To what extent can organisational culture be managed. How critical is it for organisation success

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To what extent can organisational culture be managed? Is organisational culture critical to the success of an organisation?

Peter Anthony (1994) asserts that the pursuit of change in a cultural sense has been considered synonymous with the pursuit of excellence for organisations. It is true that a wide variety of management practitioners view the control of organisational culture as something both possible and necessary for organisational success (Brown 1993). A survey of organisational practices of a range of firms revealed that 94% of the firms had engaged in ‘culture management’ of some sort (IRS 1997). However, despite the apparent popularity of these practices and the strong level of importance placed upon these activities, it can be seen that there is no factual evidence that supports the assertion that organisational culture as a whole can be managed, or that such a culture is critical to the success of an organisation. An examination of the various theoretical and practical pieces that both support and reject these ideas reveals that the truth of the theories are at best overstated, and possibly completely incorrect altogether.

An evaluation of the extent to which organisational culture can be managed must first be given a groundwork definition of ‘culture’ from which management efforts to change this phenomenon can be assessed. A major issue that academics and practitioners alike have faced is this definitional problem. There are a wide range of definitions that can be applied, and in many cases the definition utilised is paired with a most suitable methodology according to the researcher (Burrell and Morgan 1979, Ogbonna 1990 and Smircich 1983). These disagreements on the nature and scope of organisational culture have contributed strongly to the inconclusiveness of research conducted on the subject (Harris and Ogbonna 2000, Lim 1995).

In order to examine the extent to which culture can be managed however, a generalised concept of ‘culture’ must be utilised. One of the most widely accepted frameworks was promulgated by Schein (1984 and 1985), which categorizes culture into three levels - artifacts, espoused values and basic underlying assumptions. By applying this definition of culture, it is possible to examine a variety of studies that have claimed to have both proven and disproven the ability of managers to exert control over organisational culture.

There does exist a plethora of studies that claim organisational culture can be successfully managed (Anderson 2003, Bae, Sohn and Rowley 2002, Jackson and Tax 1995, Risher 2007, Soupata 2001, Troy 1994). However, the reported ‘changes’ of these studies do not extend beyond the first level of Schein’s culture framework. Graves (1986) identifies these different levels of culture and distinguishes between changing deeper level cultural values and simply altering surface behaviours. The danger of changing only surface actions is that this would simply encourage extrinsic motivation and not lead to a permanent change in culture (Sathe 1985). Such a problem was identified in the study by Ogbonna and Wilkinson (1990) of organisational culture change strategies adopted by major UK supermarkets. Despite the apparent adoption of the desired ‘culture’ by the staff of the organisations, further research revealed that the behaviours that were supposed to exemplify a change in culture were instead only brought about as a result of the threat of increased sanctions and greater surveillance. Even in those organisations where the culture appears to have been managed successfully, there is the issue of properly being able to measure a change in said culture. Anthony (1994) establishes that in two major companies (Shell Petroleum and British Air), ‘culture changes’ were championed as integral to the companies success without any concrete evidence that the underlying values of the staff had changed in line with the noticeable behavioural changes.

Smith (2003) conducted a summary of 59 organisational change efforts that focused on culture change as the main objective. Of the 59 organisations, only 19% classified their efforts as successful or near-successful in modifying behaviours. A survey cited by Carr et al. (1996) recorded 10% of companies as being successful in altering culture, whilst the findings of Troy (1994) were more positive, with 32% of the 166 companies surveyed reporting that they were successful in changing the “vision and culture” of their organisation.

Though these results imply that in the right circumstances, culture can be managed, it once again fails to identify changes on all three levels of culture as defined by Schein (1985). This reveals that attempts to manipulate culture will be successful only on the more visible levels of culture (Critchley 1993). Graves (1986) furthers this point by arguing that though behavioural responses will change in response to environmental pressures, deep-rooted values will remain constant.

