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Organisational culture and quality improvement


R. Maull
University of Exeter, Exeter, UK

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P. Brown
AXON Consulting, London, UK, and

R. Cliffe
Lloyds TSB Bank, UK
Keywords TQM, Organizational culture, Financial services, Organizational change Abstract This article has two main sections. The first section presents the theoretical underpinnings for the development of a cultural analysis model that companies should undertake prior to embarking on a TQM programme. The PCOC model (Personal, Customer orientation, Organisational and Cultural issues) which is derived from the Hofstede approach to cultural analysis, was used to determine whether the development of a questionnaire to measure the culture and the organisational environment could be achieved. The model also provides an organisational climate analysis which can then be compared with results from the cultural analysis. Describes a seven step approach whereby companies can operationalise the PCOC model to their organisation. The second section of the article presents the findings from the use of an organisational culture assessment model, PCOC, within four financial services organisations (FSOs). The returns for each of the FSOs were analysed against the returns for the four organisations as a whole. The results for each FSO are presented separately. The major issues for each FSO are drawn out using a `` test to analyse the differences for the FSOs as a whole.

International Journal of Operations & Production Management, Vol. 21 No. 3, 2001, pp. 302-326. # MCB University Press, 0144-3577

Background This article describes the results of a research project which began with the recognition that many companies undertaking total quality management (TQM) programmes have, in recent times, switched their attention from applying the tools and techniques of TQM to attempting to align their TQM programme with their prevailing organisational culture. This leaves practising managers with the difficulty of identifying their organisational culture or cultures and tailoring their TQM programmes to match. In this paper the authors seek to provide a model for organisational culture and provide results from the application of the model within four separate business units of a financial services organisation. Experience within our case study company has shown that the change issues associated with TQM were not contingent upon management techniques or skills but, as observed by McNabb and Sepic (1995), ``may be attributed to deeper, more critical sources: the fundamental, pervasive culture of the organisation and the operating climate that culture instils in its employees. The importance of culture in understanding TQM is also widely supported in the literature. Authors such as Patten (1992), Kim et al. (1995) and Hildebrandt et al. (1991) have all encouraged the acceptance and the recognition of the organisational culture construct within quality management, especially as a primary condition for its successful implementation.

Vanisina (1990) argues that ``successful implementation of TQM requires an assessment of the organisational culture and the implementation of an integrated process for change in organisational behaviour. Crofton and Dale (1996) highlight the organisational culture problems associated with TQM implementation and the effect that culture can have. Bright and Cooper (1993), however, decry the lack of empirical and theoretical work examining the connection between organisational culture and TQM, particularly with regard to the use of ``hard tools, techniques and systems in the implementation of TQM. In this article we address the need for empirical and theoretical research which seeks to connect organisational culture with TQM. First, we set out to provide a model which enables practitioners to make an assessment of their culture and its related concept, climate, where the climate represents the business context within which the culture exists. Second, we developed a process using focus groups to operationalise the culture/climate model in a format which could be used in the organisation. Third, we developed a questionnaire which aims to help companies undertake a culture/climate assessment prior to their TQM implementation. Fourth, we provide the results of the questionnaire and comment on some general implications for the development of TQM programmes. Theoretical perspectives on organisational culture The term ``organisational culture has proved extremely popular with management theorist and managers alike since the publication of In Search of Excellence (Peters and Waterman, 1982). The term ``culture has its theoretical roots within social anthropology and was first used in a holistic way to describe the qualities of a human group that are passed from one generation to the next. It was described by Tylor (1971):
culture . . . taken in its wide ethnographic sense, is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.

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Organisational culture provides a people-centred, theoretical perspective on the management of change that is seen to offer some insight into the ``intangible nature of organisations and their behaviour: a contrasting approach to the traditional management view of organisation (formal structures, rules and procedures and rational argument). The problem lies in the generation and use of new tools and techniques within the organisational culture perspective which makes the ``people management, the management of change and the realisation of strategic objectives, easier to accomplish (Brown, 1992, p. 3). An examination of organisational culture raises crucial and unavoidable philosophical issues in advance of proposing frameworks or frames of reference. There are two main areas within which philosophical issues must be addressed, namely the theoretical perspectives of organisational culture and the research approach to organisational culture. They are simply expressed as:

