Changing Corporate Culture
Companies today are facing increasing economic and social challenges, whilst still being expected to achieve and maintain a high level of performance. Research shows that corporate culture has a key role to play in the challenge for companies to engage their employees for successful implementation of strategy which drives high performance.
Dreams, now the leading bed company in England, was founded in 1985 and had to file for bankruptcy in 2013. The private equity firm Sun took over the company in the same year and appointed a new CEO. Mike Logue was expected to help lead the company back towards profitable growth. Intensive efforts were needed to establish a high-performance culture within the organisation, which laid the foundations for all additional changes and triggered a fundamental change process.
Denison Organisational Culture Survey (DOCS)
The DOCS measures the current state and “health” of corporate culture. The results of the survey are compared with over 1,000 of the most global companies, which are stored in a single database. This process guarantees a reliable assessment of your own company as well as a comparison with other organisations. The impact of corporate culture on financial performance and key performance indicators is clear; this is no short-term phenomenon, but a lasting effect that gives you
a competitive edge.
The Denison Model translates the intuitive side of culture into
measurable values and enables them to be interpreted in terms of a business context and corporate strategy. In doing so, gaps are
identified, which is crucial for effectively implementing your strategies – for example, managers can set clear goals to establish the necessary culture within the company.
In anticipation of these changes, over the three years following him being appointed, the CEO was able to successfully bring the company out of bankruptcy and back into impressive profits. As a result of the change process, Dreams developed a healthy business basis once more and regained the trust of its customers. Today, it is once again the most highly recommended bed company with just under 200 branches and 1,900 employees. But where do you even begin with a change process like this? How can a failed retail business be given a new lease of life? What does it mean to be taken over by a private equity firm, which recognises a company’s growth potential but expects rapid improvement with
concrete financial results? The new executive management team initially focussed on customers, and placed them at the forefront. In addition, the brand was revived through improved customer experience on site, improved products, innovative marketing campaigns, a redesigned company logo and a fleet of new delivery vehicles.
These changes in day-to-day operations were essential but not sufficient. The new management
insisted that only an entirely new corporate culture would change the business in a sustainable way.
Extensive organisational measures enabled the creation of a strong corporate culture, which formed the basis for all other changes along the value chain. The development of Dreams shows that a clearly focussed and consistent culture, involving and taking employees on board, can bring a company out of bankruptcy and into success.
Culture analysis as the starting point
Corporate culture includes the common norms, attitudes, and beliefs of the members of an
organisation. These can help to define employees’ behaviour and respect for corporate values by
evaluating their instinctive, repetitive habits and emotional reactions. In simpler terms, “culture is the way in which we do things.” Or, to put it even more simply, “culture is what we do even when we’re not being watched.”
Whichever definition you prefer, the new management recognised the importance of a “culture of
winning”, where employees create a working atmosphere that encourages discretionary effort &
performance. Initial observations of various business functions, however, gave reason to fear that the workforce had already given up. However, the extent to which their negative attitudes had affected the entire company still remained unclear. The people in charge knew they needed to assess how deep such attitude went throughout the company.
The investor, Sun, requires all subsidiaries to conduct the so-called Denison Organisational Culture Survey. For Dreams, a survey like this was completely new territory. When the first culture analysis was performed in 2014, many people were sceptical; however, the results provided conclusive evidence on the current state of the company. They confirmed initial observations, and proved a negative corporate culture was present with harmful effects on engagement and profitability.
The real work began once the results were available. Key questions were important to answer:
- What’s the status quo of the company?
- How do culture and strategy interact?
- What are the culture-related barriers that are preventing management from achieving business goals?
Presenting and discussing the results of the analysis revealed critical gaps that needed to be addressed in the coming months.
Challenges in implementing the survey
Only half of the employees participated in the initial survey, which suggests that many didn’t trust management’s motives. The results of the culture analysis confirmed the negative attitudes of the workforce and the negative consequences of this on the company.
It was important to find out why employees were feeling this way. The next step was carried out
company-wide with a number of “One Team, One Dreams” working groups. Employees were invited to share their opinions openly and honestly, with the promise that the executive management team would hear, understand and act. They also promised to evaluate the employees’ statements and use them as a basis for the change process.
The working groups clearly showed that a lot of effort was needed to turn the dominant culture trends – namely deficit thinking and avoidance – back into positive energy and a performance-based culture. The company’s management noted that a fundamental and sustainable change process was only
possible with mutual trust. Building trust in the company and in the management team became the first priority in order to gently re-establish a positive team spirit within Dreams’ corporate culture. The
process of building confidence began with demonstrating a mutual respect at all levels and
establishing permanent and transparent communication with all employees.
