A proverbial clash of cultures led to people feeling fearful at work, as traditional Brazilian hierarchical expectations were increasingly challenged by US-based organizational approaches and beliefs. This was the situation when KLPA was first called to engage with the mill and its leadership in early 2018. In 2014, KLPA began consulting with the C-Suite and Board along with team members around the globe at a Fortune 200 company in the sustainable paper and packaging segment. With an annual revenue of approximately $15B and nearly 50,000 employees in over 300 production units worldwide, the business unit highlighted in this study is a paper factory located in southern Brazil with around 600 employees.
A case brief
Industry: Heavy Manufacturing
KLPA has partnered with this client in Brazil since 2018, providing consulting and Culture Conversation diagnostic services. The diagnostic journey and its follow-through have been viewed as highly successful and continue to be well-received today. KLPA completed three diagnostics with this business unit in 2018, 2020, and 2022. The first diagnostic in 2018 discovered an organization culture challenged by years of heavy traditional structures for hierarchy clashing with the expectations of the new owner of the mill based in the US. The reaction became organizationally toxic, with an overbearing sense of fear to speak up, along with concerns for retaliation. On the other side, safety is forever a very strong positive at the plant, which allowed the mill leadership to leverage the positive associations toward safety for developing the culture more broadly.
In 2020, KLPA conducted a Culture Pulse diagnostic following on to the 2018 work. The improvement in the Cultural Dashboard from many red cultural areas to none at all, and a considerable amount of green areas was very encouraging to the leadership. During this period and beyond to the present, the business unit was able to successfully attract widely diverse talent to join at the relatively remote location. One reason that was identified for the hiring success is the positive and forward-looking culture of the mill. At an annual leadership meeting in late 2019, the General Manager for the mill stated that “We found around five million dollars more in our operating budget than we anticipated. When we looked around, we realized that the only thing we had changed was to invest in our people and our culture.”
Plant expansion project: Culture at risk due to changes
In 2022, KLPA was asked to return for a third diagnostic to identify how culture was affecting the stability and performance issues at the plant after implementing a major expansion project. Our 2022 diagnostic found several high-priority risks in the employee experience and culture at the plan. Employees reported high levels of stress and anxiety caused by pressure for results, construction delays, demands for production increases, and the ongoing COVID-19 pandemic. This created a culture never before experienced in that plant, affecting people’s sense of psychological and physical safety.
Each diagnostic process starts with consultant-led Discovery work. Even knowing this client well, we studied the organization’s history again and participated in meetings with key leaders and stakeholders to observe the leadership culture and decision-makers in action. The organization had grown through several mergers and acquisitions, and the mill continually performed at the highest levels globally until the 2021 experience of the pandemic, mill reconstruction, and wildly challenging markets. For KLPA, it became clear through the diagnosis that, although in 2018 for many at the plant traditional hierarchical expectations were breaking down, in 2022 people sorely missed the Stability of earlier years and simpler times. This was now being critically challenged by the complex experiences generated by the expansion project.
After the discovery and diagnosis process, KLPA supported top management in constructing action plans and strategies that responded to the cultural gaps identified between the Desired Culture and the Real one. We also supported aligning culture strategies with the business strategy to build a culture of results.
KLPA Leadership support: Moving forward
With support from the KLPA consultant team, the leadership agreed on an action plan that focused on intentionally creating greater psychological safety for people by reducing fatigue, stress, and anxiety at the plant and reversing people’s feelings of not belonging.
To support the culture shift, a communication plan was put in place to actively and transparently share the reason behind decisions with all employees and to proactively inform employees on central processes and policies, such as those related to remuneration and performance management. Additional employee listening activities were carried out, delving deeper into themes from the cultural diagnostic and seeking the collective creation of solutions.
Forming trust to deliver a Culture for Results
Receiving difficult feedback in the form of a cultural diagnostic report requires courage in a strong leader. It can be painful to hear the truth. The findings in the report are based on hundreds, if not thousands, of pages of transcribed focus group meetings. The data drives the analysis as themes emerge, and this makes the findings much more actionable than just basing culture leadership decisions on anecdotes and ‘gut feel.’
A main message that leadership got from the presentation of the data and analysis of the diagnostic (presented in both Portuguese and English) is that in order to create a strong organizational culture, the desired values, beliefs, and behaviors must be intentionally expected, reinforced, and rewarded by leadership, managers, and employees alike. But leaders have to role model them every hour of every day. The overarching objective identified by the leaders after the diagnostic was to move away from a culture based on relative fear and build a culture based on trust. With persistence and follow-through in 2018, the mill was able to turn the culture toward trust, and all indicators point to the same direction from the 2022 report to now.
This 2019 HBR article, ‘The Three Elements of Trust, ‘ provides a helpful guide to how leaders can increase trust in their organizations. The article analyzed data collected from 87,000 360 feedback reports on leaders. When building our recommendations at KLPA we encourage leaders to consider these elements of trust when implementing their action plans:
- Focus on building positive relationships at all levels of the organization.
- Prioritize good judgment and expertise. Ensure that decisions are made by those with knowledge and experience.
- Be consistent as leaders. Align your behaviors and practices with your values. Honor your commitments and keep your promises.
Conclusion: Now what? Leadership & Culture Council to lead the change.
One action item arising from the 2022 report was to define and establish a permanent Culture Council at the mill, not unlike many plants’ Safety Councils. The Council is made up of a small group of employees from across the organization who have consistently demonstrated that their performance and behaviors align with the desired culture of transparency, safety, communication, and trust-building. The Council supports leadership in implementing the actions identified from the cultural diagnostic. The Council also promotes and disseminates strategic cultural actions and acts as a connector to the employees by listening and sharing feedback with leadership about the ongoing challenges and opportunities of the cultural journey. The Council is made up of various appointed employees and has its own meeting schedule, its own governance and has been successfully operating throughout 2023.
When leading culture change, it is important that culture is led consistently from the C-suite (some would add the board), with involvement and support from HR and people managers. Senior leaders should identify culture ambassadors throughout all areas and levels of the organization to support them on this journey. Leading positive culture can feel lonely at times, but with clear vision, execution and continual follow-through, we will all meet out on the road to renewal.
