The Complex Concept of Organisational Culture
How do we define and measure Organisational Culture?
A Question for Managers and Leaders Ever been stumped with that all too confusing topic of ‘fit to culture’? This issue is something that all managers and leaders grapple with on a regular basis. It is also something that goes through our mind every time we change jobs, move companies or perhaps move to another division within the same organisation. How do you measure fit? But more importantly, how do we define our culture? There have been dozens of conversations that I have been drawn into over the past two decades where we have been examining the notion of an executive’s fit to a culture. In some instances I have been working with clients to answer that challenging question about whether or not the executive recently hired to an organisation will fit in with the culture. In other instances, the discussion has been centred on hiring into my own team which has had its own sub-culture within the overall company’s strong existing culture. We all acknowledge how important it is to understand the type of culture within a company, as well as identifying the elements of that culture and the characteristics a leader requires to be a cultural fit. This paper provides an overview of five types of culture; an easy-to-use typology that has come from reviewing research and other models in the field, as well as from practical experience and discussions with search and selection specialists as well as executives and people leaders who are dealing with this subject matter every day. This Typology has five culture types: 1. People-Oriented 2. Highly Structured 3. Competitive & Commercial 4. Creative & Innovative 5. Individualistic
Five Culture Typology (c) Incorporate Psychology 2015
These culture types reflect the range of organisational characteristics that come together to ‘coalesce’ in the culture. These characteristics and as such the culture tends to align behaviour within the organisation, align decisions, systems and attitudes, in a way that assists the organisation to achieve goals. The human capital implications for each type of culture are presented so that managers and executives might be able to make an appreciation of culture and therefore make informed and confident decisions. There are plenty of opportunities where the leader can be deliberate about shaping, directing and nurturing culture. Leaders can align behaviour and attributes in the culture in order to focus effort toward goals. Also executives managing their career can make more informed decisions about where there is an innate fit, and therefore enhance their engagement and achieve mastery in a role. So What about Organisational Culture? Through decades of research, academics and scholars have established plenty of links between organisational culture and the performance of the organisation. In times past, businesses were either unaware of culture’s importance or believed it to be far too difficult to manage and shape. In recent times however, successful leaders recognise that it can be the culture of the organisation that can actually determine competitive advantage. Take a firm such as Google; they absolutely get how culture can be a real benefit and a differentiator. By leveraging their culture of people-orientation and innovation, they have enjoyed growth in an ever-changing environment. Or consider Apple, who has been able to deliberately leverage their innovation and passion for simple product development, combined with scalable, replicable production, and they have thrived — despite incredible competition and some setbacks. In order to use culture strategically, a company or division first needs to understand its culture. In order for a search consultant to offer specialist advice and appoint the ideal executive to their clients’ strategic challenge, they need to make a thorough and accurate appreciation of their client’s culture. Sounds easy doesn’t it? Culture is a highly complex and somewhat amorphous construct that essentially rolls together all of a company’s shared values, attitudes, beliefs, assumptions, artefacts, and behaviours. Culture is broad — encompassing all aspects of its internal and external relationships—and culture is profound in that it guides individual actions even to the extent that those individuals may not be totally even aware they are being influenced by it. Researchers tend to agree that the core of any organisation’s culture is grounded in a rich set of assumptions about the nature of the world and human relationships. For example, the underlying belief that people are selfish and only out for themselves might unwittingly influence a company’s attitudes and behaviours toward outside salespeople, vendors, and consultants. Or take to look at the other side of the same coin, an underlying belief that people are inherently good and tend toward being better in situations, might influence how consumers are dealt with. This is profound stuff that is largely invisible, unspoken, and unknown to an organisation’s members. So is it possible to really know a company’s culture? Whilst admittedly it would be a daunting (and some might claim impossible) task to fully account for all aspects of a company’s culture, we can generally find a way to describe the dominant attributes. In focusing on “effective organisations”, research has uncovered many critical dimensions. John Campbell (1974) and his fellow researchers identified thirty–nine important indicators. While such a list is helpful and might be helpful to add to our vocabulary, it is impractical and unwieldy for organisations to account for so many dimensions. We can then take our thinking to the work of Robert Quinn and John Rohrbaugh (1983) who reviewed the results of many studies on this topic and determined that two major dimensions could account for such a broad range. This gave rise to their widely referenced ‘Competing Values Framework’. This framework combines two dimensions, creating a 2x2 matrix with four types of culture. According to the ‘Competing Values Framework’, the first dimension depicts flexibility, discretion, and dynamism at one end of the scale and stability, order, and control way up the other end of the scale; (flexibility vs stability). The second dimension has internal orientation, integration, and unity at one end of the scale then external orientation, differentiation, and rivalry on the other; (internal vs external). This means that some organisations emphasize adaptation, change, and organic processes (like most start-up companies) while others are effective in emphasising stable, predictable, and well-engineered processes (like a telecommunication business or a science research organisation).
