Walking into a new office, you will scan the environment, collect data, formulate impressions, and build a narrative.
You first notice the open space and the short distances between the desks. Next, it’s unusually noisy; people’s voices and tones are emotionally charged.
Your mind builds a story to make sense of all this data. You see a glimpse of the organisation’s culture. But what exactly is organisational culture? How does it come about, and how does it impact social groups and their evolution through time?
Culture is both a dynamic phenomenon that surrounds us at all times, being constantly enacted and created by our interactions with others and shaped by leadership behaviour, and a set of structures, routines, rules, and norms that guide and constrain behaviour.
— Organisational Culture and Leadership, 3rd edition – Edgar Schein, 2004
Researchers became interested in organisational theory as early as the 1940s. They borrowed biological, sociological, and anthropological concepts to explain the behaviour of organisations. For example, systems thinking, chaos theory, and complexity theory provided insights into social group behaviour.
These concepts attempted to explain the behaviour of organisations as a whole. Still, they did not explain the different patterns observed within the organisation, nor the stability or instability of the organisation or its constituent groups.
One needs concepts that permit one to differentiate between organisations within a society, especially in relation to different levels of effectiveness, and the concept of organisational culture has served this purpose well.
— Organisational Culture – Edgar Schein, 1990
The above quote is from a paper published in 1990 by Edgar Schein, one of the leading figures in organisational psychology. It is easy to read, concise, highly informative and recommended for leaders and professionals.
The ideas we present in this article are based jointly on this paper and a book by the same author titled Organisational Culture and Leadership, which focuses on the intertwined and symbiotic relationship between group culture and leadership.
Other influential views on organisational culture (such as those from Geert Hofstede’s book Cultures and Organisations: Software for the Mind) have been widely acclaimed but will not be included in this article. These and a review of his book will be treated in separate pieces.
2. Why Is Organisational Culture Important
2.1 A Sense-Making Framework to Understand Group Behaviour
Humans rarely work alone and almost always form complex social groups, exhibiting intricate behavioural patterns that are sometimes difficult to comprehend.
As anybody who has worked for an organisation enough would tell you, making sense of other people’s behaviour (and sometimes our own) is not trivial.
Our manager’s behaviour and the leadership’s strategic choices often seem incomprehensible, unjustifiable, and even erratic. Our direct reports are challenging to manage, hard to change, and sometimes unreasonable.
We cannot immediately see why our organisation performs inefficiently when solutions are so apparent. We strongly believe that our values and ideals are right, while every other group seems to wander ineffectively without clear objectives.
The concept of organisational culture provides a sense-making framework for such situations.
Although organisational culture is abstract and manifests primarily in unconscious behaviour, its impacts are tangible and immediately observable through our collective reasoning, decision-making, and behaviour as a group.
2.2 A Driver of Strategic Performance and Survival
Leadership often discusses the need to transform or attach new values to an existing culture. The intentions are undoubtedly sincere, but their practicality is questionable when combined with superficial characterisations of what organisational culture means.
As Schein discovered in his research, the effort of deciphering manifestations of organisational culture and modifying or influencing a culture’s evolution can be severely and quickly underestimated.
Schein’s predecessors’ study of organisational culture was partly motivated by the will to understand why Japanese firms outperformed their American counterparts (Schein, 1990). Explanations based on nationalistic ideas could not explain this fact since not all companies in Japan performed in the same manner; this discrepancy warranted further studies prompting Schein’s work on the subject.
Organisational culture, however, is preponderant and applies in any domain or industry. It is, in fact, more fundamental than that; any social group that has enough shared history will inevitably form a culture.
To take a more recent example. The 15th State of Agile Report states that cultural barriers are one of the top-ranking factors in the slow adoption of Agile among the survey participants (43%). The same statement also applies to DevOps and any other field where changes to how people make sense of their actions and thoughts and interact with peers and managers must transform to survive.
In summary, deciphering an organisational culture is vital to understanding its drivers, evolution, and performance capabilities.
3. What Is Organisational Culture
3.1 Understanding Organizational Culture
Organizational culture refers to the shared values, beliefs, and behaviours that shape the attitudes and actions of employees within a business. It is the personality of a company, and it plays a crucial role in determining how employees interact with each other and customers.
