What are Organisational Values and Culture?
Whenever groups of people come together to work towards a common goal, a network of interactions is formed. The word culture is one way of thinking about this network. Broadly, it is the way we do things, how we act and react; how we communicate internally and externally; how we think and how we feel. It’s more the social and emotional side of how we do things, rather than the strategic directions of what we are doing.
Culture can be quite a difficult thing to pin down. It’s not like a product that we can hold in our hands. It’s not the everyday application of tools we use to make that product. Yet for many of us it holds the key to whether our workplace is somewhere that excites us or somewhere that fills us with dread.
We're very practical in our approach to things, but sometimes it's worth taking a step back and thinking about what we're doing and how we're doing it. Being able to properly define organisational culture is an important step towards measuring it, which is then an important step towards changing it. In this article I want to talk a bit about organisational culture and what it means. I'll pick up on some of the specific themes in future posts and will undoubtedly keep adding to this article too!
There is no absolute definition of organisational culture so explanations will often combine it with values. A key part to our process though is to separate out culture and the underlying values. Values are the core beliefs and implicit identity of an organisation, while culture is more akin to the behaviours and interactions. Given this separation, values have a huge influence on culture. It can help us to identify issues where behaviours aren’t aligned with overall values, or where the values are simply unclear. To us, it also links back to the underlying psychology of the humans that make up the network.
What are the factors that define organisational culture?
Organisational culture doesn't define the specifics of what is done by an organisation, but it can cover how they are done. This definition seems a bit abstract, so let's try to narrow it down. As a quick overview to get us started, here are some factors that can be covered by culture:
- Leadership and management styles. How effective is the leadership? What approaches are encouraged and discouraged? A wide range of styles have been identified over the years: authoritarian and autocratic, democratic, micromanaging, hands-off, transactional, transformational, administrative and rule-driven, charismatic, etc. You can argue that the results are largely the same: work gets done; but the choice of management style is a cultural one.
- In some organisations, the everyday operations are pretty nailed down into a set of processes and procedures. In others, perhaps every client has unique needs and there needs to be a high degree of flexibility within a set framework or guidelines. While in other organisations perhaps chaos rules! These different approaches of how we do things, how rigidly they are defined, whether they are written or unwritten, are all part of culture.
- Team vs individual approach. Is there a high level of competition between individuals, or is everyone in it together?
- Approach to internal reporting (or lack thereof). Is there a ‘shoot the messenger’ culture that leaves senior management detached from reality?
- Recruitment and retention approach. What are the procedures and policies? Some organisations force departments to recruit in a given round, otherwise the budget is removed, which can lead to unsuitable additions to the workforce that can negatively affect morale and culture. Is suitability to existing or desired culture considered an important factor in recruitment?
- Approach to decision making. Are important decisions made adhoc, or is there a procedure? How is an ‘important’ decision defined? Are there different policies for, e.g. reversible vs irreversible decisions? Is a detailed risk analysis performed or the decision just ‘made’?
- Reward and punishment. What are the consequences for exceptionally good or bad performance? Do the policies drive performance or just instil a feeling of fear? What is the promotion process?
- Approach to change. How quickly does an organisation change to market demands? What happens if a competitor wins over a major client? How well does the workforce cope with a change in strategic direction?
- Record keeping and bureaucracy. What’s recorded and what’s not recorded? This isn’t about keeping customer data or financial records, but the general levels of bureaucracy in the organisation.
- Attitude to risk and failure. Is the organisation very risk averse? Is failure punished severely?
- Focus. Is the organisation looking at the long-term or short-term? This can of course greatly affect many aspects of an organisation because short-term gains can lead to long-term losses, though a lack of short-term awareness is equally dangerous.
I could go on for a long time here, but hopefully you get the picture!
I also can't go any further without introducing the work by Edgar Schein, who helped to popularise the concepts of organisational culture in the 1970s and 1980s (I suggest reading his book on organisational culture from 1988 ). He broke down culture into three factors, or levels: artefacts, values and underlying assumptions:
- Artefacts, which he defined as the visible structures and processes of an organisation. These are usually solid or physical, like rituals, slogans, traditions and myths.
- Values, which are the stated goals and how the organisation sets itself up to achieve them.
- Assumptions, which are essentially the views of the individuals that make up the organisation and social relationships between them.
In this structure, Schein recognises that the values an organisation states are not necessarily the ones that are prevalent. Similarly, the real processes that take place are not always those the company sets up. Thus, the assumptions layer is the real driving force behind an organisation.
Is culture emergent or created by design?
I would argue that there are usually elements of both. Sometimes culture purely emerges, but even if you start with a specific intent it will change on its own anyway. Culture is not something that’s fixed. It’s the result of a complex social network that must adapt to internal and external influences.
In many cases, the founders and leaders of an organisation set out a specific vision not just for where they wish to go but the shape of the organisation that will take them there. This may be explicit, through a set of written value statements, but their influence on culture is mostly implicit through their actions. The way a leader handles day-to-day operations is perhaps their key mechanism for shaping culture.
However, in reality what often happens is that a company is started by one or two people who are usually experts in their field and have a great idea they want to explore. They nurture their idea and it does well and grows, but perhaps everyone is too busy making products to think about culture. Tony Hsieh gives a great example of this – as his first serious company grew, they hired their friends. Everything was going well but then they ran out of friends as they’d already hired them all. So they started recruiting new staff based purely on skillset and the culture gradually went downhill to the point where the founders felt they had to sell the company and leave.
People networks and sub-cultures
To us, the key to culture is really the network of individuals that make up the organisation. A network is simply a set of people and the links between them. These links can relate to practical things like accountability, operational processes, but they can just be social links.
In a small organisation, it’s common for everyone to be strongly linked to everyone else. As the organisation grows more people are added and some of the links are weakened, then you get to a large organisation where there are individuals who simply have no direct connections between them.
This can then lead to more isolated groups, which may be physically separated into different sites or countries, but also within one site there will be multiple departments. Each sub-group can then develop their own variations and individual culture. This means that large enterprises have no single culture and it’s generally impossible, and counterproductive, to impose one. For example, perhaps the sales department needs an energetic ‘go get-em’ flying-by-the-seat-of-your-pants approach to win over those big clients, but this sub-culture might be less suitable for the health and safety team.
Organisational culture is a complex evolving thing, formed by the very people it influences. Every organisation will have a culture, whether they are aware of it or not. Our aim is to help organisations to become more self-aware, for the benefit of all – the employees, customers, and of course owners and investors. The long-term benefits of a well formed culture are significant, but I’ll save that for another blog post.
If you have any questions about this, or would like to have a chat about your own organisation’s culture, please connect with me on LinkedIn or contact me.
~~~ Last Updated: 2nd December 2018 ~~~