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(1) Whether organisational culture is an independent or dependent (internal) variable (i.e. is organisational culture something an organisation has or is?). (2) The epistemological grounding of the research method which affects the tools, methods and interventions that users have at their disposal. Culture as an independent variable Viewing culture as an independent variable looks at how it is imported into the organisation through the membership. This view takes as its key premise that there are specific characteristics of ``good cultures that are universal and easily imported into the organisation. Modern management theory exhorts managers to create corporate cultures which dovetail with effective corporate strategy (Davis, 1984). This is also considered to be one of the main success factors for ``Excellent or ``Theory Z organisations (Ouchi, 1981). Organisations are told to apply generic formulae in order to obtain a corporate culture of an appropriate and productive form. The crucial assumption here is that culture is an objective and tangible phenomenon which can be changed through the application of direct intervention methods. Appropriate research methods attempt to analyse and audit culture and seek to provide a basis for action in changing culture. Culture as a dependent variable From this perspective organisations are themselves culture-producing phenomena and are essentially social instruments which produce goods (Smircich, 1983). Accordingly, each culture is a unique product of its history, development and present situational issues. Cultures also produce distinctive artefacts, such as rituals, legends and ceremonies as by-products. While organisations are embedded within a wider cultural context, this view emphasises the sociocultural qualities that develop within organisations. Authors who adopt this perspective construe the culture concept within a systems theory framework which holds that the organisations exist largely in a determined relationship with their environment. According to Deal and Kennedy (1982), culture adds to the systemic balance and effectiveness of the organisation i.e. ``through a strong culture. The key is to achieve sufficient cultural integration across the varied areas of the organisation in order to effect sufficiently co-ordinated strategy or action, whilst maintaining the unique value systems at the local levels. Culture is the glue that holds the organisation together. It expresses the values or social ideals and shared beliefs, which are manifest in the specialised language that is unique to each organisation and which are a product of the history and operational experience within the organisation. Culture as shared values and beliefs gives identity to members and generates commitment beyond the ``self, and enhances social system stability. It is also a sense-making device that guides and shapes behaviour. Firms that have cultures supportive of strategy are likely to be successful, while firms that

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have insufficient ``fit between strategy and culture must change since it is the culture which supports the strategy (Pascale, 1990). Perspective of this research It is difficult to make categorical statements about the nature of organisational culture. Both perspectives have their supporters. Indeed, at the highest conceptual level it is reduced to the positivist/functionalist vs interpretivist/ phenomenologist perspective in cultural analysis. We recognise the importance of taking an interpretivist perspective on organisational culture. Indeed, we are aware of many ethnographic studies currently being carried out (see for example an ethnographic study with implications for designers (Parsons, 1998)). However the aim of this research was not confined to description and understanding. We were seeking to provide practising operations managers with a process which would enable them to understand their organisational culture prior to TQM implementation. As researchers seeking to inform practising operations managers, we have taken the view that it is difficult to envisage the sort of project which would directly aim at changing an organisations culture. A direct attempt to identify and then change a culture so that the culture is then more amenable to a TQM programme is not what this research attempts to do. Our view is that it is important to know about the culture before implementing a TQM programme. That is not the same as changing the culture first. We are more concerned with matching the TQM programme to the culture. If a cultural analysis method (with a particular emphasis on the issues associated with TQM) can be developed this might lead the practising operations manager into a more informed choice on the type of TQM intervention. It is therefore important to understand before we set out on TQM programmes what the current state of the organisational culture is. To do that we must first examine the different models of culture provided in the literature. Organisational culture literature We have identified four main themes in the organisational culture literature. First, some authors view culture as a learned entity. At a basic level, culture may be defined as ``the way we do things around here or ``the way we think about things around here (Williams et al., 1994). In general, learning definitions of culture deal primarily with the way we act or the way we think. A widely accepted definition of culture provided by Schein (1984) is:
The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaption and internal integration, and that have 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.

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The key feature is that culture is taught to new members as the correct way to behave, thus perpetuating organisational survival and growth.

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A second perspective from the literature is one that views culture as a belief system. According to Davis (1984) corporate culture offers a contrast to the past rigidity of management models. He defines culture as:
The pattern of shared beliefs and values that give members of an institution meaning, and provide them with the rules for behaviour in their organisation.

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An examination of organisational culture begins by distinguishing between fundamental guiding beliefs and daily beliefs. Guiding (loftier) beliefs provide the context for the practical ``nitty-gritty beliefs of everyday life i.e. guiding beliefs give direction to daily beliefs. As fundamental precepts, guiding beliefs rarely change since they are in the realm of universal truth. Daily beliefs are also part of the company culture and can be described as the rules and feelings about everyday behaviour. However these are dynamic and situational; they change to match context. A third perspective is seeing culture as strategy. Bate (1995) in a wide ranging analysis, fundamentally disagrees with the distinction between strategy and culture. To Bate, the separation of the two has no validity, since the two concepts are synonymous. He makes it clear that he was: ``not suggesting that culture is like strategy (and vice versa), nor am I saying that culture and strategy are closely related . . . What I am saying is that one is the other . . . culture is a strategic phenomenon: strategy is a culture phenomenon. The implications of such beliefs are twofold: (1) Strategy formulation of any kind is a cultural activity (the development of strategy is cultural development). (2) Culture change is strategic change. The rational outcome of these statements is that any suggestion of attempting to set up a separate ``culture change programme is fundamentally flawed since culture change is already taking place within formal and informal strategic planning processes. A more detailed outline of these arguments is contained in Bate (1995). A fourth perspective which incorporates many of the elements of the previous types is to view culture as mental programming. One of the key supporters of this perspective is Hofstede (1980) who defined culture as the ``collective programming of the mind, which distinguishes the members of one category of people from another. This definition stresses that culture: is collective and not a characteristic of individuals (shared values); is mental ``software, therefore invisible and intangible as such; is interesting only to the extent that it differentiates between categories of people. Hofstede attempted to develop a cultural typology for the relationship between organisational cultures and their local national cultures. He developed this work through research at IBM. Figure 1 shows the onion diagram model of organisational culture developed by Hofstede et al. (1990). It has four main

