Culture Management Essentials

Technology organizations rarely fail because of their technology. Marketing organizations rarely fail because of their marketing. Manufacturing organizations rarely fail because of their manufacturing. Failure typically occurs because people could not think, plan, adapt and execute effectively, as a team, to meet business objectives. This kind of capability is not as talent derived as many think. Instead much evidence suggests this capability is culturally derived and can be advanced or regressed through cultural practices.

All the technical expertise in the world is of little consequence if your organization’s culture lacks the ability to support and achieve business objectives. This paper presents theory and methods which should be useful in helping technology organizations improve their culture’s supportive capability.

Culture Defined:

Culture’s textbook definitions range from the rules of conduct, to how things are done, to the prevailing climate, to corporate values. When we look for more concrete definitions in business literature it can be difficult to find definitions that are any better than these. The problem with these definitions, and indeed with most available business text definitions on this subject, is they are at best risky oversimplifications, they are often categorically incorrect, and most importantly they are irrelevant to the task of managing operating culture.

Quality gurus Crosby and Juran offer much more substantial definitions. Crosby defines culture as patterns of behaviors, which suggests some sort of naturally occurring patterns with the possibility of structure and repeatability. Juran defines culture as the creation of values, beliefs, and behaviors necessary for success, which suggests culture is an entity man creates to meet the needs of the group at the time. So is culture a natural pattern of behaviors (Crosby) or a man made entity born out of reasoning and necessity (Juran)? According to a large body of knowledge, and my own research, both themes are true at the same time.

Metrics for Culture:

Beginning with Crosby’s and Juran’s definitions for culture, and borrowing a metric discovery tool from the software engineering profession called goal-question-metric, a body of effective metrics for culture management can be constructed.

Goal: The goal of culture is to cultivate values, beliefs and patterns of behavior that can best support organizational success.

Question: How should managers cultivate values, beliefs and patterns of behavior behavior to better support organizational success?

There are essentially two questions here: one is how to cultivate values and beliefs, and the other is how to cultivate patterns of behavior. The former depends strictly on ethics, which is the philosophy and science for determining what values to hold and when to hold them. The latter depends on the social science paradigm of diagnostics, control and change management within complex systems.

Metrics: Therefore the best metrics for managing culture will be those metrics found in ethics and social sciences. In ethics we have principles, applied forms, and tests. In social science we have statistics, factors, and performance measures to identify constraints, symptoms and causes. Both ethics and social science seek to promote advancement and control regression through diagnostics and prevention.

A Strong Culture Model:

The Orgculture model was developed using combinations of ethics and social science factors widely reported by texts and leading gurus to be important to organizational health. We surveyed hundreds of employed professionals on 40 factors and formed a database.

Using statistical tools we boiled down 40 factors to 29 based strictly on statistical significance. The remaining 29 were grouped into five dominant subgroups in order of their statistical significance. These groups are: ethics, situational leadership, process capability, risk-reward, and satisfaction. These 29 factors within their 5 subgroups consistently account for over 90% of the variation in the regression r-squared values, regardless of the size or type of groups surveyed.

Of special interest to me was the weighting of the factors in model significance. Ethics generally is the most dominant factor and often accounts for half of the model variation alone. Second is situational leadership alignment, which generally is a distant 2^nd. Combined, ethics and situational leadership generally account for over 70% of the variation, with the other remaining 3 factors accounting for the remaining 30%. I find these statistics particularly meaningful because they are consistent with the goal-question-metric line of thinking where ethics and social science were identified as dominant issues.

Since this model was derived from leading texts and studies, some established principles need to be retained.

Any of the 5 main factors can be either a cause or an affect of any of the other factors.
All of the factors are always present even though a few appear dominant. Hence, any planned change or improvement in one factor should be made with respect to all the factors.
Each group diagnostic should be viewed independently as factor combinations are unique for each group.

