Managing Change: Understanding Corporate Culture (Part 1 of 3)

**************************************************************************************** ACKNOWLEDGEMENT

This article was published in the Jan-Mar 2009 (Vol. 44, No. 1) issue of
Management – the quarterly magazine of The Malaysian Institute of Management

Reproduced here with permission from the author Dr. Victor S. L. Tan

and from
The Malaysian Institute of Management
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Many organisations today are hard pressed to change as they are driven by a strong need to change through this digital and the K-economy era. There is no alternative. They have to change to enable their organisations to compete and survive. However, many CE0s are unhappy because many of the changes implemented are not sustainable.

The scenario sounds too familiar. An organisation suddenly realises the need to change due to external pressure of competition. It decides to take a quick and simple way, i.e. undertake training for staff to improve their competency and motivation. Their staff members are sent off to a nice resort for a couple of days where they brainstorm issues, develop strategies to resolve problems, build team spirit and nurture a sense of camaraderie. When the staff members come back, they are all charged up for two weeks and then the enthusiasm subsides and everyone goes about doing things the old beaten way. The issues are still there. The result is that there is no iota of change happening. It is likewise with the implementation of change initiatives, be they TQM or business process reengineering or the GRID management approach – all started well but have not ended up well.

As a consultant, I have been posed the most common question from CEOS: How do you sustain a change initiative and the enthusiasm for continuous improvement?

There is one great strategic flaw in the way most organisations go about implementing change. They go about managing change in a superficial manner through merely changing the structure, process, strategy and technology without addressing the fundamentals that drive the organisation. And these fundamentals are the components that influence and guide the behaviour of people in organisations. It is these very basic components that make up the corporate culture of an organisation. Unless an organisation takes time to shape its corporate culture to the desired change, the effort and results will not be sustainable.

What is Corporate Culture?

Corporate culture is the way people do things in an organisation. It is a set of norms comprising of beliefs, attitudes, core values and behavioural patterns shared by people in an organisation.

It is these shared beliefs, core values and patterns of behaviour which influence the performance of an organisation. Beliefs are the assumptions or perceptions about things, which people and the organisation as a whole take as true or valid. For example, an organisation may have a shared belief about the great potential of its people. Core values are the primary or dominant values that are accepted throughout the organisation, e.g. the core value of respect. A pattern of behaviour is the way people act towards one another. For instance, an organisation that has the belief in the potential of its people and has the core value of respect will have the desired pattern of behaviour of treating people well.

KL Strategic Change Consulting Group, in its consulting work with over 250 Asian organisations, has found that the corporate cultures of Asian organisations play a significant role in determining the capability and speed of leading change within the organisations as well as in the industry. Thus corporate culture is important as it will determine whether or not an organisation survives in the face of changes, turbulence and challenges in the environment. The model developed by KL Strategic Change Consulting shows a direct correlation in how an organisation's beliefs and assumptions influence the core values, which in turn shape the behaviour of people. And it is this behaviour pattern that ultimately affects the performance of an organisation.

Characteristics of Corporate Culture

How does one go about specifically to describe the corporate culture of an organisation? There arc certain characteristics that an organisation values, which distinguish it from other organisations. It is this set of characteristics that provide a start for describing the corporate culture of an organisation. Overall, organisation behaviour experts can agree that there arc about 10 characteristics which collectively provide insights into the essence of the culture of an organisation. The following are the 10 differential characteristics:

1. Individual initiative: the degree of responsibility, freedom and independence that individuals have
2. Risk tolerance: the degree to which employees are encouraged to be aggressive, innovative and risk-taking
3. Direction: the degree to which the organisation creates clear objectives and performance expectations
4. Integration: the degree to which the units within the organisation are encouraged to operate in a coordinated manner
5. Management support: the degree to which managers provide clear communication, assistance and support to their subordinates
6. Control: the number of rules and regulations, and the amount of direct supervision that is used to oversee and control employee behaviour
7. Identity: the degree to which members identify with the organisation as a whole rather than with their particular work group or field of professional expertise
8. Reward system: the degree to which reward allocations (i.e. salary increase and promotions) are based on employee performance in contrast to seniority, favouritism and so on
9. Conflict tolerance: the degree to which employees are encouraged to air conflicts and criticisms openly
10. Communication patterns: the degree to which organisational communications are restricted to the formal hierarchy of authority

To understand the corporate culture of an organisation, employees are invited to participate in rating these characteristics on a continuum from low to high that corresponds with a scale from 1 to 10. By collating the input from a representative sample of employees, a composite picture of the organisation culture can then be determined. This description will provide a good starting point for employees to develop a common understanding about the organisation, the way things are done and how people are supposed to behave.