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Figure 1. The Hofstede levels of organisational culture

elements; symbols, heroes, rituals and values. The core of culture is formed by values which are broad tendencies to prefer certain states over others and are the deepest level of culture. Rituals are collective activities which are considered socially essential and heroes are persons who possess characteristics which are highly prized and are often the ``winners or those who get on in an organisation. Symbols are the most overt element of culture and are the gestures, objects or words recognised by those who are part of the same organisational culture. The Hofstede process for the measurement of organisational culture involves two interlinked steps: in-depth open interviews in each area or business unit, and a questionnaire survey of stratified samples of managers and workers. Whilst Hofstede was originally associated with assessing culture across countries (Hofstede, 1980) in later years he has adopted this approach to investigate internal organisational culture (Hofstede et al., 1990). In our view all of the culture models presented above follow the same basic structure with regard to the tangible elements of culture and we have summarised them for the purposes of this research using the Hofstede framework of symbols, artefacts, structure and systems, and daily beliefs etc. The literature also indicates that it is not sufficient to attempt to understand and measure the culture of the organisation. It is also imperative to measure the impact that the culture has on the everyday operations and workings of the organisation, that is, how the organisation organises itself, its relations with customers (internal and external) and how the organisation treats staff. To understand further these cultural impacts we have drawn on a wide variety of literature. This includes: Dastmalchian et al. (1991) who point out the roles of overall environment (effectiveness), communications, and supervisory support (innovation and problem solving) in an organisations ecology; Kim et al. (1995) identified the importance of the organisational decision making within the overall framework of the organisational environment; McNabb and Sepic (1995), stress the importance of work satisfaction;

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EFQM Model for Business Excellence gives highest priority (in terms of criteria weighting) to Customer Satisfaction, People (Management and Satisfaction), Results, Processes and Leadership. The model is based on the premise of ``business results achieved through leadership driving policy and strategy, people management, resources and processes (British Quality Foundation, 1995, p. 5). In the creation of the PCOC (Personal, Customer orientation, Organisational and Cultural issues) model we bring together these threads as described below. The PCOC model The PCOC model has two interrelated aspects: the cultural element and three identified elements which make up the climate (or atmosphere) in which it exists. Table I represents the headings, sub-headings and a general definition of the terms. The relationship between each of the elements of the PCOC model is shown in Figure 2. It is important to stress that the PCOC model is a holistic one. It is impossible to determine causality, i.e. whether culture drives climate or climate drives culture. In our view culture plays the central role in binding together these elements of the organisational climate. Consequently, by operationalising the model in the questionnaire (see later) we ask questions about all cultural and climate elements and analyse them together looking for inconsistencies between the various elements of the model. Using the PCOC model To operationalise the PCOC model in a form which the organisation could use the authors developed a seven step process: (1) Identify what needs to be measured, what functions should be examined and how the results are going to be analysed and published. In our case study companies the PCOC model was used prior to a major new TQM initiative as a general means of tailoring and focusing the TQM programme. (2) Identify appropriate members for the focus groups and agree the appropriate culture framework for the groups. As an example, two independent focus groups were run within our case study company, each consisting of different sets of managers. The total number of managers involved was 16, all from different units within the bank. Different grades were represented from senior directors through to more junior local line managers. (3) Run the focus groups and ensure that the information from each group is collated as accurately as possible and the key themes from the sessions are recorded. As a means of independently validating the organisational culture element of PCOC we ran two focus groups. Each was presented with a different organisational culture model. The group run by the

Personal outcomes Work satisfaction Innovation and problem solving

Issues that help to keep staff satisfied in their jobs, focusing at job, departmental and organisational level (McNabb and Sepic, 1995) The extent to which management encourages, utilises and motivates staff to produce and implement new ideas for improvements to the current ways of carrying out their jobs (Dastmalchian et al., 1991) Understanding customers, their requirements and the concept of the internal customer (British Quality Foundation, 1995) Issues of formal and informal channels of communications as well as interdepartmental communications (Dastmalchian et al., 1991) The sharing or otherwise of power and responsibility (Kim et al., 1995) The process management philosophy and how demarcation issues relating to processes which flow between departments are resolved (British Quality Foundation, 1995) The importance of planning for the future (Kim et al., 1995, British Quality Foundation, 1995) Whether employees know and understand the mission and vision of the organisation (British Quality Foundation, 1995) How change is implemented, whether it is effective and examines a number of unwritten aspects of the change process (Dastmalchian et al., 1991) Described earlier (Hofstede, 1980)

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Customer orientation Service delivery to internal and external customers Organisational issues Communications Power structure Relationships and processes Planning and decision making Mission and vision Effectiveness

