Corporate culture – grasping the ungraspable

(FCA Insight)

 

Can corporate culture be measured? It’s a thorny question and the subject of lively debate in boardrooms and academia and also here on Insight. The authors of our latest article argue for a nuanced approach.

Culture is strategy. We open with this provocative and thought-provoking sentence for a reason. For far too long culture has been relegated to the ‘soft stuff’ and often, more disparagingly, the ‘fluffy stuff’. This narrative has pushed researchers and organisations to quantify culture in the belief that this will make it measurable and, therefore, more meaningful.

Additionally, it provides reinforcement for the common rhetoric that suggests that what is measurable is manageable.

The case for and against measuring culture has been addressed in previous Insight articles with one making the case for measuring and the other against.

We offer an alternative and nuanced view: that, while culture can be assessed, there is a nuance between assessment and measurement.

The illusion of control

Measurement metrics have enabled boards and executive teams to have a sense of control over what is essentially an intangible construct. Culture is a combination of artefacts, values and basic (often unconscious) assumptions which cover all aspects of a group’s internal integration processes and external tasks, and the way these interact and constantly recombine. As one of the authors has said before: ‘culture is really a meaning system’.

As such, it is a complex set of dynamic factors that cannot adequately be ‘measured’. At best, a meaning system can be interrogated and interpreted, and a presumptive assessment can be made about how a culture might or might not enable the goals and objectives of an organisation. However, assuming that individual responses to quantitative surveys can be aggregated into a holistic understanding of a whole organisation’s culture and its impact on performance is little more than a leap of faith.

The danger with measurement is that it can produce a false metric that, more often than not, focusses organisational energy on bettering the metric rather than engaging in a truly systemic and strategic intervention.

A previous Insight article by Chesterfield, Gillespie and Reader, made the case for a quantitative analysis of culture. Speaking about the idea of a ‘safety culture’ or values relating to risk, it described quantifiable methods to conduct such an analysis.

In financial services we have heard the term risk culture being approached in a similar way. One definition of risk culture as developed by McKinsey and Company is:

‘The norms and behaviour for individuals and groups within an organisation that determine the collective ability to identify and understand, openly discuss and act on the organisations current and future risks (Levy, Lamarre et al. 2010).

While this sounds compelling, we fundamentally disagree with the concept of ‘risk culture’. What is problematic about defining a concept such as risk culture is that it locates the problem entirely within the act of taking risk. This is a reductionist view of culture that identifies a single variable and offers it up as something to be ‘fixed’ or ‘treated’.

This presents two issues. Firstly, can we be sure that our measurement instrument has adequately captured respondents’ typically subjective understanding of the questions they have been asked? Even if we assume this is true, we face a second issue: asking about one variable (in this case risk) ignores the fact that every cultural variable is, in some way or another, dependent on every other. Asking about one specific variable means your measuring instrument limits the scope of your understanding, or in Maslow’s terms, “If all you have is a hammer you treat everything as if it is a nail”.

By focussing on a ‘risk culture’, then, we are looking at an incomplete picture of what is possibly going on in the organisational system as a whole. What matters is the organisation’s overarching culture and what it means for its ability to identify, manage and mitigate risks. Therefore, focussing on how an organisation manages safety or risks is to attend to only one aspect of culture, which is what some of the survey and measurement tools do.

A case in point

The result is that when an incident occurs in an organisation, the culture work often focuses specifically on that incident. For example, one of the authors was involved in work with a company that needed help with what they called a ‘bullying and harassment’ culture. A number of bullying incidents had come to light and their employee engagement survey suggested that bullying and harassment behaviours were being experienced across the organisation.

‘Bullying and harassment’ training was then rolled out to teach people how to behave with each other. The organisation’s idea of measuring the cultural impact was to run the engagement survey again to see if the training had worked. To their surprise (but not ours) the metric remained unchanged. So, what does this mean? Was the metric wrong or did the training fail?

This question was addressed in the second Insight article, by Van Rooi and Van de Graaf. It stated:

‘A perspective focused on data would stand the risk of losing understanding of the underlying values and assumptions of culture…’

n other words, the engagement survey only tells us what is happening on the surface – it does not tap into the values or the cultural assumptions that are causing these behaviours to exist in the first place and it explains these phenomena only as far as the words used to describe them can stretch.

