Topic 2

Company culture and ethics

PREPARED BY THE SCHOOL OF ARCHITECTURE AND BUILT ENVIRONMENT

Contents
Introduction ........................................................................................................................ 2.1

Learning outcomes .............................................................................................................. 2.2

Learning resources .............................................................................................................. 2.2

What is organisational culture? ............................................................................................ 2.2

Management of organisational culture ................................................................................ 2.6

Strong and weak cultures .................................................................................................... 2.7

Culture and leadership ........................................................................................................ 2.8

Unitarist and pluralist perspectives of organisational culture ...................................................... 2.9

Ethical organisations………………………………………………………...…………………………..............2.10

References ........................................................................................................................ 2.13

Further resources .............................................................................................................................. 2.14

Suggested answers ............................................................................................................ 2.15

 Construction Business Organisation
Topic 2: Company culture

Introduction
The concept of organisational culture has gained increasing attention in recent years as a way
of improving organisational performance. Ankrah (2009) defined organisational culture as ‘a
pattern of shared basic assumptions that is learned by a group within an organisational setting
through solving its problems of external adaptation and internal integration, which having
worked well enough, is considered valid and taught to new members as the correct way to
perceive, think, and feel in relation to particular problems’ (Ankrah 2009, p. 28). In addition, in
this topic we discuss the importance of company ethics as a component of its culture.

A number of key theories can be considered to have impacted on the development of the
concept of organisational culture. In the 1950s to 1960s the human relations movement was
underpinned by the thinking that organisations existed to serve human needs (Coffey 2010).
Key proponents within this school of thought such as Argyris, Drucker and Likert argued that
efficient organisations are those made up of individuals whose values, beliefs and attitudes can
greatly influence the efficiency of the organisation.

In the 1960s and 1970s modern structural theory, which was largely influenced by Foucault
and Mintzberg, identified that organisations are rational, goal-oriented and mechanistic
(Coffey 2010). This school of thought led to the perception of organisations as ‘cultural
systems’ with a division of views between theorists about the concept of culture. On the one
hand, culture is viewed as something an organisation ‘has’; on the other hand culture is seen
as something an organisation ‘is’ (Ankrah et al. 2009). The power and politics theory, which has
been driven by theorists such as Pfeffer, Mintberg and Handy since the 1970s, is based upon
the premise that organisations are highly irrational and seek to achieve objectives and goals
through a diverse range of methods, including influence and persuasion, negotiations and
conflicts. The concept of organisational culture has thus resulted from these earlier schools of
thought and takes the form of both a rational or critical model based upon the view of the
researcher or author (Coffey 2010).

In the construction industry, more and more firms are recognising the significance of culture
and its influence on organisational effectiveness. Consequently much work has focused on
identifying ways to manage organisational culture for success. Significantly, between 1993 and
2006, a task group (CIB Task Group 23 Culture in Construction) within the Conseil International
du Batiment (CIB), a construction research networking organisation, undertook research
specifically into the role and impact of culture in the construction industry (Coffey 2010).
Although culture management has fast become a valuable organisational strategy, significant
issues remain relating to the management of an organisation’s culture. This topic will highlight
a number of these challenges, key strategies for managing organisational cultures and their
implications for the construction industry.

The topic also introduces the importance of operating a construction company as an ethical
organisation, the interrelationship between culture and ethics and identifys some of the ways
to achieve an ethical organisation.

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Construction Business Organisation
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Learning outcomes
After completing this topic you should be able to:
 define the concept of organisational culture, describe the key characteristics and
dimensions of organisational culture and outline key strategies for the management of
organisational structure
 outline and explain the differences between strong and weak cultures
 describe the relationship between leadership and culture creation and outline the
unitarist and pluralist perspectives of organisational culture.
 describe the concept of ethical behaviour in business and discuss the key principles for
achieving ethical construction organisations.

Learning resources
Readings

Reading 2.1: Schein, E. H. (2004) ’How leaders begin culture creation‘, in Organizational
Culture and Leadership, Jossey-Bass, San Francisco, pp. 225–43.
Reading 2.2: Alvesson, M. & Sveningsson, S. (2008) ‘Lessons for cultural change actors and
others’, in Changing Organizational Culture: Culture Change Work in Progress
Routledge, London, pp. 165–74.
Reading 2.3: Guffy, ME 2003, ‘Communicating at work’, in Business communication:
process and product, 4th edn, Thomson South-Western, Mason, Ohio,
pp. 25–30.
Reading 2.4 Courtney, A, Building ethical strength, In the Black, December 2013, CPA
Australia.

