Most CEOs start a culture transformation the wrong way: with the new values, the town hall, the video, the parts that feel most like leadership. Six months later, the new values are on every wall and in every onboarding deck, everyone can recite them, and nobody has changed how they work.
In our coaching work, the CEOs who actually change a culture do something less visible first. They change what the organization rewards, and only then do they talk about it. Read on to learn more about the six-step sequence they follow to transform company culture.
What is CEO culture transformation?
CEO culture transformation is the deliberate, CEO-led replacement of a company’s existing norms, behaviors and reward systems with new ones that fit a new strategy or a new reality. It differs from culture maintenance in one important way: the goal is not to protect what the company already does well, but to stop doing some of it. That makes it harder, slower and more personal than most CEOs expect.
Culture transformation is a form of organizational change management, but it is not the same thing. Change management methods such as John Kotter’s eight-step model and Prosci’s ADKAR model focus on helping people adopt a specific change: a new system, a new structure, a new process. Culture transformation changes the unwritten rules that decide how every future change will be received. Change management asks whether people adopted the change. Culture transformation asks whether the new behavior has become the default: what the organization notices, rewards, and tolerates long after the program ends.
When does a CEO need to transform culture?
A CEO needs to transform culture when the current norms are working against the strategy, not merely fading with growth. In our experience, six situations trigger culture transformation:
- A new CEO inherits a culture. The norms were built by someone else, for a different strategy, and the new CEO is judged on results the old culture cannot produce.
- A strategy pivot. A company moving from product-led to sales-led, from growth to profitability, or from on-premise to cloud needs different behaviors from the same people.
- A merger or acquisition. Two sets of norms now share one org chart. Without a decision about which governs, both go underground.
- An ethics, safety or quality failure. The culture produced the failure, so the culture is what has to change, however good the numbers were.
- A performance turnaround. The business is declining and the behaviors that caused the decline are still being rewarded.
- The company has outgrown its founding culture. The norms that worked at 200 people (the founder decides, everyone does everything, speed over process) become liabilities at 2,000. This is the hardest trigger to recognize, because nothing is broken. The culture is still beloved; it just no longer fits the company it built.
Growth can call for either job, and telling them apart is the first decision. If the right culture is fading as the company grows, the problem is scaling: the norms are still correct; they are just no longer reaching people. If a once-right culture no longer fits the company it built, the problem is transformation. Scaling is covered in Culture at Scale: The CEO’s Most Important Job; this article covers transformation.
Culture transformation vs. scaling culture
Culture transformation changes the norms. Scaling culture preserves them. The distinction matters because the two call for opposite first moves.
Scaling cultureTransforming cultureThe problemGood norms are drifting as the company growsThe current norms are wrong for the strategyThe goalTransmit what already works to people the CEO will never meetReplace specific behaviors with new onesTypical triggerHeadcount passing 500 to 1,500New CEO, pivot, merger, failure, turnaround, or a founding culture the company has outgrownThe CEO’s first moveBuild systems that carry the existing cultureDecide which existing behaviors must stopCore questionHow do we keep what works?What must change, and in what order?Time horizonContinuousFinite: a defined program with a start and an end state
How do CEOs transform company culture? The six steps
CEOs transform company culture in six steps: diagnose the current culture, define the target culture as behaviors, change the hard culture levers first, make managers the delivery system, make the first uncomfortable decision visible, and measure culture change with leading indicators. Order matters more than speed. Most failed transformations we see did the steps out of order, usually by starting with communication.
John Kotter’s eight-step model in Leading Change covers similar ground from the change-management side: it is built to help an organization adopt a change, and it starts by creating urgency and a guiding coalition. This is the CEO’s version, shorter and harder, because it starts with the reward system rather than the message, and most of the steps turn on decisions only the CEO can make.
Step 1: Diagnose the culture you actually have
In a culture transformation, diagnosis starts with what the organization does, not what it says. Organizational psychologist Edgar Schein, in Organizational Culture and Leadership, described organizational culture in three levels: the visible artifacts (offices, rituals, dress, language), the espoused values (what the company says it believes), and the underlying assumptions (what people actually believe about how to succeed here). Culture transformation happens at the third level, and the third level is only visible through decisions.
Three sources tell a CEO what a company’s real cultural assumptions are:
- The last ten promotions and the last ten exits. Who rose, who left, and what each group had in common.
- The stories new hires hear in their first month. Which episodes get repeated, and what they teach.
- Engagement data by manager. Where the culture is strong, where it is absent, and whether the gap follows the org chart.