Ethics Primer:

Ethics is a branch of philosophy that is concerned with the principles and standards of human conduct. Ethics arise not from man’s law but from human nature itself making it a body of natural laws from which man’s laws follow.

Ethics is a normative science that is concerned with the norms of human conduct. As a science ethics must follow the same rigors of logic as other sciences. When scientific ethical reasoning is properly applied ethics becomes a useful tool for sorting out the good and bad components of complex human interactions. At this level ethics is about determining what values to hold and when to hold them. Because ethics is a science it creates new knowledge and applies this knowledge to support decisions.

Ethics is a rational process for exploring all the possible behavior alternatives and selecting the best possible choice for all involved. This rational process builds from established foundations and principles to construct repeatable forms of ethical reasoning. Ethical flaws can be found at the foundation level, the principle level, or at the application level. When ethics are applied to advance organizations this branch of ethics is considered organizational ethics.

Foundations: Ethics is a critical link between technical applications and four foundations of organizational advancement: human nature, logic, utility, and transactional success. All technical and business decisions can be analyzed and tested against these foundations using ethics tests.

Principles: Ethical reasoning builds from a body of foundations and principles into logical applications. Here are a small collection of principles that apply to organizational ethics.

Natural Law: Laws that arise from human nature itself, and from which man’s law is derived. It is generally believed that the closer man’s law approaches natural law the more efficient the social system will be.
Values: Ethics is a rational process for determining what values to hold and when to hold them. Therefore, fixed adherence to values ignores ethics and promotes unethical behavior.
Change: Ethics demands a willingness to change, and change demands the application of ethics. In order for values to remain principled they must be subject to change.
Ethical process quality: The principle that ethics is at its best when intents, means, and ends, individually and collectively pursue a greater good.
Greater good: The desired state where each decision seeks to improve on the previous decision in its pursuit of alignment with Natural Law (the foundations of human nature, logic, utility, and successful transactions). Ethics seeks to order the complexities of human conduct in the most useful manner for all involved.
Linkage of Logic and Utility: Doing good is more rational and useful than doing bad, to know good is to do good, and those who do bad do so largely out of ignorance (Plato). Ethics is a logical outcome of human nature and it is useful because it is logical (Aristotle).
Forms: Principles and applications can be constructed into forms that can be applied consistently. Lower forms include Egoism (selfishness), Darwinism (might makes right), and Machiavellian (double standards). Higher forms include the law, Proportionality (Garrett), Pleasure Calculus (Bentham), Social Objectivity (Rawls), System Quality (Deming), and Transactional Efficiency (Pareto). Prima Facie Duties by Ross include keeping promises, gratitude, justice, helping others, not harming others, and self improvement. Socrates and his knowledge duty says one can never know anything absolutely and we must do ones best to know as much as possible before making decisions that affect others. Kant’s categorical imperative says one should do only what they would encourage others to do (lead by example).
Situational vs Constant Application: Some forms are universal regardless of time and place, while other forms are completely situational and vary. For example, lower forms generally are bad, higher forms generally are good, and duty forms generally are situational.
Forms Algorithm: Forms are best applied when ordered in a sequence that minimizes process flaws and maximizes success. For organizational ethics a superior algorithm is to reduce lower forms first, as these corrupt the other duty and higher forms.

Applications: When forms are organized into an ordered sequence, or a process, it becomes a branch of applied ethics. One effective and repeatable application for organizational ethics is the following three step process. First, detect and prevent all lower forms. Second, consider the most applicable duty, resolve any dilemma, and make a selection as this establishes the general decision direction. Finally, refine the duty-decision using higher forms in proportions with respect to the needs of the organization.

The order of this three step process is supported by both ethical principles and social science evidence. Ironically, many attempts in organizational ethics begin with the opposite order, with higher forms being focused upon first. This is simply a Non-Secquitur fallacy of reasoning. The Orgculture Model’s approach of addressing lower forms first has not only proven itself to be an effective and repeatable application in many field tests, but it serves as robust evidence that both ethics and social science are at their best when considered together.