It can be seen that those who attempt to assert control over an organisational culture are under-appreciating the extent to which individual and organisational deep-seated values, assumptions and beliefs are engrained into human consciousness, and thus under-appreciate the difficulty in altering such values and beliefs (Gagliardi 1986, Crafting and Frost 1985).

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Though it is evident that the surface manifestations of culture within organisations - that is, behaviours and actions - can be managed, the underlying beliefs and basic assumptions that are integral in the forming of a ‘culture’ are not malleable by management. If practitioners apply the word ‘culture’ as encompassing only the behaviours and other visible actions of staff, then attempts to manage this ‘culture’ will likely be successful. If, however, a more detailed, complex view of culture such as Schein’s definition is applied, it can be seen that the extent to which culture can be managed is limited to only the shallowest level, and that underlying beliefs, values, and assumptions are not readily malleable.

The widespread attempts to manage organisational culture are founded on the theory that corporate culture can be used as a source of competitive advantage (Barney 1986, Ott 1989, Pfeffer 1994 and Wilkins and Ouchi 1983). Despite the proliferation of a range of studies that claim to have identified such a phenomenon (see Deal and Kennedy 1982, Johnson 1992, Kilmann et al. 1985, Krefting and Frost 1985, Mitroff and Kilmann 1984, Ouchi and Price 1978, Pascale 1985, Peters and Waterman 1982, Prahalad and Bettis 1986, Reed and DeFillippi 1990, Schall 1983, Schein 1985, Scholz 1987 and Weick 1985), the proposal that organisational culture is critical to organisational success is far from a fact. Through a critical examination of the various studies that form the backbone of the ‘organisational culture as critical’ argument, inherent flaws in assumptions, methodology and conclusions can be discerned, thus refuting the overarching argument.

As mentioned earlier, the assumptions that underpin ‘organisational culture’ as a concept are widely different between researchers. A number of scholars have developed integrative frameworks of culture (Allaire and Firsirotu 1984, Hatch 1993, Martin 1992, Ott 1989, and Schein 1985). However, culture is a complex phenomenon including underlying beliefs as well as visible practices and behaviours, and there is a lack of consensus as to a model and definition of organisational culture, which creates issues in developing a sound theory of causation between ‘strong’ culture and economic performance (Furnham and Gunter 1993).

Furthermore, the assertion that there is a causal link between culture and performance is typically founded on a perception that organisational culture can play a role in generating a competitive advantage (Scholz 1997). This assumption is not a concrete theory in its own right, and thus decreases the validity of any conclusions or findings that are made as a subsequent result.

Establishing a link between organisational culture and successful performance has severe methodological problems. The lack of consensus on a definition of culture extends to the ways in which this phenomenon can be measured. Researchers have utilised both qualitative and quantitative methods, but there is a noticeable lack of a universal means of assessing culture as a measurable entity (Denison and Fey 2003). Adding onto this issue, there is difficulty in inferring underlying cultural values simply based on the surface actions of the members of an organisation (Lewis 1994).

Qualitative methods have an inherent problem with objectivity over the results generated. Both the collection of data and subsequent interpretation of this data is subjective to the researcher completing the study. The most common qualitative methods utilised in the field of organisational culture are interviews with management and staff at selected institutions. Such a method was extensively used by Kotter and Heskett (1992) in their study of adaptive and stable cultures. According to Lim (1995), this strongly undermines the quality and reputability of their findings, as well as other studies completed using qualitative data, due to the lack of comparable data and the highly subjective nature of interpretation of human responses.

