We are Not Victims of Culture. Leaders Shape It. So, Here’s a Primer on Culture.

By: Josh

In 1987, Paul O’Neill took over as CEO of Alcoa, the Aluminum Company of America. A century earlier, the company’s founder invented the process of smelting aluminum and Alcoa had enjoyed long-held success up to this point – consistent investors, strong returns, and a solid handle on the market. However, recently, investors were less encouraged after several missteps of seemingly unwise decisions to expand into new product lines, which allowed competitors to steal away customers and profits.

Paul O’Neill was a surprising selection as the new CEO to right the Alcoa ship. Previously a government bureaucrat, few Alcoa stakeholders heard of him before. So, there was early skepticism and concern. At O’Neill’s opening meet and greet upon taking over however, that skepticism turned to horror when his opening speech started with, “I want to talk to you about worker safety.” Opportunities like this for new CEOs are often dedicated to communicating a compelling vision, audacious goals, and commitments to change for the company. Instead, O’Neill talked about one thing – worker safety. Investors went a bit crazy, immediately selling stocks out of a loss of confidence in the new CEO and the future of the company.

But what went unsaid that first day was that O’Neill’s vision for worker safety was the start of a new, focused, and disciplined organizational culture. Through the lens of worker safety, O’Neill changed Alcoa’s structure, processes, how everyone did business every day in big and small ways. Alcoa introduced safety managers, implemented safety meetings, established high consequences for safety violations and negligence, and even redesigned entire warehouse footprints to ensure machine and truck use was more regulated and safer. Policies changed. Procedures changed. Everyone’s habits changed from the top to the bottom.

Before O’Neill took over, Alcoa didn’t even have a safety problem. It was a safe company, one of the most in the industry. But by the time he left in 2000, 13-years later, not only was Alcoa the safest company in the industry with no one even close to compare to, but the company’s net income was five times larger than before he started and its market capitalization rose by $27 billion.

The case of Alcoa, as told in Charles Duhigg’s book, The Power of Habit, is one that points to the power of organizational culture. Culture is the living, breathing core of an organization’s being. Famed management author and consultant, Peter Drucker, infamously asserted that, “culture eats strategy for breakfast.” The bottom line is that culture is an incredibly important component of organizations and can easily be the thing that makes or breaks them. Or can be the thing that separates good teams from great ones. Just look at cases like the TV show, Ted Lasso; James Kerr’s book, Legacy; or Daniel Coyle’s, The Culture Code. All demonstrate the importance of culture.

So, let’s explore the basic foundations of culture – what leaders need to know about what culture is, why it’s important, and how we can easily frame and understand it so we can then do something about it. Before we dive in though, It’s necessary to establish one vital assumption that leaders must acknowledge and own: We are not victims of culture. Leaders shape culture to improve our organization and its collective performance. Remember this key assumption throughout this exploration.

What is Culture?

What do we mean when we say culture? One definition I like comes from Columbia’s Dr. W. Burk, stating that culture is the collection of overt and covert rules, values, and principles that guide organizational behavior and that have been strongly influenced by history, custom, and practice.

I recently worked with a group during an off-site that crafted their own definition of culture, which I grew fond of. They claimed that culture is a community’s set of enduring values, beliefs, norms, and underlying assumptions expressed through symbols, traditions, and practices that are expected by all members, which leads to increased cohesion and performance.

While defining culture, we must differentiate it from our organization’s climate, which are the collective current impressions, expectations, and feelings of members within their local work units. To fully understand and appreciate culture, we must acknowledge that culture is much deeper seeded than climate. Culture attends to the long-held and long-developed practices of the organization that define who we are, what we do, why we do it, and how we do it. Climate reveals peoples’ current feelings about the organization, which can easily change, even by changing out leaders. Culture does include many easy-to-see tangible things. But it also captures the hard-to-see, not often talked about assumptions and beliefs that tie directly to an organization’s core identity.

Why Does Culture Matter?

To start, Gallup’s 2023 State of the Global Workplace Report showed that employees’ #1 response to the question, “what would you change about your workplace to make it better?” was overwhelmingly culture. 41% of respondents answered “engagement and culture,” which was significantly ahead of the #2 answer of “pay and benefits” with only 28% of respondents.

Gallup’s research also found that a connection to culture drives professional and personal results. Specifically, those who strongly agree with the statement, “I feel connected to my organization’s culture,” are:

• 7x as likely to be engaged at work.
• 2x as likely to strongly agree that they would recommend their organization as a great place to work.
• 68% less likely to feel burned out at work.
• 55% less likely to be actively looking for another job.

Culture matters in deeper ways too. It provides the core to an organization’s identity, helping members know who we are, what we do, why we do it, how we are different, and why all that matters.

Culture serves as a collective sense making device, providing a shared lens to view our environment through. It inspires collective commitment, nurturing one of the three key sources of cohesion – collective cohesion – where we bond over a shared identity and commitment to something.

Finally, culture is a mechanism to establish a stable social system, making clear to all members this is how we do business…and how we don’t.

So, How Do We Make Sense of Culture?

So, we get what culture is and a bit into why it matters. That all makes sense, sure. But what really is culture? How can we really understand it if we are called to shape and drive culture as leaders?

Arguably the simplest and most effective way to understand organizational culture is to view it through the lens of Edgar Schein’s model, the three levels of culture, depicted below.

