Cultural Improvement Takes Work
Klaus M. Blache | February 16, 2018
Q: Why is improving culture so difficult and so important?
A: For as long as I can remember, culture has been, simultaneously, the top roadblock and leading opportunity for large implementations and ongoing improvement. In simple terms, culture is what your employees do when they think that you are not watching.
Many labels have been used to describe factors that make cultural change difficult. The top three are fear of change (lack of confidence), lack of trust (people need time to accept a new concept), and lack of a clear communication/understanding of why the change is necessary (what the future state looks like).
Results analyses, case studies, and related headlines continue to make statements such as:
• Culture is the main reason we are not making faster progress.
• Culture accounts for a large percentage of ROI.
• There is too much employee resistance to process change or introduction of new technology.
I have found that people, in general, don’t resist change. What they resist is the impact it has on their work and personal lives. This is where employee involvement in developing workable solutions is rightfully discussed.
A mature culture requires trust and can take many years to develop; more than five years if the culture is ingrained. However, it can very quickly be destroyed without ongoing daily support. Trust and credibility need to be earned. They don’t just happen.
There are exceptions. You often read about the one-year cultural turnaround of employees at NUMMI (New United Motor Manufacturing Inc., a joint venture between GM and Toyota in California) after Toyota took over the General Motors plant. What’s usually not mentioned is that the previous plant closed and this venture was the primary opportunity for workers to stay employed at their current wage levels. You can get cultural change in a year if everyone is standing on a burning platform.
In saying this, I’m not discrediting anything that happened at NUMMI. Toyota sent hundreds of coaches to make lean manufacturing work, but also wanted to learn more about dealing with American workers. Early in my career, while I was a manager at GM Corporate Industrial Engineering, I volunteered to work the production line several times to better understand the workforce and had numerous discussions with various levels of management. These efforts allowed me to confidently state that the people and manufacturing processes worked.
When I conduct reliability and maintainability assessments, understanding the current state of the existing culture is one of the key elements. Some of the other 15 elements we use are work management, standardized work, continuous improvement, and equipment process design.
In the graph above, the lines show a comparison of assessment results from multiple plants in three companies. The company represented by line AB has a high correlation (R2 = 0.73) between process reliability and organizational culture maturity. The organization represented by line CD started with the same challenging culture as company CE but, through an increased people focus, will reach cultural and reliability maturity (and realize related performance benefits) much faster than company CE.
Planning for and tracking your cultural progress can be accomplished by comparing multiple plants or the same plant over time. While you still need to have efficient and effective processes in place to be competitive, a better culture will get you there much faster.
In their book, Corporate Culture and Performance, authors J. P. Kotter and J. L. Heskett found that, over a 10-yr. period, companies had reached cultural and reliability maturity realized revenue increases of 682% versus 166%, net income growth of 756% versus 1%, stock-price increases of 901% versus 74%, and 282% job growth versus 36%.
It’s also not surprising that one of the key Toyota Principles is about becoming a learning organization through relentless self-examination and continuous improvement. Cultural improvement will always be difficult to enable and sustain. But those who understand it and embrace it will have greater success in business performance. EP
Based in Knoxville, Klaus M. Blache is director of the Reliability & Maintainability Center at the Univ. of Tennessee, and a research professor in the College of Engineering. Contact him at email@example.com.