Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework, Third Edition

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Chapter 2: The Organizational Culture Assessment Instrument

Overview

The Organizational Culture Assessment Instrument (OCAI) is probably the most frequently used instrument for assessing organizational culture in the world today. In the past twenty years, it has been used extensively in scholarly research and in thousands of organizations of which we are aware. It has been found not only to be an accurate assessment of organizational culture, but significant relationships have been found between culture as assessed by the OCAI and a variety of indicators of organizational effectiveness.

A review of scholarly publications in just the past ten years, for example, reveals that more than sixty doctoral dissertations have investigated the relationship between organizational culture and a variety of outcomes using the OCAI. In addition, more than one hundred published studies have explored the relationships between organizational culture and factors including management and leadership success, quality and total quality management (TQM), teamwork, organizational effectiveness, educational and teacher success, athletic achievements, competitive strategy, information systems, physical health, innovation, career selection, communication, work and life satisfaction, turnover, generational differences, gender preferences, religious organization performance, and cross-national differences.

The instrument has been used in a variety of industry sectors, including health care, education, religious organizations, national and local governments, community colleges and universities, libraries, data warehouses, military organizations, recreational departments, airlines, ethnic tribes, hotels, athletic teams and national athletic organizations, energy, family businesses, tobacco and alcohol firms, and M.B.A. programs. Countries represented in these studies include Abu Dhabi, Argentina, Canada, China, Dubai, the European Union, France, Germany, Great Britain, Greece, Iran, Iraq, Jamaica, Kenya, Latin America, Netherlands, Qatar, Russia, Senegal, Singapore, Slovenia, South Africa, South America, South Korea, Spain, Taiwan, and the United States.

Because of its predictive power, the OCAI is deceptively parsimonious. One consultant complained to us that having only six items is too simplistic to get an accurate reading of an organization's culture. As it turns out, longer versions of the OCAI containing more items have been developed (one is a twenty-four-item version), but the six items in the version provided in this chapter have been found to be equally predictive of an organization's culture as the longer versions. The six items merely describe some of the fundamental manifestations of organizational culture. These dimensions are not comprehensive, of course, but they address basic assumptions (dominant characteristics, organizational glue), interaction patterns (leadership, management of employees), and organizational direction (strategic emphases, criteria of success) that typify the fundamentals of culture (Cameron and Ettington, 1988).

The OCAI is designed to help identify an organization's current culture or the culture that exists today. This is step 1 in the process. The same instrument helps identify the culture that organization members believe should be developed to match future demands of the environment and the opportunities to be faced by the organization in the coming five years. This is step 2 in the process.

Instructions for Diagnosing Organizational Culture

The purpose of the OCAI is to assess six key dimensions of organizational culture, which are explained in some detail in Chapter Three. We encourage you to take time to complete the OCAI yourself as you move through the chapter. In completing the instrument, you will be providing a picture of the fundamental assumptions on which your organization operates and the values that characterize it. There are no right or wrong answers for these items, just as there is no right or wrong culture. Every organization will most likely be described by a different set of responses. Therefore, be as accurate as you can in responding to the items so that your resulting cultural diagnosis will be as precise as possible.

You are asked to rate your "organization" in the items. Of course, you may consider multiple organizations—your immediate team, your subunit, or the overall organization. To determine which is the best organization to rate, consider the organization that is managed by your boss, the strategic business unit to which you belong, or the organizational unit in which you are a member that has clearly identifiable boundaries. Because the instrument is most helpful for determining ways to change the culture, focus on the cultural unit that is the target for change. For example, it may make little sense to try to describe the culture of the overall Ford Motor Company. It is simply too large and complex. The new product design unit is significantly different from a stamping plant or from the customer assistance center. Therefore, as you answer the questions, keep in mind the organization that can be affected by your change strategy.

The OCAI consists of six items (see Figure 2.1), each with four alternatives. Divide 100 points among these four alternatives, depending on the extent to which each alternative is similar to your own organization. Give a higher number of points to the alternative that is most similar to your organization. For example, on item 1, if you think alternative A is very similar to your

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organization, alternatives B and C are somewhat similar, and alternative D is hardly similar at all, you might give 55 points to A, 20 points each to B and C, and 5 points to D. Just be sure that your total equals 100 for each item.

Note in Figure 2.1 that the left-hand response column for the instrument is labeled "Now." These responses mean that you are rating your organization as it is currently, not as you would like it to be or as you hope it could be. Complete that rating first. The right-hand column refers to your organization as you think it should be in five years in order to be spectacularly successful, achieve its highest aspirations, become an outstanding example of high performance, outstrip the currently stated goals, or become the benchmark for your industry.