The Benefits of Corporate Culture

How does corporate culture help an organisation? What benefits can an organisation derive from developing a strong and conducive corporate culture? In our corporate culture work, we have found that our clients benefited in the following ways:

• It helps align the company towards achieving its vision, mission and goals.
• It increases the team cohesiveness of various departments, divisions or units within an organisation as its corporate culture serves as the 'glue' that bonds people together.
• It shapes the behaviour of staff at work by encouraging the assimilation of core values and the desired behaviour, thereby enabling the organisation to be more effective and efficient.
• A common culture promotes consistency, resolves conflict and facilitates coordination and control.
• It increases staff motivation through a sense of belonging, loyalty and common beliefs and values, which encourage them to think positively of themselves and their organisations.
• A strong culture enables an organisation to pull all its people together and maximise their potential; this certainly provides a competitive edge.

A study of 200 companies by Harvard Business School researchers John Kotter and James Heskett found that corporate culture has a strong impact on the performance of organisations. This landmark study provides four significant conclusions as follows:

• Corporate culture can have a significant impact on a firm's long-term economic performance.
• Corporate culture will probably be an even more critical factor in determining the success or failure of firms in this new millennium.
• Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people.
• Although difficult to change, corporate cultures can be made more performance enhancing.

A company with a strong positive culture will motivate people to continue growing, learning and improving. Research has shown that employees have higher motivation and satisfaction working in organisations which are well managed with managers and employees who practise sound principles, common beliefs and shared values.

Thus it can be seen that to enable change initiatives and the enthusiasm for continuous improvement to be sustained, organisations need to develop a conducive corporate culture to support such efforts. They need to inculcate beliefs, assumptions and core values that shape behaviour towards the desired results. To do this requires more than just simply instituting a performance management system. It requires a mindset change of the way people create their own identities, make sense of their working lives and find meaning from their work. And that is going to the core of fundamental change – the change in corporate culture.

Written by Dr. Victor S. L. Tan. Dr. Tan is the Chief Executive Officer of KL Strategic Change Consulting Group. He is an author of five management books. His latest book is The Secret of Change. For more information, visit www.klscc.com or contact the author at victorsltan@klscc.com

Initiatives for Organisation’s Business Continuity Plan (BCP)

**************************************************************************************** ACKNOWLEDGEMENT

This article was published in the New Straits Times on September 27, 2003

Reproduced here with permission from the author (Dr.) Josef Eby Ruin
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1.0 Business Continuity Plan (BCP) deliverables

Typically, a BCP is prepared to document the following deliverables:

• Identifying tasks to be undertaken, and the responsibilities of various personnel in the disaster management team or committee (DMT)
• Stating the job of a BCP coordinator
• Identifying the contact numbers and addresses for DMT members and support resources required; and
• The communication matrix or template required to notify stakeholders, the public, and the media

The plan in the BCP defines the business resumption procedures that encompass the critical business processes of an organisation. It details the key resources to be used and the various action plans to be initiated so as to recover these resources for the business continuity. Key areas to be documented in the BCP would be:

• Formalising the recovery team's set-up, and availing them the mandates and power
• The recovery team's roles
• Minimum and necessary support staff needed
• Location of the organisation's control command centre (CCC) and mission-ciitical facilities required
• Protection and location of critical information
• Identification and testing of the business recovery site for the critical functions to continue
• Telecommunication requirements of the business operations of the organisation
• Personnel requirements (the "red-label" staff) to deliver the agreed level of minimum services; and
• The location and stand-by roles of "green" and "yellow-labelled" staff

2.0 What determines a BCP's success?

As BCP is the heart/brain of any organisation's continuity management strategy, its success depends on the following:

• Effective implementation and testing of the documented BCP procedures, and getting them understood across the entire organisation
• The hands-on application exercise for staff who are directly involved in the execution of the plan
• Awareness programme to ensure enterprise-wide adoption of the plan

3.0 The continuity culture and awareness

All proposals identified in the BCP should be implemented as a matter of commitment, otherwise the effort, time and investment made in its preparation will be wasted, redundant or at best become superfluous. The same goes for awareness that have to be embarked upon so as to provide the assurance that the entire organisation is competent and confident with the plan’s success and effectiveness.