What is organisational culture?

Culture has been defined in various ways depending on who is describing it and from what
context and perspective it is viewed. According to Bates and Plog (1990), ‘culture is the system
of shared beliefs, values, customs, behaviours and artefacts that the members of society use to
cope with their world and with one another, and that are transmitted from generation to
generation through learning’ (Bates & Plog 1990, p. 7).

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This passing of shared beliefs, values, customs and behaviours is also known as ‘social culture’.
Similar to the concept of social culture, each organisation has an individual culture, which
comprises its own system of shared beliefs and values and is referred to as organisational
culture (Naoum 2001). Naoum defined organisational culture as ‘the way things are done and
operated within the internal environment of the workplace. It has a number of features
including: common beliefs; pattern of behaviour, norms; values and rules that are exercised
among members of the organization. These features are strategically driven and they are
usually established through the company founders or the new managers/leaders. The closer
the values and beliefs among members of the organization, the stronger the culture’ (Naoum
2001, p. 162).

Cuff (1991), an architectural researcher who studied the sociology and culture of American
architectural firms, highlighted that ‘every architectural office has a unique web within which a
portrait of its culture can be discerned’ (Cuff 1991, p. 113). This is perhaps a common trait
across the various different types of construction organisations whereby there is a tacit
agreement of acceptable behaviour, reliable expectations and values that members of an
organisation are expected to share. The culture of each organisation can be unique and
dynamic; however, Naoum (2001) highlighted that there are three key dimensions of
organisational culture:
 Social culture, referring to behaviour of individuals and the ways in which individuals are
motivated. Social culture encompasses all the social activities which occur both internal
and external to an organisation.
 Technical culture, referring to the manner in which an organisation operates and more
specifically the techniques adopted in the daily procedures, practices and policies. The
techniques adopted are dependent upon the characteristics of the tasks which has an
impact on its organisational culture and structure.
 Managerial culture, referring to an organisation’s management approach in task
allocation and project coordination. The manner in which these are undertaken will lead
to positions of power and authority within the organisation which ultimately can affect
organisational culture.

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Topic 2: Company culture

Figure 2.1 illustrates the inter-relationship between the three dimensions of organisational culture.

Managerial
culture

Social Technical
culture culture

Figure 2.1: The three dimensions of organisational culture

Source: Naoum, S. (2001) People and Organizational Management in Construction, Thomas Telford Publishing,
London, p. 163.

Furthermore, Naoum (2001) highlights two key characteristics of organisational culture:

 ‘Culture is dynamic in nature’ (Naoum 2001, p. 168): Even though culture can remain stable
over a certain period of time, it is never static. A number of contributing factors including
environmental or contextual crises can often bring about the need to re-evaluate existing
sets of values or practices and drive change resulting in changes to organisational
strategies and structure. In such cases individuals within an organisation may occupy new
positions and design and implement new systems, policies and procedures. Where new
systems and programs prove to be successful these may be adopted for a certain period of
time to an extent they become ‘cultural’. In contrast those less effective systems are
revisited for further re-design.
 ‘Culture is a socio-technical system with input and output process’ (Naoum 2001, p. 168):
a company’s organisational culture should be seen within the context of the external
environment, which is characterised by various organisations with different skills and
resource needs operating in different market, technical and legal conditions. ‘Such
variations place different demands on the companies which lead to different socio-
technical systems and in turn differences in culture. Strategies, procedures and behaviour

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adopted by the management create the work environment for other members, but the
management is a product of the culture itself‘(Naoum 2001, p. 168).

Similar to national cultures, organisational cultures are developed and changed over time
whereas organisations continuously respond to external pressures by changing their culture to
reflect changing industry characteristics. As Naoum (2001) explains, changes to an organisation’s
culture can range from those relatively easy to change such as transformations to people’s
behaviour to those more difficult to change, often associated with deeply rooted values.

‘The term value in a cultural context refers to matters that are difficult to visualize and hard
to change even when the group members change. For example, a manager’s care about
customers and an executive’s policy regarding long-term debt. On the other hand, the “term
people” behaviour refers to matters that are more visible and easier to change—matters in
which new employees are encouraged to follow their fellow workers. For example, being hard
working and friendly or being tough and decisive’ (Naoum 2001, p. 164).