Organisational culture Values Rituals Heroes Behaviours

Table I. The elements of the PCOC model

Figure 2. The PCOC model

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authors used the Hofstede model while a second group facilitated by an outside consultant used the Schein (1984) model. Each group was asked to identify the culture of the case study company based on the structure of their model. The outputs from the two focus groups were very similar. An indication of the kind of outputs obtained is shown in Appendix 1. (4) Design the questionnaire. The first inputs to the questionnaire development process were the outputs from the focus groups detailed above. As well as using many of the common outputs from the two groups as the basis for questions, the authors also sought to test a small number of the non-common outputs from the focus groups. The questions which relate to the outputs of the focus groups are provided in Appendix 1. A copy of the whole questionnaire is in Appendix 2. (5) Analyse questionnaire (see results section). (6) Publish the results. This ensures that staff receive feedback on the results of the questionnaire. (7) Integrate staff feedback and identify the areas that need to be addressed when implementing organisational change. Results The reader will be aware that much of the work leading to the results presented here, is commercially confidential and we cannot release the names of the organisations. However, we would like to state that these results represent the organisational culture within four separate parts of one very large financial services organisation (FSO). Two (FSO I and II) are branch networks. The remaining two (FSO III and IV) are dedicated to the processing of the same type of financial services product (examples of financial services products are insurance, credit cards, mortgages etc.). At the time of the analysis the four FSOs were part of the same organisation. Subsequently, FSO III has been sold. Demographic breakdown of results In total 235 staff returned the questionnaire. Of the total, 138 women and 97 men responded; 60 per cent of all respondents were aged 30 and over 16 per cent were aged 25 or below. Overall, 50 per cent of all respondents had been working for more than ten years. Interestingly, of the branch respondents 66 per cent of Network I staff and 39 per cent of Network II staff had been working for more than ten years. This disparity reflects a general difference in age profile between the two branch networks. The overall breakdown by grade and function are shown in Tables II and III respectively.

Reliability of the questionnaire An often used test of internal consistency for multi-item scales is Cronbachs coefficient alpha. The Cronbachs alpha scores for the four PCOC elements are recorded in Table IV. Results of the questionnaire A substantial amount of data was collected on each of the four FSOs. This has been reported back to each of the business units in question and has informed subsequent TQM programmes. However, this truncated analysis provides a summary of the main points and enables some general conclusions to be drawn. The responses were scored so that a high score represented a positive attitude and a low score represented a negative attitude. FSO I FSO I was the lowest scoring group of the whole of the survey. In every single aspect of the questionnaire excepting behaviours the results for FSO I were significantly different from the mean at p < 1 per cent. FSO I was not only very different from the sample as a whole but also it had low scores across the whole profile. Particularly low scores were identified in Personal outcomes and Customer Delivery scores, as well as below average Culture and Organisation ratings. The general results for FSO I are shown in
Grade Junior clerical Senior clerical Junior manager Middle manager Senior manager Returns 49 90 50 30 16

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Table II. Returns by grade

Function FSO FSO FSO FSO I II IIII IV

Returns 95 92 24 24

Table III. Returns by FSO

PCOC element People Customer Organisation Culture

Cronbachs alpha scores 0.87 0.72 0.93 0.79

Table IV. Alpha scores for PCOC elements

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Figure 3. Variables whose means for this group are significantly different from the population mean according to a ``t test are marked with ``+ signs. The ``t test was also carried out for three other FSOs. The FSO I profile was characterised by particularly low scores in Work Satisfaction and Innovation and Problem Solving and Power Structure, very low Service Delivery and Heroes scores, and low Communications. Investigating further into the data the profile presented was complex. Staff did not feel they were involved in the decision making, planning and future of the organisation. Staff were unempowered (there were particularly low scores on management actively seeks new ideas), dissatisfied (see the overall low scores on work satisfaction), felt the organisation had poor internal processes (low scores on ``employees treat internal teams and people as important customers) but motivated with some areas of real customer services values. For example there was a strong score on ``all employees understand who our customers are and their requirements. All this was carried out in an environment which valued sales over customers and staff: ``quality and service is more important than volume and sales scored very low compared to the population mean. FSO I staff consistently rated their pride in working for the company higher than the extent to which they believed the organisation showed loyalty and respect to them. The four lowest scoring questions were: (1) Everyone looks forward to going to work. (2) There is no time to examine problems that affect us. (3) My branch has a lot of influence. (4) Budget pressures have no impact on decisions being made. Of the 98 rating-scale questions, FSO I staff rated 21 of them below 2.5 and another 42 below 3.0.

