Do Skills Shortages Threaten Corporate Growth and Innovation?

Global Skills Shortages Threaten Corporate Growth and Innovation

by CFO Innovation Asia Staff

Αccording to a new survey released by Deloitte and Forbes Insights, “Talent Edge 2020,” the quest for talent in global and emerging markets is the leading concern among 41% of the corporate executives and talent managers surveyed, and a slightly more pressing concern for companies in Europe, the Middle East and Africa (48%) than their counterparts in the Americas or Asia-Pacific countries (35% and 41%, respectively).

The Survey, also reveals potential critical shortfalls in research and development (R&D) skills and executive leadership. Nearly three-quarters of executives surveyed (72%) anticipate either a severe or a moderate shortage in R&D talent, while more than half of those same executives (56%) stated they expect the same magnitude of shortage among executive leadership.

Definition: Organizational culture, Values and Beliefs

1. "Organizational culture" is a set of commonly shared values and beliefs. It influences the behavior of people and is reflected in work practices, i.e., how we do things here.
2. "Values" are the fundamental axioms or established feelings about the desirability of some quality, like innovation or individualism.
3. "Beliefs" are perceptions about the connections of things such as events and outcomes.

Kotter insight: Changing the culture is a step-by-step procedure

In Kotter's model, changing the culture is a step-by-step procedure.

1. "Even when there is no personality incompatibility with a new vision, if shared values are the product of many years of experience in a firm, years of a different kind of experience are often needed to create any change. That is why culture change comes at the end of a transformation, not the beginning."
2. Culture is not something you can directly manipulate, as if by decree. Culture change occurs after you have successfully altered people's actions and their new behavior has produced success, which can be traced back to the new actions and behaviors.
3. An adaptive culture, is one that benefits the four main constituents: shareholders, employees, customers and management, while minimizing layers of management and bureaucracy, as well as counterproductive silos.

5 tips for Anchoring change in a culture

Anchoring change in a culture

1. Culture change comes last, not first.
2. Lasting change depends on results. You must show new approaches work and that it's worthwhile to change.
3. Requires a lot of dialog.
4. May involve turnover of key people who block change.
5. Promotion practices need to be changed to be compatible with the new practices. New leaders should be compatible with the new culture and champions of it.

Why Shallow roots require constant watering?

Shallow roots require constant watering: Kotter uses an example of a technology-oriented company to illustrate the point. As long as the new general manager was around to focus the organization constantly on speed to market and the customer, progress was made substantial progress. When the GM retired, because the underlying cultural belief that "good technology will solve all our problems" had not changed, the company quickly regressed over two years.

Culture is powerful for three reasons

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Culture is powerful for three reasons.

1. Individuals are selected and indoctrinated to support the existing culture.
2. Culture propagation occurs through the actions of hundreds or thousands of people in the organization.
3. This reinforcement happens without much conscious intent and is therefore difficult to challenge or even discuss.

Removing the Barriers to Team Success

 

Sherriton and Stern in their book 'Corporate Culture: Removing the Hidden Barriers to Team Success'.  contest that corporate culture change is needed for successful implementation of formal teams.  

However we ought to bear in mind the following:

1. Senior managers trying to implement teams continue to act individually: they are concerned about control over the teams and concerned that consensus decision making is too time consuming. They often set a very bad example, for example, by protecting their turf.
2. Team members are typically not used to working in teams. They often are uncomfortable and lack the communication skills to make the teams work effectively.
3. Introduction of teams while downsizing or facing threats of downsizing creates forces that are antithetical to teams.
1. Corporate culture is defined by four elements.
1. Ritualized patterns of beliefs, values and behaviors.
2. Management environment created by management styles, philosophies, what is said, done and rewarded.
3. Management environment created by systems and procedures.
4. Written and unwritten norms and procedures.
2. Their book describes successful change in subcultures when top-level support was either absent or sporadic.
1. They feel that each major functional organization such as marketing or R&D has its own subculture, as do divisions and other large units of the organization.
2. Subcultures are influenced by the overall corporate culture, but subcultures are never the same as the overall culture.
3. There is much more freedom to change a subculture than is commonly realized or acted upon

Insights from 'Corporate Culture: Removing the Hidden Barriers to Team Success'. By Jacalyn Sherriton and James Stern.

Practical advice on Organizational Development and Culture Change

Organizational culture is the pattern of basic assumptions, values, and beliefs shared that frame how work is to be done and evaluated, and how employees are to relate to each other and to stakeholders, customers, suppliers.

