Andrew MacLeod argues that insights into, and more importantly understanding of, an organization’s culture help to ascertain the risk appetite of an organization and can therefore be used to enhance organizational resilience. For an organization to truly enhance its resilience it needs to embed a culture of resilience at every level.
By Andrew MacLeod BA (Hons) MBCI
“The concept of organizational culture must be recognised as one of vital importance to the understanding of organization and all activities and processes operating within and in connection with organization.” (Brooks, 2003)
As Brooks states, the concept of culture and therefore insights into its operation within an organization are fundamental. However, to fully understand how culture can enhance organizational resilience, one must be clear by what is meant by both organizational resilience and organizational culture. This paper will define organizational resilience in the contemporary context and explore what is meant by culture. It will be demonstrated that culture is a complex field of study and that every organization has its own unique culture which is interwoven with concepts of individual and national culture. This paper will argue that insights into, and more importantly understanding of, an organization’s culture help to ascertain the risk appetite of an organization and these insights can be used to enhance organizational resilience. It will be shown that for an organization to truly enhance its resilience it needs to embed a culture of resilience at every level.
The use of the term ‘resilience’ has proved increasing popular and widespread in the last decade, becoming a “concept used liberally and enthusiastically by policy makers, practitioners and academics” (McAslan, 2010). Resilience in organizations, particularly after the financial crash of 2008-9, has become much sought after. The UK Financial Services Authority (now The Financial Conduct Authority and the Prudential Regulation Authority) rebranded its external risk management division as a resilience department. This is indicative of organizational resilience encompassing more than risk, security and business continuity. It is widely agreed that organizational resilience implies “a common property … is the ability to cope with unanticipated system and environmental conditions that might otherwise cause a loss of acceptable service.” (Meyer, 2009)
Academic study into organizational culture began “in the 1970s and early 1980s with the work of Peters and Waterman” (Brooks, 2003) although the concept of defining the culture of an organization can be traced to the works of Jaques and his study of the culture of a factory which he defines as “its customary and traditional way of thinking and doing things which is shared.” (Jaques, 1952). Despite the concept of organizational culture having been recognised for well over half a century and culture “being a bedrock of behaviour in organizations” (Mullins, 2010), there remains substantial academic debate about what constitutes organizational culture and its relevance to enhancing an organization’s resilience.
One of the most popular definitions of organizational culture, because it captures the essentials in succinct terms, is delivered by Uttal;
“Shared values (what is important) and beliefs (how things work) that interact with an organization’s structures and control systems to produce behavioural norms (the way we do things around here).” (Uttal, 1983)
Whilst that definition has undoubted merits as a simplistic generic statement, it is limiting in allowing a full understanding of culture in an organizational context. As Mullins comments, “attempting to analyse culture in terms of different levels or generic typologies is too simplistic and prescriptive and serves no useful purpose in evaluating applications of management and organizational behaviour.” (Mullins, 2010). However, as Mullins goes on to point out, there are some fundamentals controls that are always likely to influence organizational culture.
