Unwritten ground rules: transforming organization culture to achieve key business objectives and outstanding customer service

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1 Steve Simpson Keystone Management Services, North Beach, Australia Senior Management Centre, University of Western Australia, Crawley, Western Australia, Australia and the Australian Institute of Management, Australia Keywords Corporate culture, Organizational change, Customer service Abstract Discusses the importance of bringing to the awareness of all employees the ``unwritten ground rules'' UGRs) that operate in an organization. UGRs can be used to transform an organization's culture to a new set of ground rules that directly reinforce behaviours that contribute to strategic organizational objectives and excellent customer service. Defines and describes unwritten ground rules and then discusses their relevance to customer service and the achievement of organizational objectives. Examples of negative and positive unwritten ground rules that were described by staff to be at the core of their organization's actions are provided. Provides a model that defines unwritten ground rules in four quadrants of organizational activities and suggests that all four quadrants need to have effective ground rules for an organization to succeed. Finally, it provides an UGR change process that involves seven elements for changing the UGRs to achieve the organization's strategic objectives and a truly ``balanced scorecard''. Received March 2001 Accepted April 2001 # MCB University Press [ISSN ] [ 394 ] Introduction Achieving strategic delivering exceptional customer service are two of the primary goals that every senior management team needs to achieve. Many managers and experts have recognized excellent customer service as a major requirement for organizational success Albrecht, 1992; Whiteley, 1991; Carlzon, 1989; Connellan and Zemke, 1993). In addition to customer service, organizations have specific strategic objectives particular to that organization, and its environment, such as increased revenue, new product innovation or making work processes and jobs more efficient and flexible. The purpose of this article is to describe ``unwritten ground rules'' UGRs) and the role that they play in hindering or helping an organization to achieve its objectives and to provide excellent customer service. The article also aims to provide a process that can be used to determine what ground rules are currently operating, which ones need to be transformed to meet organizational objectives and how groups of people can be helped to move toward a set of new ground rules that will reinforce behaviours that achieve these objective and provide excellent customer service. While a great deal has been spoken and written about customer service and the need for organizations to make excellent service part of their strategy, few approaches have offered a comprehensive yet straightforward and effective approach to bringing this about. The research and practical application carried out to date which is described in this article suggests that UGRs can be a powerful force in transforming an organizational culture to achieve excellent customer service and the achievement of corporate goals. The research register for this journal is available at Organizational culture: the foundation of organizational success There is increasing recognition that organization culture directly affects performance and the quality of customer service Denison, 1990; Kotter and Heskett, 1992; Gordon, 1985; Cummings and Worley, 1997). Vision, mission and value statements in the majority of corporate strategic plans proclaim the importance of service as the basis of company success. Almost every company distributes marketing materials that promise unique and outstanding customer service. There is considerable evidence, however, that customers are experiencing a decline in service levels across most industry sectors. The American Customer Satisfaction Index ACSI) has tracked customer satisfaction by company, aggregated to industry sector since The ACSI is based on thousands of customer interviews, measuring satisfaction in dozens of industries from department stores to phone companies and airlines. Service satisfaction over the 1995 to 1999 period has declined in many industries as can be seen in Table I. The ACSI has shown dramatic declines in satisfaction for some specific companies. One airline company has satisfaction levels 14.3 percent lower in 2000 than in A large telecommunication company and a utility company both have seen their satisfaction levels decline by 17 percent. One bank had satisfaction level scores 15.3 percent lower than the first year of measurement. Some evidence is now emerging to support the existence of positive relationships among organizational culture, customer service and other key organizational objectives. Several recent studies have shown that there is a strong link between the The current issue and full text archive of this journal is available at

2 achievement of organizational business strategy and the organization culture Cummings and Worley, 1997). One study of 25 different industries and 34,000 people showed that firms whose culture support employee participation in decision making, adaptable work methods, sensible work designs, and reasonable and clear goals achieve financial results twice as high as companies scoring low on these factors Denison, 1982). Much has been written about organizational culture, and how it shapes and defines behaviours such as customer service. Organization culture has been defined as ``a system of shared meaning held by members that distinguish the organization from other organizations'' Robbins et al., 1998). The culture provides an organization with its distinct personality. Schein 1983) sees organization culture as:...the pattern of basic assumptions which a group has invented, discovered or developed in learning to cope with its problems of external adaption and internal integration. Writers in