The Crimson Press Curriculum Center

First Page and the Assignment Questions:

Institutional survival, properly understood, is a matter of maintaining values and distinctive identity. This is at once one of the most important and least understood functions of leadership.

-- Philip Selznick

   On February 28, 2000, Business Week carried a story entitled “This Scandal Changes Everything.” The story discussed breaches of auditor independence at PriceWaterhouse-Coopers (PWC), the largest public accounting firm in the world. The article contained the following paragraph:

Half of PWC’s 2,700 U.S. partners owned stock in companies the firm audits, according to the report by law firm Lankler Siffert & Wohl done at the behest of the [Securities and Exchange Commission]. The report also revealed that 1,885 people at the firm—1 in every 20 employees—committed violations, prompting Lankler Siffert to conclude that PWC has serious structural and cultural problems.

   It is unlikely that the term “cultural problems” would have appeared in a similar article written perhaps as little as 15 years ago. Yet, over the past 15 years, and particularly during the decade of the 1990s, much was written about organizational culture and the important role it plays in an entity’s successful performance. Clearly, as the above quote suggests, a failure to manage culture can have devastating effects. This note defines organizational culture, outlines its various dimensions, discusses ways that it can be maintained or modified, and describes its relationship to other managerial activities.

ORGANIZATIONAL CULTURE DEFINED

   Edgar Schein, one of the leading authorities on culture, defines it as follows:

A pattern of shared basic assumptions that the [organization] learned 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.

   Schein identifies three levels of culture: (1) Artifacts, which are visible, audible, palpable manifestations of the underlying (or basic) assumptions; they include behavior patterns, rituals, physical environment, dress codes, stories, and myths. (2) Shared values, which are the espoused reasons for why things should be as they are, such as norms, codes of ethics, company value statements, and so forth. (3) Basic assumptions, which are the invisible but identifiable reasons why group members perceive, think, and feel the way they do about external survival and internal operational issues; included are assumptions about mission, means of problem solving, relationships, time, and space.

Artifacts

   Artifacts are relatively easy to understand. Many organizations have dress codes, such as uniforms or proper attire, for example, that are indicative of some underlying culture. When IBM and Lotus merged some years ago, the prediction of a cultural clash was due, in part, to this outward manifestation of their cultures—IBM, with a dress code that stipulated white shirts and conservative ties, and Lotus, whose employees wore tee shirts and sandals.

   More recently, a merger between Beth Israel and Deaconess Hospitals in Boston led to a clash in cultures, one outward manifestation of which was arrival time for meetings. At Beth Israel, meetings started using “BI time,” which meant they began about 15 to 20 minutes after their scheduled start time. There was no such “artifact” at Deaconess, and shortly after the merger individuals from the Deaconess became irate while waiting for Beth Israel people to arrive so that a meeting could begin. Needless to say, until a compromise (representing a new artifact) was reached, the meetings were less productive than they otherwise might have been.