Organisational Culture

IQPC Summit Masterclass Organisational Culture Moving to a Process Led Organisation 14 June 2006

Organisational Culture Learning Outcomes

How culture is formed – and what impact it has on an organisation

How culture manifests itself at three key levels

Methods of assessing and measuring culture

Strategies for changing aspects of culture to benefit your organisation

Case Studies of real examples of cultural assessment

Over to you!

Each table:

Brief Introductions

As a group – discuss and record a definition of Organisational Culture

You have 15 minutes

One minute feedback to the whole room!

Organisational Culture – a Definition

“ The collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an organisation’s members, learned by the new recruits and transmitted from one generation of employees to the next” Edgar Schein

“ The way we do things around here…”

“ The collective programming of the mind”

Organisational Culture – a Definition

“ The collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an organisation’s members, learned by the new recruits and transmitted from one generation of employees to the next” Edgar Schein

But it’s all Pink and Fluffy!…

Organisational Culture – Why it matters

It is a powerful, latent and often unconscious set of forces

It determines individual and collective behavior, thought patterns and values

Cultural elements impact on strategy, objectives and operations

The values of leaders and senior managers are influenced by their own cultural backgrounds and shared experiences

It will impact – positively or negatively - on everything you try to do!

So what is Organisational Culture?

Schein’s Three Levels of Culture Edgar Schein - 1985 Surface Manifestations and Artefacts Visible structures and processes (easy to see, harder to decipher) Espoused Values Strategies, goals and philosophies (espoused justifications)) Basic Assumptions Unconscious, taken for granted beliefs, thoughts and perceptions (ultimate source of values and actions)

Surface Manifestations and Artefacts

Are the most visible and accessible form, Visible and audible behavior patterns and objects:

Dress Codes

Formality in relationships

Working hours

Meeting etiquette

Decision making

Communications

Social events

Jargon, uniforms, symbols

Conflict handling

Work / Life balance

Organisation Values and Beliefs Some Examples…

“ Teamwork must be at the heart of all we do”

“ We expect teamwork and collaboration across our organisation for the benefit of all stakeholders”

“ We treat one another with respect and communicate openly. We foster collaboration while maintaining individual accountability. We encourage the best ideas to surface from anywhere within the organization. We appreciate the value of multiple perspectives and diverse expertise.”

Organisation Values and Beliefs

Are said to provide a common direction and act as guidelines for behavior

Often originate from the founders of the organisation or senior management

Typically based on moral, societal or religious precepts learned in childhood and modified through experience

Are espoused or alluded to – but are they really adopted?

Basic Assumptions

Invisible, preconscious and taken-for-granted understandings held by individuals with respect to human behaviour, the nature of reality and the organisation’s relationship to its environment

Ultimate strength of an organisation’s culture depends on the homogeneity of the groups members – socialisation plays a key role in this

Working at home?

So that’s easy, then?

Desired / Preferred Culture

Initiative

Co-operation

Team Work

Creativity

Commitment

Actual Culture

Politics

Internal Competition

Individual Agendas

Avoidance of Blame

Indifference

Culture Gap This is what you have to uncover !

So what is Organisational Culture built on?

Each table is forming a new company

Each table:

Discuss and record the types of things you will need to consider as you start working together

You have 10 minutes!

Culture is formed from…

External Survival Issues

Mission, Strategy, Goals

Structure, Systems, Processes

Measurement and correction

Internal Integration Issues

Language and Concepts

Group boundaries and Identity

Nature of Authority and Relationships

Allocation of Rewards and Status

Deeper Assumptions

Relationships to nature

Reality and Truth

Human Nature

Human Relationships

Time and Space

Culture is transmitted and embedded by…

Primary Embedding Mechanisms

What leaders pay attention to, measure and control

How leaders react to critical incidents

How leaders allocate resources

Leader’s role modelling and coaching

How leaders allocate rewards and status

Recruitment, selection, promotion and exit

Secondary Reinforcement Mechanisms

Design and Structure

Systems and Processes

Rites and Rituals

Physical space, facades and buildings

Stories about important events

Creation of heroes

Can become Primary over time!

Organisational Socialisation Deselect Richard T Pascale 1985 1. Careful selection of entry level candidates 2. Humility-inducing experience. Openness to accept norms and values 3. In-trenches training leads to mastery of core disciplines 4. Rewards and control systems designed to reinforce behaviours that are deemed pivotal in the market place 5. Adherence to values And reconciliation of personal sacrifices 6. Reinforcing folklore 7. Consistent role models

Yes, but it’s STILL Pink and Fluffy?

Assessing and Measuring Organisational Culture

Assessing and Measuring Culture

Culture can be assessed by means of individual and group interview processes

Surveys provide quantitative measures across the organisation

Use an organisational problem or issue to help understand if culture helps or hinders

Beware of sub-cultures!

Typical Approach Assess “As-Is” Culture Survey Focus Groups Interviews Define Desired Culture Leadership Interviews Values Workshops Targets and Levers Development Plan Gap Analysis

Organisational Cultural Survey

Quantitively assesses culture against four key organisational traits

Mission

Consistency

Involvement

Adaptability

Dan Denison Bill Neale

Links Culture to Bottom Line… X

Performance Comparisons Weak Performing Companies Composite of Companies with ROI of 9% Strong Performing Companies Composite of Companies with ROI of 30%

What is the Organisational Culture Survey?

Behaviour based survey designed to link cultural traits to business performance

Dimensions:

4 cultural traits

12 indices

60 questions

Results benchmarked and normed against over 1,000 organisations

Research based:

20 years

1,000 organisations

40,000 respondents

Flexible Delivery

Online

Paper based

User specific demographic questions

User defined data splits

When do we use it?

