The Bregman Leadership Podcast
Episode 212

Siobhan McHale

The Insider's Guide to Culture Change

Is there really an organizational culture? Or does each organization have microcosms of cultures? Siobhan McHale, author of The Insiders Guide to Culture Change, took a low-performing Australian bank and over a seven-year change initiative, transformed it into one of the highest performing banks in the world. Discover the challenges of introducing culture change that sticks, how culture is the dance, not the dancer, and why we shouldn’t let managers and CEOs rush too quickly into perceived best courses of action.

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Get the book, The Insider’s Guide to Culture Change from Amazon here:

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Website: Siobhanmchale.com
Bio:  Siobhan McHale has worked across four continents, helping thousands of leaders to create more agile and productive workplaces. She also has been on the “inside” as the executive in charge of culture change in a series of large, multinational organizations. One of these inside jobs was a radical seven-year change initiative at Australia and New Zealand Banking Group Limited (ANZ) that transformed it from the lowest-performing bank in the country into one of the highest-performing and most admired banks in the world. Professor John Kotter used her work with ANZ as a Harvard Business School case study designed to teach MBA students about managing change.

Transcript

This transcript is unedited.

Peter:

I’m delighted to say that this week we have Siobhan McHale on the podcast who has written the insider’s guide to culture change, creating a workplace that delivers grows and adapts Siobhan is the executive general manager for people, culture and change at deluxe. And before that, she was the head of culture change program at ANZ, and led a seven year change initiative at at the Australian New Zealand banking group and said, and that transformed it from the lowest performing bank in the country until one of the highest performing and most admired banks in the world. And so I, as I always like to do on this podcast, I like to have thought leaders and thoughtful people who are leaders who actually apply their methodology, or even develop their methodology through application in the real world and act. And so Siobhan comes to us in that capacity and welcome to the Bregman leadership podcast.

Siobhan:

Thank you, Peter. Great to be with you this morning. My time in Melbourne.

Peter:

Yeah. Thank you for joining us at 6:00 AM your time. So I I appreciate that. Okay. Siobhan I want to just start with some of the basics, right? And we’re going to talk about the methodology and the case study and Anzac, but let’s start with what is culture.

Siobhan:

Yeah. And, and culture, I often say is one of the most talked about, but often least understood concepts in workplaces today because many people think of it purely in terms of employee engagement. So they think of it just about the experience that employees have in the organization, but actually it’s much more than that. And it relates to how things operate from how you design to how you manufacture, how you sell your products or services. So you can decide to create an adaptive culture and agile culture, a customer oriented culture, a strategic culture, a discipline culture, quality, you know, the list goes on, but yet we have this misconception that it’s just about employee engagement. So I think it’s much broader and it actually goes to the heart of how you’re performing or not performing as an organization.

Peter:

So I agree with you and, and, and also culture what you’re saying, and I’m going to say it in slightly different terms, but tell me if I’m understanding this correctly, culture exists for the sake of something that we develop a culture, or we do our best to develop a culture or a culture exists, you know, despite our efforts, but in order to achieve some outcome or driving towards some objective or outcome or way of being in the world. Right. Thinking about this correctly.

Siobhan:

Yeah. So when Peter Drucker said, culture eats strategy for breakfast, often I say, well, culture and strategy are not in competition. It’s actually the culture enables strategy, right? And when you, you start with where you want to go, and then the culture is about, well, what is the enabler from a cultural perspective? Right.

Peter:

Okay. So I was recently at a conversation with Marcus Buckingham who writes about this and he protests vehemently against the idea of culture. And what he says is that every organization and, and the, he sort of talks about it as research. I mean, rotation is built of lots of different teams and functions, all of which operate differently and uniquely, and that who manages, you determines the culture that you exist in, in an organization versus the larger organization. And I wonder if you could comment on that or have your, you know, kind of perspective on, you know, is there really an organizational culture, or are all organizations filled with, you know, a multiplicity of cultures based really on who the particular leader is of that area?

Siobhan:

Yes. Well, for me culture, it’s a bit like the distinction between the dancers and the dance. So the dancers are the behaviors of what’s happening in the individual parts, but the dance is the bigger picture. It’s the collective agreements, how old, and yes, sometimes it is difficult to see what those are at the organizational level, but they are always there. And it is it’s the passion. What are the patterns of relatedness between the pods? Because they are greater than the sum of the parts and they show up in nature. So we see patterns in the structure of a, the leaf of a Fern. We see patterns in families where often those in the families can become blind to these collective patterns or agreements. And we also see them show up in our workplaces. So over 30 years of researching and studying this, I can see the patterns that connect in an organization. And that is what the culture is.