the marketing field provide a definition similar to that in organizational behaviour:...a pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them norms for behaviour in organizations Deshpande and Webster, 1989). An organization's culture is very closely linked to the underlying shared values and beliefs that people hold regarding the way they should behave during certain activities. There are a large number of theories that describe the different dimensions of culture that include teamwork, control of money and decisions, risk, rewards, conflict, honesty, profit versus people, and change. Borgatti 1996) provides a more specific definition of the shared beliefs, values and Table I Year 2000 customer satisfaction levels and percentage change in satisfaction 1995 to 2000, selected industries, ACSI Industry sector 2000 ACSI satisfaction %) Change %) Airlines 63 ±12.5 Telecommunications 72 ±4.0 Retail 73 ±3.2 Gas stations 76 ±2.6 Banks 68 ±8.1 Hotels 72 ±4.0 Hospitals 69 ±6.8 Motion pictures 68 ±11.7 PC Industry 74 ±5.1 Source: American customer satisfaction index from 1995 to 1999, norms that define a group's culture. They include:. cognitive schemas scripts and frames that mould our expectations and help us assign meaning and order to the stream of experience);. shared meanings common interpretations of events);. perceptions how the world is, how things work ± implicit theories of the market, of management, of politics, of human nature);. prescriptions and preferences what the best way to do things is; what they want to happen;. behavioural codes how to dress, how to act, what kinds of things you can joke about, is it ok to be late?);. basic values what is really important; what is wrong or bad);. myths and legends stories about the past: knowledge of the stories identifies you as belonging, and often the stories have hidden points like this is what happens to people who...);. heroes and heroines;. emblems objects that have meaning, like group T-shirts, gold watches);. rituals. When we speak about an ``organization's culture'' we are referring to the dominant culture which represents the core values that are shared by most of the organization's members. Some organizations have very strong cultures, which means that the core values are intensely held and widely shared within the organization. Strong cultures have a greater influence on the behaviour of its members. Religious organizations, cults, sporting teams and Japanese companies are examples of organizations with strong cultures. In larger organizations there are often subcultures that are shaped by the different circumstances and values within the smaller departments and teams within the organization. The core or dominant culture of the organization is modified and added to by the values within these subsections. The potential influence of organization culture is revealed by Kotter and Heskett 1992), where it is proposed that corporate culture:. can have a significant impact on a firm's long-term economic performance;. will probably be an even more important factor in determining the success or failure of firms in the next decade;. is a common inhibitor to long-term financial performance even in firms that [ 395 ]

3 [ 396 ] are full of reasonable and intelligent people. Organization culture has a number of functions; it creates a distinction between one organization and another, it provides a sense of identity for organizational members, it generates a commitment to the larger team or organizational unit and it is the social glue that holds the organization together by providing cues for what employees should say and do. Culture can be a liability when the shared values are not in agreement with what is needed to enhance organizational effectiveness. The organization culture can limit ability to adapt to a changing environment. An organization such as Telstra for example, had difficulty at first responding to a deregulated market because its internal culture did not place a high priority on customer service. UGRs The concept of UGRs has been developed as a way to provide managers with a clear and practical understanding of organization culture Simpson, 1997). It provides a tangible way for staff to be involved in generating empowering UGRs which help the organization achieve key objectives and excellent customer service. UGRs define acceptable and expected work behaviour. They are the expectations and norms that are usually unspoken and unwritten, that influence behaviour and attitudes of members of a group. They are the individual and group's perceptions of what constitutes acceptable and unacceptable behaviour within the workplace. In simple terms, they are the perceptions of ``the way we do things around here''. The combined set of UGRs makes up an organization's culture. The major difference between organization culture and UGRs is that organization culture is an abstract concept that writers and academics have defined. UGRs, on the other hand, are what the individual and group actually experience and ``know'' either consciously or unconsciously. UGRs are the experience and awareness in the individuals of the group culture. UGRs become the carriers of organizational culture. Documented policies, procedures, job roles and customer service standards often count for little if the UGRs are not aligned with these stated policies. UGRs are one of the most important determinants of customer service in a work team. A new employee faces UGRs in the first days of his or her new job. In most cases, a new employee will receive an induction or orientation where they are informed about the ``way we do things around here''. Then they find out how the organization works in reality ± and they find out by determining what they perceive to be the norms for the group. The specific events where people imply UGRs are many and varied, including:. how staff talk to one another;. how staff talk to customers;. what staff say about a customer when the telephone is put down;. how staff talk when a manager is present, and what they say when the