Competing Values Framework (Quinn & Rohrbaugh 1983)
The ‘Competing Values Framework’ gave rise to a matrix that most organisations seemingly could be plotted into. The matrix had four broad types of culture;
The Collaborative (or clan–like) culture
The Controlling culture where control and hierarchy seems to be very prevalent, and
The Competitive culture.
Now when we started to test this framework against many of the organisations that we deal with when we are consulting to them, it really started to make a lot of sense. That was until we started to try to apply the two by two matrix to some professional service firms, and it just didn't seem to apply to many of these consulting and legal and specialist professional companies. So we looked at some research and models of culture by Charles Handy (1999). Handy also classified culture of organisations into four broad types. These types are the power culture, the role culture, the task culture, and the person or support culture. Interestingly, although Handy chooses to talk about culture, he also details the structures that are often associated with the four types of culture. On one hand this could be because culture is quite difficult to describe, but structure is more tangible. (A flow-on from this thought is that culture and structure are intrinsically connected and interrelated). So with Handy’s model we then looked at how much information was overlapping between the two approaches and what was new. Then we also tested it against all of our major clients and all of those organisations that we know well. We concluded that a practical and pragmatic way of thinking about organisational culture is that there may be five broad types of culture. With those five broad types of culture, we think we can apply our thinking in a more constructive and coordinated manner to most, if not all of the organisations that we consult with. There is no one right or correct culture, but rather some cultures might be more appropriate in certain contexts than others. The key to using culture to improve performance lies in matching culture or attributes to organisational goals.
Highly Structured Cultures Highly Structured somewhat controlling (hierarchy-oriented) cultures are structured and controlled, with a focus on efficiency, stability and “doing things right – e.g. engineering, procurement, construction and management. Hierarchical organisations share similarities with the stereotypical large, bureaucratic corporation. As in the values matrix, they are defined by stability and control as well as internal focus and integration. They value standardisation, control, and a well-defined structure for authority and decision making. Effective leaders in hierarchical cultures are those that can organise, coordinate, and monitor people and processes. Good examples of companies with hierarchical cultures are McDonald’s (think standardisation and efficiency) and government agencies (think rules and bureaucracy). As well, having many layers of management - like telcos or fin services with multiple levels—is typical of a hierarchical organisational structure.
Competitive & Commercial Cultures Competitive (market-oriented) cultures are results-oriented, with a focus on competition, achievement, and “getting the job done.” – e.g. sales and consulting businesses. Up until the mid to late twentieth century, most observers believed a hierarchical organisation was the most effective. But coming into the late 1960s another school of thought emerged. That is that an external and competitive organisational culture will yield better performance. Competitive (or market) organisations are similar to the Control (hierarchy) in that they value stability and control; however, instead of an inward focus they have an external orientation and they value differentiation over integration. This began largely because of the competitive challenges played a far greater role in the market-place. With their outward focus, Competitive organisations are focused on relationships and transactions, (this can be with customers, suppliers, contractors, unions, legislators, consultants, regulators and so forth). This culture believes that success is found through effective external relations. Control optimises stability and control through rules, standard operating procedures, and specialised job functions, Competitive organisations are concerned with competitiveness and productivity through emphasis on partnerships and positioning.