Peter:

And so what I’m curious about is the culture of different parts of the organization. So I think when I think of my work, right, and I think of, I go into a sales organization and there’s a certain culture in a sales organization that for example, feels distinct to me from the culture in the engineering organization, I’m thinking of a high tech company or firm, you know, you’re thinking of in your organization may be in deluxe. Maybe it’s in manufacturing. If I, if I was an engineer trying to sell, right? I’m like to the extent that a culture is a set of agreements about how a business operates or how things work around here in order to achieve a certain objective that if I’m, you know, an engineer and I, and I, and I operate the way sales operates, I’m going to run into a lot of trouble because that’s not the culture of engineering in general, but probably in an organization compared to the culture of sales, which is different, which in, in my experience creates a lot of tension sometimes between areas of a business, because the cultures that the individuals are operating in and the cultures of the organizations that they’re operating in seem to be very, very different.

Peter:

And sometimes in intention, does that, have you experienced that?

Siobhan:

Yes, very much. And all fun. What I talk about is the role, how do the roles of the different pots see themselves and what is the connectedness between them? So an example that can sort of talk to that. And what you’re saying is when I walked into a and said bank that you mentioned in Australia for the first time, one of the things that I noticed was the sales and the branches. There were 700 branches and they had one particular way of operating, but they were taking up their role as the order takers, just waiting from the instructions from head office, head office, we’re taking up the role of the order givers and the relatedness between the head office and the branch is what was a blame pattern. You’re to blame for the poor customer service. And that blame pattern was going around and around and leading to the worst customer satisfaction scores of any bank in the country.

Siobhan:

So the culture was the relatedness between those two parts and this blame passion now to Marcus Buckingham’s point, he would say, well, no culture is just about what’s happening in one part or what’s happening in the other pod. But actually if you just went in and said, Oh, well, it’s about the parts. It’s about just the branches. Your intervention might be different. You might say, well, all the bronze stuff need to go and customer service training, but actually that would have been the wrong intervention because the rotting intervention was to reframe the role of the different pods. So we reframe the ball of the head office from order givers to support providers to the branch is giving them risk and HR and it services. And we reframe the vault of the branches from order takers to serve as providers to the customer. And that reframing through a new operating model shifted the ways of relating and ultimately the culture.

Peter:

I love that. So, so you’re saying what I’m hearing you say is there actually are different cultures to different parts of the organization, and that’s a problem meaning, and it’s a problem because if they’re not all working towards some overall objective, that they can kind of approach consistently in a way in which they build trust to get there, then, then you’re going to continue to have this discourse. So, so that your approach is to say, it may be true that there’s these different cultures. And as, as a senior level executive in an organization, we have not only an obligation, but an opportunity to develop a more unified culture so that everybody’s working towards some kind of common goal.

Siobhan:

Yeah. And often it’s in how the different parts frame their role. So if head offices framing its role as an order giver, and you have an order taker, then that’s a problem because their relatedness is not functioning to the best sort of like giving the best outcome to the organization. So you reframe the role, which is one of the four steps I talk about by reframing the role of the parts. You can get a different way of taking up the roles. So you reframe to a support provider and service provider and a different relatedness starts to happen. You rewind that relationship between the two pints, and then you get much more effective ways of working.

Peter:

So let’s go through your sort of four elements or the four stages, the four pieces of this puzzle.

Siobhan:

Yeah. So the first step where many managers take a wrong turn is they rush very quickly to solutions when it comes to change. And actually what you need to do is diagnose what’s really going on. So just the conversation that we had many managers would rushing to say, well, let’s just put in some training for the branch staff rather than see what’s really going on in the organization. So that’s step number one, step number two is reframing. How can you reframe the role of the parts in order to get faster change with less noise, then you go into breaking the passions, but dysfunctional patterns between the parts. And I give lots of examples. And then the fourth is keeping your foot on the, on the change accelerator and consolidating your gains over the longer term.

Peter:

So, so let’s go through these and it’s, and you know, you have a consulting background from PWC, and this sounds like, you know, sort of solid consulting methodology. It sounds like there’s like a, you know, like I could see the lineage of, of, of the model diagnosing what’s really going on. So my question about that, cause you have a lot of detail in the book too, about how, how to do this and how to go forward with it. It what’s, what, what you’ve already described is you have to be very, very careful not to diag you know, it’s that story of the blind people touching different parts of the elephant. And nobody’s seeing the whole elephant because you see, Oh, like a trunk, like a big tree, or like a stone, like a tusk, but, but no one’s necessarily seeing the whole thing. And that’s something that happens in organizations all the time. So a key element diagnosing what’s really going on is getting the bird’s eye view and saying, what are the systems that are interacting with each other that are maybe causing friction or enabling success? Am I thinking about this correctly? Yes. How do you do that?