1. Dominant Characteristics Now Preferred

A The organization is a very personal place. It is like an extended family. People seem to share a lot of themselves.

B The organization is a dynamic and entrepreneurial place. People are willing to stick their necks out and take risks.

C The organization is very results oriented. A major concern is with getting the job done. People are very competitive and achievement oriented.

D The organization is a very controlled and structured place. Formal procedures generally govern what people do.

Total 100 100

2. Organizational Leadership Now Preferred

A The leadership in the organization is generally considered to exemplify mentoring, facilitating, or nurturing.

B The leadership in the organization is generally considered to exemplify entrepreneurship, innovation, or risk taking.

C The leadership in the organization is generally considered to exemplify a no-nonsense, aggressive, results- oriented focus.

D The leadership in the organization is generally considered to exemplify coordinating, organizing, or smooth- running efficiency.

Total 100 100

3. Management of Employees Now Preferred

A The management style in the organization is characterized by teamwork, consensus, and participation.

B The management style in the organization is characterized by individual risk taking, innovation, freedom, and uniqueness.

C The management style in the organization is characterized by hard-driving competitiveness, high demands, and achievement.

D The management style in the organization is characterized by security of employment, conformity, predictability, and stability in relationships.

Total 100 100

4. Organization Glue Now Preferred

A The glue that holds the organization together is loyalty and mutual trust. Commitment to this organization runs high.

B The glue that holds the organization together is commitment to innovation and development. There is an emphasis on being on the cutting edge.

C The glue that holds the organization together is the emphasis on achievement and goal accomplishment.

D The glue that holds the organization together is formal rules and policies. Maintaining a smoothly running organization is important.

Total 100 100

5. Strategic Emphases Now Preferred

A The organization emphasizes human development. High trust, openness, and participation persist.

B The organization emphasizes acquiring new resources and creating new challenges. Trying new things and prospecting for opportunities are valued.

C The organization emphasizes competitive actions and achievement. Hitting stretch targets and winning in the marketplace are dominant.

D The organization emphasizes permanence and stability. Efficiency, control, and smooth operations are important.

Total 100 100

6. Criteria of Success Now Preferred

A The organization defines success on the basis of the development of human resources, teamwork, employee commitment, and concern for people.

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6. Criteria of Success Now Preferred

B The organization defines success on the basis of having unique or the newest products. It is a product leader and innovator.

C The organization defines success on the basis of winning in the marketplace and outpacing the competition. Competitive market leadership is key.

D The organization defines success on the basis of efficiency. Dependable delivery, smooth scheduling, and low- cost production are critical.

Total 100 100

Figure 2.1: The Organizational Culture Assessment Instrument — Current Profile

We invite you to take time now to complete the six items for your own organization. Rate the organization in its current state using the "Now" column. Then complete the instrument the second time using the "Preferred" column. In this chapter, we provide instructions for scoring the instrument and in Chapter Four for creating an organizational culture profile for your company. In Chapter Five, we give instructions for involving your entire organization in developing a more broad-based culture assessment as well as creating a strategy for cultural change.

Scoring the OCAI

Scoring the OCAI is easy. It requires simple arithmetic calculations. The first step is to add together all A responses in the "Now" column and divide by 6. That is, compute an average score for the A alternatives in the "Now" column. You may use the worksheet in Figure 2.2 if you'd like. Next, add together all B responses and divide by 6. Repeat this computation for the C and D alternatives.

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Figure 2.2: Worksheet for Scoring the OCAI

The second step is to add all A responses in the "Preferred" column and divide by 6. In other words, compute an average score for the A alternatives in the "Preferred" column. Again, use the worksheet in Figure 2.2 if you'd like. Next, add together all B responses and divide by 6. Repeat this computation for the C and D alternatives.

Following an explanation in Chapter Three of the framework on which the OCAI is based, we explain in Chapter Four the meaning of your average A, B, C, and D scores. Each of these scores relates to a type of organizational culture. In Chapter Four, we also provide a worksheet for plotting these scores or to draw a picture of your organization's culture. This plot serves as an organizational culture profile and is an important step in initiating a culture change strategy.

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CHAPTER

339

IMPLEMENTING, MONITORING, AND EVALUATING STRATEGY

Learning Objectives

After reading this chapter, you will

• understand the role of budgets and controls in the strategic planning process;

• have learned methods of implementing strategy;

15 Many hospitals and health systems have strong strategic plans in which they outline long-term goals and tactics to reach those goals. Where organiza- tions tend to fall short is in the execution stage, primarily due to a lack of accountability, according to Scott Becker, CEO of Conemaugh Health System in Johnstown, Pa. “Everybody has a great strategic plan. The organizations that are successful are the ones that effectively operationalize it,” he says. . . .

