New Year’s resolutions aren’t just for people trying to drop a few pounds or organize their closets. With 2014 fast approaching, corporations, too, are thinking about what they might do differently in the year ahead. Unfortunately, like the millions of Americans who will fail to stick to their New Year’s resolutions, so too will many corporations see their change initiatives fall short. According to a new survey by the Katzenbach Center at Booz & Company, only about half of corporate transformation initiatives accomplish their goals and sustain the results.
The culprits for these disappointing results are many, but “change fatigue” and a simple lack of capabilities rank high among the reasons cited by the more than 2,000 executives and employees surveyed. Also near the top of their list, though, is a failure to leverage corporate culture in support of change. Although 84 percent of survey respondents said culture was critically important to business success, less than half said their company does a good job of managing culture. Within the latter group, many also agreed that culture simply isn’t a priority in their company’s transformation initiatives. (For more on the survey, see the video at the end of this story.)
These findings have significant implications for CFOs, who often are at the heart of change efforts. With their 360-degree view of the organization, they are frequently the first to identify the need for change and among the handful of leaders who can drive it. And, of course, they are directly responsible for change initiatives within their own department, the performance of which bears in a myriad of ways on the success of the corporation as a whole.
The Katzenbach Center survey makes clear that CFOs and their C-suite colleagues who ignore or downplay culture are missing opportunities to wring better results from their change initiatives. Among other top findings:
• A stunning 60 percent of survey respondents say culture is even more important to business success than a company’s strategy or operating model.
• Only 35 percent of survey respondents say their company’s culture is managed effectively, and 51 percent say it needs a major overhaul.
• The top barrier to sustainable change is too many competing priorities, which leads to “change fatigue” among the corporate workforce.
• The most common reasons survey respondents give for their company’s resistance to change are skepticism attributable to past change failures and a feeling that employees are not involved in the change process.
The last two items on that list illustrate how important culture can be to successfully managing change. Companies that careen from one initiative to another, that don’t involve frontline employees, and that don’t seem to learn from their mistakes are companies that are creating, knowingly or not, a culture of failure.
The Role of the CFO
Finance and the CFO are in a unique position to influence corporate culture, and in particular, to drive a performance culture. Finance’s view extends across the enterprise, without bias toward individual businesses. It has access to enormous amounts of data, and by connecting the dots in that data, finance leaders can often spot and define performance trends or potential problems before anyone else. The finance function acts as the conscience of the shareholders, ensuring that investments are made in the right places and following up to see whether returns are achieved as expected.