General business applications

Merger/acquisitions

Industries facing significant changes

Start-up ventures

Change in leadership

Organisation in decline

Organisations starting a new strategic initiative

Customer service challenges

Cultural Diagnostic Correlation between cultural traits and company performance, in terms of: product development, market-share, sales, quality, innovation and employee satisfaction. Focus Groups Gather information on cultural manifestations, including actions and behaviours, the working environment and the signs and symbols in it. Identify key change risks. Leadership Interviews Gather information on leadership style, and the behaviours that are currently rewarded in the organisation Desk Study Review of existing cultural / climate data, such as employee satisfaction survey. Survey should only be used in conjunction with a number of other complimentary inputs…

Flexible Stable Mission – Defining a meaningful long-term direction for the organisation Strategic Direction and Intent The organisation’s plan to “make their mark” in their industry. Clear strategic intentions convey the organisation’s purpose and make it clear how everyone can contribute Goals and Objectives A clear set of goals and objectives can be linked to the mission, vision and strategy, and provide everyone a clear direction in their work Vision The organisation has a shared view of a desired future state. It embodies core values and captures the hearts and minds of the organisation, while providing guidance and direction “ The degree to which the organisation is crystal clear about its business direction”

Denison, D.R. (1990; 1994; 1996); Denison, D.R. and Neale, W.S. (1996)

External Focus Internal Focus

External Focus Internal Focus Flexible Stable Coordination and Integration Different functions and units of the organisation are able to work together well to achieve common goals. Organisational boundaries do not interfere with getting work done. Consistency – Defining the values, systems and processes that are the basis of a strong culture Agreement The organisation is able to reach agreement on critical issues. This includes the underlying level of agreement and ability to reconcile differences when they occur Core Values Members of the organisation share a set of values which create a strong sense of identity and a clear set of expectations. The degree to which the organisation has shared values, systems and processes which support achievement of the business mission and goals

External Focus Internal Focus Flexible Stable Involvement – Building human capability, ownership and responsibility Empowerment Individuals have the authority, initiative and ability to manage their own work. This creates a sense of ownership and responsibility toward the organisation Team Orientation Value is placed on working cooperatively toward common goals to which all employees feel mutually accountable. The organisation relies on team effort to get work done Capability Development The organisation continually invests in the development of employee’s skills in order to stay competitive and meet on-going business needs The degree to which individuals at all levels are truly engaged in and “own” the business direction, and positioned to help the business succeed

External Focus Internal Focus Flexible Stable Adaptability – Translating the demands of the business environment into action Organizational Learning The organisation receives, translates, and interprets signals from the environment into opportunities for encouraging innovation, gaining knowledge and developing capabilities Customer Focus The organisation understands and reacts to the customer, and anticipates their future needs. It reflects the degree to which the organisation is driven by a concern to satisfy the customer Creating change The organisation is able to create adaptive change. The organisation is able to read the business environment, quickly react to current changes, and anticipate future changes The degree to which the organisation understands the customers’ needs, can change in response to changing demands, and can learn new skills and technologies to support business success

Using a blank diagram… Individually indicate how you think your organisation will score “AS-IS” Where would you like “TO-BE”

Denison also shows 2 Paradoxes … against 4 key organisational traits

Understanding the model – inherent tensions between traits Adaptability and Consistency Highly consistent cultures may become inbred and may be the most difficult to change. In contrast, highly adaptive cultures may have difficulty in achieving high rates of efficiency or shared sense of purpose often found in cultures that are well integrated Mission and Involvement The meaning and direction established by an organisation’s mission may limit the involvement of some of the organisation’s members. As many organisations have discovered, simply declaring a new organisational mission does not necessarily imply the support and commitment of the organisation’s members. By the same token, high involvement among an organisation’s members does not necessarily imply a clear sense of direction and purpose Effective Organisations The culture of an effective organisation must reflect all of these characteristics. Thus effective organisations are likely to have cultures that are adaptive, yet are highly consistent and predictable, and that foster high involvement, but do so within the context of a shared sense of mission.

Performance Profiles Mapping your organizational culture

Reporting Example

Another View of Organisational Culture

Fons Trompenaars Egalitarian Hierarchical Person Task INCUBATOR Fulfilment-oriented Culture FAMILY Person-oriented Culture GUIDED MISSILE Project-oriented Culture EIFFEL TOWER Role-oriented Culture

Example Question 1 - Criticism

In your organisation, criticism is:

Aimed at the task, not the person

Only given when asked for

Mostly negative and takes the form of blame

Avoided for fear of hurting each other

Example Question 2 - Conflict

In your organisation, conflict is:

Controlled by the intervention of higher authority and often fostered by it to maintain power

Suppressed by rules, procedures and definitions of responsibility

Resolved through full discussion of the merits of the work issues involved

Resolved by open and deep discussion of personal needs and the values involved

Example Question 3 - Hierarchies

In your organisation, hierarchies are:

Redundant, because each person is working for their own professional development

Necessary because people have to know who has authority over whom

Determined by the power and authority of the people involved

Relevant only if they are useful for getting the job done

Results Egalitarian Hierarchical Person Task INCUBATOR Fulfilment-oriented Culture FAMILY Person-oriented Culture GUIDED MISSILE Project-oriented Culture EIFFEL TOWER Role-oriented Culture 1A 2C 3D 1D 2B 3C 1C 2D 3A 1B 2A 3B