Once goals are set, leaders need to determine the critical success factors [CSF] to meet those goals. . . . Every CSF should have an assigned leader, a set of key performance indicators [KPIs], and action steps or tasks to be completed to achieve the CSF. KPIs track the quantitative progress or effectiveness of a CSF in achieving a measurable target. For example, increased margins may be measured by KPIs such as reduced expenses per adjusted admission, reduced readmission penalties and shorter length of stay. . . . Hospital leaders need to measure KPIs to determine areas for improvement and then create action plans to meet KPI targets. . . . Hospital executives need to work with medical staff leaders and other stakeholders to develop specific plans to reach their objectives. . . . Emphasizing the link between assigned actions and the hospital’s overall goals helps employees understand how they personally contribute to the organization’s mission and vision, which is essential for employee satisfaction and the hospital’s ability to meet its goals.

—Sabrina Rodak, “Creating Accountability in Healthcare Strategic Plan Execution,” 2013

C o p y r i g h t 2 0 1 8 . A U P H A / H A P B o o k .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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• be familiar with the various bodies and structures involved in strategic planning, along with their roles;

• have discovered ways in which progress toward strategic goals can be monitored; and

• know what a balanced scorecard is and how it can be used to monitor strategic planning efforts.

Formulating a cogent, meaningful strategy is a critical organizational func- tion. However, even the best plan document is worthless if the organiza- tion does not implement it. Sadly, a top strategy consulting firm has found

that more than one-quarter of companies having strategic plans lacked an execution plan and 45 percent failed to track the accomplishment of strategic initiatives (Dye and Sibony 2007). Some top executives think that strategy formulation is their primary responsibility and strategic implementation can be delegated downward. As seasoned, successful executives can attest, strategy formulation is only the beginning; the hard work comes after. As Arthur A. Thompson and colleagues (2016, 287) attest, “Experienced managers are well aware that it is a whole lot easier to develop a sound strategic plan than it is to execute the plan and achieve desired outcomes.”

Many executives engage outside consultants to stimulate strategic think- ing, evaluate their organization’s situation, and put their strategic direction into words, thinking they can preserve time for what they consider to be more important tasks. However, as recounted in exhibit 14.3, when consultants depart, many times all they leave are a series of nice PowerPoint slides or a brightly covered, bound document. Leaders who have limited involvement in the planning process may find translating the strategic document into action a challenging and difficult task.

The successful implementation of strategic thought is preceded and fol- lowed by critical activities that involve different skills and tools. As shown in exhibit 15.1, the strategic action cycle includes strategic planning, budgeting, implementation, and controlling or monitoring. Implementation integrates budgeting, monitoring, and evaluation. Organizations should assign an appro- priate mix of internal and external personnel to these various tasks. In addition, performance standards must be established so that progress on implemented strategies can be measured and any problems can be controlled.

This chapter discusses methods for transitioning from strategy formula- tion to implementation to monitoring, identifies those who should be engaged in the cycle, and presents balanced scorecards and budgets as means of monitor- ing and evaluating strategic progress. We will examine methods for organizing personnel, selecting appropriate budgetary targets, creating critical success factors, and integrating budgets and strategy.

Strategic action cycle The four stages of the strategic action cycle are (1) strategic planning, (2) budgeting, (3) implementing strategy, and (4) controlling problems or monitoring progress.

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Chapter 15: Implementing, Monitor ing, and Evaluat ing Strategy 341

Engaging the Right Structures and the Right People

Ideally, strategic thinking and strategic planning should be infused throughout an organization and drive its actions. As discussed in chapter 12, organizational struc- ture can significantly affect the formulation and implementation of strategy. Just as vital, or even more so, is having the correct people prepare and enact strategy.

For employees to become actively involved in the strategic action cycle, they must perceive it as a process, not an event. If they believe that the strategic plan will be used to change and improve the organization, they will be much more easily engaged. As exhibit 15.2 explains, few will choose to participate when planning is directed at achieving a non-mission-based end.

How to organize the strategic process and whom to involve are critical decisions. Almost all organizations designate someone to be in charge. This person is responsible for facilitating the process, coordinating data and meet- ings, and ensuring that key tasks are achieved. She does feasibility and planning studies; completes environmental assessments; and develops the plan’s format, timetables, and methods for evaluation.