Ethics Math: I developed a math model for this application. (See appendix 2). For every possible decision there are nearly 50 billion ways a decision could be made, of which only about 360,000 are theoretically good. By eliminating the lower forms first over 99.986% of all the possible bad decisions are eliminated, leaving only 7.2 million possible bad decisions. Conclusion: The removal of Lower Forms first effectively takes any decision to the six-sigma ethics quality level.

One of the greatest contributions of the OrgCulture Model is the discovery of the importance of ethics in operating culture. Because of this, we know that one of the surest ways to improve cultural capability is to provide training and coaching in organizational ethics.

Situational Leadership:

According to Dr. Paul Hersey in his book The Situational Leader there are four distinct leader styles and four follower styles. From this 4 x 4 matrix there exist 16 possible alignments, of which only 4 are good. Situational leadership seeks to assure that proper alignments occur for each task with each follower.

In accordance with the table in Appendix 3, S4 leader behavior needs to be matched with R4 follower, the S3 with the R3, and so on. When leaders do not match their styles to the appropriate readiness level of the follower gaps occur that have been proven to hurt performance. Our studies have shown that high gaps in situational leadership correlate highly with deficiencies in each of the other 5 culture factors.

Situational Leadership is the ultimate social science metric. It follows a sound algorithm, is repeatable, and provides immediate feedback regarding the level of advancement or regression in readiness by an individual for any given task. Situational Leadership is also an excellent tool for personal and leadership development. Gaps between leader style and readiness level can cause instability and failure in the other 4 main culture factors, ethics, process capability, risk-reward, and satisfaction.

Organizations can promote improvements in their cultures by providing training and coaching in situational leadership.

Social Science:

Social sciences study the performance of people systems and how they can be predicted, controlled, or improved. Examples of social sciences are economics, psychology, sociology, political science, quality control, marketing, and all fields of management. Social sciences use statistics to isolate, control, and improve key performance factors.

One aspect of social science that drives the need for diagnostics and control is the phenomena of advancement and regression. In all social sciences there are things that advance and regress performance. Unless both conditions are known in real time there is little that can be done to proactively improve performance. Fortunately much is known about the causes of social system advancement and regression.

Advancement: Causes of social system advancement are capability or readiness, willingness or buy-in, and confidence or security. Organizations that maintain strong process capabilities, have high levels of consensus, and have tasks performed by individuals who are confident and secure, have a strategic advantage over other organizations that do not have these internal strengths.

Regression: Causes of social system regression are the inverses of those causing advancement. Reductions in capability or readiness, reductions in willingness, and reductions in confidence or security, all can cause performance regression. Regression can be triggered by pressure, stress, or by a regression of another factor. Regression, if not reversed, can develop into severe forms of culture failure such as Groupthink or Abilene, where catastrophic failures to individuals and to the organization become more probable. Causes can be diagnosed and expressed in terms of the five culture factors: ethics, situational leadership, process capability, risk-reward, and satisfaction.

Two common symptoms of regression are resistance and frustration. It is an unfortunate fact that many managers consider these causes and expend a significant amount of resources trying to fix or punish- resistance and frustration.

Resistance is nothing more than a natural response to problems encountered with an idea or a decision. Resistance is information first, and behavior second. Resistance reveals one of two things: either there is an ethical flaw causing natural resistance, or there is a transactional loser who is attempting to minimize their losses. In either case, both conditions are preventable and correctable in most instances.

When resistance is viewed as bad behavior first the potential value of the information it represents can easily be lost. When managing culture, resistance needs to be viewed as information, and the information must be put to fruitful use. Treating resistance as a threat that needs to be overcome with force is a distraction at best, as the force can be viewed as abusive hence promoting more frustration and regression, which ironically can lead to even more resistance. Force can suppress resistance but it can never cure it. The best way to deal with resistance is to prevent it through ethical reasoning. Situational leadership is ideal for generating feedback, like a control metric, so resistance can be detected and the decisions refined before they can do damage to the culture.