“We can, however, identify a number of key influences that are likely to play an important role in the development of any corporate culture. These include history, primary function and technology, strategy, size, location, management and leadership, and the environment.” (Mullins, 2010)
These are demonstrated by Johnson and Scholes who suggest that the organizational paradigm is contained in a cultural web. (Johnson & Scholes K, 2002)
Culture can be a shared set of ideologies, values and rituals. It conveys a sense of an underpinning bond between a group, although each individual will subtly shape a culture, and “different groups may have different beliefs, different values, and different interpretations of things around them.” (Brooks, 2003)
Organizational cultures, particularly in large organizations, may contain sub-cultures and counter-cultures. A sub-culture is where a group has values and related behaviours that are so different that they distinguish their members within the dominant culture. Whilst Brooks maintains that “friction is commonplace between different organizational subcultures” (Brooks, 2003), sub-cultures remain compatible with the dominant culture in an organization. A counter-culture is where a group has values and related behaviours that are so different that they set their members in opposition to the dominant culture of an organization. Cultures can be found at ascending levels throughout society and organizations, it is important to remember that “although culture is created and sustained in social contexts, such as in an organization, it is dynamic and constantly evolving.” (Brooks, 2003)
Schein (Schein, 1985) suggests that culture is found at three levels: assumptions and taken for granted beliefs; values; and behaviours. To expand further, what Schein is suggesting is that at the core of any culture lies peoples’ assumptions and fundamental ideologies which affect their view of the organization. These deeply rooted principles will guide the ways in which the culture can be altered. Individuals generally want to maintain these assumptions and it is when these basic principles are challenged that greatest resistance to change is found. These assumptions then inform cultural values or supporting beliefs. These are often manifested as codes of ethics and morality, or in an organization, the way that business is conducted. Finally, and most obviously to the outsider, are visible signs, symbols, rituals and ceremonials or behaviours. This is supported by Morgan’s view that “organizations are in essence socially constructed realities that rest as much in the heads and minds of their members as they do in concrete sets of rules and regulations.” (Morgan, 1986) Although there is merit to be found in this approach, it has been argued that Schein’s view is a “rather static view of a dynamic concept.” (Brooks, 2003)
Culture is a general concept that varies in every organization and frequently within organizations. The concept can be linked to organizational change and as this paper will go on to demonstrate, insights into the operation of culture can enhance organizational resilience. This paper believes that Mullins best summarises organizational culture when he states;
“Every organization will have its own unique culture and most large business are likely to have something of a mix of cultures.” (Mullins, 2010)
It can be argued that studying the types of organizational culture best demonstrates how insights into the operation of culture can enhance organizational resilience. Handy, developing the work of Harrison (Harrison, 1972), identifies four main cultures based on structural design features: power culture; role culture; task culture; and person culture. Brooks describes Handy’s theory as “a rather superficial, even trite, view of this complex, all embracing and symbolic concept which is culture.” (Brooks, 2003) However, if one combines Handy’s theory with Deal and Kennedy’s work which categorises corporate cultures on two determining factors: the degree of risk associated with the organization’s activities; and the speed at which organizations and their employees receive feedback on the success of decisions or strategies (Deal & Kennedy, 1982), it is clear that Handy’s (Handy, 1989) work can give insight into how culture can enhance organizational resilience.
Power cultures are what Handy describes as being found in small entrepreneurial organizations. They rely on central power, informal communications and have little bureaucracy due to a unity of purpose. Role cultures have considerable bureaucracy and are characterised by being broken down into numerous departments, particularly into areas of specialisation. Generally role cultures are suited to organizations where efficiency is stressed. A task culture is common in matrix organizations, “where a team culture exists alongside autonomy.” (Brooks, 2003) These organizations have the agility to make quick decisions, making the organization flexible. Finally, person culture, where the individual is dominant, and limited control is exercised and little formal structure is present (Handy, 1989). For any academic or manager wishing to understand how to enhance organizational resilience it would be essential to understand the type of cultural structure in place in an organization so as to put in place the most effective resilient capabilities to reflect that organization. They may also decide that the organizational culture is not appropriate to enhance resilience and therefore consider “manipulation of the structure of culture” (Brooks, 2003) although this decision could not have been made without effective insight into the operation of culture within that organization.
The relevance of the operation of culture to enhance organizational resilience is demonstrated within BS 25999-2, the now superseded British Standard for Business Continuity, which has a chapter entitled ‘Embedding BCM in the organization’s culture’ (BS 25999-2, 2007) where it states the purpose as;
“To ensure that the organization embeds business continuity into its routine operations and management processes, regardless of its size or the sector within which it operates.” (BS 25999-2, 2007)
Many organizations now run bespoke briefing sessions for their staff where organizational resilience (encompassing crisis management and business continuity) is embedded into the culture of individuals in the organization. These organizations have recognised that without understanding and developing resilience within the culture of the organization, organizational resilience will never be enhanced.