People-Oriented Cultures People-oriented cultures are highly collaborative, family-like, with a focus on mentoring, nurturing, and “doing things together – e.g. service-oriented business like a Community Centre. The definition of people-oriented cultures seems to resonate with the Collaborative type in the ‘Competing Values Matrix’. In the values matrix, those cultures that tend to be people-oriented and quite collaborative have an inward focus with concern for integration, but value flexibility and discretion rather than the stability and control. Many western firms and observers began to take note of the different way some Eastern companies, in particular Japanese companies, approached business. Unlike American national culture, which is founded upon individualism, Japanese firms had a more team-centred approach. This basic understanding affected the way that Japanese companies structured their companies and approached problems. These organisations were more collaborative, team-based and people-oriented. They tended to operate more like families and they valued cohesion, a humane working environment, group commitment, and loyalty. Companies were made up of semi–autonomous teams that had the ability to hire and fire their own members and employees were encouraged to participate in determining how things would get done. An example of a people-oriented culture can be seen in some community health organisations These organisations tend to have high respect for relationships with co-workers, customers, owners, agents, suppliers, the community, and the environment.
Creative & Innovative Cultures In the values matrix, ’creative’ organisations are similar to people-oriented cultures in that they emphasize flexibility and discretion; however, they do not share the same inward focus. Instead they are like Competitive organisations in their external focus and concern for differentiation. In hindsight perhaps a new approach was needed with the arrival of the information age, where people and organisations had to deal with fast-paced and changing business environments. Perhaps innovation & creativity gave organisations a more future-focussed perspective and being entrepreneurial lead organisations to find new and improved products and services. Creative & innovative organisations value flexibility, adaptability, and thrive in what would have earlier been viewed as un-manageable chaos. High-tech companies like Google are creative cultures. Google develops innovative web tools, taking advantage of entrepreneurial software engineers and cutting-edge processes and technologies. Their ability to quickly develop new services and capture market share has made them leaders in the marketplace and forced less nimble competition to play catch-up.
Individualistic Cultures Outside of the values matrix, we believe there is another culture type that can be applied to organisations. This is the Individualistic Culture. These are the cultures wherethe specialist is the focus of the organisation, they have differentiating professional expertise, they are highly results oriented and the specialists take personal responsibility for their own professional development. In these types of organisations teamwork and collaboration is important but not at the expense of getting an outcome for a client. They have fewer, quite punchy meetings as they are considered an over-head. Those in the firm might describe culture as ‘sharp’ and ‘strong’, ‘possibly abrasive/abrupt’. Staff may socialise but little emphasis is placed on this. Often times the major financial milestone is annual and whilst there is performance management in place, it is activity based – timesheets, utilisation and billable hours. The ultimate measures of success are financial performance, utilisation & client satisfaction. (NPS). KPI’s linked to remuneration; often times there are quite chunky annual bonuses + LTI. An example of this type of culture can be seen in the top-tier professional service firms, such as any of the major consulting firms, top legal firms or the strategy consulting firms.
Human Capital Implications – Recruitment and Leadership Appointments Since each of these organisational types are distinguished by different attitudes, values, behaviours and beliefs it is understandable that some people may not ‘fit’, thrive and flourish in some cultures, but may respond and thrive in others. Where an organisation has a more people-oriented culture, top performers may be motivated by recognition, connection with people and adherence to principles. Some of their internal drivers might be flexibility and growth. They might be the type of person who is engaged by professional and personal development, reputation, ethics, culture, colleagues, good management practice and balance of life. Their personality might demonstrate real openness, being engaging and friendly and they are likely to be respectfully organised. Highly-Structured Cultures - Top performers in this sort of culture might be motivated by status and power, security and principles and good process. Some of their internal drivers might be interest of the job and progression. They might be the type of person who is engaged by security of the job, good processes, size and security of the organisation. Their personality might demonstrate conscientiousness, reliability, dependability and practical thinking style. Competitive/Commercial Cultures - Top performers in this sort of culture might be motivated by success, (or fear of failure), commercial achievement, earning more money, growth potential, status. Some of their internal drivers might be autonomy, money and progression. They might be the type of person who is engaged by opportunities for advancement, being paid