Cultural Audit - Get the truth about your organisation - Gugin (2022)

by Finn Majlergaard | 19. Nov, 2021 | Article, Blog, blog posts on creating great corporate cultures, company culture, competitive advantage, corporate culture, Cultural audit, cultural differences, cultural diversity, Cultural due diligence, cultural intelligence, cultural synergies, featured, organisational effectiveness, organisational effectiveness blog

Cultural Audit - Get the truth about your organisation - Gugin (1)

Introduction

Cultural audit is the process where we describe all the aspects of a particular organisational culture. Gugin has developed and refined a comprehensive framework that gives us all the insight we need and at the same time gives our client a clear view of what their corporate culture looks like. Our cultural audit process is often used when a company needs a turn-around or in a merger or acquisition situation where we want to identifythe cultural strengths and weaknesses of the organisations involved.

Between 55 and 77 per cent of all mergers fail to deliver on the financial promise announced when the merger was initiated, and they fail for the same two basic reasons:

  • Failure to assess the potential impact of attempting to merge and integrate the cultures of the companies involved.
  • Failure to plan for systemic, systematic and efficient integration of those cultures.

Culture clashes result in internal confusion and in-fighting often characterised by unfamiliar ways of doing and talking about things. These, in turn, result in huge inefficiencies, loss of momentum and increased internal focus at the same time that the new company needs absolute ringing clarity on purpose, plan and action with strong external focus.

The Cultural Audit process is proactive problem-solving in advance

What is the Cultural Audit process facilitated by Gugin?

Definition of a cultural audit:

“A Cultural Audit is a study and examination of an organization’s cultural characteristics (such as its assumptions, norms, philosophy, and values) to determine whether they hinder or support its vision and mission

Source:

You can use a cultural audit of your organisation as:

  • A framework describing, assessing and compare human behaviour in an organisation
  • A way to identify and evaluate cultural risks and opportunities in an organisation
  • A leadership tool that can facilitate an acceleration in organisational performance
  • A valuable tool when prioritizing the tasks in a change process

Cultural Audit - Get the truth about your organisation - Gugin (2)

  • We align your corporate culture with your strategy.
  • We take you safely through major changes in your organisation.
  • We develop the crucial cultural intelligence in your organisation by training your employees and leaders
  • We help you develop a competitive advantage with a unique corporate culture

Gugin has helped more than 600 companies around the world creating a winning corporate culture.

Book Dr Finn Majlergaard, CEO Gugin for a speech or lecture in your Company, University or Business school. He teaches at universities and business school across the world and has facilitated hundreds of workshops for more than 600 companies in 25+ countries

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Why you should let Gugin conduct a cultural audit of your organisation?

It improves organisational effectiveness because you become aware of what people consider valuable in your organization

  • What inside your corporate culture makes people come to work on a rainy day?
  • What makes your clients buy your good and services if you are not a price leader?
  • Why do employees leave your company?

It makes the recruiting process more effective

  • Our work identity is becoming increasingly important to us. It is, therefore, crucial that there is a cultural fit between new employees and the organisation. When you know your cultural DNA you will have an easier job interviewing and testing job candidates.
  • Anyone can pay a higher salary and provide more attractive benefits, but no one can replicate your corporate culture. By focusing on your cultural strengths outlined in your corporate cultural DNA your company will stand out in a unique way

It identifies the Cultural Gaps in your organisation

  • Do you have a culture that supports the goals and objectives of your organisation? You might have a vision about being the most innovative company in your industry, but if your organisational culture doesn’t promote innovation you will never get there. The vision will remain in the powerpoint presentation.
    By comparing the current and the ideal corporate culture we can help you facilitate the necessary changes

It is a very valuable tool when integrating organisations after a merger or acquisition

  • 65% of all M&A’s fail to meet their original objectives because of cultural friction. With an organisational cultural audit in place, we can lower that percentage and help you protect your investment.
  • The cultural audit will ease the integration process and help the leadership team to focus on the right organisational issues throughout the entire integration process.

Gugin has conducted a survey among 1200 middle managers with the purpose to find out how important the corporate culture is to them ad what this corporate culture can do for them if it is done right

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When should you ask Gugin to conduct a cultural audit of your organisation?

When you want to know how you can benefit the most from your organisational culture

  • Why not let the cultural diversity work to your advantage instead of regarding it as a problem that should be fixed? It is a good idea – on a regular basis – to describe the ideal company culture and assess the current company culture and then initiate processes to bridge the gaps.