manager walks away;. what is said during tea breaks about other staff members and the organization;. what is talked about in the corridors immediately after a meeting;. how a different point of view is handled within meetings, and whether the person with this different viewpoint is valued or isolated;. whether people are encouraged to share their views;. whether people laugh, and what they laugh about or at; and. who decides what money can be spent, on what, how much, and when it can be spent. UGRs are implied from observations of the alignment between what the company proclaims in public and internal documents, what management and staff say in public and private contexts, and what management and staff do. A company's marketing material may declare its total commitment to customer service. In staff meetings and elsewhere, the management of that company may also speak about their commitment to customer service. When staff see these same managers treating customers, or talking about customers in a less than positive way however, a negatively oriented UGR is created, which may be ``around here, the company talks about good service, but we know they don't really mean it''. UGRs are also implied when staff and management observe the consequences of actions within a work group. A strong UGR will develop for example, if it is repeatedly observed that people who speak up in meetings are allocated extra duties as a consequence of their speaking out. Similarly, a UGR will emerge if a manager invites honest opinions, yet becomes defensive at the first hint of negative feedback. While UGRs are predominantly implied, this is not always the case. Social settings sometimes provide a sufficiently relaxed and trusting environment for them to be shared

4 explicitly. A manager may joke for example, about his or her view that a casually employed staff member can be given the least preferred work assignments, since they are least likely to complain. In another context, a staff member might advise a colleague not to provide negative feedback to a manager, who is known for his ``long memory and a tendency to seek retribution''. Preliminary research into UGRs We have worked with a number of organizations to introduce the concept of UGRs and to identify prevailing UGRs. We have gathered managers and staff responses in organizational seminars or in random surveys by asking participants to complete on a card, sentences such as ``Around here customers are...!''. ``Around here, when it comes to money...!''. Tables II and III below show sample responses regarding customer service and the treatment of money collected from ten companies involved in this exercise. These tables show a range in the orientation of comments. Some staff made reference to the impact customers have on Table II Sample responses to ``around here customers are...'' Positively oriented Always treated as the most important people, with extra effort made to see that their needs are met The people who pay our salaries People seeking our assistance Mostly happy with the service unless they have an axe to grind Encouraged and welcomed Negatively oriented Sometimes a bit of an inconvenience A nuisance A source of extra work Stopping me from getting the job done Never happy no matter what you do Demanding in their requirements and expectations Tolerated and avoided if possible Often placed second to achieving a task or goal Not the main concern in getting the jpb done Table III Sample responses to ``around here, when it comes to spending money...'' Positively oriented We look for value for our dollar We do it well Clear it through the boss and make sure procedures are followed Negatively oriented The boss makes knee-jerk decisions, usually to his advantage and to the detriment of everyone else Pennies are watched while pounds are burned Logic plays no part You need to know who to get in contact with to make it a reality I get no say, the bosses decide what to buy At the end of the financial year, priority goes out of the door and it is a free for all the organization, while others referred to the value or lack of) the customers bring to the organization, and others made comments pertaining to the organization's treatment of customers. In regard to money, staff see the necessity to ensure proper control is placed on spending money but some see that this process is illogical and dependent on the power and personal whims of managers. These results also demonstrate two important points. First, they indicate that UGRs are an important part of the working life of people and affect their performance in fundamental ways. Second, the formal organization operates in one world while staff and their UGRs operate in another one. The organization is therefore an ``iceberg''; where the above the surface formal organization operates on costs, revenue, saving money, formal systems and achieving quantifiable goals while below the surface staff are affected by job satisfaction, teamwork, customer satisfaction norms, values and beliefs Figure 1). The results of our work show that the top of the iceberg is not aligned and supported in many organizations by the below the surface UGRs. As a result customer and job satisfaction and team morale suffer which affect the above the surface financial performance and the achievement of the objectives of the organization. Transforming a culture to empowering UGRs While academics and experts on corporate culture have defined and described organizational culture extensively, leaders are still confronted with a sense of impotence when trying to change their team or organizational culture. The many definitions and debates about the dimensions of culture contribute to confusion about how to change culture. As Cummings and Worley 1997) state: Despite the increased attention and research devoted to corporate culture, there is still some confusion about what the term culture really means when applied to organizations. Managers are often aware that they have a culture that is counter productive but they do not know on how to change it to a positive empowering culture. Large scale cultural change may be necessary in certain situations if: the firm's culture does not fit the changing environment, the industry is extremely competitive and changes rapidly, the company is mediocre or worse, the firm is about to become a very large company, or the [ 397 ]