Siobhan:

One of the key ways you’ve got to do it, I think is step back from it rather than, I mean, I, I was asked by the CEO of an infrastructure company, for example, it’s coming and help them create a more commercial culture. One of the things that they wanted to do was put all their top 200 managers through a skills training course, teach them how to be more commercial. And actually that wasn’t the problem. We needed to step back and see the role that they were taking up in relation to their clients. So they had been in a, a, an environment where there wasn’t a lot of competition and they had been enrolled of relationship manager, satisfying the client needs. There was a margin on top. So all they had to do was just keep satisfying and making the client happy in a commoditized world. They needed to manage their margins much more carefully, but they kept on doing favors for free for clients. So we actually had to reframe their role from relationship managers to commercial managers. And that reframing was part of changing the culture rather than just a sheep dip approach of sending everybody on a two day skills training course. So how did

Peter:

You discover what the real problem was that was going on? I mean, they say, you know, and this is true for me. Anytime a client comes to me and says, here’s what we want you to do. My question is always why, like, what’s the problem that’s leading you to ask me for the solution, because I don’t necessarily trust that they’re asking for the right solution because my job is to make sure that what I deliver is a solution to the actual problem that they’re having. So when someone asks me, you know, what to deliver X service, my question is, what’s the problem you’re trying to solve is that, is that your entry point to diagnose what’s really going on.

Siobhan:

Yeah. Similar to you. Often managers have a view of what the solution is and they come in, they say, I need you to run this training, or I need this new policy or procedure. And the thing to do is to resist the temptation, to move quickly to that solution and to get them to agree, to do a diagnostic, I call it. So when you spend the time doing a diagnostic, you start to interrogate what is going on in the different parts. So what are the branch staff saying? What are the head office people seeing and experiencing and stepping back from that and saying, well, what’s the relatedness between these parts. If I just went with what the manager wants, I’d be doing a customer service training for all the branch staff, but you step back from it. And you always say, what is the pattern that is connected? Where is this behavior being fueled from? And then you start to see the related as our head office air in this role of order giver and the bronch staff, or in the role of order taker, what is the solution to that pattern of relatedness? And it may not be skills training. It may actually be a reframing of the roles of the pods. And that may mean a new operating model, for example.

Peter:

So you put a lot of stake on the way people think about their roles. That culture is very determined or the, the, you know, sort of patterns or agreements that determine how a business operates, which is how you define culture, right? Patterns are going games, determine how business operates. You know, how things are working around here that is determined largely by how people think about the role that they’re playing in the organization or in the city.

Siobhan:

Correct. So if you think about even a simple example that I talk about in the book about saver Connor is she gets up one morning, greats, her husband, Mark, good morning, and role of wife. She goes down to the kitchen and meets her nine year old twins and steps into the role of mother and gets them ready for school. Then she gets on the train and commutes to New York where she’s the head of department at a New York hospital that morning. She steps into role of teacher. As she makes first year medical students, that lunchtime. She has a meeting with her boss to negotiate new imaging equipment because she’s head of the department. And later on that day, she bumps into a colleague who asks her for a diagnosis about a patient. And she steps into role of advisor. Now, Sarah is the same person, the same author, antic, Sarah Connor’s through all of those interactions. But the mental map that she holds of her role changes, how she behaves in each instance. So our mental maps are like a GPS in your car. And if you, if you’ve got an old version of a GPS, you can head down the wrong road. You need to update the GPS or update the mental Mack when you’re going through change in order to help people to shape and shift their behavior.

Peter:

Do people resist when you want to come in and reframe their roles?

Siobhan:

You not necessarily telling them that you’re reframing your roles as a leader, but you’re helping them to say that the imperative has changed. So for example, in the a and Z example, when we, when we did the work with the branch staff, we were basically revealing to them that their role was to serve the customers. And we were lining everything up so that they could do that easily. They had the right systems, the right processes, the right metrics, because nobody wants to be changed. But as a, as a manager, often you’re looking for signs of how do people see their role and how do they, how do we actually need them to be framing their role in order to best achieve their objectives? So, for example, at the moment I’m working at U Lux group and we’ve just reframed the role of the top 200 leaders to say, well, you were enrolled with crisis manager, but now your role is shifting to ambiguity navigator. We’re going into a time of economic recession, where there will be challenges, but also opportunities. So you need to be able to navigate in these times of uncertainty in order to ensure we survive and thrive through this period. So just that simple reframing from crisis manager to ambiguity navigator, it gives them a different mental map and an understanding of what’s required.