All parties must appreciate the importance of BCP to the organisation's survival and their roles in the process. This awareness should extend to external stakeholders and third parties whom the organisation depends on in both normal and crisis operations.

By implementing the BCP in this manner, all those involved in the invocation of the BCP can have full confidence in the organisation's ability to manage a crisis. With such commitment, the BCP-involved staff will have that “continuity culture” in their work habits. This kind of value shall put an organisation head-and-shoulder above the rest as far as organisational resilience is concerned.

4.0 Appointing an organisation’s BCP coordinator

A BCP coordinator is to be appointed. He is to report directly to the board member responsible for the BCP programme. A coordinator has to understand the organisation's business structures, corporate objectives and the various people who make the organisation ticks. Ideally, he is seen as a good programme manager with superior communication and interpersonal skills. He is a good leader and has a good understanding of the cost and budget dynamics as the setting up of business recovery sites (hot, warm, cold sites) are not cheap to initiate and maintain.

5.0 The relevance of awareness, dryruns and training

A BCP has to be practical and implementable. BCP is a live strategy, hence it needs periodical updates with revisions for applicability, suitability, and efficacy for maximum value-impact. If the BCP document is merely printed, then distributed and turned into a “showcase or decorative file”, then that organisation’s BCP initiatives have failed and the whole exercise is futile.

If an emergency is declared and the organisation is obliged to invoke its BCP, it would fail since no one (or not all the critical staff) have any idea as to its contents and without knowing the moves to initiate. Thus, there is the dire need to underscore the importance of getting the BCP awareness and testing for the staff, especially the red-labelled staff who will become the main initiators when a crisis attacks.

An organisation's BCP cannot be considered “fool-proof” until it is tested and proven workable. Testing or BCP-exercising can take various forms – from communications plan test to partial systems test to partial system and business simulated test to full-system and business live test. The frequency of exercise may be at a minimum of once a year.

6.0 Knowing the organisation’s stakeholders’ expectations

When a crisis occurs, there is the need to recognise the various stakeholders. The list may vary, depending on the nature of the crisis. Typically, an organisation's stakeholders whose expectations need to be served would include one or many of the following:

• Adversarial groups, brokers, distributors, dealers
• Vendors, suppliers, business groups
• Community leaders, competitors, customers/clients
• Employees, investors, law enforcement officials
• Regulatory authorities/officials
• News media organisations, plaintiff attorneys, politicians
• Security analysts, ratings agencies, insurance companies
• Stockholders, union officials, shareholders; and
• Any entities, individuals, groups that have interest in the beleaguered organisation that is facing the crisis

7.0 Inherent features of a credible BCP

A credible BCP needs to have a mechanism set up to establish easy maintenance and update an organisation's BCP. A roadmap for the unexpected can be one such mechanism. Such roadmap must define responsibfiities to:

• Differentiate between business recovery and disaster relief-rescue teams
• Identify tasks to be undertaken by various teams
• Identify and list key contacts, suppliers and resources
• Provide the framework for crisis communication and how to inform stakeholders and handle the media

A credible BCP should define the business continuity procedures clearly. The procedures are to cover mission critical processes and must highlight what are the key resources to be used, and what processes are to be followed, to recover these resources that are affected by the crisis. A credible BCP should also integrate itself with other key strategies in the organisations like perhaps the policy for:

• Crisis communication and public relations
• Safety and emergency guide
• IT and communications recovery procedures
• Security framework
• Departmental operating outlines
• Supply chain logistics policy; and
• Operational risk management manual

8.0 Contents of a BCP document

There is no hard and fast rule as to what constitutes a complete BCP document. However, six fundamentals should be present.