Creating a culture of winning
The key word here is communication – as it turned out, this was at best, missing and in the worst case scenario, inconsistent. As a result, many employees felt isolated, uninvolved, and eventually
First of all, the executive management team developed and delivered a clear strategy based on a
mission and vision for the future. To get employees involved, it was necessary for all employees,
regardless of location or functional responsibility, to understand the company’s direction over the
following three years. In addition, employees are only likely to make an above-average contribution to the company if they are able to see the value of their contributions in terms of the overall result. The
demands of the management team in this respect were clear: listen – understand – act. As a result, management was able to invest resources selectively in specific measures that were necessary to create a performance-oriented culture full of committed employees.
Establishing trust through a positive employee experience
All employees were given easy access to the intranet and therefore had direct access to important
information such as changes in day-to-day operations. In addition, measures were implemented to ensure that every employee could be easily and quickly contacted. An employee app called Hub was introduced to ensure that this was made possible. Using Hub, a member of the executive team, usually the CEO, creates a weekly video update on business transactions over the past seven days. Above-average customer service is also properly acknowledged by the CEO. Employees can also ask
questions via Hub; their questions will be answered within 48 hours and published for all to see. Hub also has a chat feature that allows employees to contact the executive management team even at the weekend, highlighting the availability of the executive team.
Finally, it’s important for every new employee to understand the company’s goals. Once a month, all new colleagues meet in Birmingham for the so-called Bedding-in Day. On this day, the mission and strategy are outlined, employees take part in a tour of the factory and also have the opportunity to meet the executive team in person. As it turned out, interacting with colleagues in person was much faster and more effective than other methods of communication. As a result, regular road shows were
introduced for all of the company’s employees as well as quarterly listening forums, a Monday briefing in Bedquarter – Dreams’ headquarters – and an annual conference for retailers. These formats allow the management team to personally inform all business units about the latest developments. Employees sitting at the front are also encouraged to ask questions about their department so that any problems can be quickly resolved.
“Employees are only likely to make an above-average contribution to the company if they can see the value of their contributions in terms of the overall result.”
The appreciation and satisfaction of our customers is equally as important. Dreams has received almost half a
million responses to a customer survey so far: Customers appreciate the excellent service but see potential for
improvement. Based on feedback like this, the company has recently introduced free shipping. This required an investment of ten million British pounds. Dreams is, however, satisfied that offering this service “for free” is what’s right for its customers.
Culture of gratitude
At Dreams, there’s a culture of gratitude that is expressed through various internal awards and simple gestures.
Example one: The executive team serve lunch to factory employees.
Example two: “Above and Beyond the Call of Dreams” (ABCD) – This is an award for employees who consistently show above-average commitment.
These recognitions reduced the impression of a faceless and inaccessible executive management team for employees. Their initially negative image increasingly became one of appreciation.
Of course, involving employees in the financial success of their employer is also a thank you and an
important preservation tool. The sustained economic success of the last three years, as a result of the change process, has enabled all employees to receive bonus payments. The improved economic
situation also created additional scope for extensive employee training and further development at all levels. Feedback demonstrates that this has had a positive impact on retention.
But this still wasn’t enough. Dreams set itself the goal of improving the sleep and therefore the quality of life of all of its employees and their relatives. The company now offers employees the opportunity to purchase high-quality beds at attractive prices. Dreams has spent £2.6 million on this initiative, which is being used by many.
In addition, Dreams supports the charitable organisation “The Fostering Network”. Many employees show their personal commitment by collecting donations in their spare time or by organising fund
raising events. So far, 180 children have benefited from the company’s dedication.
Positive employee experiences have a direct influence on the customer experience and helped build a trusting relationship; this is clear in the case of Dreams. The effects of this are a core element of the
culture change at Dreams, which continues to develop. Currently, structured training plans, further training measures, and succession planning programmes are being implemented in all areas. To enable this, a process has been developed that recognises and promotes talent.
The change process has shown Dreams’ executive management team that a change in company
culture is worthwhile. The positive interaction between investing resources in customer and employee satisfaction and the financial outcome of this have been clearly demonstrated.
Validation studies by Denison have reliably shown that ROE for companies with a results-oriented
culture is increasing significantly. Dreams’ corporate culture survey, based on this method, measures employee engagement. The increase in performance within the company speaks for itself (see figures).
To begin with, the Denison Organisational Culture Survey enabled the management team at Dreams to make an initial assessment of their corporate culture. It later also served as a tool to drive change and measure its progress, such as employee engagement. The tool provides analyses that management can use to pinpoint and implement the correct necessary measures. These measures always have the goal of improving the economic performance of the company through clarity and one common focus
Today, CEO Mike Logue is proud to have been named “Specialty Retailer of 2017” thanks to his
leadership skills. This award is one for a rigorous change process that has led to better numbers over a four-year period of improved culture.