Organisational Culture Change - Is New Leadership Required?

A key issue for students looking at the challenge of changing organisational culture is whether new leadership is required? Can the change be achieved without someone new at the top?

Let's look at a sample essay case study to see how some potential essay points might be identified.

Mini-case study:

All Change at Barclays - Antony Jenkins and Project Transform

The new CEO of Barclays, Antony Jenkins, wants to change the organisational culture of the bank in response to a series of damaging revelations in recent years.

Like some other banks, Barclays has been hit by heavy penalties for the mis-selling of interest rate hedging products sold to small firms, and payment protection insurance (PPI) schemes to consumers. Barclays was also implicated in a LIBOR-rate fixing scandal which further damaged its reputation as a bank which had become too reliant on high-risk investment banking.

Jenkins has launched a culture change programme named "Project Transform" and has made it clear to Barclays employees that they must either accept the new corporate culture or leave the business.

Essay question:

To what extent does successful organisational change requires new leadership?

How might an essay be planned for this question? What points might be developed in favour/against the underlying assumption in the essay question?

Here are some suggestions:

Possible points in support of the question: (i.e. that new leadership is required for organisational culture change to be successful)

Existing culture is likely to be a reflection of previous leadership style, so a change in leadership is a powerful signal of a desired change in culture.

Organisational change unlikely to be successful under existing leadership who will be too closely associated with the culture that needs changing! They may have been part of the problem!

Existing leadership may not accept the need for change (may actively resist), so without new leadership culture change will not be a strategic priority.

Much evidence that new leadership is often the stimulus for broader strategic change – including culture (e.g. a change in strategic direction, retrenchment etc). Often the case when the new leader comes from outside the business or industry.

Possible counter-arguments (i.e. that successful org culture change can be achieved without new leadership)

Culture change is complex (because organisational culture is complex - link to Schein's layers of culture model) and requires a detailed understanding of how the existing business works. Leaders who are already in the business have this deeper understanding.

For culture change to be successful, whole organisation support is needed, not just new leadership. The issue is more about how the organisation can accept the need for change and embrace it.

Case study application points:

[don't forget – at least two references to the stimulus case]

Barclays (banking / financial services) diversified activities in a highly competitive services sector – so culture change has to reach far and wide to be effective

Powerful sub-cultures in Barclays – particularly in the investment banking division, which may be difficult to change in the short-term (e.g. “bonus culture")

Note the impact of leadership style on culture: Bob Diamond brought different values to Barclays from investment banking when he became CEO.

Possible lines of further analysis & evaluation

Whether new leadership is really required or not, many well-known firms link the need for change with a change at the top! E.g. Nokia, Sony, RIM, Royal Mail

What do we mean by leadership? Not just about the CEO. Archie Norman believes that up to 80% of the senior management team need to be replaced if organisational culture is to be transformed. That might involve large numbers of managers, depending on the size and complexity of the business.

New leadership by itself is not enough. It needs to be credible new leadership.