I. General introduction
a. Objectives
b. Responsibihties
c. Exercising
d. Maintenance

II. Plan invocation
a. Disaster declaration
b. Damage assessment
c. Continuity actions
d. Team organisation and responsibilities
d. Red-label, yellow-label, and green-label staff
e. Emergency operations centre

III. Communications
a. Parties that need to be informed
b. Contacts
c. Key messages and common templates to use

IV. Suppliers
a. List of recovery suppliers
b. Details of contract provisions

V. Awareness and training
a. Approach and concept to cascade or disperse the BCP among staff
b. Mock runs and testing for credibility and practicality

VI. Custodian, evolvement and Changes
a. List of all BCP holders
b. Distribution and change process

9.0 FAQs regarding BCP initiatives

Whatever, and despite all sorts of BCP materials that can be read to gain insights into what it is all about, there will still be lots of unanswered questions for management practitioners. Knowing some simple answers that an organisation should answer for some of the frequently asked questions (FAQS) on BCP issues (like those stated below) would make an organisation’s management understand BCP better as well as facilitate the organisation’s team to develop credible and elective BCP.

FAQ 1: System for management notification
i) What kind of management notification system does your organisation have in place if a crisis occurs during non-business hours?
ii) How long will it take to reach everyone (from board to senior management decision- making body)?
iii) What needs to be done if a disaster happens at 4.45pm?

FAQ 2: Organisational emergency response
i) When was your organisation's BCP documents last reviewed?
ii) Has it ever been tested to see if it worked?
iii) How well does this BCP gel with the response plans of other subsidiaries within your organisation?

FAQ 3: Vulnerabilities and internal problems
i) What are other identified internal problems that your organisation has which could damage its business if the “bad” or negative news leaked out to the public?
ii) What will the public’s reaction be, if say, one of such "bad" news is disclosed by a disgruntled staff
iii) How will your management explain and justify the situation so that such news will have insignificant financial impact on your organisation?
iv) What is being done by your management to reduce the chances of such whammy from occuring now or in the future?

FAQ 4: Official spokesperson
i) Who is your organisations spokesperson in a crisis environment?
ii) Who is the alternate spokesperson if the principal spokesperson is not available, or not appropriate/relevant for that kind of crisis event?
iii) How good are they in handling tough questions from reporters?
iv) How much confidence does your organisation has that the spokesperson is convincing and credible?
v) How are disclosures handled in your organisation when a crisis occurred in a branch, region or isolated location outside your head office? Who is the designated spokesperson in such a situation?

FAQ 5: Accuracy of information
i) How much information your organisation would divulge if there is a crisis in your organisation?
ii) Who is to ascertain what to say?
iii) What are your organisation's approval process?
iv) How long will such approval process take?

FAQ 6: Disseminating news to stakeholders and employees
i) How does your organisation contact the board, management, and employees so they would hear first before learning about the crisis from the news media?
ii) How about your customers, suppliers, other key audiences and stakeholders? How long would that take?

FAQ 7: Similar crisis in other organisations
i) What similar crisis situations have other organisations experienced in the past year that went “public”?
ii) How well would your own organisation have handled those similar crises?
iii) How much of their management time have those other organisations taken?
iv) How much have those crises cost them in expenses, ill-publicity?
v) Would there be lawsuits, and regulatory or government investigations?
vi) How long might they be, before those organisations get the problem behind them?
vii) What would your organisation have initiated if it happened to your organisation?
viii) What are the “lessons learnt” from their experiences?
ix) Have you made any changes in the way your organisation do business as a result of what happened to those organisations?

Written by (Dr.) Joseph Eby Ruin, FCCA (UK), CA (Malaysia), Hon. DBA - Management Philosophy (Kursk State Technical University). (Dr.) Joseph completed his ACCA (UK) in 1976. He became Fellow in 1984. He has also been a member of the Malaysian Institute of Accountants since 1983. For his many management books, articles, and conference, seminar and workshop papers, he was conferred the honorary degree of Doctor of Business Administration (Management Philosophy) by the Kursk State Technical University, Russia in 2006. He was elected Regional Director of The Professional Risk Managers' International Association (PRMIA) Malaysia Chapter in November 2007. He can be reached at RiskFirst Consultancy & Training Services, Tel: +603 - 22735506.

Chen Ming-fa’s note:

Also see Managing Business After Disaster http://biz.thestar.com.my/news/story.asp?file=/2009/1/12/business/2955533&sec=business

The field of Business Continuity Management (BCM) is gaining prominence. In Malaysia, the Malaysian central bank i.e. Bank Negara, has issued business continuity guidelines as part of the corporate governance for all financial and insurance institutions. To become a professionally certified BCM guru, visit the Business Continuity Institute http://www.thebci.org/ to find out more.