Figure 3. Comparison of PCOC elements for FSO I with overall mean

FSO II The profile of FSO II seems to present an organisation that was relatively happy with what it was doing, and doing what was required to get by. In only two aspects of the model, planning and decision making and heroes, were the means significantly different from the population mean at p < 5 per cent. The profile is presented in Figure 4. A number of specific points are worth detailing. Planning and Decision Making (3.55, significant at p < 5 per cent) and Relationships and Process (3.52) all scored high but the rest of the scores were around the overall mean. Work Satisfaction was slightly above the mean (2.98) although Q35, In my department everyone looks forward to going to work each day, scored considerably below the mean at 2.21. This Branch Network also had low Power scores, which suggested that they felt that power was concentrated elsewhere. The people who worked in the network tended not to be in a position to make, or be involved in making, any kind of important decisions. The environment within FSO II appeared, generally, to provide reasonable challenges to staff within their jobs, although answers to other questions pointed out they did not have the time or opportunity to examine problems properly. Service Delivery scored just below the PCOC element mean (2.99). Staff understood who their customers were, and believed that the organisation was organised to meet customer need. The concept of the internal customer was generally not understood and answers to the specific question on ``quality and service is more important than volume and sales were very close to the population average at 2.4 (towards tending to disagree). There were above average Values (3.3) and Heroes (3.07, significant at the p < 1 per cent) scores they were able to identify and specify clear organisational role models. The PCOC elements are shown in Figure 4 compared to the overall mean.

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Figure 4. FSO II score compared to overall mean

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FSO III FSO III was the highest scoring organisation surveyed. In every single aspect of the questionnaire excepting behaviours the results for FSO III were significantly different from the mean at p < 1 per cent. Interestingly, whereas FSOI had a similar profile of results below the mean FSO III has a similar profile above the mean. The comparison with the overall mean scores is shown in Figure 5. Work Satisfaction was very high (3.60 against a mean of 2.97), staff were involved in areas of Innovation and Problem Solving (3.95 against a mean of 3.02), they were trained to use quality tools and techniques and their managers actively appeared to solicit their ideas. Time was put aside to deal with problems that affected them. Service delivery scored exceptionally high (4.0), compared to a mean of 3.01. Staff knew who their customers were. The organisation was organised to meet customer needs. In FSO III employees treat internal teams and people as important customers (this scored 3.9 for FSO III as against 3.1 for the sample as a whole) and the largest single difference in the whole questionnaire, Quality and Service were more important than Volume and Sales (3.9 for III as against 2.6 for the sample as a whole). Staff felt that they were involved in Planning and Decision Making (3.93), they had a strong understanding of Relationships and Processes (4.01), decisions were made with the long term in mind and there was an emphasis on customer needs when planning. In terms of Mission and Vision almost everyone understood the FSO III mission, there was a clear vision for where they were going, and staff were committed to the achievement of the long-term goals. The lowest scoring element was heroes (3.13), although it was well above the 2.86 average. Only two questions scored below 2.5. They were: Successful people do not work long hours; and Budget pressures have no impact on decisions being made. Given that every other area also highlighted Q90 (budget pressures), it was clear that there was a company-wide emphasis on cost control.

Figure 5. Comparison of PCOC elements for FSO III with overall mean scores

FSO III presented a profile of a company that had successfully implemented quality principles and philosophies throughout the company. They had, in reality, actually transformed from an organisation on the brink of closing only four years ago, through the application of TQM. They had recently been externally recognised through success in one of the major quality awards. The FSO III profile consistently exceeded the overall mean profile, often by 1 clear point (25 per cent). This profile was one of an excellent company, committed very strongly to excellence in customer satisfaction and where continuous improvement was a priority. FSO IV FSO IV was the second highest scoring organisation in this survey. The results are shown in Figure 6. It scored higher than any other FSO on Work Satisfaction (3.23), yet the second lowest on Heroes (2.75) and the lowest on Behaviours. Work satisfaction, Service Delivery (3.27), Communications (3.24), Relationships and Processes (3.64), Heroes and Behaviours (3.18) were significantly different from the mean at p < 5 per cent. There were ten questions that scored below 2.5. The two lowest scores were: Advancement is on the basis of Job Performance only (i.e. they felt that it was not), and budget pressures have no impact on decisions being made, which scored 1.79 although the average was only 1.9. Other very low scoring questions were, Decisions were not made in meetings, To get promoted you had to work long hours, Pay and bonus were not designed for team performance, and Not everyone had a personal development plan; Controversial issues did not appear in the staff magazine, Results were more important than procedures and Projects were not implemented by the agreed dates. On the issue of whether quality and service is more important than volume and sales FSO IV scored 2.7 as against the sample average of 2.6. The profile presented by FSO IV was of a business area that was clearly above the mean in most aspects and had applied and improved itself through the use and application of total quality principles. It would appear from the

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Figure 6. Comparison of PCOC elements for FSO IV with overall mean

