July 3, 2024

New Discoveries on Organizational Culture and Leadership (TPL Insights #229)

By Rob Andrews

As much as I’ve studied peak performance cultures, Peter & Edgar Schein’s book, “Organizational Culture and Leadership,” gave me an expanded perspective. They offer a disciplined framework for understanding the intricate dynamics of organizational culture and its profound impact on leadership and organizational effectiveness. The book explores the layers of culture, from visible artifacts to underlying assumptions, providing valuable insights into how culture shapes behaviors, perceptions, and organizational outcomes.

One of the recurring themes in the book is the notion that organizational culture is not just a superficial set of values or rituals but a complex, multi-dimensional living thing that influences every aspect of an organization’s being. The Scheins argue that culture operates at multiple levels: artifacts, espoused beliefs and values, and underlying assumptions. This three-level model provides a structured approach to analyze and interpret organizational cultures I had not previously considered, highlighting the importance of understanding the visible and hidden aspects of culture.

One thing that seems obvious is the role of leadership in shaping and sustaining organizational culture. The Scheins portray leaders as focal figures who embody and influence the cultural norms and values of their organizations. They emphasize that effective leaders align their actions with an organization’s stated values while also being mindful of the deeper, embedded assumptions that determine organizational behavior.

I liked Schein’s description of the dynamic nature of culture, emphasizing that it evolves in response to internal and external pressures. This evolution is influenced by factors such as leadership decisions, organizational history, and the integration of new members. Understanding this dynamic process is crucial for leaders seeking to initiate cultural change or foster cultural alignment within their organizations.

The case studies presented, such as those of Digital Equipment Corporation (DEC) and Sibagaygi, provide a real world of how different organizational cultures “show up” and impact organizational performance. For instance, DEC’s culture was characterized by open communication and a confrontational approach to problem-solving, contrasting sharply with Sibagaygi’s more formal, hierarchical structure in which “healthy debate was rare.

As I reflect on the insights gleaned from “Organizational Culture and Leadership,” the richness of organizational cultures is fascinating. The Scheins’ framework highlights the need to move beyond surface-level observations and dive deeper into underlying dynamics that shape organizational behavior. This deeper understanding not only enhances our ability to diagnose organizational issues but also provides a foundation for fostering a positive and productive work culture.

“Organizational Culture and Leadership” is a terrific work that offers important insights into the complexities of organizational culture and its critical role in shaping company performance. The book’s framework and revealing case studies provide valuable lessons for leaders and scholars alike, emphasizing the importance of cultural awareness, alignment, and adaptation in today’s fast changing workplace. Here are the five points from Schein’s work that caught my attention:

Culture as a Learned Result of Group Experience

  • Key Insight: Culture is not simply a set of rules or values; it is learned through shared experiences and problem-solving.
  • Implication: Leaders need to understand that culture evolves from the collective learning of the organization. Changing culture requires addressing and reshaping these shared experiences.

Levels of Culture

  • Key Insight: Schein describes culture in three levels: artifacts (visible structures and processes), espoused values (strategies, goals, philosophies), and basic underlying assumptions (unconscious, taken-for-granted beliefs).
  • Implication: Leaders often focus on artifacts and espoused values but miss the deeper, underlying assumptions that truly drive behavior. To effect real change, they need to delve into and understand these deeper layers.

Role of Leadership in Culture Formation

  • Key Insight: Founders and leaders play a critical role in forming and embedding culture through their actions, behaviors, and priorities.
  • Implication: Leaders must be aware that their behavior sets the tone for organizational culture. They must consistently embody the values and behaviors they wish to see in their organization.

Culture as a Source of Resistance to Change

  • Key Insight: Culture can be a significant barrier to change because it represents stability and consistency for employees.
  • Implication: Leaders need to recognize that resistance to change is not just about reluctance to adopt new practices but is deeply rooted in the cultural fabric of the organization. Overcoming this resistance requires addressing these cultural elements directly.

The Importance of Cultural Assessments in Mergers and Acquisitions

  • Key Insight: Schein emphasizes the critical role of cultural compatibility in the success of mergers and acquisitions.
  • Implication: Leaders must conduct thorough cultural assessments during M&A activities to identify potential clashes and plan for cultural integration. Ignoring cultural differences can lead to significant post-merger challenges and failures.

These insights can provide a deeper understanding of organizational culture and help leaders navigate the complexities of culture change and leadership more effectively.

Note: As impressed as I am with this work, a missing piece of data is what happens when a pivotal leader retires, leaves or steps aside. The reality is that corporate cultures are incredibly perishable. When Eric Claus left Save-a-Lot Food Stores, it took less than a year for the new private equity owner to lose half the company’s enterprise value. I recall Eric saying that he knew the new owners would flounder when he witnessed the new CEO complexly ignore every hourly employee he encountered, speaking only to management.