The three levels of culture
There are several definitions of corporate and group culture. The American guru of culture and leadership, Edgar A. Schein, defines culture in a particularly useful way for our purposes. Schein defines organizational culture as1:
āA pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.ā
From this definition it follows that:
1. Culture is learned and reinforced and handed on as learning to the next generation and new members of the group
2. Culture has a purpose in terms of achieving common objectives. Perceived success will reinforce the culture and make it stronger
3. A group will develop its own distinct patterns of behaviours and beliefs to support the culture, and the internal socialization process.
Schein notes that the early stages of a company's life are critical in defining the culture at three levels (Diagram 1.1).
At the top level is what one can physically observe about the culture: the buildings, the physical workspaces, the visible behaviour, the rituals, the advertising, the organizational charts, and documented work processes, or artefacts, in Schein's words. These elements are easy to observe, but difficult to decipher. We can admire the pyramids, but have little idea of why they were built!
At the middle level you find the articulated shared goals, strategies, philosophies, and explicit values and beliefs, which Schein calls the espoused values. The P&G Way, outlining the guiding principles of Procter & Gamble, would be an example of an espoused value, used to justify decision making principles.
At the lowest level one finds the often invisible or difficult to detect values and beliefs or assumptions in his terminology, which guide the culture and the actions in the organization. These are the concepts or behaviours that are taken for granted; they are non-debatable and difficult to change. Assumptions based on the national heritage will be prevalent at this level. An American's right to individualism is such a fundamental national assumption, as is HP's belief in the independent business division. The American national value, though, is deeper-rooted and more staid than the more contextual HP value, which management would be able to influence and alter.
The popular mission, vision and value statements that most companies promote are often a mixed bag of how the culture actually is and how the company would like it to be or not to be. Most American companies have included a statement about collaboration and teamwork in their corporate values. This may be an appropriate corrective value in a company with an invisible assumption of everyone's right to individualism, but may not necessarily reflect how people actually behave. In Chapter 4, we will explore how a company's value statement often includes different types of messages with different purposes. They will tell you quite a bit about the culture and values of the company, once you have deciphered them, which may not always be what the company intended to communicate.
Reinforced by the daily work practices in the mature organization
These embedded values, beliefs and assumptions are reinforced in the mature organization, through the daily work practices, in what Schein calls the secondary articulation and reinforcement mechanisms, which include:
- Organizational design and structure
- Organizational systems and procedures
- Rites and rituals of the organization
- Design of physical space, facades and buildings.
For simplicity and variety, we will use the words corporate or organizational values or just values to represent the values, beliefs and assumptions in the remainder of the book.
The six dimensions of corporate culture
P&G is a company that seeks the truth. This is a deeply-rooted belief that was inculcated by its purist and religious founders. When P&G launched Ivory Soap in 1881 its slogan said that the soap was 99.44% pure. Not 100%, not 99% ā no, 99.44%, and scientifically proven to be purer than other Castile soaps. With that fact in hand, P&G, also keen on making a good profit, advertised it intensively and soon became the undisputed market leader. Anyone who has worked at P&G has toiled with frustration over the infamous one-page-memo. That single page that will summarize any major business decision. It is used to recommend an action, whether it is a billion dollar investment or a more mundane new advertising campaign. Every word is evaluated until it is perfect ā and the ātruthā is found. It can take weeks and tens of iterations between the writer and managers above to get it approved. Over the years, the P&G culture became centred on artefacts like that and at times developed cult-like traits. Either you enjoyed it and stayed for long, or you left early, as there was little room for cultural dissent. However, virtually all people who have worked in P&G are impressed by the principled and uncompromising nature of its culture.
In his classical IBM questionnaire-based study, Hofstede established six dimensions of what he terms Organizational (read corporate) Culture through statistical analysis.3
1. Process oriented versus results oriented (means v. goals)
2. Employee versus job orientated (people concern v. getting the job done)
3. Parochial versus professional (a person's identity derived from company or profession)
4. Open systems versus closed systems (inclusive culture v. exclusive-secretive-clubby)
5. Loose versus tight control (of people and what they do)
6. Normative versus pragmatic (following procedures v. market/customer driven).
These are very useful when describing a corporate culture in a consistent manner. However, as indicated repeatedly by Hofstede, Schein and others, this is a complex field and not easily captured in simple models. There are simply too many variables. You may be able to use a simple model to describe a business culture, but will probably not achieve much in terms of predictability of the performance of the organization. When it comes to culture, the devil is in the proverbial detail and the detail is multi-faceted.4
It is obvious that national values will have a significant influence on these six dimensions. For Danish companies, the culture is generally described as open and inclusive, whereas Japanese companies are generally considered more closed. Does this make either of them more or less effective in reaching their objectives? The answer is more complex, will depend on the particular circumstances and is not a simple yes or no, as we shall soon see!
Companies from every country can be grouped along these six dimensions; however, there can still be significant variances between companies from the same country. Google and Procter & Gamble are both American, but obviously very different, companies, that originated in different eras with somewhat different expressions of the basic American values ā yet both are successful; and there are Danish companies that are closed and successful and Japanese companies that are open and successful.