A sense of community, shared values, and a commitment to excellence characterize a strong organizational culture.
3.2 Manifestations of Organisational Culture
Although organisational culture is essentially an abstract framework for explaining group behaviour, the forces it creates are tangible, authentic, and observable.
According to Schein, organisational culture manifests in the following ways:
- Behavioural patterns among group members include their language, communication methods, and rituals. For example:
- The language can be formal or informal.
- The communication method is direct or indirect, face-to-face or mediated, with loud or low voices, and how easy or difficult it is to approach management.
- Rituals include daily standups, retrospectives, bilateral meetings, team gatherings, water cooler or coffee gossip breaks, and escalation processes to senior management.
- Espoused values are typically listed in mission statements or team manifestos. They are not necessarily the same ones that are applied. For example:
- Project delivery methodology is a favourite of software teams, and Agile is the methodology of choice. Agile often loses meaning when applied out of context, highly commodified (see Waterfall, Agile, and DevOps: A Critique of Current Challenges), or ritualised (see Thoughts on Six Sigma for Developing Your Software Engineering Processes).
- Formal philosophy guides teams in their interaction with the various stakeholders. For example:
- The primacy of technology over the business, or vice versa
- How transparent should we be when communicating with clients or management on timelines and quality?
- Decision-making procedures, whom to include, and who has the final say
Schein lists a few other dimensions equally crucial in defining what culture means, such as climate, rules of the game, embedded skills, and formal rituals and celebrations. We will not go into their details here, but I trust most will be self-explanatory notions that most are already familiar with.
Schein also stresses that organisational culture is not restricted solely to these observables but includes every shared assumption or meaning the group holds. In Schein’s view, organisational culture provides stability and meaning to the group and allows them to navigate the daily internal and external pressures. More on that in the following paragraphs.
3.3 Groups and Culture Creation
In Schein’s view, organisational cultures do not exist outside the group that holds them.
In effect, a group that has spent enough time together and accumulated shared experiences and a stable core will develop a unique culture.
Although organisations are vastly more complex and display a broader spectrum of phenomena than small groups, Schein argues that all organisations have started, at some point, as small groups and continue to exist as a collection of smaller groups with different and sometimes conflicting subcultures.
Cultural diversity (as in multiple subgroups with different subcultures) can also arise from mergers, acquisitions, geographical expansions, and the assimilation of individuals or groups from different ethnographical and cultural backgrounds.
The group’s internal stability directly influences the culture’s strength and consistency and comes from the following factors:
The Role of Emotional Intelligence In Modern Organizations– An Ingredient or Byproduct of Great Leadership?
3.4 The Edgar Schein Model
Edgar Schein is a renowned organizational psychologist who has developed a model for understanding organizational culture. According to Schein, there are three levels of organizational culture:
The model put forward by Schein defines organisational culture as follows:
Culture can now be defined as (a) a pattern of basic assumptions, (b) invented, discovered, or developed by a given group, (c) as it learns to cope with its problems of external adaptation and internal integration, (d) that has worked well enough to be considered valid and, therefore (e) is to be taught to new members as the (f) correct way to perceive, think, and feel in relation to those problems.
— Organisational Culture – Edgar Schein, 1990
As the group struggles to maintain its internal cohesion and fend off external threats, a learning process occurs on various levels:
The lessons learned from successfully dealing with those internal and external threats will be repeated and reinforced over time, becoming the foundations of that culture. These lessons are what Schein refers to as assumptions.
Schein states that the cognitive processes that develop within a group will ultimately decide how that group will:
- Perceive reality (nature of time, space, and human relationships of group inclusion or exclusion), the group’s mission, and its ultimate objectives
- Espouse and advocate specific values, although not necessarily apply them
- Develop a particular attitude towards problems, both internal and external
- Learn how to deal with failures.
3.5 Culture Levels
Schein categorises manifestations of organisational cultures into three levels based on their accessibility and visibility for an external consultant.
In analysing the culture of a particular group or organization, it is desirable to distinguish three fundamental levels at which culture manifests itself: (a) observable artefacts, (b) values, and (c) basic underlying assumptions.
— Organisational Culture – Edgar Schein, 1990
At the top are the most visible and tangible artifacts we encounter in office setups and hear in people’s voices. Next comes the publicly-stated and espoused values written down in mission statements.