In the Merger or Acquisition process

  • Dealing with organisational cultural issues is one of the most important and yet overseen tasks when companies are involved in a merger or acquisition. Performing a cultural audit together with the other due diligence activities and internal audits will add important information to the decision process and later to the integration process.

When you initiate a strategy change in your organization

  • When you change the strategy it is required that the organization changes accordingly. It doesn’t happen by itself and there will most often be a strong resistance to change because we human beings see all change as a threat. In that situation, a Cultural Due Diligence will help you create the best plan for a change playing on the cultural strengths in your organisation

When you have to reduce cost and increase performance

  • If your leadership style, motivation- and reward systems, internal branding etc. don’t fit the reality you will experience cultural friction which leads to higher operational costs. If you are not aware of where the cultural friction is a cost-cutting process can have severe negative consequences for your organisation. A Cultural Due Diligence can help you lowering the cultural friction. This way the performance will be increased.

The Gugin Cultural Audit Process explained

The elements of the Cultural Audit Process

Basic elements:

  • What gives status in the organisation
  • Which time orientation do you have
  • Do you focus on group or individual achievement?
  • Do you focus on relationships or rules?
  • How much does the job identity mean to people?

Other elements:

  • Leadership style
  • Problem-solving Paradigm
  • Organisational Practices
  • Informal vs. formal management structure
  • Leadership/Management practices
  • Supervisory practices
  • Communication style
  • Integrity
  • Physical environment
  • Perceptions and Expectations
  • Cultural indicators and artefacts

Qualitative methodology:

  • Interviews
  • Focus Groups
  • Workplace observations
  • Documentation review

Quantitative methods:

  • CEO/Executive interviews
  • Workplace observations
  • Org. Effectiveness assessment
  • CDD Survey to a sample of all employee groups

How does Gugin identify the cultural DNA in the corporate cultural audit process?

DNA is a molecule that encodes the genetic instructions used in the development and functioning of an organism. We all have unique DNA. It is our biological identity.

Organisations are similar. They are all unique which is why we use the term the Cultural DNA when identifying and describing a company’s culture. Like the human DNA, the cultural DNA is made of components that have different forms from one organisation to the other.

We describe your organisation’s cultural DNA by assessing each of the elements in the DNA. In our model, we have 17 elements which make up the cultural DNA

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Step 1:: Pre-Assessment

Before we can start the cultural audit process we need to define the scope for- and purpose with the cultural audit process. As outlined earlier there are several different situations where it is beneficial to perform a corporate cultural audit, but each situation requires a customized version of the process.

The complexity of your organisation is another factor influencing the form and content of the cultural audit process.

All that is cleared in the pre-assessment and we will agree on a timeframe for the process.

Step 2:: Data collection

Most of our clients have a lot of data available in the form of employee surveys, exit interviews, external ratings, intranet resources, internal newsletters, statistics etc.

This information is very important to us. We re-organize it and extract the pieces that can go into the elements of the Cultural DNA

We are also interested to see which stories have been told internally in the past. Who are the heroes, what do you focus on when telling stories etc.

Step 3:: Interview and survey preparation for the audit of your organisation’s culture

Based on the pre-assessment and the data we have collected in step 2 we customize the survey questionnaires and the interview sheets in order to secure we get all the necessary information to be able to describe your culture in the correct way.

The surveys will be available on our extranet and will contain questions in relation to all the elements of the Cultural DNA. As most of the human behaviour is implicit we ask very specific questions where the answers form a preference for certain behaviour (see the example to the right)

The questions will be a mix of multiple-choice, free form answers and ratings on a scale from 1 to 5.

The interviews can be carried out face-to-face, via Skype or telephone. We do recommend that at a fair amount of the interviews are carried out face-to-face as we also observe body language, dress-code etc.

The number of people we need to interview is dependent on the size and complexity of your organisation.

A client calls you with a problem far from your field of competence. What do you do?

You tell the client he/she has got the wrong person and switch him/her back to the reception
You pass the client on to a colleague who might be able to help
You get the client’s contact information and promise to back as soon as possible
You tell the client that your IT system is down (lie) and

Step 4:: Processing the data collected in the cultural audit

After having collected the data, closed the online surveys and done all the interviews we start processing the data and the information.

Some of the survey data are processed automatically while everything else has to be evaluated manually and categorized in one or more cultural DNA elements.

When that is done we will decide whether we need additional interviews and/or more specific questions in one or more survey fields.