One of the leading academics in the study of organizational culture, Brooks, identifies that “organizational culture is frequently cited as being responsible for all manner of organizational ills and, on occasion, credited with creating positive qualities.” (Brooks, 2003). This would suggest that whilst organizational culture can frequently be a barrier to change and therefore developing resilience within an organization, at the very least an understanding and insights into that organizational culture would be necessary to enhance resilience. As the second part of the quote alludes to, organizational culture can be mentioned in a positive light as well as a negative one, and frequently it is an organization’s culture that allows it to enhance organizational resilience. Organizations in Japan are frequently considered to have exceptional organizational resilience and generally follow the role culture structure (Handy, 1989). A large proportion of the credit for this can be attributed to the organizational culture which is prevalent in Japan.
“Japanese organizational culture is based on more trust, more subtlety and more intimacy in work relationships.” (Pugh & Hickson, 1989)
However, the reader must bear in mind that the source was written in the 1980s when Japanese organizations were in the ascendancy and their cultural model was being mooted as one which American and western organizations could learn from. In the present day, the Japanese corporate model is not so sought after, although the Japanese response to the Fukushima disaster again showed the national culture was inherently resilient. This concept of a culture enhancing resilience encouraged Morgan to state;
“Many discussions of Japanese management tend to ignore the cultural-historical circumstances that allow Japanese management to flourish as it does.” (Morgan, 1986)
The concept that national culture embeds itself in certain organizational cultures and therefore gives insights into an organization’s “capacity to recover quickly from difficulties” (McAslan, Organizational Resilience. Understanding the Concept and its Application, 2011) is not limited to Japanese organizations. Schramm-Neilsen compared the decision making process in French and Danish organizations, and came to the conclusion “there are clear differences in the way decisions are arrived at … we find that they fit into different patterns according to what is considered important in relation to the desired outcome.” (Schramm-Neilsen, 2001). This insight into how and at what speed decisions are made is a crucial insight into how best to develop effective crisis leadership and therefore resilience in both French and Danish organizations.
Where an organization has been impacted by a disaster or crisis it is essential for that organization to conduct a post incident enquiry and learn from the incident to further develop their resilience. Frequently these post incident enquiries focus on the culture of the organization and whether it supported organizational resilience. For example in the aftermath of the Deepwater Horizon oil spill, the US Coast Guard produced a report that laid significant blame at the hands of rig owner Transocean.
“Deepwater Horizon and its owners, Transocean, had serious safety management system failures and a poor safety culture … Collectively, this record raises serious questions whether Transocean’s safety culture was a factor that contributed to the disaster.” (BBC News, 2011)
Mitroff argues that for an organization to be resilient it must appoint a crisis leader whose role is to embed resilience in the organization’s culture. He then takes his argument a step further when he calls for ‘quantum organizations’ to fully embed organizational resilience in the culture of the organization:
“the idea of a quantum organization through the concept of “distributed security.” That is security, or much more generally CM [Crisis Management], is part of everybody’s job … In effect, every employee in the organization would be a fellow of the crisis academy.” (Mitroff, 2005)
When an organization has reached the state where the organizational resilience is embedded within the culture, at all levels and sub-cultures, it will have effectively used an understanding of culture to enhance its resilience.
In conclusion, the operation of culture in an organization is a complex concept and different cultures, and influences on that culture, can be found at a myriad of levels within organization and more generally society. As Brooks states, “Organizational culture is a complex field of study stimulating definitional and methodological debate and contention.” As culture is linked to everything within an organization, including performance, attitudes to change, structure and most relevantly for this paper, organizational resilience, possessing insights into, and more importantly understanding of, the operation of culture is essential to enhance organizational resilience as it is the culture of the organization which dictates the risk appetite of the organization. For an organization to truly enhance its resilience it needs to embed a culture of resilience at every level.
The author
Andrew MacLeod BA (Hons) MBCI is an award winning business continuity and crisis management director with eleven years’ experience developed as a director at Needhams 1834, a leading independent provider of business continuity and crisis management consultancy, planning and training services. He can be contacted at andrew@needhams1834.com or 02073539498.
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