Finally, we have the subconscious taken-for-granted assumptions that can only be uncovered by interviewing senior members of the group and hearing their narratives.
The below table summarizes those levels.
|Definition||Observable attributes or objects||Espoused values, group norms, ideologies, and philosophies||Axioms, hidden laws, rules of thumb, and heuristics|
|How they are created||Generated by processes and members’ interactions||Leaders promulgate values after social validation. If the values do not produce results, they are discarded and replaced.||Traumatic learning experiences from the founding moments.|
|How to access them||Objects, attire, feelings, processes, tools, and ambience that one experiences inside the office||Usually documented in mission statements, charters, etc.||Revealed by interviewing senior motivated members of the group|
|Attributes||Tangible, observable, measurable||Declared, espoused, conflicting, divorced from reality||Unconscious, hidden, taken-for-granted|
|Deciphering||By observing the processes that produce those artifacts and looking out for anomalies||By interviewing key people and looking at the important events that shaped the organization’s history||By looking at inconsistencies in the espoused values and past traumatic experiences|
Notes about the three levels:
4. What Organisational Cultures Provide
In 1947, Kurt Lewin proposed a theory that attempts to explain the purpose of human systems. Edgar Schein subsequently refined some of those ideas in his studies and finally came up with the following conclusions to explain the existential purpose of cultures in human systems.
4.1 Anxiety Reduction
The ultimate goal of a human system (such as an organisation or a group) is to “maintain a certain level of equilibrium and autonomy vis-à-vis the environment“.
The strength and tenacity of culture derive, in part, from this anxiety reduction function.
— Organisational Culture – Edgar Schein, 1990
According to this view, a system is embedded in an environment to which it constantly tries to adapt. Leaders are rational decision-makers who, through their actions on the system, seek to close the gap between the system and its environment, thereby preserving the state of equilibrium.
Our environment as individuals or social groups is complex, dynamic, chaotic, and unpredictable. It affects us by inducing anxiety whenever we cannot predict, control, or make sense of the events around us.
The anxiety reduction mechanisms we developed throughout the ages rely not solely on organisational culture but other social and cultural constructs like political, religious, commercial, and social institutions.
The strength of organisational culture is proportional to its ability to
- Provide a coherent narrative of historical events
- Impose a certain amount of order on an otherwise complex environment
- Provide a measurable level of predictability of an individual’s behaviours who is also a group member.
Book Review: Strategic Management and Organisational Dynamics — The Challenge of Complexity to Ways of Thinking About Organisations
4.2 Formation of a Group Identity
The second conclusion that Kurt Lewin and Edgar Schein arrived at was that culture (and cognitive structures such as beliefs, myths, and general attitudes to specific problems) provide an understanding of the world and a common platform for cooperation.
The evolution of culture is, therefore, one of the ways in which a group or organization preserves its integrity and autonomy, differentiates itself from the environment and other groups, and provides itself with an identity.
— Organisational Culture – Edgar Schein, 1990
Individuals who share our beliefs are one of us, while those who don’t threaten our integrity. We can quickly and happily cooperate with people from the first group but experience immediate anxiety and discomfort when working with the second.
People who share common beliefs act similarly, and their actions are predictable by other individuals of the same group. This predictability induces trust and allows bonds and relationships to form. Introducing some order into a messy reality makes it easier to perform long-term planning while making sense of events that affect us can provide meaning.
Identity is also central to a group’s culture, and Schein states that just like people are reluctant to relinquish their beliefs despite evidence that contradicts them, so do groups.
What are cognitive structures?
From Springer.com: A cognitive structure is a psychological construct that accounts for a form of human knowledge. Schema and mental models are examples of cognitive structures. The cognitive structure provides meaning and organization to experiences and guides the processing of new information and retrieving stored information.
5. Dynamics of Organisational Culture
5.1 Organisational Culture Lifecycle
Organisations are dynamic systems that evolve and change over time. Their lifecycle starts with a founding moment, followed by creation, maturity, decline, and fall.
Because culture is heavily tied to a specific group, it follows the same cycle.
The average lifetime of organisations is about 40 years, although some organisations live much longer (the Catholic Church is 1500 years old).
