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Rotman Insights Hub | University of Toronto - Rotman School of Management

4 steps for organizational culture change

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Soo Min Toh

Management researchers know a lot about the effects of culture, whether that’s the shared norms, values or expectations within a business, a geographic or social community.

Far less is understood about what influences the development or change of a culture and how to do that well. That matters, says a new review of existing research because organizations need functional cultures that ultimately serve their goals.

The impetus for the study came while the authors were doing previous research on the impact of cultures — including how managers may recreate norms that they have picked up from previous experiences, to their team’s detriment.

“We realized that there really wasn’t a lot to explain what we were seeing,” says co-author Soo Min Toh, a professor of organizational behaviour and human resources management at the University of Toronto Mississauga and the UofT’s Rotman School of Management. “Without understanding how those cultures come to be, it’s hard to understand the consequences of culture and what we can do to change those cultures in order to adapt.”

Based on a review of nearly 70 related research articles, Toh and her team found that theories on culture creation vary and there is no agreement on whether organizations can intentionally — and effectively — create cultures that support their goals.

Some management academics believe that cultures are largely driven in response to what’s happening in the environment, such as ecological or human threats, diseases, market forces, or social conflicts. The COVID-19 pandemic is a great example where “organizations and even employees have experienced events that have perhaps altered some of their values,  their priorities, and what they think are solutions to their work,” says Toh. 

More research is devoted to the idea that cultures develop around their leaders. One perspective says that the culture reflects a leader’s own characteristics, such as their personality or demographic make-up. Another posits that the culture is a result of a leader recreating a culture they already know, in an effort to build something they think will work.

While no one theory can account on its own for what leads to cultural change, all three perspectives have something useful to contribute, the researchers say. They outline a potential four-step process for culture change and development that integrates elements from the three ideas. Organizations should:

  • Identify and assess environmental changes that may significantly affect them, whether as risks or even opportunities.
  • Evaluate how well-suited their current cultures are to handling those changes.
  • Look for alternatives if they need them, based on evidence demonstrating that the alternative is likely to solve the environmentally generated problems.
  • Create or implement an alternative culture that responds to the environmental changes.

Things don’t stop there. Given that the environment is dynamic, leaders need to regularly go through the exercise to ensure their culture is adapted to current conditions.

Research into how to successfully create an effective culture is still limited, the co-authors concede. But at a minimum, the process needs to involve both leaders and those they lead. “The employees are additional resources to keep watch for what changes are happening,” says Toh. “And a leader can’t create a culture without their cooperation. That collaboration is necessary for defining and developing the appropriate culture.”

The paper was co-written with Yeun Joon Kim, of the University of Cambridge, and Sooyun Baik of ShanghaiTech University. It appeared in the Journal of Management.

Soo Min Toh is an professor of organizational behaviour at the University of Toronto Mississauga, with a cross-appointment to the organizational behaviour and HR management area at Rotman.