Peter:

And it feels like there’s this step that you’re not articulating specifically, but feels really important. And I think is implicit, which is the clarity of what it is that we’re all trying to accomplish collectively and in alignment together, right? To be able to say, you know, together, our objective now is to manage the success of the business in an environment of ambiguity. Like that’s what our goal is. That’s what we’re going for. So given that, then what is the role that you can, can play in, in doing that? Am I thinking about this correctly?

Siobhan:

Yes. You’ve got to be scanning the whole system and having an understanding of what the requirements are. And by role, I don’t mean a job description. That’s your described role. And often there are pages and pages and it causes more confusion. This is a distillation of where are we at what’s emerging and what role do you need to step into at this time? And indeed that role can change just even in one meeting. Often, we don’t really appreciate that. Even in one meeting, you might be enrolled with listener role of presenter, role, challenge, or role with motivator role of clarifier. All of those roles can exist just simply in one meeting. But often we’re not flagging the role that we’re in. I though with people’s, they’re not really understanding fully where we’re coming from. We don’t always signal that or, or put that on the table or talk about the role that we’re stepping into

Peter:

Diagnose what’s really going on. We really understand the objective and the focus and the vision and the purpose of where we’re headed. We reframe people’s roles and, and understand that’s not job descriptions, but we reframe their roles. And then we break

Siobhan:

The visuals are in the pot. So that can happen at the individual level, the team level, the department level, or even as a whole organization, different levels of role reframing. Great.

Peter:

And then we break the patterns and I’m, I’m super interested in this step because I have both seen it happen in an instant, and I’ve seen people spend decades trying break patterns, unsuccessfully. And one of the key differentiators in my experience is the top leader. And I’ll, I’ll, I’ll sort of give this example because I’ve seen it multiple times in one place, which is know, I’m thinking about a bank and you’re talking about an said, which is a bank I’m thinking about, you know, Goldman Sachs. And I’m thinking about when when there’s a change in leadership, right? And actually that’s happened in American express. Also Lou Gerstner was running American express, Lou Gerstner left Harvey Golub stepped in literally Harvey Gollob wore suspenders, right. A stupid thing, but within three weeks, and I was doing a lot of work in American express at the time, within three weeks of Harley Harvey, Golub, stepping in as CEO, a third of the men were wearing suspenders, right?

Peter:

It’s like a stupid little thing, but it’s like, and I don’t think they would ever say I’m wearing suspenders because Harvey’s wearing suspenders. But, but it’s, it’s this sort of natural thing. And I’ve seen a Goldman Sachs where leadership has changed multiple times between a leader who steps in, who came from an investment banking background and a leader who steps in, who came from a trading background. And when those leaders change over, when there’s a change from an investment banking CEO to a trader CEO, the culture of the bank changes people change their roles, change, literally the people themselves change. And so it’s like instant pattern changes based on who’s at the top leadership level. And, and I’m curious about what you’ve seen around that. And other ways that you can break a pattern, maybe when it’s the same leader, who’s wanting to break a pattern, but maybe they themselves are stuck in an old pattern.

Siobhan:

Yeah. And I think those are great examples of the power of patterns and how patterns can capture you almost immediately. And I think how you break them as you, you know, you become aware of the pattern. So I worked with one CEO in an engineering company and he complained to me, he said Chavon, I’m just really frustrated. I’ve asked my head of marketing to install this new advertising billboard on the top of the head office roofs so that we can get more signage and more visibility of the brand. But, you know, three months later that sign still hasn’t appeared and it speaks to this culture. That’s not performing quickly enough. And I asked him, I said, well, bill, just talk me through. What’s been happening. And actually what emerged was that he’d had conversations with every member of his leadership team about this problem, except the head of marketing.

Siobhan:

So he wasn’t having the tough conversations. And I pointed this out. I said, Oh, so you’ve talked to everybody, but you actually haven’t talked to George about this problem. And in that moment, he began to realize that actually he was co-creating this pattern of lack of accountability and poor performance in the organization. In that meeting, he decided change his role and Cole, Georgia had the conversation with him. And from that moment, the conversation about the culture started to change because he stepped out of the role of Mister nice guy, trying to be nice and liked with everybody, which was the culture in the organization and named the, the role of mr. Rail, you know, giving, you know, being real, having the conversations that mattered and seeing his role. And co-creating that pattern was crucial in breaking the pattern. And the organization started to see an up and up an uptake in, in terms of its financial performance.