5 Figure 1 The organizational iceberg and UGRs [ 398 ] company is small and growing rapidly Uttal, 1983). There are a number of factors that make culture difficult to transform Brown, 1995). One of the main inhibitors of cultural change is the lack of trust in management and between team members. The willingness of the individuals and the team to change is another key factor. Some groups are change oriented while others are stability oriented. Those that are stability oriented respond to change when it is triggered by crisis or strong external pressure. Those cultures that are change oriented are more likely to respond to incremental, continual change. Strongly established UGRs or a lack of a need to shift current UGRs can also limit a change to a more positive culture. Young or new members to a team or people who have experienced a large number of cultures are often willing to accept a new set of UGRs. There is a growing body of research that has described how to successfully implement change. This literature plus our own experience with introducing UGRs into organizations has resulted in recognition that there are two important stages in bringing about a more positive and empowering culture using the UGR concept. This includes two major stages: 1 Awareness, understanding and diagnosis of UGRs. The first stage is to understand the current organizational vision, strategic objectives, and values. The concept of UGRs needs to be introduced and teams need to analyse the existing UGRs and determine which ones are negative and which ones empower people to achieve valid and valuable organizational goals. This process often involves a talk on UGRs and asking people to write on cards sentences describing their existing UGRs. As part of this process a framework is introduced which helps understand the type of UGRs that are currently in the organization and why the negative ones are kept. The four-quadrant model developed by Wilber 1996), adapted into a framework for organization development by Cacioppe 2000a, b). provides an excellent way to categorize UGRs into the different dimensions of business activities. The four quadrants represent four aspects of reality: we shared meaning, values, etc.), I personal experience, level of awareness), it individual objects, things, etc.) and IT systems, interrelationships, etc.) which translate into the dimensions of: organization culture, people well-being, efficiency, and effectiveness. These four dimensions provide an excellent framework for a truly ``balanced scorecard'' and extends the concepts of Kaplan and Norton 1996) and the triple bottom line into a more conceptually comprehensive approach. The data we have gathered in our workshops and surveys indicate that most employees describe preferred UGRs in the organization culture We) and the people well-being I) quadrants. These have to do with customer service, the treatment of managers, team morale and job satisfaction. The senior managers of organizations, on the other hand, tend to focus on and emphasise the effectiveness IT) and efficiency it) dimensions. The analysis of UGRs using this framework helps managers and staff indicate the major areas that negative UGRs are occurring and also provides insight into why the UGRs often do not change. 2 Implementing the change process using UGRs. There are a large number of models

6 and approaches to managing change. Brown 1995) has summarized the five major models of cultural change and indicates that there are many similarities with each model emphasising different aspects. Cacioppe's 1998) model of change has incorporated the major components of these models of cultural change as well as the more general change models developed by Kotter 1998) and others from the area of organization development. Figure 2 below shows the seven elements from Cacioppe's model needed to successfully change UGRs. These seven elements and the organizational symptoms that result when they are not effectively dealt with during a change process are dealt with more extensively elsewhere Robbins et al., 1998). The seven elements do not necessarily progress from 1 to 7 in a time sequence and some elements need to be dealt with in parallel with others or need to be revisited after being dealt with initially. A brief description of each of the seven elements and examples of how it has been dealt with as part of an empowering UGR change process follows: 1 Determination and agreement on the need to change: there has to first be an agreement of the need for change and then commitment of the senior managers that energy, time and resources will be put into the change. This means that there needs to be a recognition by senior managers that there are sufficient benefits that will accrue by focusing on and improving the current UGRs. Figure 2 Seven elements required to successfully implement UGR change g An external crisis such as loss of major customer business or a new CEO can lead to pressure for change. Focus groups, customer surveys and the CEO providing clear information and goals that need to be achieved can be an important part of the change process. We have found that on occasions simply being exposed to the UGR concept is sometimes enough for senior managers to determine the need for change. 