Transform Stage

The Transform Stage is where the organization goes beyond where it was when it started financial decline. The goal is not to become merely financially sustainable, but to become financially resilient: adaptable to changing conditions and able to recover readily from setbacks. Resiliency is characterized by a number of good financial management practices; however, changing the organization’s culture is the primary leadership task for becoming resilient. A checklist of key leadership tasks for the Transform Stage is below:

Assess culture and change readiness. An assessment will arm you with information and evidence to support a culture change. It will tell you what the current culture is like, identify the available levers of change and barriers, and help recruit others with influence in the organization to the cause. The assessment can cover items such as:
  • Is there a vision statement? Are there clear goals, and are they accepted by employees?
  • What are the current values, beliefs, and attitudes?
  • How high or low is employee morale?
  • What level of trust do employees have in managers and co-workers? 
  • Does conflict exist between different groups and, if so, how much?
  • Are the organization’s leaders seen as credible?

For instance, if you find that employees have a low level of trust in managers you may need to take steps to improve trust. Otherwise, employees are unlikely to be receptive to later steps in the culture change process.

Determine new values and announce them. Before you can change the culture you have to know what you want the culture to change to. For example, perhaps the goal is for the organization to include the public more or for decisions to become more data- and evidence-driven, rather than, rather than guided by intuition. Articulate the envisioned culture in a set of values that can be shared with others. Also, explain the reason for the culture change. For example, is a different culture necessary to reach a valued public goal or perhaps to reduce cost and avoid job losses? An announced culture change that is part of a larger strategic and performance framework will be more successful.

Identify behaviors needed to realize the new culture. Culture is composed of values, attitudes, and behaviors. Behaviors are the easiest of the three to change, so the work of culture change focuses there. Identify the kinds of behaviors that represent manifestations of the desired culture. Then, describe to managers the specific behavioral practices they need to adopt. Support them via feedback and skill practice, and model the new behaviors yourself. It is important that this task be undertaken concurrently with or very soon after the announcement of the new values. The new behaviors make the new values concrete. For instance, if trying to move toward a culture that values data-driven decisions, an important new behavior would be bringing data on program effectiveness to support budget requests.  

Measure and create incentives for the new behaviors. Use a performance management system to measure the extent to which managers exhibit the desired behaviors and to reward them accordingly. As managers are rewarded for the new way of behaving, they come to view the new behavior as a good thing. Once they view it as “good,” it has become a value. Baltimore’s famous CitiStat performance measurement system is one well-known example of how to measure and reward behaviors that support data-driven decision making. The city collects performance data across a variety of programs, and agency heads regularly meet with the mayor’s representatives to review the data. Agency heads are grilled about their performance. Particularly good performance has been publicly rewarded (with tickets to sporting events or concerts, for example) and it has not been uncommon for under-performing agencies heads to be replaced. This sends a clear message that the mayor takes performance seriously.

Engage employees. Find ways to engage employees more deeply in the mission and values. In many cases, the leader of the culture change will benefit by becoming a facilitator, encourager, and supporter of employees as they work on flexible, cross-functional teams to analyze and solve problems. In this mode, the leader shares ownership and responsibility with the staff to solve problems in way that agrees with the organization’s values. In Baltimore’s CitiStat system, city agencies must be prepared to answer any performance questions raised by the mayor or cabinet at a bimonthly CitiStat session. Consequently, agencies must come prepared with data and evidence to explain unfavorable changes in performance statistics and what will be done about it.

Find ways to deal with resistant employees. The reality is that some employees will find it difficult to adapt to culture change. It may be necessary to find a way for these employees to move on. For instance, if structured correctly, an early retirement incentive may enable these employees to move on while containing personnel costs.

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