Transatlantic blog by Kathy Miller Perkins

Organizational culture is one of those concepts that many find hard to define let alone address.

I contend that every organization has a culture whether we are aware of it or not. In her blog last month, Katrin took a different position on this topic, positing that organizational culture does not exist. She suggested that organizations are merely legal entities lacking any characteristics resembling culture. Her implication is that culture is completely defined by people. To illustrate her point, she referred to the USA’s Whitehouse where the culture changed when the new administration moved in. While I agree that the new people entering the Whitehouse did change the culture, I don’t think that most organizations have much in common with the changes that took place in the Whitehouse in January. The transition from the Obama administration to the Trump Whitehouse involved a total transfer of power from one party to the other and to one administration to the next. This conversion involved a complete turnover of staff. Most organizations never experience this kind of dramatic change all at once. In fact, this type of complete change obliterates the organization altogether. A new organization is created with its own unique culture.

Certainly, a change in leadership very often sets the stage for other types of change. Nevertheless, organizations are remarkably immune to fast transformation. Even as leadership shifts, most people employed within the organization stay in place and carry with them the company’s traditions and norms. Moreover, organizations have systems, structures and rules that support and reinforce the existing culture. While these fundamentals can be modified, the changes do not occur overnight no matter what the individuals within the company desire. Therefore, my argument is that culture is certainly dependent on people, but that it also encompasses additional organizational elements. Fundamentals such as history, tradition, structure and governance are not only part of a culture but also provide the boundaries and frameworks within which people think, act and interact.

For illustrative purposes, I would like to compare organizational cultures to national cultures. Many factors contribute to national cultures such as history, government structures, institutions and laws.  These national fundamentals interact with individual and collective values, habits and identities to create the national culture. Certainly, citizens contribute to national culture, however they usually do so within the context of the existing national institutions and systems. [1]   In other words, the way that people view their world is likely to be circumscribed by other aspects of the national culture.

For example, nations characterized by caste systems create a strict framework that defines social relationships and power.  People within these systems understand what is appropriate for their roles and tend to respect these boundaries. On the other hand, citizens in more egalitarian countries are more likely to define power and appropriate social relationships through frameworks that are broader than social class. They may confront or override boundaries that they perceive to limit their freedom. Certainly, in both cases, a nation’s citizens or at least some of them, legitimize and maintain these frameworks. Nevertheless, once legitimized, they are resilient and affect how people view their world and their place within it.

Organizational cultures are much the same as national cultures, although on a smaller scale. Like nations, organizations have histories, structures, systems and rules that constrain the relationships and actions of the people within them. Therefore, even as individuals come and go, the organizational legends as well as the systems that enable and reinforce certain kinds of beliefs and behaviors are likely to remain, or at the very least, change slowly. Only a major disruption impacting both people and systems, can shake up a culture and lead to dramatic change.

I would like to focus on three elements in addition to individuals that I believe are integral to organizational culture:

Structure. The way an organization is arranged. Hierarchical organizations are quite different from their flatter counterparts. For example, in one of our hierarchical client companies, people are segregated physically through facilities based on formal roles. The senior leaders who are positioned on the top floors don’t often see let alone interact with those who are lower in the hierarchy. Power is concentrated in the hands of a few. Therefore, the actions and interactions tend to be very formal and rules-driven. On the other hand, a different client organization employs a flatter structure.    Power is distributed rather than centralized, and people and teams are self-directed for the most part. The number of managers and supervisors are few. The cultures of these two organizations differ dramatically. Not only do people view their own roles differently, they also diverge in what they view as appropriate and inappropriate behavior. The differences between the two cultures are too numerous to describe thoroughly in this short blog.

Size. The number of people comprising an organization. The culture of a “mom and pop” company most likely will show little resemblance to the culture of a large corporation.  Rules tend to be fewer and more flexible and the interactions less constrained in the smaller organizations. If the employees of the smaller company were all transported to a larger organization, chances are the new culture would change the people rather than vice versa.  The Business School of Lausanne (BSL), the organization that Katrin described in last month’s blog, is a relatively small school.  As far as I know, almost all know each other and interact routinely.  Under these conditions, the faculty and students are far more likely to have a clear impact on their culture.  They are much more likely to be able to design or redesign the systems that support the school.  And they are more likely to have opportunities to provide input and assist in the decision-making process.   Chances are that trust and collaboration characterize small organizations like BSL since people have more opportunities to interact and get to know each other.

Leadership and Governance:  I believe that nothing is more significant to the organizational culture than leadership. While no one person or group of people can dictate a culture, top-level leaders do establish the boundaries within which culture emerges. For example, CEOs like Paul Polman of Unilever and the late Ray Anderson of InterfaceFlor set new directions for their companies through their own personal visions.  In pursuit of their visions, these leaders encouraged conditions that enabled flexibility, commitment and innovation. They enabled a culture that is inclusive.  And they put in place systems that reinforce these conditions.  Most significantly, Polman leads by example, as did Anderson when he was alive. Thus, the cultures of these companies are characterized by motivated and engaged employees.

Likewise, I imagine that Katrin, in her role as Dean of BSL, set the stage for the move towards holacracy that she described in her blog last month.  While I am certain that she did not personally prescribe the culture that enabled the shift, I suspect that she sparked the beginnings of the change.   She must have been willing to share power. A more autocratic leader would be less likely to even consider moving towards a holacracy let alone to enable such a cultural framework.

In conclusion, I do believe that individuals do significantly influence culture.  However, structure, size, leadership, history and many other factors also play a strong role in determining the culture that emerges.  Therefore, if we are to enable organizational transformation and change, we must consider not only the individuals and their attitudes, but also the elements that create the boundaries and frameworks within which they act and interact.

[1] Scott, W. Richard. 2014. Institutions and Organizations: Ideas, Interests, and Identities, Fourth Edition. Thousand Oaks, California: Sage Publications.

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