There are four common symptoms of frustration:

Aggression: When someone acts aggressively towards a source of frustration, or towards a non-source (deflection).
Regression: When a process, individual or group deviates from expected behavioral or when performance declines.
Fixation: When individuals form into cliques or social groups to escape or to seek protection from the unpleasant aspects of a social system.
Resignation: When individuals give up trying to win within a difficult social system. Resignation can range from an emotional distancing to physical removal from the system.

The key to all social system management, ethics management, and culture management in general, is to look past the symptoms of failure and to focus on the root causes. By focusing on the 5 culture factors of ethics, situational leadership, process capability, risk-reward, and satisfaction managers are automatically guided towards causes and away from symptoms.

The key to social science management is detection and prevention through timely diagnostics. The more an organization invests in timely diagnostics, the more capable the organization will be at managing regression and advancement. Formal metrics from SPC, six-sigma, or enterprise information systems can be very effective at detecting and preventing technical problems, however their ability to detect and prevent cultural problems are more limited. Ethics and situational leadership, though less formal, are especially effective at detecting and preventing culture failure.

Transactions:

Cultures are driven by transactions. All internal and external transactions either meet the basic needs of the participants, or they fail to do so in varying degrees. The degree of cultural nonconformance can be measured through the 5 culture factors.

The Italian economist Alfredo Pareto defined the perfect economic state for any transaction (today referred to as Pareto Efficiency) as the state where at least one party is clearly better off, most parties are as well off, while no party is clearly worse off. This definition of the win-win transaction is the cornerstone of all culture management. It is the intent, means, and ends of an organizations transactions that ultimately determine the cultural capability within the organization.

How transactions are conducted can be just as influential to a culture as the transaction itself. For example, transactions that are constructively proposed with a positive sandwich technique ( say something good, offer the proposed transaction, then close on another constructive thought) has been proven to produce better results than other variants. If you insult the prospect, propose the transaction, then threaten them if they do not agree, damage to both the transaction and to the transactional process (culture) can be predicted. Our studies throughout many organizations reveal that many cultural disorders are caused precisely by such misapplications of transactional power.

All changes in cultural health, whether they are advancements or regressions, are precipitated by transactions. Therefore, the shortest path to a stronger (or weaker) culture is through the kinds of transactions that are occurring. Make them win-win, and pursue them constructively, and the culture will benefit.

Summary: The Role of the Manager in Culture Management

Culture management begins and ends with the basic idea of how each manager perceives their role. If this role is perceived to be void of culture management responsibilities the culture will be weak. If culture management responsibilities are ingrained into all management positions, and if upper managers lead accordingly by example, the supportive capability of the culture will be strong. The following summarizes some of these necessary managerial responsibilities:

Accept culture management responsibilities: The managerial role is not just to meet the boss’s requirements, but to help subordinates and coworkers cope and succeed. The manager is not only responsible for getting work done, but for developing and maintaining the work environment by maintaining the 5 factors, especially ethics and situational leadership.
Manage the ethical components: Detect and eliminate lower forms. Use the ethical reasoning tools to determine what values to hold and when to hold them, while avoiding strict adherence to any set of fixed values. Support duty selection through improved information flow and open dialog. Refine decisions using higher forms.
Manage the social science components: Promote advancement and prevent and control regression through the simultaneous focus on the 5 culture factors of ethics, situational leadership, process capability, risk-reward, and satisfaction. Use statistics to diagnose, control, prevent, and advance where practical. Use situational leadership to detect and prevent culture failures.
Focus on causes, not symptoms: Avoid over reactions to resistance and frustration. Shift your focus to the 5 factors which are most likely where your true causes are.
Improve transactions and transactional processes: Seek Pareto Efficient content and outcomes, as well as constructive approaches using positive sandwiches.