“People don’t follow what companies say. They follow what the system rewards.”

Companies define new values, set ambitious growth targets and expect people to embrace change. Yet in practice, employees take their cues less from corporate principles than from the systems around them.

In this Morgan Philips Talk, Danya Lougheide explores what credible cultural transformation really requires, why technical expertise alone does not make a successful hire and how HR can connect people decisions with business performance.

1. Many companies want to change their culture. Where does credible transformation begin?

For me, transformation begins with an honest assessment of where the organisation stands today. Before talking about the future, we need to understand the culture people actually experience in their day-to-day work.

Defining new values is the easy part. The real question is whether structures, processes and leadership behaviour reinforce them consistently. When there is a persistent gap between aspiration and lived reality, employees naturally choose the route that is most likely to work in practice. A company may call for greater ownership, for example, while still requiring every decision to pass through several layers of approval. That contradiction shapes behaviour far more powerfully than any value statement.

“People don’t simply follow what is said. They follow what the system enables, rewards or prevents.”

Cultural transformation therefore begins not with posters or statements of intent, but with creating the conditions in which the desired behaviours can genuinely take hold.

2. How can an organisation evolve without devaluing what it has achieved so far?

Many change initiatives create resistance before they have even begun because the message implies that everything done in the past was wrong. In reality, existing structures usually developed for good reasons. They often reflect sound decisions made in a different context or at an earlier stage of the company’s development.

“There were good reasons for the decisions made in the past. Today, there may be equally good reasons to choose a different direction.”

The challenge is to combine continuity with renewal. People are far more likely to support change when previous achievements are acknowledged, the need for a new direction is clear and they understand how they can contribute to it.

3. Change often creates uncertainty. How can companies provide stability when the destination is not yet fully defined?

Stability does not depend on having every answer from the outset. It comes from being reliable and transparent. When employees invest time, share ideas or raise concerns, they need to see what happens next. Even when a suggestion is not taken forward, clarity about the reasoning behind that decision creates trust.

“When you ask people for their views, you also take responsibility for explaining what happens next.”

Visible, early improvements can also demonstrate that participation leads to meaningful change. At the same time, major transformation takes time, and pretending otherwise undermines credibility. Honest communication about progress, priorities and constraints is often more valuable than presenting a supposedly perfect master plan.

4. Even with good communication, there is often resistance. How do you approach it?

My first step is to understand what is driving the resistance. Not every critical response is a rejection of change. Employees may be pointing to genuine operational problems, competing priorities or risks that have not yet been considered. That feedback can be extremely valuable, provided we distinguish between fundamental opposition and constructive challenge.

At the same time, change rarely begins by convincing everyone at once. It is often more effective to start with the people who are ready to move, give them the support to create tangible results and allow those results to build momentum across the organisation.

“I focus first on the people who want to make things happen. Once the value becomes visible, others follow.”

When committed people have positive experiences and their results are visible to others, change becomes tangible. That creates far more momentum than any presentation or internal campaign could achieve on its own.

5. You emphasise how strongly organisational conditions shape behaviour. What does that mean for hiring?

Performance is always shaped by both the individual and the environment in which they work. Throughout my career, I have seen highly capable professionals struggle to succeed, not because they lacked competence, but because the conditions around them did not align with their strengths, expectations or preferred way of working.

Organisations differ significantly in pace, decision-making, autonomy and collaboration. The question is therefore not only whether someone can do the job, but also under which conditions they are able to realise their potential and contribute sustainably.

“The key question is not only: Is this person right for us? It is also: Are we right for this person?”

Looking at both sides of the equation leads to better selection decisions and creates the foundations for successful, lasting working relationships.

6. What role should HR play in organisations going forward?

I believe HR’s role is to help people and the business succeed together. That requires a genuine understanding of the employee perspective, but also the ability to interpret business realities and place people decisions within their commercial context.

“HR must do more than sense whether a decision is right. It must be able to explain it transparently and frame it in business terms.”

Not every decision can be justified through metrics alone. However, observations, experience and decision-making logic can be made more systematic and therefore easier for others to understand. The clearer HR is about how and why it reaches a conclusion, the more trust, acceptance and credibility it builds with senior leaders, managers and employees alike.

Conclusion: Culture becomes credible when systems and behaviours align

Cultural transformation becomes credible when leadership, structures and everyday decisions consistently reinforce the values an organisation claims to uphold. For Danya Lougheide, four principles are central:

• Respect for what has already been achieved
• Clarity about why change is necessary
• Consistency in communication and execution
• Commercial thinking focused on sustainable success

“Ultimately, people are influenced less by what companies say about culture than by what they experience every day. That is why culture work begins with the conditions we create.”

Seen in this light, HR is far more than a support function. It becomes an active driver of culture, business performance and sustainable growth.