2 Commitment to a clear shared vision: this requires managers to establish a clear vision, purpose, goals and empowering UGRs and then to communicate them to everyone in the organization. Activities such as strategic planning, vision challenges, internal marketing and team briefings can help achieve a commitment to a clear shared vision. Generating a set of empowering UGRs is a key component of this step. 3 Actionable first steps: this ensures that people have things they can do immediately which are tangible steps that show they are going in the right direction. This can be any action, no matter how small, that demonstrates that progress has been made to the new vision and objectives. People need to be shown how the empowering UGRs impact on the dayto-day work of all staff, and may need guidance on what they need to do as individuals to act in accordance with the empowering UGRs. 4 Capacity and resources: sufficient resources, skill, time and an optimistic attitude to the change are necessary or else staff becomes frustrated that they cannot make the changes properly. Internal training programs on UGRs, use of external consultants, part-time help and giving staff time as part of their regular duties, are examples of the additional resources that are needed to carry the change through. 5 Championing and modelling the way: the leaders and change agents must actively work towards getting everyone on side with the new UGRs that are expected. This includes modelling the language and actions that are required for the change to be successful. This is seen in decisions to spend money or not, priorities in objectives, and where managers spend their time and energy. 6 Aligning, rewarding and reinforcing: people respond to what they are rewarded for. Establishing a reward and recognition program to acknowledge and reward staff who model positive UGRs and help the achievement of goals provides [ 399 ]

7 [ 400 ] incentives for this new behaviour to occur. The human resource systems e.g. performance management, selection, strategic planning process, etc.), management information systems and other activities of the organization need to be aligned to the UGRs that are adopted. These systems need to reinforce and encourage the required changes or else staff will feel there is only a superficial effort being directed to the new UGRs. 7 Monitoring, evaluating and improving: surveys and measures that indicate the success or lack thereof) of the change process is required as input to regular meetings to evaluate and improve the change process. This needs to be designed at the outset of the project rather than after it has been operating one year, as is often the case. If all of these factors are dealt with then the organization has a very high likelihood of successfully implementing new UGRs and achieving the new culture and performance it is seeking. If one or more of these elements are neglected the change process may slow and stall and, in many cases, is implemented in a very limited way. UGR change action plan The seven elements and the corresponding activities that will be used to ensure each factor is managed properly needs to be compiled into a ``UGR change management plan''. It is important that the change action plan follows the procedures required in any good goal setting approach. This means actions need to be specific, measurable, achievable, have set time frames and regular reviews. Most importantly, each action needs to have champions responsible for following through actions to ensure they are completed. Following up, reinforcing and insisting on the agreed actions being implemented are where many managers fail. Other priorities, everyday demands and crises and the lack of time result in managers letting the actions go till ``another time''. Without realizing it, managers who allow this to happen propagate their own UGR; ``around here, we come up with good ideas to make this a better team or organization, but our manager doesn't really care if it never happens!". Those managers who recognize that the UGRs are the lifeblood of a team and organization and are able to successfully regenerate it by understanding and working with the UGR process, will be the exceptional leaders of the future. Conclusion This article has shown that UGRs are what staff experience as organization culture and that UGRs are a powerful force that either inhibit or nurture the achievement of key organizational objectives and customer service. It has also shown that in the organizations we have worked with to date the majority of UGRs are negative and seriously affect the performance of the formal organization. A process for understanding and bringing the existing UGRs to organizational light has been described and a framework that is useful to analyse the balance and alignment of UGRs has been suggested. Finally, a stepby-step process was covered on how to shift an organization to UGRs that empower people, contribute to organizational goals and provide customers with quality service. There is still considerable work needed to further understand the ``science'' of organizational culture, how UGRs operate and how they can be used to bring about whole system change in a positive and efficient way. This article provides a substantial step forward in that direction and may encourage other organization development consultants, leaders of teams and organizations to continue this work. References Albrecht, K. 1992), The Only Thing that Matters, Harper Collins Publishers, New York, NY. Borgatti, S. 1996), Corporate Culture Defined, Brown, A. 1995), Organization Culture, Pitman, London. Cacioppe, R. 1998), Management, Making Change Stick, November, pp Cacioppe, R. 2000a), ``Creating spirit at work: re-visioning organization development and leadership ± Part 1'', The Leadership & Organization, Vol. 21 No. 1, pp Cacioppe, R. 2000b), ``Creating spirit at work: revisioning organization development and leadership ± Part 2'', The Leadership & Organization, Vol. 21 No. 2, pp Carlzon, J. 1989), Moments of Truth, Harper and Row Publishers, New York, NY. Connellan, T.K, and Zemke, R. 1993), Sustaining Knock Your Socks Off Service, American Management Association, New York, NY. Cummings, T. and Worley, C. 1997), Organization Development & Change, 6th ed., South- Western College Publishing, Ohio, USA. Denison, D. 1982), ``The climate, culture and effectiveness of work organizations: a study of organizational behaviour and financial

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