The output of culture diagnosis is a short, blunt list of the behaviors the current culture rewards. If the list matches the values statement, there is nothing to transform.
Step 2: Define the target culture as behaviors, not values
A target culture is only useful if it can be observed. “Collaboration” is a value. “Decisions above $1M require sign-off from two functions” is a behavior. For each value the new culture needs, the CEO names two or three behaviors that would prove it, and two or three that would contradict it. This list becomes the standard for every decision in Steps 3 through 5.
Two or three values are enough. Companies that launch seven new values transform none of them.
Step 3: Change the hard culture levers before the soft ones
In a culture transformation, the hard levers of culture move first. The hard levers are promotions, exits, metrics and decision rights, the formal reward and control systems that tell people what actually counts. The soft levers are messaging, values documents and town halls. The hard levers go first because the organization has already heard the words and no longer believes them.
In practice, changing the hard culture levers means:
- Promotion criteria change in writing, and the next promotion cycle visibly applies them.
- One or two metrics that measure the new behavior are added to the executive dashboard, and one or two that rewarded the old behavior are removed.
- Decision rights move to wherever the new culture says they belong.
The full set of levers is described in Skyline G’s Seven Culture Levers, the systems a CEO controls that carry culture: promotions, exits, metrics, decision-making, stories and rituals, manager quality, and the work environment. In a culture transformation, promotions, exits and metrics carry most of the weight.
Step 4: Make managers the delivery system for the new culture
Managers are how a new culture reaches employees the CEO will never meet. Gallup’s State of the Global Workplace 2026 report found that global manager engagement fell to 22% in 2025, down nine points from 31% in 2022, with the largest single-year drop between 2024 and 2025. A disengaged manager does not deliver anyone’s culture transformation. The same Gallup report found that best-practice organizations had 79% of managers engaged in 2025, so the gap is a leadership choice, not a law.
Culture transformation lands on managers in three parts:
- Expectations. A clear statement of the new behaviors expected of them.
- Development. Coaching and practice in how to lead to those behaviors.
- Consequences. Visible consequences, good and bad, for whether they do.
Of the three, consequences are the one most often skipped.
Step 5: Make the first uncomfortable culture decision visible
Every culture transformation has a moment when the organization decides whether the change is real. It is almost always a personnel decision: a high performer who embodies the old culture is passed over, moved or let go, and the CEO explains why.
This is the step CEOs most want to avoid, and it is the step that does the most work. Until it happens, employees are waiting to see whether the new rules apply to people who matter. After it happens, the rest of the transformation gets easier, because people stop waiting.
The decision does not have to be a firing. It can be a promotion that surprises people, a public reversal of a decision made the old way, or a senior leader held to a standard they used to be exempt from. It can also be the opposite of a punishment: rewarding someone for surfacing bad news the old culture would have buried. That kind of decision builds what Harvard’s Amy Edmondson, in The Fearless Organization, calls psychological safety, the shared belief that it is safe to speak up, and it is often the fastest signal that the rules have changed. What matters is that the decision is visible, that it costs something, and that the CEO owns it.
Step 6: Measure culture change with leading indicators
Culture transformation is measured by what people do before it is measured by what they feel. Engagement scores lag; in our experience they move 6 to 12 months after behavior changes. Leading indicators of culture change move within a quarter.
Leading indicators (move first)Lagging indicators (move later)Share of promotions that meet the new criteriaEngagement score, overall and by managerShare of managers observed using the new behaviorsRegretted attrition of top performersPulse-survey answers on “leaders here act on what they say”Retention of the acquired company’s top quartile (in a merger)Number of decisions made under the new decision rightsCustomer or quality outcomes the strategy depends on
Culture transformation after an acquisition
Post-merger culture integration is a culture transformation with a deadline. Most integration plans treat culture as a workstream, a slide somewhere after IT systems and before the org chart. That is backwards. Culture is the integration. Everything else is logistics.
An acquiring company is buying a set of norms about how decisions get made, what gets rewarded, and what good work means. Those norms don’t disappear on Day 1. They go underground and surface in every disagreement for the next two years. Three practices make the difference in post-merger culture integration:
- Decide, out loud, which culture wins. “We’ll take the best of both” sounds gracious and produces paralysis. Be honest about which norms will govern. People can adapt to a clear answer. They can’t adapt to ambiguity.
- Watch the first ten promotions and the first ten exits. The acquired team reads those decisions for one signal: are we really part of this company, or are we the losing side? Promote acquired talent early and visibly, or expect the best of them to leave.