1. Corporate culture is the product of long-term social learning and reflects what has worked in the past.
2. Culture change efforts begin with diagnoses.
1. Behavioral approach
1. Assesses key work behaviors that can be observed.
2. Describes how specific relationships are managed and tasks performed (see example, pg. 483).
2. Competing values approach
1. Culture can be understood by how an organization handles dilemmas around four contradictory values. (see model, pg. 484).
2. Four sets of competing values: 
• Participation vs. goal achievement; 
• internal focus vs. external focus; 
• stability vs. creativity and innovation; 
• organic processes vs. mechanistic processes.
3. Culture change.
1. There is considerable debate over whether it can be done or not.
2. Given the problems with cultural change, most practitioners in this area suggest that changes in corporate culture should be considered only after other, less difficult and less costly solutions have either been applied or ruled out.
3. Here comes some practical advice:
1. Start with a clear vision of the firm's strategy and the shared values and behaviors needed to make it work.
2. Have top management commitment, because culture change must be managed from the top.
3. Symbolic leadership is critical: leaders must walk the talk. In successful cases of culture change, leaders almost always demonstrate a missionary zeal for new values and behaviors.
4. Support organizational changes in structure, reward systems, HR systems, information systems and leadership style.
5. Pay careful attention to the selection and socialization of new-comers, as well as the termination of deviants.
6. Manage ethical and legal issues effectively. Don't promise values for culture change that the organization can not deliver on.
 
Insights from 'Organizational Development and Change'. By Thomas Cummings and Christopher Worley.

Organizational Change: Key elements of success.

1. Successful organizations believe the organization's culture must be changed.
2. Organization change requires vision, tenacity and a long-term horizon.
3. Organization change requires commitment from top management.
4. Organization change requires extensive communication with all stakeholders. Employees must be empowered and educated so they can exploit their new power.
5. It is necessary to systematically measure progress and results.

Key elements of success.

1. Leadership
2. Culture change
3. Work force involvement
4. Communication and measurement
5. Education
6. Supportive Human Resource systems
7. A shared sense of urgency for change

Triggers for change.

1. Organizations on the brink of disaster that had engaged in change efforts consistently rated triggers higher than organizations not currently in dire circumstances.
2. Highest ranking triggers
1. Changing regulatory or legal environment
2. Competition
3. Customer dissatisfaction
4. Declining or increasing profits
3. Second ranked triggers
1. Declining or increasing market share
2. Declining or increasing revenue
3. Rising costs
4. Technology change
4. Third ranked triggers
1. Employee morale
2. Merger or acquisition
3. Public Image
4. Quality

Is there a thing such as the 'right' Organizational Culture?

"Let me begin bluntly there is no such thing as the "right" culture and culture can not be fostered or installed."

Edgar Schein 

1. Success of the company creates organizational culture. If the founders had a wrong set of assumptions about how things are, they would have failed. The right set of assumptions is relative to the business environment. The longer the company is successful, the more stable the culture becomes.
2. Pronouncements that we must change our culture either will be denied or cause levels of anxiety that trigger intense resistance to change. Therefore, you will fail if you take culture head on.
3. If the present culture is dysfunctional, or out of line with current environmental realities, then take these steps:
1. Start with what the business problem is. The issue is not about culture, but about the mission of the organization and whether it is being fulfilled.
2. Figure out what needs to be done strategically and tactically to solve the business problem. What does the organization need to do concretely to solve its survival or growth problems?
3. When there is clear consensus on what needs to be done, examine the existing culture to find out how present tacit assumptions would aid or hinder that. Some parts of the culture may be fine, or certain subcultures within the organization maybe fine.
4. Focus on those cultural elements that will help you get to where you need to go. It is easier to build up the strengths of a culture than to change dysfunctional elements. The diversity of a culture and its subcultures almost always have strengths to leverage.
5. Identify the culture carriers who see the new direction and feel comfortable moving in that direction. This helps create role models, these people are often found in subcultures or in marginal roles in the organization.
6. Build change teams around the new culture carriers. Different parts of the organization, because of environmental needs, may have to go in a different directions to produce the desired changes in thinking and acting.
7. Top management must adjust the reward, incentive and control systems to be aligned with the new strategy.
8. Ultimately the structures and routine processes of the organization must also be brought into alignment with the desired new directions.
4. All of this takes a great deal of time and energy across many layers of management and many task forces and change teams. It is fueled by the need for a solution to a clear business problem. Culture change occurs as a by-product of fixing fundamental problems.
5. If the culture prevents correcting the business strategy, that culture will be broken by destroying the group that carries the culture. That means firing a lot of people, or the organization will die.
6. Culture is not a suit of clothes to be changed at will. The residue of past success, it is the most stable element in an organization.
 