The top level, artifacts, are the most visible and easiest parts of a culture to obtain. Artifacts are visible, tangible components of an organization’s makeup. They are the language members use, its structure and organization, the systems and processes that everyone uses day-to-day, and how members interact with one another. Artifacts can also be physical things like objects, statues, or structures that carry significant meaning. However, while artifacts are easy to see and collect, they are hard to interpret. Artifacts really describe the “how” and “what” of a group’s regular behavior but does not provide the “why.”

The second level, values, are the principles that govern behavior. They guide who we are, begin to touch on why we do it, and provide the very basic litmus test of what is and is not acceptable within the group. Values may be reflected in artifacts such as the organization’s values posted on its walls or website. But values are often harder to directly observe and tend to require deeper investigation and inference of the organization.

The final and deepest level is underlying assumptions and beliefs. This level defines the very core of an organization and the ultimate “why” of our behavior and even purpose. This level is often unconscious, making it the hardest to see and interpret, but ultimately shapes how members perceive, think, and feel. It directs how things really are in the organization. These underlying assumptions and beliefs are rarely talked about outright and are often learned responses through socialization within the organization over time. The more the assumption or belief is taken for granted by the group, the more it drops out of awareness.

When we look at the opening case of Alcoa, the artifacts were easy to spot. It was things like safety managers, safety meetings, consequences, standard operating procedures, how warehouses were designed, and so on. When it came to values, Alcoa espoused safety, performance, profit, and quality. However, it was clear that nothing ever trumped safety. All of this, however, sprung from a deeply held and rarely communicated assumption that every worker should expect to work in a safe environment. The industry was dangerous; accidents were normalized and even to be expected within reason. But through O’Neill, Alcoa came to challenge that assumption and replace it with one that asserted that productivity did not need to necessitate danger.

5 Ways Leaders Can Use the 3 Layers of Culture

Now, if you’re like me, at this point you might still be left thinking, “Well, now what? I get culture now, but what do I do with it?” So, to wrap up our initial exploration into culture, let’s touch on five take aways that leaders can apply to put this model of culture into action.

1. Level visibility vs. interpretation vs. noise. The top layer, artifacts, are the most visible and easiest to encounter. As we go deeper into the layers, however, things become less and less visible. It’s harder to observe values and deep-held beliefs, but it also becomes easier to decipher and interpret them. The deeper we go, the more time it takes to identify, assess, and make sense of what we encounter. Leaders cannot simply stop at artifacts to understand the culture. Artifacts are the starting point. We must continue to dig, knowing that it will take time and exposure to make sense of all the seemingly unconnected things. There is also going to be a lot of noise to navigate through in this process. Be patient, be consistent, and be deliberate as we strive to understand and clarify our culture.
2. The who, what, and why of identity. I see organizational identity as being members committing to a clear, shared understanding of who we are, what we do, and why we do it. Our culture provides those three critical Ws of our identity. Artifacts and values define who we are and what we do. They guide our organization’s behavioral norms, define what is and is not acceptable, and capture our rituals and the patterns of how we work. But it is the underlying assumptions and beliefs that capture our why. Leaders communicate perspective and “why.” We provide purpose, direction, and motivation. To do this, we need to know, interact with, and use all three layers of our culture.
3. Espoused vs. enacted values. Does our organization walk the talk? Does our audio match the visual? Do we actually live out the values we preach every day through our behaviors, processes, rewards, and consequences? Are the values that we espouse the ones that we actually enact? Are we aligned? Leaders must be the honest brokers for our organization and shed light on a lack of alignment between our behaviors and our values. Alcoa proved to be aligned on their behaviors and their value of safety. Do we? Or do we subconsciously reward the effective bully, valuing his results over being a good teammate? Maybe we preach candor and transparency, but routinely don’t place certain leaders or positions at the table because they are too confrontational or don’t have the “right credentials or experience.” Leaders align the organization’s espoused and enacted values.
4. Leaders drive culture down. Go back to the assumption we made at the start of this argument – we are not victims of our culture. Leaders drive culture. We shape it. To do that, we must do it top down, starting with artifacts. We cannot directly or quickly change our collective organization’s beliefs. But we can introduce new artifacts that change the way we do business and shift our attitudes. We can work to establish new, authentic values. We can eradicate unwanted artifacts of our culture. Through these efforts, done consistently over time, our new collective behaviors begin to percolate down, challenging and shifting the established subconscious of our organization.
5. Culture is reflected up. We drive culture down, but it is reflected back to us from bottom up. As underlying assumptions and beliefs become challenged and begin to shift, that gets reflected through new values and new artifacts. It might come as new artifacts springing up or old, undesired ones finally stopping. It might also be members’ coming to finally own and commit to new artifacts instead of merely complying with them like a new standard of performance. As we work to shape culture from top down, we must pay attention to what is reflected back to us from bottom up. Are these shifts desired and in-line with how we are aiming to drive the culture? If not, what else and how else must we adjust? Pay attention to what our culture is communicating back to us, even among change.

I hope through this short primer, we not only understand culture more clearly and deliberately, but also have come to cultivate a few ideas on how we can start intentionally shaping it. Here are a few questions to think about this week or to even pose to your team to begin dipping our toes into the deep waters of our organization’s culture.

What do we all know and believe, but remains unspoken? Why?

If you had to simplify all the rituals and activities your organization does into two or three simple statements, what are they? What do these communicate?

What undesired artifacts of your culture must stop? Why? How should we approach it?

What do we value? Why? Do these values actually guide our behavior? Or are they nice words adorning our walls?