Finally, we look for cultural patterns and gaps if we have a benchmark.

We will invite you for a preliminary briefing of the key findings and get your feedback to these.

  1. Detailed cultural profile of your organisation.
  2. Specification of cultural patterns and differences in the different sub-cultures.
  3. Prediction, specification and prioritisation of cultural friction points and their impact on the effectiveness.
  4. Specific recommendations on ways to avoid and/or minimise cultural friction
  5. Recommendations on organisational adjustments in order to minimise cultural friction.
  6. Road map for the implementation of recommendations.

Step 5:: Writing the report

After having collected the data, closed the online surveys and done all the interviews we start processing the data and the information for the cultural audit report.

Some of the survey data are processed automatically while everything else has to be evaluated manually and categorized in one or more cultural DNA elements.

When that is done we will decide whether we need additional interviews and/or more specific questions in one or more survey fields.

Finally, we look for cultural patterns and gaps if we have a benchmark.

We will invite you for a preliminary briefing of the key findings and get your feedback to these.

Step 6:: Planning the implementation / Change process


Depending on the reason why we have conducted the Cultural audit the next steps will vary a lot.

If we have done it because you need to change the culture of your organisation we will benchmark against the ideal corporate culture and develop change plans for each of the elements

If we have done it because we need to cut costs we identify the middle manager layers that produce the most cultural friction and work with these and we will make plans for changing the culture in a way so that it will improve effectiveness even in a situation where cost are cut and people are fired.

  • Detailed cultural profile of your organisation (Cultural DNA).
  • Specification of cultural patterns and differences in the different sub-cultures.
  • Prediction, specification and prioritisation of cultural friction points and their impact on the effectiveness.
  • Specific recommendations on ways to avoid and/or minimise cultural friction
  • Recommendations on organisational adjustments in order to minimise cultural friction.
  • Road map for the implementation of recommendations.

What shall you do now?

Please get in touch with us. We will love to hear why a cultural audit is necessary for your organisation. Then we can share some of our experiences and ideas

FAQs

What is Organisational culture audit? ›

A culture audit includes reviewing both subjective values within an organization and the actual, observable conduct by employees and vendors. Conducting a culture audit can be especially difficult since the audit department itself is influenced by the same culture they will audit.

What are the 3 components of cultural audit? ›

Every culture audit should have three main components to provide a comprehensive evaluation of the company culture.
  • Assess. A culture audit first reviews policies and procedures that set the tone for the organization. ...
  • Analyze. ...
  • Recommend. ...
  • Surveys. ...
  • Customer Reviews. ...
  • Interviews/Focus Groups. ...
  • Review Documents.

What is a cultural audit used for? ›

A cultural audit will help you to assess where your organization is at and whether workplace culture is supporting your overall business goals. It will help you to assess the effectiveness of your working environment, employee engagement and internal communications.

What does a cultural audit include? ›

A cultural audit is a survey of the university employees that identifies the organization's values, beliefs, perceptions and behaviors. It defines what issues the university considers important.

How do you audit a culture? ›

The eight steps:
  1. Make the case for auditing culture.
  2. Gain the support of the board and audit committee.
  3. Pinpoint exactly what you want to assess.
  4. Take a risk-based approach.
  5. Be strategic about resourcing.
  6. Tailor your approach to the organisation.
  7. Be flexible.
  8. Writing your report.

How do you conduct a culture analysis? ›

5 Simple Ways to Assess Company Culture
  1. Evaluate the onboarding process. ...
  2. Gauge openness within leadership. ...
  3. Look at incentive programs (or lack thereof) ...
  4. Observe team interactions. ...
  5. Determine attitudes from answers.
Apr 24, 2018

What are elements of organizational culture? ›

To keep and attract that high-caliber talent, companies need to build and sustain great organizational cultures. To do this, there are five essential elements organizations should address: purpose, ownership, community, effective communication, and good leadership. Let's look a little deeper into each of them.

What is the importance of organizational culture? ›

By building a strong culture, businesses can provide consistency and direction, guide decisions and actions, fuel the workforce and help reach their potential. While organizational culture is an integral part of a business, it's not always visible to long-term employees.

What do you mean by audit? ›

Definition: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organisation.

What is a corporate culture ethics audit? ›

An ethics audit is a comparison between actual employee behavior and the guidance for employee behavior provided in policies and procedures. The more descriptive and specific ethics-related policies and procedures are, the easier it is to make these comparisons.

