the base pay program.

Incentive programs could be instituted using customer satisfaction ratings to drive rewards. Performance criteria could also incorporate cost management effectiveness, while maintaining a balance between costs and results. To help managers think beyond their own unit's results and understand the downside of trying to get the most pay for their own people without regard to equity or costs, at least one incentive pay plan based on overall results should be instituted. Finally, management personnel could be evaluated and rewarded based on how well they develop their employees, which will be likely to increase their focus on this objective.

Design. Reorganizing the customer service process to provide a single contact or service point - probably a team - could help the utility focus on customer satisfaction. This approach would lend itself to investing in human resources by creating a multiskilled workforce with more autonomy to satisfy customers and handle complete transactions as a way of improving the service level.

THE SOFTWARE FIRM

The culture of this organization is very different from the utility's, but reasonably well-suited to its environmental [TABULAR DATA FOR TABLE 2 OMITTED] and contextual realities. The organization's driving need at this time is to continuously develop and use the skills and creativity of employees. As a result, a flexible structure with defined roles that are temporary and change frequently will best allow the organization to succeed in a wide variety of future endeavors.

Although dramatic changes are not required, some critical needs are

1) More delegation by managers.

2) More recognition of support functions and their contributions.

3) Better creation and communication of long-range plans.

4) According equal weight to overall organizational performance and product or unit performance.

HR strategy and fit to desired culture: staffing. Traditionally, the firm has hired and promoted people with the best technical skills. Selection criteria for entry into management should probably be modified to ensure that successful candidates possess or can develop the particular management style and philosophy needed to improve organizational performance. Even if managers continue to be drawn from within the organization, training and management education may increase the effectiveness of those promoted.

Development. Management education could play a large role in improving this culture, with delegation, planning and communication of strategy being key topics. Because technically oriented professionals tend to focus on their own development and task accomplishments, their thought models must often be changed drastically if they are to manage effectively. Even in work team environments there is a big difference between the role of a team member and that of a team leader.

Rewards. In this organization, the "spoils" have historically gone to direct sales people who participate in volume-based individual incentive programs, and to technical contributors responsible for creating breakthrough products or technologies. Incentive plans could be developed to increase recognition of the contribution support functions make to the firm's overall success. To encourage a broader perspective on the part of managers, some incentives could be based, at least in part, on organization-wide results. Long-term or project-based incentives also could be used to increase emphasis on long-range planning and sustained performance in all parts of the organization.

Design. Because of the nature of the work, this organization already operates in a project-focused manner. The workplace structure and defined employee roles fit the work to be done. The firm may want to consider incorporating staff support functions into the project teams, but will need to balance efficiency concerns against the benefits of supporting this aspect of its desired cultural change.

ORGANIZATIONS WITH POORLY DEFINED OR FRAGMENTED CULTURES

Both the utility and the software firm seem to have a fairly good consensus among key managers about what the organization's culture is and what it should be. Many organizations that perform a cultural assessment will identify disagreement among key functions or businesses, all of whom are constituencies.(3) In fact, resolving differences is a prerequisite for improving the effectiveness of the culture organization-wide.

The utility had conflicting cultural expectations between the information systems function, the customer service function and the more mainstream functions related to production and delivery of primary services. For that organization, conducting cultural assessments within these functions and then determining key points of difference between senior management's desired culture and the culture desired by people in the functional businesses was beneficial.

Assessments will not necessarily light a clear path to reconciliation between functions. The result could be an agreement that cultural differences are acceptable or manageable, or perhaps, that the differences warrant an outsourcing of one or more "culturally incompatible" functions. One research organization created a new company to market a product it developed because the reward systems required for sales force effectiveness were culturally incompatible with the values and beliefs of the rest of the organization. In another organization the information systems function was outsourced because its culture supporting continuous, dramatic innovation did not fit the rather pedestrian needs of the rest of the organization.

ORGANIZATIONS WITH DYSFUNCTIONAL CULTURES

Neither the utility nor the software firm had a seriously misaligned or dysfunctional culture. In fact, many organizations would be happy with a similar degree of fit between their culture, their mission and their environmental or contextual realities.

In organizations with significant misalignments of culture - very large gaps between what the culture is and what people feel it should be - key constituencies must come to some consensus about:

* Which components of the culture are misaligned.

* What priorities should be assigned each of the gaps.

* What resources are needed and how they should be used.

* How the change effort should be managed and who does what.

* What role human resource strategy should play in signaling, making and reinforcing the necessary changes.

In many cases cultural misalignments are a byproduct of major organizational change initiatives, such as total quality management, employee involvement or reengineering. Each of these initiatives typically requires some cultural adjustment to be effective, even though they all seem to have similar goals, such as treating employees as critical assets, focusing on customer satisfaction and delegating authority broadly. Even when the optimal culture for supporting these initiatives has been identified and agreed to, the difficulties associated with making adjustments to the current culture must still be dealt with.

Each organization must decide whether it has the right people in the right places to make the changes, whether these people have been adequately trained, given the necessary resources and focused on the right objectives, and whether they believe they will be rewarded for their contributions. HR strategy must be consistent with the needs of the organization, and its component strategies must provide alignment with the organization's objectives.

CONCLUSION

Human resource strategies can be powerful tools for signaling cultural change and reinforcing those changes once they are made. Who is hired and retained, how people are paid, and what behaviors are deemed desirable all send strong messages about the desired culture. The potential of HR strategies and programs for shaping organizational culture cannot be overestimated. For HR strategy to realize its full potential, the organization must first determine what its culture is and what it should be. Then the organization can create a plan for aligning culture with its mission and environmental or contextual realities by managing the culture from what it is to what it should be.

Notes

1. E. Skein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 1985).

2. J. Person & J. Sorensen, organizational cultures In Theory & Practice (Aldeshot, England: Avery, 1989).

3. J. Collins & J. Porras, Built To Last (New York: Harper Business, 1994).

Robert J. Greene, PhD, SPHR, CBP, CCP, is consulting principal with James & Scott Associates Inc. in Bannockburn, Ill. He specializes in HR/compensation strategy and program design.

COPYRIGHT 1995 Society for Human Resource Management
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