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May

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cultural transformation

How to measure cultural behavioural change as Key Performance Indicator: Culture in Action Index

Article by Dr David Rosete

Organisational culture has been a dominant theme in management literature for several decades. However, there is still considerable disagreement on what the concept means; how it should be observed and measured; how it relates to more traditional organisational psychology theories and more importantly, how our understanding of organisational culture can be used to help organisations meet their goals and objectives. This may sound grim, however, in the organisational psychology literature, there is considerable agreement that culture involves a set of beliefs that are shared by members of a social unit. These beliefs are acquired through social learning and socialisation processes, and they include assumptions and worldviews, values, behavioural norms, patterns of activities, and material artefacts.

There is also considerable agreement amongst academics and human resource professionals that values have a long tradition of being associated with shaping, directing and guiding human behaviour in and out of organisations. We also know that values can be measured through one’s behaviours.

It is through measuring behaviours we begin to see the merits of a well imbedded cultural transformation program. For an organisation to be successful in changing its culture, we must see a tipping point of behaviours exhibited by the group of employees, aligning to the desired culture behaviours being driven as part of a wider cultural transformation program.

Put simply, an organisation can quantify in part the success of a cultural transformation program by measuring the point at which a series of small behavioural changes or incidents becomes significant enough to cause a larger, more important change. In the case of a culture program, the desired cultural behaviours’ being demonstrated by the organisation members. Often, it’s the leader who is the catalyst for these changed behaviours and instrumental in leading the tipping point within the organisation.

An approach that has proven very effective and is now part of one of Australia’s largest community-owned providers of senior lifestyles and care, is the Culture in Acton (CIA) index. This measure was specifically designed to form part of the Board’s Key Performance Indicators (KPIs), to track the effectiveness of a million-dollar investment in transforming the company’s culture.

The CIA index is calculated by exploring a group of employee’s views on how they see themselves, colleagues and their direct manager either encourage or dissuade others from displaying the core cultural behaviours within the work-place.

From a KPI perspective, to measure the tipping point one would ideally only look at the ‘Colleague’ view when calculating the CIA index. Tipping point comes when 35% of employees are displaying the cultural behaviours in a consistent fashion. An example of calculating the CIA index is below.

Let’s assume you have 1,000 respondents in total. Of those, 800 responded with either Agree or Strongly Agree to the behavioural question “I have observed my colleagues supporting and holding others to account”. Let’s then assume, 200 responders selected Disagree or Strongly Disagree. The CIA index is then calculated for this behavioural question as (800/1000, 80%) minus (200/1000, 20%), which equates to 60% CIA index score.

This form of evaluating is just one way to measure the impact of a culture transformation program. Other methods may involve more of a return on investment (ROI) design. Return on investment is essentially a monetary figure arrived at by comparing the cost of a given program, with the benefits of a program. This kind of analysis is based on the outcome of a program and hence is best conducted after it is believed the program has impacted on the organisation, be it in a positive or negative way. In the case of the Australian senior lifestyles and care organisation, systems design ROI measures showed that the Lost Time Incident Frequency Rate (LTIFR) had reduced from 25.52 (FY16) to 11.58 (FY17). Revenue had increased by 7% to $174.1 million, customer satisfaction rating moved to 93% and Net Promoter Score was +45 in FY17. How to calculate ROI, the benefits of obtaining ROI, the criteria for an effective ROI process, as well as potential barriers to implementation will be discussed in future articles.

Dr David Rosete is an organisational psychologist, lecturer and researcher

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