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profile that the focus of TQM implementation had been on process, cost and planning and perhaps not so strongly on directly improving the areas of staff morale and improvement. Application of findings In reviewing the findings from the application of the questionnaire we have attempted to highlight some of the specific issues for the organisation concerned. To make these issues more meaningful for other practising operations managers the following section describes these issues within the context of answering three questions: (1) Can operations managers identify culture prior to introducing TQM programmes? (2) What are the implications for the design of TQM programmes? (3) How do operations managers manage the fit between organisational culture and strategic direction? Can operations managers identify culture prior to introducing TQM programmes? The FSO in which this work was based had run a large TQM programme prior to the research described here. It was now considering embarking on the second phase of the programme and understood that identifying the underlying cultural assumptions was an importrant prerequisite. By operationalising the PCOC approach the company was able to successfully identify a number of aspects of both culture and climate prior to its second phase of TQM. This information was then used to formulate the change programme and the interventions, focusing them on the key development areas and strengths of the various parts of the organisation. However, we must point out that an understanding of the organisational culture will not necessarily make change easier to implement or guarantee success. What it provides is a frame, which allows understanding of the key issues to develop through a strenuous diagnosis process, with the concomitant understanding of the areas to address in the intervention process. This information can then be fed back to individual managers to give them a map of the culture of their units, groups or departments. The major benefit of using the PCOC model was in the information it provided about the differences in culture in different parts of the organisation. This moves us on to answering the second question. What are the implications for the design of TQM programmes? The PCOC model identified that the environment within the four financial service organisations was not a homogeneous phenomenon. Rather, perceptions of the culture and the environment differed widely by FSO and incidentally by job grade (not detailed in this paper) which removed the myth of a single organisational culture within the FSO. This lends support to our

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earlier statement that companies need to manage change by measuring and understanding the key characteristics of the culture, before interventions are designed and planned. Bate (1995) also argues that this was an essential task in the change process. The development of the understanding of organisational culture within the four financial services organisations served to underline the particular difficulties of managing change at the most fundamental levels. Since each FSO was unique and had its own particular strengths and areas for development this gave the TQM team a problem. It was clear that the traditional ``sheep dip or ``one size fits all programmes where each staff member is in turn subjected to teaching on TQM methods would not be appropriate. FSO III and IV were clearly more developed in terms of understanding quality principles that FSOII and certainly advanced on FSO I. These results led the team to tailor their second phase programme to meet the needs of individual FSOs. In the first example, the quality team were considering the introduction of a company-wide performance improvement programme using some six-sigma techniques. It was clear from the analysis of the results that there would be considerable problems in FSOs I and II in introducing such sophisticated concepts. See for example the lack of understanding of internal processes. Add to this the clear existing assumption that employees show greater loyalty to the company than the company shows to them, the results on lack of empowerment, importance of budgetary pressures and need to work long hours, and the attempt to introduce robust six sigma processes might induce some cynicism. However, in the product units (FSO III and IV) the quality culture is clearly further developed. Process measurement was already established. Further developments of process measures were used to build on the existing focus on empowerment and service delivery. Second, the team were considering the adoption of the Business Excellence Model (British Quality Foundation, 1996, p 5). The team now recognised that it was likely that FSO I and II would score very low on some elements and might achieve an overall score that would prove to be discouraging. However, FSO III and IV were clearly much further advanced in quality thinking and the BEM might prove useful. Subsequent application of the BEM at FSO III actually resulted in their achieving a national award. In FSO I attention was placed on simplifying internal processes and addressing how management could be encouraged to seek ideas from staff through the use of a very simple local improvement initiative. To support this activity simple process based improvement techniques were taught. However, the culture analysis also pointed the Quality team to a more fundamental issue the tension between what senior executives were publicly exhorting the company to achieve and how the FSO was managed at the operational level. This draws us on to the third question.

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How do operations managers manage the fit between organisational culture and strategic direction? In a leading study on the value of cultural strength by Kotter and Heskett (1992), the key finding was that culture mattered, but strength did not. For them the most important issue was not whether a culture was strong or weak but whether a culture fitted its present or future context. There was no direct correlation between strength of culture and success. But there was a link between success and the adaptiveness and context-fit of a company or its ``performance-enhancingness. Kotter and Heskett identified a clear value for performance-enhancing cultures and those companies without performanceenhancing cultures experienced an enormous cost. This issue of appropriateness has been one of the major contentions of this research and has been the underlying reason why we developed a culture and climate model. Pascale (1990) developed an associated concept. He identified the organisational paradox of ``Fit/split/contend/transcend and the analysis that was undertaken raised important issues of ``lack of fit: a lack of consistency and coherence. The fit is seen between the coherence of the organisations strategies with the current organisational culture and climate. The issues that these contentions raise are discussed below, with specific reference to the particular problems within the branch network at FSO I. It was clear from the high and low scoring questions and the widely varying scores within FSO I that there was a lot of Pascales ``Contention. While procedures were very important, according to some of the high scoring questions, it was also clearly indicated that results were more important than procedures. And while staff believed that long-term success was dependent on high quality products and high customer service, there was general agreement that Quality and Service were less important than Sales and Volume; this also applies to FSO II. The main mechanism of control, which appeared strongly in all business areas, was that of cost control. It was apparent that decisions were made with the influence of strong cost consideration, whether quality and service issues or not (this was specifically addressed in the questionnaire). All of the issues outlined above describe areas of contention or of constructive conflict where seeming contradictions exist. Results versus Procedures, Volume versus Quality, Cost versus Service all appeared as key decisions to be made on a regular basis. Pascale (1990) believed that they should not be resolved, rather that they should be used to ``orchestrate tension or ``harness contending opposites. This leitmotif appears across a number of writings on the difficulties in managing organisational culture. Peters and Waterman (1982) advocated the use of ``simultaneous loose-tight properties, Collins and Porras (1994) called for ``ideological control and operational autonomy and Hampden-Turner (1994) recognised the idea of ``making sense of opposites and reconciling ``values that contrast. The quality team recognised that the key was not to balance the issues, since balance implies stability, but rather the management of the dynamic relationships between opposites. Our analysis has shown that some FSOs are