5.2 Formation of Organisational Culture
Schein believes cultures are created in groups that share a long history. But how is culture formed, and when?
To answer these questions, we must examine critical incidents in the group’s history and the leader’s actions during the founding moments.
Critical incidents in a group’s history are emotionally charged events where the group has faced and overcome internal or external threats (more about that in the next section).
Leaders and dominant figures can contribute to culture creation through their small daily actions. Group members pay close attention to a leader’s actions and responses, especially when anxiety is high. Then, they absorb those observations into a guiding framework. Through experimentation, group members determine what works and doesn’t, contributing to culture creation and its continuous transformation.
However, only the shared knowledge and solutions that stood the test of time become part of a group’s culture.
5.3 Internal and External Pressures
External and internal pressures influence culture formation and are critical to understanding how organisational culture develops and evolves. Systems thinking and cybernetics were prevalent when Schein conducted his research and formed the basis of most business management strategies.
In cybernetics, we work with the assumption that the system’s ultimate objective is to attain a stable state of equilibrium with the environment. The latter’s ever-changing nature constantly presents the group with challenges it needs to overcome to survive. Leaders act to close the gap between the external reference provided by the environment and the system’s current state.
Naturally, multiple solutions to external and internal challenges present themselves, and the group would need to form a consensus on which solutions to adopt.
Schein defines external pressure through the below challenges where the group must arrive at a consensus on how to approach them:
The internal pressures also consist of finding consensus, albeit on different topics:
- Basic concepts of time — Cultures organize themselves differently regarding cadence and orientation of time. Organizations can live in the past, present, or future, affecting their time management processes and long-term planning capabilities.
- Basic concepts of space — Think of rank and status and how that translates into larger offices and private areas.
- Group boundaries and criteria for inclusion determine whether someone is “one of us” or an outsider.
- Rewards and punishments directly relate to the perceived value of one’s work.
- Allocation of status, power, and authority controls promotions, appearance and support of dominant figures within a group and management of office politics.
- Criteria for love, friendship and intimacy are heavily shaped by the culture’s view of the nature of human beings (humans are good vs evil, rational vs emotional, etc.), the nature of truth and intimacy.
- Managing the unmanageable — This includes such as ideology, gender, and religion.
5.4 Maturity of a Culture
After an initial stage of turmoil, where the group is experimenting with different solutions to internal and external pressures, it will reach a state of equilibrium.
The group then maintains the state of equilibrium through active resistance to change. Unfortunately, this resistance happens even if circumstances change to disconfirm their original beliefs.
Culture perpetuates and reproduces itself through the socialization of new members entering the group.
— Organisational Culture – Edgar Schein, 1990
That is not to say that cultures are fixed and never change; small incremental changes occur when they lose or add members as long as they do not threaten the group’s integrity and identity.
As groups welcome new incomers, senior staff pass on the organisation’s culture (shared assumptions, embedded skills, perspective on the nature of time, space, and human relationships) via training, mentoring, and narrative sharing.
We expect to see three outcomes of this socialisation process.
5.5 Cultural Transformation
Deeply held assumptions often start out historically as values but […] gradually come to be taken for granted and then take on the character of assumptions. They are no longer questioned […] Such avoidance behaviour occurs particularly if the learning was based on traumatic experiences […] If one understands culture in this way, it becomes obvious why it is so difficult to change culture.
— Organisational Culture – Edgar Schein, 1990
You know it’s time to change when the methods you have employed so successfully in the past become less effective in the face of new challenges.
However, Schein says that is not reason enough to abandon a long-standing, cherished legacy and embark on a transformation journey. For that to happen, the organisation’s survival must be at stake.
At this critical juncture, one of two things can occur.
- Scenario 1: Guided cultural transformation
- Here, the leadership sees an opportunity to solve the issue without losing the group’s identity or integrity.
- Scenario 2: Forced radical change
- In the other scenario, a radical cultural transformation might be required, and more drastic measures might be taken, such as replacing key members with new ones.
In either situation, the organisation may successfully relinquish some features of its culture (perhaps also its identity) and learn new solutions or accepts continuous decline and demise.
Cultural Transformations and Resistance to Change: Understanding the Risks to Your Organization’s Growth
6. Understanding Your Organization’s Culture
Understanding your organisation’s culture is vital to leveraging its capabilities and remedying its weaknesses. More importantly, it’s the only way to understand what’s happening around you.
