A change of corporate culture is like a long journey

It is sometimes said that success is part of the DNA of successful teams. However, success may be less the result of genetics. Is there such a thing as a culture of success and how could you define it?

Team baut Turm

Profitable banks and insurance companies have a different corporate culture than the industry’s low performers: it’s a special culture of success. This topic was explored in detail by the zeb.transformation study 2022: 150 companies from the financial industry in German-speaking countries participated, each of which evaluated 30 criteria on a scale from 0 to 100 for their company. Surprisingly, some parameters differed a lot. Christian von Schirach, study author and Senior Manager at zeb, summarizes the reasons in an interview. 

It is sometimes said that success is part of the DNA of successful teams. However, success may be less the result of genetics. Is there such a thing as a culture of success and how could you define it?
Culture affects customer orientation as well as the ability to change. Via these two aspects, it has an influence on profitability. Today, a culture of success involves a different understanding of leadership and a shift of responsibility to the entire team. This creates a more comprehensive understanding and higher identification of employees with the company’s goals. 

What made culture a management issue in the first place?
The first major impetus was the emergence of agile methods, because they allowed for a faster response to market demands. This, of course, also affects the corporate culture. The second reason was COVID-19 and the subsequent complete change in work organization. These two waves have overlapped and reinforced each other. All in all, it was a strong external impetus.

Do companies need to reinforce this impetus at all, for example through special projects?
Like every human being, a company is sometimes inflexible. In addition, systems tend to revert to earlier stages and old structures from time to time. A company would do well to use the impetus and foster it in a variety of ways. 

What stands in the way of change?
We were successful for a long time, but the old structures are no longer suitable today and even less so in the future. Changes in the markets will come faster requiring creative minds. The active participation and commitment of employees become a success factor, as does appropriate leadership at a distance. If you don’t act now, you will fall behind in the competition.

Participation and commitment sound like soft factors. How do you make them tangible?
Small digital formats, for example, are helpful. The CEO of an insurance company recently told me that the first thing he does every day is to look at the eNPS: the employee net promoter score. On a daily basis, a part of his staff is asked the following question: would you recommend the company as an employer? When analyzing the results over time, clear trends can be identified. It’s like a temperature curve. For this CEO, the eNPS serves as the key decision indicator for leadership measures.

The zeb.transformation study recently examined which measures work well. Were there any surprises?
I was less surprised by what worked well and more surprised by what was apparently ineffective. Only seven percent of the companies surveyed – i.e. more than 150 – believe that their variable remuneration system creates an incentive in some way. Think about how much effort large companies in particular invest into target agreements, measurements and year-end performance appraisals. Usually between 98 and 102 percent of the bonus is disbursed – which is good on paper, but doesn’t have any impact.

If the individual bonus doesn’t work as an incentive – what is the alternative?
Openness within the team, transparency, knowledge transfer, trust and involvement of the entire team in the development of targets and their achievement – these are profitable targets. I find the introduction of agile formats very useful – to exchange ideas within teams about how to work, to take a step back from the results for a while and ask yourself: how do we work as a team and what can we improve? All of these are signs of appreciation for employees, showing that they are being listened to. Agile formats provide extremely valuable impetus for collaboration, while potentially disrupting long-term goals. And that’s a good thing, because it’s a contradiction in terms to have long-term goals for employees. 

What do you mean by “contradiction”?
I’m thinking of OKR: objectives and key results. If I use them for orientation, the time spans are three or four months. Then we talk about short-term targets or outcomes and how to achieve them. This significantly strengthens the identification with what I actually do, because I always talk about it with the team: the targets that I can achieve and the targets that I have achieved. This is completely different from annual targets, as the individual employee finds it difficult to influence them. That is why we attached great importance to the topic of targets in the zeb.transformation study. 

Looking at the entire study: what measures are indispensable?
First: I have to start at the top. The board must consider the topic of culture to be relevant and address it on a regular basis. And below the board level, too, it’s usually HR which needs to assume clear responsibility and proactively address the issue. Second: you have to be committed full-heartedly, otherwise it won’t work. In total, we have identified seven building blocks (see “Take-aways”).

Are there any special steps to consider along the way?
Some of the signals may be small, but they are highly symbolic. In one bank, the board had decided to no longer wear ties – a classic issue. The board members completely agreed on the importance of culture, but one board member wanted to continue wearing a tie. The result was: the 1,600 employees noticed it and thought the board disagreed on the issue of culture – so a minor style issue caused huge damage.

What other surprises did the study reveal apart from the questionable benefits of bonus systems?
The spread in the key figures distinguishing successful companies in the industry from less successful ones also came as a surprise. The assessment was based on a scale from 0 to 100. Low and high performers were sometimes 60 to 70 points apart. A rather huge spread. Let me give you one example: developing leadership skills and continuously working on them. This does not mean offering random training sessions. It is about training managers together with their teams in the business units, i.e. directly on the job. We then paid special attention to the topic of training managers and found that it had a positive impact on all aspects assessed. This means that it is highly rewarding to invest into leadership skills.

How do employees cope with this new culture of leadership?
The workforce is never homogeneous and always reacts in a variety of ways to changing circumstances. For example, we examined the change in productivity due to hybrid working conditions in individual projects. For some employees, productivity has increased by up to 50 percent. At the same time, it has dropped by 50 percent for others. Organizing yourself or taking on more responsibility are very individual topics. But it also clearly shows that there is enormous potential for organizations. After all, for some employees productivity has increased by 50 percent. Organizations now need to identify the exact reasons for that and what needs to be done to mitigate the downside risks. This is a learning process.

Does that include performance reviews – a difficult issue from the perspective of the staff council?
Yes, that’s often a difficult topic which is handled differently.  The staff council often adamantly rejects performance reviews. However, one of our clients has agreed in certain areas and together with the staff council to grant a high degree of flexibility in choosing the work location in return for the introduction of individual performance reviews. And a second client, another insurance company, is currently discussing whether to reintroduce Saturday as a working day. This would have been completely inconceivable two years ago, and now the board and the staff council are negotiating intensively about it because many employees agree: they would be willing to work on Saturdays if they are granted more flexibility in return. Oftentimes, it’s even the employees who request this. This poses an extreme challenge for staff councils at the moment because both sides exert pressure resulting in completely new solutions.

On a scale from one to ten, with the highest value representing maximum willingness to change – where can banks and insurance companies be found?
I assume: three.

In a nutshell: what does zeb do in the move project?
We embark on a long journey together with our clients. Transformation takes time and requires a sustainable approach. We support our clients at the beginning of this journey and then enable them to continue to do so on their own.


Take-aways from the zeb.transformation study 

  • Culture of success as a quantifiable management topic
  • Operational responsibility for culture of success
  • Consistent alignment of HR measures
  • Company-wide development of the culture of success
  • Monitoring of target achievement and respective communication
  • Consistent leadership
  • Objectives and key results as target system

By the way: a culture of success is a building block of the zeb.move program, which bundles zeb’s expertise in the transformation of companies in the financial services industry.

"Sustainable change in complex systems requires an attractive target image, high effort and time."

Christian von Schirach, Senior Manager, zeb