organisational culture

IQPC Summit Masterclass

Organisational Culture

Moving to a Process Led Organisation

14 June 2006

Turning Client Vision into Results2

Organisational CultureLearning 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 everythingyou 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 ValuesStrategies, 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 BeliefsSome 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 Culturebuilt 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

1. Careful selection of entry level candidates

Deselect

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 valuesAnd reconciliation of

personal sacrifices

6. Reinforcing

folklore

Richard T Pascale 1985

7. Consistentrole 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

LeadershipInterviews

ValuesWorkshops

Targets and Levers

Development Plan

GapAnalysis


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 CompaniesComposite 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…


External Focus

Internal Focus

Flexible Stable

Mission – Defining a meaningful long-term direction for the organisation

Strategic Direction and IntentThe 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 ObjectivesA clear set of goals and objectives can be linked to the mission, vision and strategy, and provide everyone a clear direction in their work

VisionThe 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

Flexible Stable

Coordination and IntegrationDifferent 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

AgreementThe 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 ValuesMembers 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

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


External Focus

Internal Focus

Flexible Stable

Involvement – Building human capability, ownership and responsibility

EmpowermentIndividuals have the authority, initiative and ability to manage their own work. This creates a sense of ownership and responsibility toward the organisation

Team OrientationValue 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 DevelopmentThe 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

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


External Focus

Internal Focus

Flexible Stable

Adaptability – Translating the demands of the business environment into action

Organizational LearningThe organisation receives, translates, and interprets signals from the environment into opportunities for encouraging innovation, gaining knowledge and developing capabilities

Customer FocusThe 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 changeThe 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 successDenison, D.R. (1990; 1994; 1996); Denison, D.R. and Neale, W.S. (1996)


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 ProfilesMapping your organizational culture

Market ShareMarket Share

Employee SatisfactionEmployee Satisfaction

Product DevelopmentProduct Development

Perceived QualityPerceived Quality

Cash FlowROA

Cash FlowROA

Sales GrowthSales Growth


Reporting Example


Another View of Organisational Culture


Egalitarian

Hierarchical

Person Task

INCUBATORFulfilment-oriented

Culture

FAMILYPerson-oriented

Culture

GUIDED MISSILE

Project-oriented Culture

EIFFEL TOWER

Role-oriented Culture

Fons Trompenaars


Example Question 1 - Criticism

In your organisation, criticism is:

A) Aimed at the task, not the person

B) Only given when asked for

C) Mostly negative and takes the form of blame

D) Avoided for fear of hurting each other


Example Question 2 - Conflict

In your organisation, conflict is:

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

B) Suppressed by rules, procedures and definitions of responsibility

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

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


Example Question 3 - Hierarchies

In your organisation, hierarchies are:

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

B) Necessary because people have to know who has authority over whom

C) Determined by the power and authority of the people involved

D) Relevant only if they are useful for getting the job done


Egalitarian

Hierarchical

Person Task

INCUBATORFulfilment-oriented

Culture

FAMILYPerson-oriented

Culture

GUIDED MISSILE

Project-oriented Culture

EIFFEL TOWER

Role-oriented Culture

Results

1A

2C

3D

1D

2B

3C

1C

2D

3A

1B

2A

3B


Levers for Change –

Case Study


Background

• Utilities Company

• Survey covered in bound and outbound customer service functions

• Business units offering similar products and services to different markets

• Business units in different geographical locations


Case Study – Entire Organisation


Case Study – Business Units

Business Unit A Business Unit B


Interventions

• Mission– Leadership Development – Executive coaching

– Visioning and Strategy development workshops

• Consistency– Bottom up Values development

– Communication – two way – listening sessions – forums

– Improve knowledge sharing

• Involvement– Learning and Development programme aligned to business

goals

– Review performance management and reward systems

• Adaptability– Encourage innovation – ideas can come from anywhere

[email protected]

14 June 2006