An organization’s CEO must direct and be highly involved in overall strategic planning as a strategist, organizer, and tactician, but experts recom- mend that the person charged with leading the day-to-day strategic process be someone other than the CEO (Zuckerman 2005). Consensus building and visioning discussions are difficult when CEOs have this role because their power and authority can easily inhibit the free flow of dialogue.

Strategic Planning

Budgeting

Implementation

Controlling/ Monitoring

EXHIBIT 15.1 The Strategic Action Cycle

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However, the person responsible for facilitating strategic planning gener- ally reports directly to the CEO. Depending on the organization, this person’s title might be chief planning and development officer, director of planning, vice president, coordinator, or chair, or—depending on an organization’s size, market, expertise, and culture—this person may be responsible for just strategy development or for any or all of the many related duties that follow:

• Strategic formulation • Business development • Data generation and analyses • Marketing • Public relations • Change management or organizational development • Project management

In large systems especially, this person also integrates strategic planning and system or network development (Bhasin 2016).

Although the participants in the process can be organized in various ways, the structures described in the following sections generally are consid- ered core groups.

Governing Board The governing board has principal responsibility for the strategic planning process. Under a governing board’s direction, organizations have completed

Governing board An overarching entity whose principal responsibility is to oversee and direct an organization.

Many accreditation bodies now require that organizations produce a stra- tegic plan if they wish to become or remain accredited. Bob, the chair of a department that was soon to receive an accreditation visit, was fully aware of this requirement. He also knew that his department did not have a function- ing strategic plan. He carefully gathered past attempts at strategic planning, combined the results into a 20-page plan proposal, and circulated it to the members of his department for comment.

At the next department meeting, Bob asked his colleagues for their feedback. One senior member bluntly asked Bob, “What is the purpose of this document? Are we going to try to improve our department, or is it just for accreditation?” Bob sat back as he contemplated this question and then honestly answered that it was primarily for accreditation purposes. Given this answer, his colleagues commented that what he had written was fine and proposed no changes to the plan.

Clearly, the plan was created for an event (to receive accreditation); it did not detail a process for improving the department. The approved plan sat unopened on Bob’s desk until the accreditation visit.

EXHIBIT 15.2 Is Strategic Planning a

Process or an Event?

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Chapter 15: Implementing, Monitor ing, and Evaluat ing Strategy 343

strategic plans in as little as one day at a retreat. However, development of a strategic plan typically takes 40 to 120 hours of board and committee meet- ing time. The duration depends on the availability of needed information, the organization’s expertise (or lack thereof), and the type and quality of staff and resources allocated to the process.

The governing board bases the guidelines it sets for the development of a strategic plan on the organization’s mission, vision, and values. The board’s responsibilities include

• approval of the organization’s mission, vision, and goals; • discussion and approval of key strategic directions; • final approval of the strategic plan document; and • periodic monitoring of implemented strategies.

Strategic Planning Committee The strategic planning committee generally reports to the governing board and may consist of both board members and nonmembers. This committee may be either standing (i.e., permanent) or ad hoc. This committee engages key stakeholders who are not represented on the governing board. During the development of the strategic plan, the committee typically meets once every two weeks for two to six hours. The strategic planning committee is responsible for

• organizing and facilitating the planning process; • determining key stakeholders’ needs; • regularly (usually annually) reviewing the organization’s mission and

vision; • monitoring trends and periodically reviewing the internal and external

environment; • developing a strategic plan draft, including planning goals and

objectives for board consideration; and • evaluating progress toward strategic objectives.

Medical Staff (in Clinical Organizations) In the United States, the medical staff of a hospital primarily comprises inde- pendent practitioners, although the number of doctors employed by medical facilities today is greater than it was in the past. For clinical operations, including hospitals, surgical centers, nursing homes, hospices, and so forth, physicians are key stakeholders and the principal source of referrals. Thus, the involvement of the medical staff in strategic planning is fundamental to properly creating and executing a strategic plan. Key medical staff should serve on the governing board, the strategic planning committee, and other task forces established for

Strategic planning committee A standing or ad hoc committee that is responsible for organizing and leading an organization’s strategic planning process.

Medical staff An organized body of licensed professionals who are approved and given privileges to practice medicine at hospitals and other healthcare facilities.

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the strategic planning process. The governing board may also enjoin medical staff members to organize their own planning committee and responsibilities. The medical staff committee should report to the strategic planning committee.

Consultants Organizations often hire planning consultants for their expertise, data resources, extra manpower, and insight regarding future changes and innovative strategies. Conditions that might motivate an organization to bring in outside consultants include a lack of internal staffing or expertise and the need for a neutral facilita- tor between leaders and key stakeholders who hold strongly vested positions regarding controversial opinions or proposed future directions.

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