more and perhaps a bigger bonus, the market position of the company and the company direction. Good quality leadership is important to this type of person. Their personality might demonstrate conscientiousness, energy and drive, being outgoing and having some impact and confidence and they are quite open to opportunities. Creative & Innovative Cultures – The candidate who fits well in this culture might have a personality that is innovative, open to ideas and opportunities, intellectually hungry and creative, spontaneous and off-the-wall, they will also be conceptual in how they think about things. Top performers in this sort of culture might be motivated by achievement, new ideas and opportunities and being the first to market with something, a product, idea or a service. These cultures engage well with people who want innovation, the opportunity to influence, prospect of growth. They are not engaged by restricting and stifling structure and process. Individualistic Cultures – The professional who may thrive in this sort of environment will be competitive, achievement driven, confident and self-assured, resilient, conceptual in how they think about things. They also value good productive outcomes and they are driven to be seen to be correct and to win. Top performers in this sort of culture might be motivated by achievement, success, recognition, autonomy, money & status. These cultures engage well with people who want success, to be seen to be a specialist and expert in their field. They want to do interesting and high profile work and they want to work with the firm with the best reputation. Professional development is also important for the person who fits in this type of organisation, but they are likely to recognise that they need to drive this themselves and gain that professional development largely on the job and on client work. Cultures within Culture But what about those teams and divisions that seem to be different from the broader organisation? Whilst much of the research that has emerged on company culture has examined the company as a whole, it is also clear that the company type is not homogeneous. Yes there can be teams and divisions that are different to the broader culture type of the organisation. This can be quite deliberate or it may have evolved through necessity or even as a result of leadership in a particular division. Fekete, in her book ‘Companies are People, Too’, studied dozens of organisations and relates that teams can have different cultural type than their company. For example, a company with a highly individualistic and competitive cultural type (for example a top-tier legal firm) might have a business development team that is quite innovative and creative and this could be a deliberate strategy supported by structure and leadership. That is not to say that it will be plain sailing all of the time, there could be occasions where the strain of culture change and tension is noticeable. Another example is where a company with a highly competitive culture may have a human resources team that is highly people-oriented and deliberately so. This could moderate the impact of some of the competition seen across the business. So this body of knowledge can be very valuable for business leaders driving culture and strategy at a strategic level. It can also be very helpful for executives and professionals who are considering a career change, about to join a company with a different or distinct style to the company they are presently working for. We have worked with many individuals who find themselves on the edge of this dilemma like decision. Some of the questions that have been very helpful are summarised here:
What are the main characteristics of the culture?
How are people led in this organisation? How are people & teams managed?
What is seen as strategically important around here? What is celebrated?
What is ‘the glue’ that holds the organisation together?
Are people loyal? Why?
What results do you get on engagement surveys?
How is success measured?
Tell me about the meetings in this business? Typically, what are they like?
What sort of procedures & processes are important here?
This is indeed a complex and challenging arena. As outlined earlier in this article, I wanted to interpret some of the leading ideas and frameworks about organisational culture and pull some practical thinking together into a thought-starter. Feel free to contact Incorporate Psychology to discuss any high priority issues that you are considering. We may be able to assist you in implementing your own organisational cultural analysis, and also support the right cultural placements with Executive Assessment, Executive Coaching or Training solutions. Contact ICP today on (07) 3852 2441 or email us email@example.com. Reading & Reference list
Pfeffer, J. (1998). The Human Equation. Harvard Business School Press
Cameron, Kim & Quinn, Robert E. (1999), Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework
Ravasi, D., Schultz, M. (2006). Responding to organizational identity threats: Exploring the role of organizational culture. Academy of Management Journal, 49(3),
Sandy Fekete, LeeAnna Keith. (2003) Companies Are People, Too: Discover, Develop, and Grow Your Organization's True Personality
Charles Handy, (1993) ‘Understanding Organizations’ [Fourth Edition]
Quinn, R.E. Rohrbaugh J. (1983) ‘A Spatial Model of Effectiveness Criteria: Towards a Competing Values Approach to Organizational Analysis’ - Management Science, Volume 29, Issue 3
Campbell, J. P., Bownas, D. A., Peterson, N. G., & Dunnette, M. D. (1974). The Measurement of Organizational Effectiveness: A Review of Relevant Research and Opinion. Final Report, Personnel Decisions, Inc., Minneapolis, Minnesota.