So to return to the example of a firm with a ‘bullying and harassment’ problem. Rather than applying a quantitative measurement, an assessment based on interrogation, interpretation and understanding, helped to reveal the underlying cultural causes for the bullying behaviour that was being witnessed.

A series of structured conversations underpinned by a robust qualitative research methodology (making up about 15-20% of the population) was able to ascertain the lived experience of the culture. This approach (drawing from organisational psychology, group dynamics and management theory) made it possible to unearth some of the cultural assumptions that were contributing to the manifest behaviour.

The underlying narrative turned out to be that, in this particular organisational culture, tenure trumped everything. This meant that individuals who had served long periods of time in the organisation had the authority regarding how decisions were made. This was an unconscious assumption that had passed down over generations in the organisation. It was just ‘how things were done’ and the bullying that was being experienced was a product of this. Members with longer tenure felt they were entitled to make the decisions or have the right to veto others.

Another deep-rooted assumption was that seniority could not be challenged. So, despite ‘speak up’ policies and training, junior staff did not question what senior members of the team did or said. Senior individuals continued to ‘get their way’, resulting in others feeling bullied and not heard. The business’s values were plastered around the walls, but what we found was that individuals really didn’t know what they meant. It was also evident that leaders were not displaying the values that they expected their people to uphold.

Despite what was written on the walls, the things that were truly valued in the organisation were status, hierarchy and tenure. It was this that informed the behaviour that was being experienced by others as bullying. A measurement of ‘speak up’ would only have told us whether or not people were speaking up; it would not have allowed us to understand why the manifest behaviour was happening or what some of the underlying, unconscious patterns and assumptions were that had been perpetuated over generations in the organisation.

This then is the nuance between measuring and assessing; the first enables an ‘understanding’ of what is happening only against a pre-determined measure, whereas the second enables a holistic analysis of the underlying cultural patterns that contribute to the observed behaviour.

This truly culturally-framed understanding enabled a very different conversation with the organisation. It wasn’t about rolling out training on bullying and harassment, but more about creating the right, psychologically-safe environment for performance. The focus now was on creating a psychologically safe work environment and ensuring that the value set was understood and lived by all.

Six months after interventions were put in place to support this, a fresh survey was carried out to answer two questions; how psychologically safe did people feel and how did they experience the values in the organisation? This was introduced specifically to focus on the aspects of culture that were deemed by the assessment process to be derailing the organisation. Importantly the survey did not use pre-determined categories as metrics to measure. Instead it addressed the specific dimensions of the culture that were standing in the way of achieving the organisation’s goals.

Assessment not Measurement

What we want to highlight through this article is that measurement and metrics can be a fallacy. Culture tools usually measure culture on what are pre-determined categories deemed to be essential for ‘healthy organisations’. But if culture rests on a complex pattern of assumptions that a group develops over a period of time, doesn’t that make culture unique for each organisation?

Further, it is easy to be caught in a net of false metrics. For example, we may be able to tell the regulator that we have trained all our people on a regulation, a metric that is commonly used in ‘culture reporting’. What we cannot account for is whether the training is solving the underlying problem or just the symptom.

On the other hand, an assessment methodology applying the rigour of deep understanding, as described here, that takes into account the unique nature of group behaviour and from this draws out the attributes of culture that stand in the way of goal achievement, is probably more apposite in this context.

Describing the culture in terms of a set of predetermined and presumptive measures sets limitations on our ability to understand the real multivariate complexity of an organisation and what is needed to improve its governance and effectiveness.

To quote Lewis Carrol, “The snark was a boojum, you see”.

The old adage of ‘culture eats strategy for breakfast’ has been thrown around a lot in recent years and a number of management scholars have also spoken about culture as being a strategic priority. We take an even stronger view. If culture and its dimensions are critical to the organisation’s achieving its goals, as we believe, then culture really is strategy.

 

Dr Allen Zimbler was a full Professor of Business Administration at the University of the Witwatersrand in Johannesburg, he has recently retired as an Executive Director of Investec Bank Plc in London.

Ajit Menon is visiting faculty on the Masters and Doctoral programme at the Tavistock and Portman Clinic and Essex University. He teaches about Organisations and Consulting. He is a business psychologist and partner at Blacklight Advisory Ltd.

Levy, C., E. Lamarre and J. Twining (2010). Taking control of organisational risk culture. McKinsey working papers on risk, McKinsey&Company.


Story originally appeared on fca.org.uk

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