Cultural Transformation – Don’t Throw the Baby out with the Bath Water
At The Rainmaker Group we are all for cultural change and transformation. Quite frankly, most organizations are in need of cultural change in some form or another. However there are times that organizational change and cultural transformation can be taken too far. We frequently see this to be the case when an organization feels forced to restructure and lays off thousands of employees.
The news headlines have been ripe as of late with stories of large, well established companies such as Yahoo, Sprint, and Citigroup laying off thousands of workers. This creates a considerable amount of stress for the workers who and can leave serious cultural "scars" that may negatively impact an organization for years to come.
You are probably familiar with the old adage, "Don't throw the baby out with the bath water." What this essentially means is don't be in such a hurry to discard the bad that you throw out the good.
When it comes to corporate restructuring and cultural transformation as a whole, this saying couldn't be more fitting…
Ed Frauenheim with Workforce Management has a great article up on Workforce.com about Intel's massive corporate restructuring and the negative impacts it has had on its once storied culture of innovation and fresh ideas. Check out Ed's article here for the whole story. Essentially what has happened with Intel is that many of the elements that made its culture so great were thrown by the way-side in an attempt to cut costs and improve financial performance.
I have to say that I can sympathize with Intel's position… It has been under incredible pressure as of late to improve its lagging financial performance and loss of market share to Advanced Micro Devices (AMD) and a massive corporate structure probably seemed like a good way to quickly cut costs in the short term.
The hardest part of being a publicly held corporation is that the number one priority and responsibility is to increase stockholder wealth. Most stockholders aren't interested in long term prospects and organizational culture when stock prices are falling, and revenue and market share are slipping. They want results now.
And to be truthful, the stockholders seem to have gotten the results they were looking for - at least in the short term. Third quarter revenue in 2007 was up 15% and profitability has improved as well.
However in its quest to cut costs and please its stockholders' demand for short term results Intel has endangered much of what made Intel the great organization that it is. The long term affects of this restructuring may take years to reveal themselves, so it will be some time before we know for sure the real impact of this restructuring.
Employee surveys have revealed that morale and job security is low, and only a slim majority of workers are satisfied with their opportunities to grow and develop at Intel. In fact Frauenheim's article reports that 40% of Intel's employees would be willing to work for another company with similar pay and benefits. This puts Intel at serious risk of losing the valuable talent that it still has should these individuals be approached by corporate recruiters and headhunters.
After reading Ed Frauenheim's article the dangers of corporate restructuring and dramatic cultural change should be clear. I have pointed you to this article not to scare you away from a decision to restructure your organization or embark upon cultural transformation, but rather to point out some of the potential downfalls of taking such drastic moves to achieve short term results.
Many organizational cultures have great opportunities for growth and improvement. However this does not mean that change should be done hastily or without consideration for the long term ramifications of such a move. An organization's culture gives it an identity. Some things about it may be great and others not so great. The important thing to consider is what needs to stay and what needs to go. Above all, be sure not to throw the baby out with the bath water.
Now go Maximize Possibility!
Other blog posts you may be interested in:
- Five Signs that Personal Accountability Isn't a Core Cultural Value
- Five Signs Your Organization May be Trapped in a Pyschic Prison
- Cultural Change Begins with Personal Accountability
- Five Signs Your Culture may Be Inbred
Chris Young helps organizations Maximize Possibility through talent management, cultural transformation, and strategic intervention. Bring Chris in today!