As well as the various uses of qualitative approaches, there have been a range of quantitative methods utilised for measuring organisations (Cooke and Rousseau 1988). Some examples include the Organisational Culture Inventory (Cooke and Lafferty 1983), the Organisational Culture Profile (O’Reilly et al. 1988) and Organisational Norms Opinionnaire (Alexander 1978). Despite these studies having a greater degree of both ease of comparison as well as overall objectivity when contrasted with qualitative studies, this does not preclude the results from also having shortcomings (Sackman 1991). The greatest limitation of quantitative data is its inability to go beyond the superficial aspects of organisational culture - that is, the realised actions and behaviours of staff members - and reveal any information about the underlying assumptions and beliefs that form the basis for any organisational culture (Saffold 1988, Schein 1990). Additionally, the use of surveys incurs a basic limitation in that answers will unconsciously be bound by the question (Lim 1995).

As a result of the severe methodological limitations evident in any attempt made to quantify a link between organisational culture and organisational success, there have been very few empirical studies that have managed to relate cultural characteristics to the financial performance of a firm (Gordon 1992).

In the absence of objective, comparable data that is bound by a set of agreed definitional boundaries, it is impossible to assert with certainty that there is a link between organisational culture and success. Christensen and Raynor, in their piece detailing the relevance of academic management theory to practical organisational use, discuss the concept of being a “discerning consumer of theory” (2003, p. 73). One of the issues that a large amount of theories experience within the field of management is to diagnose correlation as causation. The two are explicitly different - correlation merely identifies a link, whereas causation implies a direct relationship where the advent of one variable will be the cause of the second variable occurring.

A review of the studies examining this topic reveals there is no real indication of an existing relationship between organisational culture and short-term corporate financial performance, let alone a causal link. Several studies (notably Frame et al. 1989 and Quick 1992) reported their outcome data as successful, but in each of the cases there was no evidence of a firm relationship between culture and performance.

What this highlights is that the usefulness of measuring organisational culture (whatever the assumptions and methodology used) is limited to an explanatory and descriptive tool rather than a predictive one when it comes to organisational success (Lim 1995).

Christensen and Raynor (2003) also identify that those correlations that masquerade as causations tend to use adjectives in place of a description of a mechanism. This use of adjectives is evident within many of the most commonly referenced studies linking culture and performance - “strong and unified culture” (Peters and Waterman 1982), “adaptive culture” (Kotter and Heskett 1992) and “positive culture” (Soupata 2001). In each of these cases, as well as the other studies championing a link between culture and performance, there is a noticeable lack of an explanation of how these cultures are the direct cause of the subsequent performance.

Finally, for a theory to be taken as absolute truth, it must be evident that such a theory can apply in any situation. This is not the case, as there are examples of case studies that refute the claims of writers such as Kotter and Heskettt and Peters and Waterman. For example, Lewis (1994) identified a lack of relationship between culture and performance, and finding also encountered by Fairfield-Sonn (1993). Furthermore, Reynolds (1986) identified that responses to a culture questionnaire in two companies with unimpressive performance were identical to the responses recorded by one of the companies Peters and Waterman had identified as excellent in 1982.

Thus it can be seen that the implied widespread application of the theory promulgated by a a large section of academics and practitioners is far from true. A ‘discerning consumer of theory’ (Christensen and Raynor 2003) would be likely to reject the premise that organisational culture is critical to the success of a firm, due to the extensive methodological and causal issues evident in each popular study. This has implications for the study of the management of organisational culture as well. The popularity of the advent of culture management rests upon its apparent simplicity as a concept (Anthony 1994) and it’s place in creating a competitive advantage (Barney 1986). However, the fact that there is no quantifiable link between culture and success should minimise the importance placed upon cultural management techniques. Furthermore, these techniques have been overstated in their usefulness and impact. Though surface actions and behaviours can be manipulated by management, the deep-rooted values and beliefs that form the basis of an organisations culture are not so easily manageable.

Organisational culture is readily apparent in all firms and organisations, and it is the subject of my practical and academic debate. Two key issues, namely it’s manageability and role in the success of an organisation, have both been overstated by practitioners and academics alike. Though the fact it can be managed, and its advent within successful organisations is somewhat true, the true value of organisation culture as a source of completive advantage has been overblown.

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