Furthermore, underpinning an organisation’s culture is an ‘industry culture’, which is

characterised by specific patterns of attitude, values and beliefs. This industry culture, while
not directly shaping the culture of an organisation, does play a key role in influencing the
general behaviour and attitude of an organisation. The construction industry, which is highly
fragmented and subject to significant cyclical changes, is well known for its adversarial culture.
Consequently the need for culture change in the industry has long been recognised as a way
to improve its poor performance (Sommerville et al. 1999; Latham 1998; Egan 2003). A key
point to note is that in order to achieve long-term cultural change — whether in an industry or
organisation — the culture from which the behaviour originates needs to change in the first
place. All levels within the industry or organisation must commit to change, as highlighted in
the following quotes extracted from a number of reports referring to the need for culture
change in the industry (as cited in Coffey 2010):

‘Lasting change in an industry, workplace, organisation or society is only possible if the culture
from which the behaviour emanates itself changes … All of this reinforces the point that deep
seated unacceptable cultures may take many years to change and that they involve a
combination of education and strong regulation and sanctions (Building and Construction
Industry [Restoring Workplace Rights] Bill 2008)’.

‘The building and construction industry in Australia requires significant cultural change. Such
change is necessary if the rule of law is to be reintroduced to conduct and activities within the
industry, if individuals’ freedoms are to be maintained, and if the industry is to achieve its
economic potential. Change is required n the attitudes of all sectors in the industry, including
governments, clients, head or subcontractors, industrial organisations and employees (Final
Report of the Royal Commission into the Building and Construction Industry: Vol. 11 – Achieving
Cultural Change, 2003)’ (Coffey 2010, p. 101)

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Management of organisational culture

There are two key approaches to the management of organisational culture: to maintain
existing order and strive for continuity, or to transform and break away from existing patterns
(Bate 1994). Selecting an appropriate strategy to manage organisational culture depends on
contextual factors relating to both the internal and external environment, as well as the
perspective of the leader or change agent (Willcoxson & Millett 2000).

Before selecting a suitable approach for managing organisational culture, it is important to

develop a clear understanding of the key values, assumptions and rituals that underpin both
the existing culture and the new target culture. Only through a sophisticated understanding of
the tacit and explicit characteristics or attributes of the existing or target culture can
appropriate action be developed. Willcoxson and Millett (2000) outline a number of key
methods or strategies for the management of organisational culture:
 ‘Recruitment, selection, replacement and promotion: recruitment of new employees of
a desired culture can be an effective method when seeking to strengthen an existing culture
or to support a culture shift whereas removal or replacement of specific employees may be
more useful when a dramatic culture change is sought. Those individuals demonstrating or
symbolizing the desired organisational culture may also be promoted.
 Socialisation: education, development and training programs can facilitate acculturation
to an existing or new culture as well as enhanced interpersonal communication and
teamwork. This strategy is particularly useful for highly fragmented organisations.
 Performance appraisal and reward systems: this method may be used when organisations
are seeking to achieve specific behavioural norms or practices whereby reward systems can
promote desired behaviours which may ultimately lead to changed values.
 Leadership and modelling: Actions and behaviour of leaders can demonstrate to
members within an organisation the values, beliefs and symbols it ascribes to which may
facilitate the adoption of such values, beliefs and symbols by its members.
 Participation: This strategy is useful when a more lasting change in values is sought
requiring all members within an organisation to take part in ‘cultural reconstruction or
maintenance activities and associated input, decision-making and development activities.
 Policies, procedures and allocation of resources: Organisational policies and
procedures need to be developed or redesigned to align with the strategic direction of
the existing or new target culture. Adequate amount of resources also need to be
allocated to support this’ (Willcoxson & Millett 2000, p. 97).

The literature on organisational change provides a range of strategies. Alvesson and Sveningsson
(2008) outline one approach to organisational change, which comprises six key steps:
 ‘evaluating the situation of the organization and determining the goals and strategic direction
 analysing the existing culture and sketching a desired culture
 analysing the gap between what exists and what is desired
 developing a plan for developing the culture
 implementing the plan
 evaluating the changes and new efforts to go further and/or engaging in measures to
sustain the cultural change’ (Alvesson & Sveningsson 2008, p. 43).

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Further to this, Alvesson and Sveningsson (2008) propose a more process-oriented view, which
is based upon ‘seven sub-principles for organizational change’:
 ‘change a new compelling direction
 identify organizational barriers to implementing the new direction
 develop a task-aligned vision
 communicate and involve people in implementation
 support behaviour change
 monitor progress and make further changes’ (Alvesson & Sveningsson 2008, p. 43).