 

Insights from Organizational Culture. By Edgar Schein

What are the common Cultural Traits of Visionary companies?

Collins and Porras in 'Built to Last' explain  what great companies do to maintain their cultures, which they describe as cult-like.

1. The cultures in visionary companies are not soft or undisciplined:
"Because visionary companies have such clarity about who they are, what they're all about, and what they are trying to achieve, they tend not to have much room for people unwilling or unsuited to their demanding standards."
2. Visionary companies are not great places to work, at least not for everyone. If you can't embrace their ideology, they expel you like a virus. If you do not fit their practices, they will weed you out in the hiring process or shortly thereafter.
3. Cult-like cultures are key to preserving the core ideology of a company.
4. Visionary companies have these characteristics about their culture that are cult-like:
1. Fervently held ideology
2. Indoctrination
3. Tightness of fit
4. Elitism
5. Visionary companies create these cultures through practical, concrete things:
1. Orientation and training programs
2. Internal universities
3. On-the-job socialization with peers and immediate supervisors
4. Rigorous up-through-the-ranks policies such as promoting from within, and hiring young people and shaping their minds from the start.
5. Exposure to pervasive myths of heroic deeds
6. Corporate songs, cheers, etc.
7. Tight screening practices; hiring and removal in first few years
8. Incentives and advancement are closely linked to core ideology
9. Awards, contests and public recognition are closely linked to core ideology
10. Tolerance for honest mistakes, but severe penalties or termination for breaching core ideology
6. These cult-like cultures succeed because they are balanced by mechanisms to stimulate progress, e.g., taking on challenging tasks (Big Hairy Audacious Goals or BHAGs).
7. Adhering to a small set of core beliefs allows these companies to grant a good deal of operational autonomy.
 

 
• Insights from Built to Last. By Collins and Porras.
The authors conclude: "It means that companies seeking an 'empowered' or decentralized work environment should first and foremost impose a tight ideology screen and indoctrinate people into that ideology, eject the viruses, and give those that remain the tremendous sense of responsibility that comes with being a member of an elite organization. It means getting the right actors on the stage, putting them in the right frame of mind, and then giving them the freedom to ad lib as they see fit."

Culture is reflexive: In changing culture, there are three critical areas to address

1. Culture is reflexive: Beliefs shape behavior, but behavior also shapes beliefs. Values affect beliefs and behavior, but beliefs and behavior also affect values. Often espoused beliefs and values are not consistent with the beliefs and values that can be inferred from observed behavior. This lack of alignment can cause great dysfunction.
2. Most organizations are a mixture of many cultures: one in R&D, another in marketing / Sales, etc.
3. External forces, historical forces and internal forces all shape behavior. Managers can most affect internal forces giving them a lever to change culture.
4. In changing culture, there are three critical areas to address.
1. Content of the change (vision of the new culture).
1. Do a culture audit: What is the culture like, what needs to be changed?
2. Leadership is essential for successful culture change.
3. Key champions at all levels are required.
2. Leverage points for change (what and how to change).
1. Full-blown culture change requires change in all the key elements of organizational context: structure, business processes, measurement, appraisal and rewards. If, in fact, you do all these things, Nadler argues that culture change will be the ultimate outcome.
2. Values must be articulated in terms of expected behavior. Establishing one value as more important than others is important to give people a set of priorities.
1. Good technique used at AT&T, where Senior Executives interviewed people lower in the organization about the new values and how they saw them being implemented. This is a good check on implementation, and helps senior executives understand the issues involved in the effective transformation of a culture.
2. A key test of culture change is who is getting promoted, the good guys or the bad guys
3. What happens to someone delivering good results but not living the new values? This is a critical dilemma for leadership. Support and coaching for change must be offered; if a person refuses or does not change, then they must be removed. GE under Jack Welch was very strongly committed to having executives both get results and live the values. If they did not live the values, and did not improve, they were out.
3. Tactical choices (when and where to change).
1. Culture and values are the very foundation upon which the overall change agenda rests.
2. Interventions into culture should be sequenced separately from the hardware changes. One effective sequence is to have culture initiatives occur sometime after the announcements of structural and work-process changes.
3. Use bottom-up interventions also, e.g., education and training, meetings, forums, etc.
4. Migrate change laterally from one organization to another. Use beta sites and skunk works to try out changes and work out the kinks. Transfer that learning to the next site. Customer visits can be a very powerful tool in this change. Customer needs get the attention of almost any level in the organization.