- Move the leaders, not just the reporting lines. Nothing transmits culture faster than an acquired executive sitting in the acquirer’s operating reviews and seeing how decisions actually get made.
Integration plans measure synergies. The number that predicts whether the deal works is retention of the acquired company’s top-quartile performers at 18 months. Manage to that.
What culture transformation looks like in practice
Three cases show the culture transformation sequence from different angles: one from inside an ordinary company we worked with, and two well-documented CEO-led transformations.
A sales-strategy pivot led by a functional leader, at a 5,000-person manufacturer
The culture transformation sequence works at any level that owns promotions, structure and metrics, not only at the CEO level. A component manufacturer we worked with shows it inside one function. The company was replacing its entire sales strategy: new roles, a new reporting structure and new processes, all at once. The old sales culture rewarded leaders for closing rigid, one-off deals on their own. The new strategy needed them to partner with engineers and build solutions that served many customers. Same people, opposite behaviors.
The head of sales did not start with a kickoff. He narrowed the target culture to five competencies the pivot depended on (strategic thinking, influencing others, teamwork and collaboration, planning and organizing, and executive presence) and made strategic thinking mandatory for every senior sales leader in the program. The reporting structure changed in the same window, so decision rights moved with it. Then every senior sales leader went through a three-month coaching program against those behaviors, with progress tracked and reported.
The behavior shifted within the three-month transition. Sales managers and engineers began developing solutions together, cross-organization coordination improved, and customers were served faster. In the post-program assessment, participants, their managers and their colleagues all rated the targeted competencies higher than before. The program was then extended to the next level of leaders, because the first level had visibly changed.
Microsoft under Satya Nadella
When Satya Nadella became CEO of Microsoft in 2014, its culture was widely described, including by Nadella himself in Hit Refresh (2017), as internally competitive and defensive. He named a target culture in behavioral terms, borrowing Carol Dweck’s distinction between a fixed mindset and a growth mindset, and then changed the hard levers. Performance reviews were reworked to weigh how employees contributed to others’ success, not only their own results, and the company’s long hostility toward competing platforms was reversed in visible product decisions, such as bringing Office to iOS and embracing Linux. The messaging followed the decisions, which is why it was believed.
Ford under Alan Mulally
When Alan Mulally arrived as CEO of Ford in 2006, the executive culture rewarded concealing problems. His first structural change, as Bryce Hoffman recounts in American Icon, was a weekly Business Plan Review in which every executive reported status in green, yellow or red. For weeks, every chart was green while the company was losing billions. The culture transformation’s visible moment came when one executive, Mark Fields, showed a red chart for a delayed launch and Mulally applauded instead of punishing him. The next week, the charts changed color. It is a textbook case of psychological safety created by a single CEO decision. The “One Ford” plan supplied the strategy; the applause supplied the culture.
What the three culture transformation cases have in common
The manufacturer shows what Steps 2 through 4 and 6 look like inside an ordinary company: narrow the target, move the structure, develop the managers, measure. Microsoft and Ford show Step 5, the visible CEO decision that tells the organization the change is real. In every case, the talking came after the deciding.
How long does CEO culture transformation take?
CEO culture transformation typically shows its first measurable behavior change within about three months and becomes self-sustaining over the following one to two years. The single biggest factor in the timeline is how quickly the CEO makes the first visible decision. Behavior moves first; engagement and retention follow 6 to 12 months later.
PhaseTypical DurationWhat ChangesDiagnose and redesign (Steps 1 to 4)About 3 monthsThe senior leaders who own the hard levers diagnose the culture, define the target behaviors, move structure and metrics, and show the first observable shiftProve and extend (Steps 4 and 5)Months 3 to 12One visible decision proves the change is real; manager development extends to the next level of leadersReinforce and measure (Step 6)Year 2 and beyondNew behaviors are the default; engagement and retention follow and are reported quarterly
Phase
Typical duration
What changes
Diagnose and redesign (Steps 1 to 4)
About 3 months
The senior leaders who own the hard levers diagnose the culture, define the target behaviors, move structure and metrics, and show the first observable shift
Prove and extend (Steps 4 and 5)
Months 3 to 12
One visible decision proves the change is real; manager development extends to the next level of leaders
Reinforce and measure (Step 6)
Year 2 and beyond
New behaviors are the default; engagement and retention follow and are reported quarterly
Culture transformations that drag on for years usually stalled in the second phase, because the CEO delayed the uncomfortable decision.