Organisations must constantly overcome growth-related issues, external threats, and internal conflicts like those described in the previous sections.
In the following paragraphs, we examine the role of organisational culture in the evolution of those events using the ideas presented earlier.
6.1 Growing the Business
Growing the business invariably involves assimilating new members into your group or serving new customer segments or niches.
With every new group member or client, there is the risk of disagreement on issues of a fundamental nature, but there is also an opportunity for efficient collaboration and growth.
Growth is a time of opportunities intertwined with anxieties.
Deciphering the root causes at the heart of those differences requires excellent leadership skills, an appreciation of human nature, and a perfect understanding of the culture’s dynamics.
6.2 Facing New Challenges
The fast-changing pace of some industries, such as high-tech, can be frustrating as you have to constantly keep up with emerging technologies and compete with new entrants.
In this case, it is vital to identify critical periods of the organisation’s lifecycle where change is unavoidable and respond appropriately. What has worked in different contexts needs to be revisited. For this reason, senior management needs to be prepared mentally and psychologically for cultural transformation.
6.3 Dealing with Conflict
Conflict arises when members reject elements of the dominant culture. It can also occur when the interests of two parties (individual vs group or individual vs individual) clash.
Using quick-and-easy solutions can treat the symptoms but will not prevent the issue from reoccurring. The leadership must identify and attend to the root cause for that to happen.
It is vital to understand that how you deal with conflict becomes part of the culture.
7. Using the Schein Model to Create a Strong Organizational Culture
Understanding the three levels of culture outlined in the Schein model is essential to create a strong organisational culture. By focusing on each level, you can create a culture aligned with your business goals and values.
- To create a strong culture, start by focusing on the visible aspects of your business, including the physical environment, the dress code, or the office layout. Creating a workspace aligned with your business values creates a sense of community and shared purpose among your employees.
- Espoused Values
- Next, it is crucial to nurture your company’s values and beliefs. We believe mainstream ideas on mission statement creation and empty slogans are ineffective. It is the small decisions and actions that leaders make every day that shape the group’s culture.
- Basic Assumptions
- Finally, to create a strong organizational culture, it is crucial to focus on the deeply ingrained beliefs and values that guide the behaviour of your employees. This focus includes reinforcing positive behaviour and constraining negative ones. Ultimately, actions and decisions that stand the test of time become assumptions taken for granted and only difficultly unlearned.
8. Final Words
Experiences shape our views of reality, and the mental patterns that ensue are deployed to interpret future experiences and (more crucially) reconstruct the past.
These models can become obsolete with new experiences. Recognising the obsolescence of our paradigms requires, in addition to courage, the mental tools or frameworks that help us forge new ones.
Creating these frameworks is usually driven by a passion for learning and scientific curiosity, precisely what researchers like Schein do.
Complicated and sometimes conflicting views in psychology, philosophy and cognitive analysis have produced different theories to explain organisational behavioural patterns, and Schein’s is one of many.
Depending on your views of the nature of knowing and thinking (realism, idealism, relativism) and human systems (systemic or process-oriented), your theories will vary from one end of the spectrum to the other.
This short article tried to investigate one of those theories, which offers a straightforward and intuitive explanation of organisational behavioural patterns.
We hope it has helped the reader better understand organisational social behaviour and opened the door for further investigations.
Creating a strong organisational culture is crucial to building a successful business. Understanding the Edgar Schein model of organisational culture and focusing on the three levels can create a culture aligned with your business goals and values.
Doing so can create a positive work environment, improve employee morale, and ultimately lead to greater success for your business.
Informal Education, Soft Skills, and Timeless, Universal Topics You Often Miss at Engineering School
9. Further Reading
- The Toyota Way — Jeffrey K. Liker
- Organisational Culture and Leadership — Edgar Schein
- Thinking Fast and Slow — Daniel Kahneman
- Sapiens — Yuval Noah Harari
- HBR at 100 — The Most Influential and Innovative Articles from Hard Business Review’s First Century
- Strategic Management and Organisational Dynamics — The Challenge of Complexity to Ways of Thinking About Organisations — Ralph Stacey