better at managing contention than others and that there was, particularly in FSO I and II, a lack of dynamic balance. In the specific case of FSO I, management had failed to manage opposing values instead indications were that they embraced strongly the Cost/Sales/Results values to the detriment of Quality/Service/Procedures. FSO I needed, but was lacking, the idea of ``transcend management where management can orchestrate and manage the particular issues created by the Fit, Split, Contend paradigm for the benefit of the organisation (Pascale, 1990, p. 22). This has induced a major re-think on the strategic alignment of the TQM message. The quality team have embarked on a major senior management initiative aimed at highlighting the value of the service quality message. The intention is to cascade this message through the senior team down to regional and local managers who will then recognise the need to balance cost and service, volume and quality etc. Conclusions In this paper we begin by recognising that many companies are now attempting to identify their organisational culture or cultures prior to implementing their TQM programme. This raises a major philosophical point: can organisational cultures be identified? Are they in any sense separate from the organisation or are they synonymous with the term organisation? In short is culture something an organisation has or something an organisation is? In recognition of the needs of operations managers we took the view that culture could be identified and set out to provide users with a model of culture and to develop ways to apply the results of a cultural assessment which would feed through into changes to a TQM programme. In developing a model which would help organisations assess their organisational culture prior to TQM, we recognised it was also important to measure the impact that the culture had on the everyday operations and workings of the organisation. In other words, how the organisation organised itself, its relations with customers (internal and external) and how the organisation treated staff. The model, therefore, has two interrelated aspects: the cultural element and three identified elements which make up the climate (or atmosphere) in which culture exists. The specific focus of the PCOC model is to identify areas for intervention within the organisation. The model does not contain implicit value judgements about ``best or ``strong cultures or what profile is best to have. The focus is on identifying those areas that can assist organisational and quality improvement through development and focused interventions. The PCOC model was used as a pilot in four separate FSOs to determine whether the development of a questionnaire to measure the culture and the organisational environment could be achieved. The model identified that each was unique and had its own environment and culture. In this paper the findings are presented in detail as well as the Cronbachs Alpha Coefficient. The Alpha

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scores gave us considerable confidence in drawing our conclusions from the data. In summary, the results are in three areas for practising operations managers. First, the PCOC model does provide the basis for assessing organisational culture prior to implementing an organisational improvement programme. In this case we tailored the questions to look at quality issues. The data analysis identified that each of the four FSOs had its own particular culture and work environment. It was apparent from the analysis that FSO III had achieved important changes and had created a healthy environment conducive to innovation from highly motivated, satisfied staff. In contrast, FSO I, a branch network, and therefore the main point of contact for most of the FSOs customers, had a culture dominated, it appeared, by cost and profit considerations, possibly even to the apparent detriment of staff and customers. Second, the results indicated that in this case the ``one size fits all change programme is not applicable. Substantial tailoring would be required to fit the change programme to individual FSOs. Third and perhaps most interestingly, the data indicated the problems inherent in managing organisational tensions: specifically, those of results versus procedures, quality versus volume, cost versus service. These all appeared as key decisions to be made on a regular basis. Each of the four FSOs had different success in managing these tensions. In a competitive environment, where it is not a choice of two alternatives but where both must be balanced daily, a reliance on Cost/Sales/Volume (as in FSOI and to some extent FSO II) whilst declaring the importance of Service/Quality/Procedures may well build up a resistance to organisational improvement based around ``practice what you preach.
References Bate, P. (1995), Strategies for Cultural Change, Butterworth-Heinemann, Oxford. Bright, K. and Cooper, C.L. (1993), ``Organisational culture and the management of quality, Journal of Managerial Psychology, Vol. 8 No. 6, pp. 21-7. British Quality Foundation (1996), Guide to Self-assessment (Business Edition), British Quality Foundation, London. Brown, A. (1992), ``Organisational culture: the key to effective leadership and organisational development, Leadership and Organisation Development Journal, Vol. 13 No. 2, pp. 3-6. Collins, J.C. and Porras, J.L. (1994), Built to Last. Successful Habits of Visionary Companies, Century Business Books, London. Crofton, C.G. and Dale, B.G. (1996), ``The difficulties encountered in the introduction of total quality management: a case study examination, Quality Engineering, Vol. 8 No. 3, pp. 433-9. Dastmalchian, A., Blyton, P. and Adamson, R. (1991), The Climate of Workplace Relations, Routledge Publishing, London. Davis, S.M. (1984), Managing Corporate Culture, Ballinger, Cambridge, MA. Deal, T.E. and Kennedy, A.A. (1982), Corporate Cultures: The Rites and Rituals of Corporate Life, Addison-Wesley, Reading, MA.