What is a culture survey? ›

An organizational or workplace culture survey is a way for employers to gauge how their employees feel about the work environment and identify areas where they can improve. It gives upper management a simple way to make sure the business is operating in a manner that stays true to the company's core values.

Why do companies do social audits? ›

Responsibility auditing, also called social auditing, can help corporations uncover these gaps and proactively improve their management practices.

What is a compliance culture? ›

Having a culture of compliance means that every one of those employees understands the rules and embraces their part in ensuring that they are followed. For example, a breach of export controls can just as easily happen in the post room as it can in the boardroom.

What questions would you ask about the ethical culture at that company? ›

10 Questions to Ask During an Interview: Determining Culture Fit
  • Why is culture fit important in the workplace? ...
  • How would you describe the work environment? ...
  • What is your management style? ...
  • What are your company values? ...
  • What does work/life balance look like at your company?
Feb 18, 2020

How do you audit? ›

Steps to ensure a successful audit include:
  1. Planning for the audit. Planning is crucial, and additional time needs to be taken to adequately prepare for an audit. ...
  2. Keeping up with accounting standards. ...
  3. Assess organizational changes. ...
  4. Learn from the past. ...
  5. Develop a timeline and assign responsibilities. ...
  6. Organize data.
Nov 1, 2020

What is accounting culture? ›

Accounting is seen as a cultural object since it carries “extended” signification. It carries social meaning about the role of productivity and profitability which goes beyond any individual business situation.

What is the compliance audit? ›

Compliance audit is an assessment as to whether the provisions of the applicable laws, rules and regulations made there under and various orders and instructions issued by the competent authority are being complied with.

Why is cultural assessment important? ›

Culturally competent care adapts care to the patient's cultural needs and preferences and begins with a cultural assessment that forms the care plan's foundation. Nurses who assess their patients' cultural beliefs, values, and practices are better able to individualize care and achieve positive outcomes.

What is an example of cultural analysis? ›

This refers to how well a certain culture adapts to its surroundings by being used and developed. Some examples of this are foods, tools, home, surroundings, art, etc. that show how the given culture adapted.

What is the purpose and benefits of a cultural assessment? ›

A cultural assessment is an internal process by which organizations can evaluate their overall workplace culture. Such an assessment typically aims to analyze both the implicit and explicit beliefs and attitudes held by an organization and fostered by those associated with it.

What is workplace culture examples? ›

Here are examples of the values that companies often prioritize: Respect and fairness. Trust and integrity. Growth mindset.

What is work culture in an Organisation? ›

It is the mix of your organisation's leadership, values, traditions, beliefs, interactions, behaviours and attitudes that contribute to the emotional and relational environment of your workplace. These factors are generally unspoken and unwritten rules that help to form bonds between your colleagues.

What are the 4 types of company culture? ›

4 Types of Corporate Culture
  • Clan Culture. Clan culture, also called a collaborative culture, is mainly focused on teamwork. ...
  • Adhocracy Culture. Adhocracy culture is primarily focused on innovation and risk-taking. ...
  • Market Culture. In a market culture, the bottom line is the main priority. ...
  • Hierarchy Culture.
Jun 16, 2021

What is the most important part of a company culture? ›

Employees feel respected.

The single best predictor of a company's culture score is whether employees feel respected at work. Respect is not only the most important factor, it stands head and shoulders above other cultural elements in terms of its importance.

What makes good culture? ›

But, what really makes great cultures are the intangible things—the attitudes, the relationships, and understanding of a shared vision. Apply these simple insights instead of (or in addition to) a swanky perks package, and your employees will thank you for it. In fact, they'll support you beyond your imagination.

What is a strong culture in an organization? ›

Strong cultures are those in which organizational values and beliefs are widely shared and significantly influence people's behaviour on the job. Organizations with a strong culture create clear and coherent values and expect that members agree with and care intensely about those values.

What is a corporate culture ethics audit? ›

An ethics audit is a comparison between actual employee behavior and the guidance for employee behavior provided in policies and procedures. The more descriptive and specific ethics-related policies and procedures are, the easier it is to make these comparisons.

What do you mean by audit? ›

Definition: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organisation.

Why do companies do social audits? ›

Responsibility auditing, also called social auditing, can help corporations uncover these gaps and proactively improve their management practices.

What is strategic audit? ›

a formal examination of how successfully an organization is operating and how well it is using resources to work towards its goals over time: One aim of a strategic audit is to ensure that the business portfolio is strong.

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