Activity 2.1
Consider the concept of organisational culture in relation to construction companies.
(a) Can you define what is meant by the term organisational culture?
(b) What are the three key dimensions of organisational culture?
(c) What are some of the key strategies for managing organisational culture?

Reading 2.1
Please read Reading 2.1. In the chapter the author provides detailed explanation about
the potential issues associated with the management of organisational cultures. The key
problems highlighted include hyper-culture, symbolic anorexia, limited value of values
and limited knowledge.

Strong and weak cultures

The strength of an organisation’s culture can be measured through the degree to which it
is embedded in the organisation’s practices, procedures and behavioural norms and is
demonstrated through its members’ acceptance of the beliefs, attitudes and values of the
organisation (Naoum 2001). Strong cultures are those deeply embedded cultures that go
directly to an organisation’s ‘heart and soul’, whereas weak cultures reveal a limited
perspective of a definable organisational character (Strickland 2004).

Evidence suggests that strong cultures can lead to better performance in organisational
effectiveness and productivity (Naoum 2001). Brown (in Naoum 2001) highlights three key
reasons why strong cultures lead to increased performance and efficiency:
 A strong culture helps to align organisational goals by sharing its values widely across its
members regarding both the goals to pursue and how those goals should be achieved.
Consequently members within the organisation work together harmoniously because
there are few communication or coordination problems resulting from internal conflicts.
This ultimately leads to increased organisational performance.

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 A strong culture results in high levels of employee motivation due to two key reasons.
Firstly, individuals prefer to be part of an organisation with a well-defined corporate
character and distinctive philosophy. Secondly, strong culture organisations tend to
create an internal environment which supports employee decision-making and autonomy
which in turn makes working for them rewarding. High employee motivation thereby
results in high organisational performance.
 A strong culture is well positioned to learn from past experiences. Given that values and
behavioural norms, integrative rituals and ceremonies and well-known stories are deeply
ingrained in strong culture organisations, these are often used as the basis for decision-
making throughout the organisation which helps meet new challenges. An organisation
which is able to ‘reflect on its development and … draw on a stock of knowledge encoded
in stories, rules-of-thumb and general heuristics is likely to perform better than
competitors unable to learn from their past successes and failures’ (Naoum 2001, p. 179).

On the other hand, weak cultures are those highly fragmented companies which lack
consistency in establishing organisational values and beliefs, so limited behavioural norms are
seen in operating procedures and practices and its members share few traditions (Strickland
2004). Individuals within such companies lack a sense of allegiance to a definable
organisational culture and have little real understanding of what the company stands for.
Consequently, employees in weak-culture organisations view their company as simply a place
to work and have little passion or emotional commitment to achieving organisational goals.
Strickland (2004) outlines a number of key characteristics underpinning weak-culture
organisations, including:
1. A highly politicised internal environment in which many issues get resolved and decisions
made on the basis of which individuals or groups have the most political clout to carry
the day.
2. Hostility to change and a general wariness of people who champion new ways of doing
things.
3. A ‘not-invented-here’ mindset that makes company personnel averse to looking outside
the company for best practice, new managerial approaches, and innovative ideas
(Strickland 2004, p. 302).

Activity 2.2
Reflect on the following:
(a) Can you highlight the key differences between strong and weak culture?
(b) Why do strong cultures lead to increased performance and efficiency in organisations?
(c) What are the key characteristics which underpin weak cultures?

Culture and leadership

Clear establishment of organisational values, principles and practices through effective
leadership is a key factor that contributes to the development of strong cultures (Strickland
2004). According to Schein (2004), culture and leadership can be considered two sides of the
same coin: ‘On the one hand, cultural norms define how a given nation or organizations will

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define leadership—who will get promoted, who will get the attention of followers. On the
other hand, it can be argued that the only thing of real importance that leaders do is to create
and manage culture; that the unique talent of leaders is their ability to understand and work
with culture; and that it is an ultimate act of leadership to destroy culture when it is viewed as
dysfunctional’ (Schein 2004, p. 11).

This is not to say that effective leadership is the only way to create and change culture.
However, it is ultimately the role of a strong leader to recognise, overcome or revitalise a
company’s operations and practices when elements of its culture have become maladapted
(Schein 2004). Therefore, it is important for those in leadership positions to spend the time
required becoming more organisationally culture-centred (Barclay 2010).

Reading 2.2
Please read Reading 2.2. In the chapter the author discusses the role of the leader in the
creation of organisational cultures. An outline of a generic process of culture formation
is outlined paying particular attention to the impact the leader or founder has on the
process. Four case studies are discussed to highlight real-world examples of the special
role leaders play in creating organisational cultures.