DeVellis, R.F. (1991), Scale Development: Theories and Applications, Sage, Newbury Park, CA. Hampden-Turner, C. (1994), Corporate Culture. From Vicious to Virtuous Circle, rev. ed., Piatkus, London. Hildebrandt, S., Kristensen, K., Kanji, G. and Dahigaard, J.J. (1991), ``Quality culture and TQM, Total Quality Management, Vol. 20 No. 1, pp. 1-15. Hofstede, G. (1980), Cultures Consequences, Sage, Beverly Hills, CA. Industrial Society (1995), Change Management. Managing Best Practice Series, October, The Industrial Society, London. Hofstede, G., Neuijen, B., Ohayv, D.D. and Sanders, G. (1990), ``Measuring organisational cultures: a qualitative and quantitative study across twenty cases, Administrative Science Quarterly, Vol. 35, June, pp. 286-316. Kim, P.S., Pindur, W. and Reynolds, K. (1995), ``Creating a new organisational culture: the key to total quality management in the public sector, International Journal of Public Administration, Vol. 18 No. 4, pp. 675-709. Kotter, J.P. and Heskett, J.L. (1992), Corporate Culture and Performance, Free Press, Macmillan, New York, NY. McNabb, D.E. and Sepic, F.T. (1995), ``Culture, climate, and total quality management: measuring readiness for change, Public Productivity and Management Review, Vol. 18 No. 4, Summer. Ouchi, W.G. (1981), Theory Z, Addison-Wesley, London. Parsons, R. (1998), Supporting the Management of Electronic Engineering Design Teams, PhD thesis, University of Plymouth. Pascale, R. (1990), Managing on the Edge. How Successful Companies Use Conflict to Stay Ahead, Penguin Books, London. Patten, T. Jr (1992), ``Beyond systems the politics of managing in a total quality management environment, National Productivity Review, Winter, pp. 9-15. Peters, T.J. and Waterman, R.H. (1982), In Search of Excellence. Lessons from Americas Best-run Companies, Harper & Row, London. Schein, E. (1984), ``Coming to a new awareness of organizational culture, Sloan Management Review, Winter. Smircich, L. (1983), ``Concepts of culture and organizational analysis, Administrative Science Quarterly, Vol. 28, pp. 339-58. Tylor, E.B. (1971), Primitive Cultures: Research into the Development of Mythology, Philosophy, Religion, Language, Art and Custom, J. Murray, London, 2 Vols. (1903). Vanisina, L.S. (1990), ``Total quality control: an overall organisational improvement strategy, National Productivity Review, Winter, pp. 57-74. Williams, A., Dobson, P. and Walters, M. (1994), Changing Culture: New Organisational Approaches, 2nd ed., Institute of Personnel Management, Cromwell Press, Wiltshire.

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Appendix 1. Common outputs from the two organisational culture focus groups

Hofstede element

Focus group examples Young Cloth cap Good managers deliver Aggressiveness is okay Anti-failure Command and control Do not need to learn Bottom line Change (but do not have to be good at it) Always have a scapegoat Dont admit mistakes Communications Planning process Management meetings Cost reduction exercises Steering committees

Questions The output of the focus groups related to values led to the development of 12 questions being placed in the questionnaire. Q31 asked about aggression, Q42 about anti-failure and Qs 38, 41 and 47 asked about aspects of command and control. Q54 asked about the bottom line as a value and Qs 39, 92, 97 and 99 asked about change

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Values

Rituals

Heroes

Symbols

Individual names included CEO and senior directors Answers here also included organisational images Tiered head office Uniforms Furniture Cost/income Cost cutting Hidden targets Hierarchy Integrated operations Sales orientation Budgets Functional silos project management Aggression Delivery Must know but do not need to learn Territorial Teflon

From the output of the focus groups, 14 questions were developed and placed in the questionnaire concerning rituals. Four questions were developed to analyse communications issues (Qs 36, 57-60) and four were developed for planning (Qs 83-86) as the two most important aspect of rituals. There were three questions asked about management meetings (Q9, 10 and 56) one question about cost reduction (Q23) and one about admitting mistakes (Q42) Q17 asked the respondent to give the name of someone they considered a hero

Structure and systems

Two questions, based on the focus groups output, were asked about symbols. Both (Qs 19 and 24) were concerned the idea of a uniform Four questions were asked based on the Structure and Systems output of the focus groups. Q54 covered both issues of Cost/ Income and Sales Orientation, Budgets (Q90), and the idea of functional silos (Qs 53 and 68). Functional silos is similar to the issue of territorial competencies where other questions were asked Four questions were asked based on the Structure and Systems output of the focus groups. Q54 covered both issues of Cost/ Income and Sales Orientation, Budgets (Q90), and the idea of functional silos (Qs 53 and 68). Functional silos is similar to the issue of territorial competencies where other questions were asked

Competencies

Appendix 2. Questions in questionnaire

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Note: the name of the company has been replaced by ``this organisation