Two CEOs Share Their Playbooks for Culture Change
Mark Costa, CEO of Eastman Chemical Company
This article authored by Carolyn Hendrickson, CEO, Tandem Group first appeared in Industry Week on May 13, 2021. It is the final article in a series of articles about re-evaluating corporate culture in manufacturing.
With the challenge defined and a path mapped out, it’s time to embark on the real work.
There’s gold in them thar hills! The question is, how do you get to the treasure trove of value inherent in your company? The best leaders are always prospecting for ways to unleash the human potential in their organizations. Re-evaluating the mindsets, behaviors, and ways of working in your company is a good place to start.
Changing a company’s culture starts by defining the challenge, aligning leaders, and charting a clear, actionable path. While these steps are essential, they are not sufficient. It’s like having the map to the gold without starting to dig. What have CEOs learned about the work involved in actually changing the culture in their organizations?
To help answer this question, our clients Mark Costa, CEO, and Perry Stuckey, CHRO of Eastman Chemical Company, and Ganesh Iyer—formerly with Caterpillar, now CEO of E.D. Etnyre—shared their perspectives.
Eastman Chemical is a large global specialty materials company and Etnyre is a small family-owned manufacturing business in the Midwest that makes equipment for the asphalt and roadbuilding industry.
Ganesh Iyer, CEO of E.D. Etnyre
These senior executives work in very different businesses, but the lessons learned have many similarities. Lead from the top, model the desired behaviors, and build an accountability system to make the desired ways of working stick. Make sure you have an actionable plan that leaders are committed to implementing and recognize that not all leaders will be up for the journey. These are table stakes for creating culture change.
There are also some less common best practices that are just as important, if not more so, for producing lasting change in a company’s culture.
Connect to Purpose
Successful leaders go beyond the mission and vision of the company. “People need to connect to something bigger than themselves. Coming to work every day has to be about more than putting food on the table,” says Iyer.
At Eastman, Costa explains, “our culture change centers around our vision and purpose—to enhance the quality of life in a material way. That’s our moral purpose and drives everything we do. To create sustainable culture change, leaders have to find ways to link what employees do day-to-day to the deeper purpose of the company.”
At Etnyre, the culture change involved working sessions and training to help employees better understand importance of their work on the end result, and on customer satisfaction. At Eastman, the energy is around creating new, innovative chemicals and materials that have a positive impact on people’s lives. Leaders make clear the connection between running their factories more efficiently and the ability to fund new product innovation.
What is the deep purpose you can help your employees connect to in a meaningful way?
Focus on Critical Behaviors
Many companies identify a set of values as part of their culture change, but they don’t always do the work to further define what those values mean day in and day out. What do courage, trust, respect, and transparency look like? The companies that do this best take the time to get specific on the behaviors behind the values, train the workforce on what “good” looks like, and build the behaviors into their systems.
“We have built our key behaviors into our performance management system,” Iyer explains. “Half of someone’s rating is on the results they produce, and the other 50% is on the values and behaviors we want them to demonstrate in achieving those results.”
“Behaviors ultimately define a culture,” says Costa. “The interactions you have and what you choose to do every day defines your culture.”
Have you defined the specific behaviors you want your employees to demonstrate? Do they know how what they do every day will help the company achieve its goals?
Shift the Conversation
Most leaders know that culture change needs to be supported by the people, processes, and structures in the organization. But what often don’t realize is that shifting the conversation in the organization is the single most important element for sustainable culture change.
“We have to have more courageous conversations if we are going to encourage an innovative culture,” says Costa.
Another client of ours, the president of an underground pipeline company, says, “Our new practice of sharing background conversations has changed the culture and performance of this company.” He explained how the simple act of people sharing what they were thinking but typically not saying started to transform their culture.
It is necessary to develop the skills to have productive conversations; they don’t happen naturally. “We have created a process and structure to create the right conversations for a more innovative culture,” says Costa. Companies have to build muscle in the conversation domain if they want to shift culture and raise performance.
What are the conversations you need to create in your company?
Link Culture to Performance
Culture change is about achieving different results; it is not just a feel-good thing. Changing mindsets, behaviors and ways of working are essential to getting the full value from your business.
“Our cultural transformation is anchored in metrics connected to the goals we want to achieve,” explains Costa. “People have to work differently to achieve those goals and are held accountable for doing so.”
Unlike some other industries where the outcomes are rapidly evident, new product innovation in manufacturing can take years. Costa explains the challenge is keeping people motivated every day for five years to get to an outcome. It’s not like some other industries, where you may see the outcome in weeks or months.
“There is no question the culture work we have done has impacted our business results in a significant way. It’s a dramatic shift,” explains Costa.
At Etnyre, Iyer has experienced similar results. “We said we would grow by about 50% in five years and here we are in the third year and we are about to achieve that goal. That growth would not have happened without this cultural transformation.”
What are the results that are possible for your company if you made some changes to your company culture?
Know It’s a Journey
Leaders embarking on a culture change need to be prepared for it to take a long time. Costa and Stuckey caution leaders, “Culture change is a marathon, not a sprint. It is a long hard road and will take years to produce the desired results.” Furthermore, Stuckey emphasizes, “There are leaders who are up for this journey and those who not. You have to make sure your leaders are energized and committed to changing the culture. And if they are not, you need to remove them and quickly.”
Companies must always be re-evaluating because, as Stuckey reminds us, “Your culture speaks volumes of who you are as a company.” It’s all about talent and how to get the best talent to help your company be successful. You do that by creating an environment where they thrive. “The war for talent will intensify, especially in manufacturing. If you don’t realize that, you will not survive.” says Stuckey.
There are many companies that have successfully changed their culture and others that are just starting. Sharing lessons learned across the industry will increase our collective ability to prepare manufacturing companies for the future. Investing in re-evaluating and shaping the culture is essential to attracting the workforce of the future and sustaining the value of the manufacturing industry in this country for generations to come.