In our executive coaching engagements, the first phase usually runs as a three-month program for the senior leaders who own the hard levers. The manufacturer above saw its targeted competencies rated higher by participants, managers and peers inside that window.
Frequently asked questions
What is CEO culture transformation? CEO culture transformation is the deliberate, CEO-led replacement of a company’s existing norms and reward systems with new ones that fit a new strategy, triggered by a new CEO, a pivot, a merger, a failure, a turnaround, or a founding culture the company has outgrown.
Is culture transformation the same as change management? No. Change management, using models such as Kotter’s eight steps or Prosci’s ADKAR, helps people adopt a specific change. Culture transformation changes what the organization rewards, which determines how every future change is received.
Is culture transformation the same as scaling culture? No. Scaling culture preserves norms that still work and transmits them to a larger company; transformation replaces norms that no longer fit. Growth can trigger either. If the right culture is fading, see Culture at Scale: The CEO’s Most Important Job.
How long does CEO culture transformation take? CEO culture transformation typically shows its first measurable behavior change within about three months and becomes self-sustaining over the following one to two years. Transformations that drag on usually stalled because the CEO delayed the first uncomfortable decision.
Where should a new CEO start with culture change? A new CEO should start by diagnosing what the current culture actually rewards, using the last ten promotions, the last ten exits and the stories new hires hear, before announcing any new values.
Why do most culture transformations fail? Most culture transformations fail because the CEO leads with communication and leaves the reward systems unchanged. Employees believe what the company does, not what it says.
How do you measure culture change? Culture change is measured first with leading indicators such as the share of promotions meeting new criteria and manager behaviors observed, then with lagging indicators such as engagement and regretted attrition.
Who should lead culture transformation besides the CEO? The CEO owns the decision and the first visible move, the executive team owns the hard levers in their functions, and frontline managers deliver the new behaviors to employees. HR supports all three but cannot substitute for the CEO.
The decision that defines culture transformation
Culture transformation is not a communication program with a change-management workstream attached. It is a series of decisions, made in the right order, that teach the organization what now counts. The first of those decisions is the CEO’s alone, and it is the one the organization is watching for.
The CEOs who get this right stop asking “How do I get people to believe in the new culture?” They ask instead: “What is the first decision that would prove I believe in it?”
Then they make it, and they say why.
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About the authors
Thuy Sindell, PhD, is Co-Founder and President of the Coaching Division at Skyline G, where she leads a global network of 120+ coaches, facilitators and consultants. An executive coach since 1998, she coaches CEOs and C-suite leaders on leading their organizations, role-modeling company values and scaling effectively, and has coached senior leaders at companies including Apple, Google, Meta, Microsoft, Netflix and LinkedIn. She is rated the #1 coach at two Magnificent 7 companies, co-founded two software startups including Hit the Ground Running (acquired by Kenexa, now IBM), and has been featured in Forbes, Fortune, CNN and The Washington Post. She holds a PhD in organizational psychology from Alliant International University, is co-author of four books including Hidden Strengths (Berrett-Koehler, 2015), and gave the TEDx talk “5 Factors That Make Someone an Influencer.” LinkedIn
Milo Sindell, MS, is Co-Founder and Managing Partner of Skyline G and President of its Coaching Scaled Division. A former senior consultant at Intel and Sun Microsystems in strategy, change management and leadership development, he cofounded the employee performance software company Hit the Ground Running in 2006, acquired by Kenexa (now IBM) in 2010. He holds an MS in Organization Development from Pepperdine University and is co-author of four books on leadership and employee performance. LinkedIn
Sources
- Gallup, State of the Global Workplace 2026: manager engagement 31% (2022) to 22% (2025); 79% at best-practice organizations
- Edgar H. Schein with Peter Schein, Organizational Culture and Leadership (Jossey-Bass/Wiley, 5th ed., 2017)
- John Kotter, Leading Change (Harvard Business Review Press, 1996; new preface 2012)
- Jeffrey Hiatt, ADKAR: A Model for Change in Business, Government and Our Community (Prosci, 2006); see The Prosci ADKAR Model
- Amy Edmondson, The Fearless Organization (Wiley, 2018)
- Satya Nadella, Hit Refresh (HarperBusiness, 2017)
- Carol Dweck, Mindset (Random House, 2006)
- Bryce Hoffman, American Icon: Alan Mulally and the Fight to Save Ford Motor Company (Crown Business, 2012)
- Skyline G, Culture at Scale: The CEO’s Most Important Job