Peter:

So I’m curious about the challenge of what you’re describing, because what you’re describing makes total sense in a world, and you have a psychology degree focus on organizational psych, but a psychology degree. And, and it’s like, it’s like, Oh, let me show you this blind spot. You don’t see that you’re not having this hard conversation, go have that hard conversation everything’s solved. And, and in my experience, it’s a little bit more challenging than that. And that there’s all sorts of layers of things. And you, you talk about the 32,000 employees changing their behavior a and Zed, and you write that they’re pro that their new relationship building skills enabled them to replace the bulb. You gave them relationship building skill training, and that their new relationship building skills enabled them to replace the blame game with a sense of their own role in solving problems.

Peter:

And I found myself wondering like, but isn’t a culture of Blaine, much deeper than like having the skills to build a relationship that, that it’s not simply an issue of skills. It’s a simply, you know, it’s an issue of everything from as deep as like, am I enough? And what does it mean if I failed or if I’m accountable for something, or if I haven’t succeeded, you know, to to, to real disagreements about kind of, who’s stepping up and who’s accountable. So I’m curious about the real underlying challenges of changing that kind of a pattern or those kinds of behaviors.

Siobhan:

Yeah. And that’s a great question. And that change did take seven years. These are complex adaptive challenges, then not simply are we sent them on relationship training and then everything changed. And I think one of the fundamental things that we did in order to change the culture was to introduce a new operating model so that new operating model defined the different roles within the bank. And it changed the pattern of relatedness from head office makes all the decisions and everybody had to, you know, a customer would come into the branch and say, I need some help. And the branch staff had to keep putting that decision back up to head office and it was slowing everything down. So step number one, we changed the operating model and that started to shift the, the roles, the mental maps people had of their roles and the relatedness between the parts.

Siobhan:

But then we layered in a whole lot of systems to enable the bank to be better able to respond to customer needs. We layered in training and we kept on going and monitoring that journey for seven years. So an organizational effort, you know, I had a team of almost 30 people full time working on this culture and helping leaders to understand the role they were taking up and helping their teams to shift their role. Cause it doesn’t happen overnight and it’s not necessarily an easy change, so significant investment time and energy, but most importantly to your area earlier point Pater, the leadership team sold their role as the leaders of the culture change. They didn’t delegate it to HR to do the change for them,

Peter:

Right. That feels really critical and important. I mean, for me, as I was reading through the book too, I was thinking like the, the, you know, middle management, you know, CA can enable a change or prevent a change very, very easily. And senior management sends the very, very clear message that, that allows middle management to make these kinds of choices in a way that’s supportive of direction or not. Does that feel right?

Siobhan:

It feels wrong. And it’s such a big myth. I remember my first day at an infrastructure company and I’m actually in the first week I was having conversations with the executive team or were telling me we need to create a more performance based culture, or we’re going to go into decline as an organizations because our margins are being squeezed. And our share price has plummeted. I was in a meeting with the CFO and he was explaining to me over the course of an hour, how important it was to change the culture. At the end of that hour, we stood up, you shook my hand, we shook hands in a pre covert time. And he said Chavon, I’m wishing you all the very best of luck in changing the culture and are realized in that moment that he thought that it was my role as outsourcing, you know, good luck with it.

Siobhan:

Chavon at my first intervention in that organization was to sit down with the CEO and the executive attainment to explore our roles. What is your role? What is my role? What are the different roles? Because culture changes, always leader lead at all levels, but leaders cannot aggregate their responsibility for taking up their change role. Now often they don’t have the tools. And one of my frustrations was where is the toolkit for doing culture change? Everybody’s talking about it, but there’s no tools. So, you know, I had to sort of then look at myself and say, well, you know, you’ve spent 30 years researching this. Yeah. You know, I don’t need to write a book. I have a job, but I was so passionate about giving leaders at all levels, the tools to enable them to make culture change happen.

Peter:

That’s great. We have been speaking with Siobhan McHale. She has written most recently the book, the insider’s guide to culture change, creating a workplace that delivers, grows and adapts. It’s based on her experience, heading the culture change program at a N Zed bank Chavon. It’s such a pleasure to talk with you. Thank you so much for being on the Bregman leadership podcast. I’ve really enjoyed the conversation.

Siobhan:

Peter, thank you for having me.

 

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