Insight from: Delta Consulting's (David Nadler) perspective

What makes the difference when it comes to Corporate Culture and Performance

Kotter and Heskett in Corporate Culture and Performance.

1. Kotter and Heskett studied 10 cases of major culture change that seemed to be successful. The companies were Bankers Trust, British Airways, ConAgra, First Chicago, General Electric, ICI, Nissan, SAS, American Express TRS, and Xerox. They found:
1. "The single most important factor that distinguishes major culture changes that succeed from those that fail is competent leadership at the top."
1. All ten cases of major change occurred after an individual with a track record for leadership was appointed head of the organization. Each had a track record of producing change.
2. In their new jobs they created change on a grander scale.
3. These leaders demonstrated the close interrelationship of competition, leadership, change, strategy and culture.
4. All of these leaders either:
1. Came from the outside.
2. Came to their firms after an early career somewhere else.
3. "Grew up" outside the core of the company.
5. While a limited sample, one can theorize that an outsider's perspective is important to change.
1. In all four very large companies in our study, the change leader had spent considerable time in the company before taking over, thereby developing a good sense of the resources in the company.
2. Complete outsiders tended to be successful at smaller companies.
2. Why you can't change culture from the bottom up.
1. The sheer resistance to change in an organization requires great power to overcome, and that power resides at the top.
2. Interdependence in organizations makes it very difficult to change anything important, without changing everything. Only people at the top can do that.

Thinking-Ahead Insights: Culture Change: John Kotter's perspective

Culture Change

1. John Kotter's perspective.
1. Definitions
1. "Culture" refers to norms of behavior and shared values among a group of people.
2. "Norms of behavior" are ways of acting that persist because they are rewarded and the group teaches these behaviors to new people, sanctioning those who do not conform.
3. "Shared values" are important concerns and goals held by most people in the group: they shape group behavior.
2. In Kotter's model, changing the culture is the last of eight steps, not the first.
1. "Even when there is no personality incompatibility with a new vision, if shared values are the product of many years of experience in a firm, years of a different kind of experience are often needed to create any change. That is why culture change comes at the end of a transformation, not the beginning."
2. Culture is not something you can directly manipulate, as if by decree. Culture change occurs after you have successfully altered people's actions and their new behavior has produced success, which can be traced back to the new actions and behaviors.
3. An adaptive culture, one that benefits the four main constituents: shareholders, employees, customers and management, while minimizing layers of management and bureaucracy, as well as counterproductive silos.
3. Anchoring change in a culture.
1. Culture change comes last, not first.
2. Lasting change depends on results. You must show new approaches work and that it's worthwhile to change.
3. Requires a lot of dialog.
4. May involve turnover of key people who block change.
5. Promotion practices need to be changed to be compatible with the new practices. New leaders should be compatible with the new culture and champions of it.
4. Shallow roots require constant watering.
1. Kotter uses an example of a technology-oriented company to illustrate the point. As long as the new general manager was around to focus the organization constantly on speed to market and the customer, progress was made substantial progress. When the GM retired, because the underlying cultural belief that "good technology will solve all our problems" had not changed, the company quickly regressed over two years.
5. In an organization, the less visible shared values and group norms are, the harder they are to change.
6. Culture is powerful for three reasons.
1. Individuals are selected and indoctrinated to support the existing culture.
2. Culture propagation occurs through the actions of hundreds or thousands of people in the organization.
3. This reinforcement happens without much conscious intent and is therefore difficult to challenge or even discuss.
7. There are different culture-change scenarios, some much harder to accomplish. For example:
1. The core of the old culture is not incompatible with the new vision. The challenge is to graft new practices onto old roots, while eliminating inconsistent practices. This is least difficult to do.
2. The core of the old culture is incompatible with the new vision. This is a much more difficult situation to cope with.

O2 inside business management: Culture Change: Summary of Key Thinkers' Ideas

O2 inside business management: Culture Change: Summary of Key Thinkers' Ideas: "Culture Change Summary of Key Thinkers' Ideas This is the result of an extensive set of discussions among a group of organization..."