Unitarist and pluralist perspectives of organisational

culture
Even though the concept of organisational culture has connotations of a singular unitary
culture it is unlikely that all companies ascribe to singular cultures, particularly larger
companies such as IBM. In this sense, organisational culture is seen as a plural, involving a set
of differentiated sub-cultures within the one organisation. Schein (2004, p. 20) explains that
there are instances where the variations among subgroups within large organisations are
substantial, suggesting that ‘it might not be appropriate to talk of the culture of an IBM or a
General Motors or Shell. In the evolution of DEC over its thirty-five-year history one can see
both strong overall corporate culture and the growth of powerful subcultures that reflected
the larger culture but also differed in important ways’ (Schein 2004, p. 20).

Those change agents or writers who argue for a unitary perspective of organisational culture
contend that culture can be managed or changed through top-down leadership or
organisation-wide systems and programs (Willcoxson & Millett 2000). Based on this
perspective, the fundamental unity of the company makes it possible for leaders to control or
change the strategic direction of a company. The widely shared values, beliefs and norms
within the company eventually become taken-for-granted assumptions for its members. These
assumptions remain stable and are reinforced over time through professional meetings and
continuing education or training sessions and through the practice of teamwork among a
number of its members, which serves to reinforce each other. According to Schein (2004), a
key reason why many companies strongly rely on peer-group evaluation is that ‘this process
preserves and protects the culture of occupation’ (Schein 2004, p. 21).

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On the other hand, those who take a pluralist perspective acknowledge the existence of
diversity in organisational culture and view a company as one made up of a diverse range of
sub-cultures resulting from various factors, including professional affiliation, status and social
or divisional interactions (Willcoxson & Millett 2000). This is particularly relevant within the
current context of increasing internationalisation of businesses whereby ‘international
companies, with national subsidiaries tied to a parent company, often exhibit distinct cultures
interacting with the parent company culture, but so also do many nationally based companies
where, for example, research and development divisions may form a sub-culture quite
different from that of marketing divisions’ (Willcoxson & Millett 2000, p. 95). Therefore, a
company with plural cultures achieves success through effective management of diversity,
whereby efforts to manage or change culture should be carried out through systems and
programs tailored to suit the individual needs of departments or divisions within a company.
This need to effectively manage and deal with diversity is perhaps a key strategy required of
construction companies given the diverse nature of construction projects, which often involve
diverse groups of people coming together to establish collaborative working relationships in
response to individual projects while being engaged on different terms and conditions.

Ethical organisations
Ethics is a branch of philosophy that seeks to investigate morality and ways of thinking to guide
human behaviour. It involves an examination of moral standards in society and the application of
these standards to everyday life. The notion of the common good is a key factor that determines
whether an act or behaviour is considered right or wrong (Vee & Skitmore 2003). De George (1990)
defines ethics as ‘a systematic attempt to make sense of our individual and social moral
experience, in such a way as to determine the rules that ought to govern human conduct’
(De George 1990, p. 15).

Ray et al. (1999) defined ethical behaviour in business as being ‘legal behaviour and a
collection of moral principles or a set of values being shared not only with the business
community, but also within society as a whole (Ray et al. 1999, p. 140).

Even though we commonly come across the phrase ‘business and ethics do not mix’,
business is in fact subject to moral standards since it involves social conduct (London &
Everingham 2006). The management of ethical behaviour requires an understanding of
both the individual and situational factors that influence how members within an
organisation behave. A company can only be as ethical as the people who own, manage
and work for it, yet its organisation and practices can be more or less conducive to ethical
activities that can be reinforced or impeded by the larger systems of which it is part
(London & Everingham 2006).

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Ray et al. (1999) highlighted that there are as yet a number of fundamentally unresolved
philosophical problems concerning ethics. Therefore, it should be expected that there would
be a high degree of uncertainty within and between individuals and organisations in their
perceptions of and attitudes to ethical issues and behaviour. However, until solutions to these
deep philosophical problems are found, organisations need to adopt some practical measures
and principles to underpin ethical behaviour in business. According to Sternberg (1995), an
ethical organisation is required to treat its members ethically in order to maximise its long-
term value: ‘treating employees ethically simply means treating them with ordinary decency
and distributive justice. The ethical business rewards contributions to the business objective,
and is honest and fair to its staff; it avoids lying, cheating and stealing, coercion, physical
violence and illegality. And crucially, since trust is so dependent upon expectations, the ethical
business is extremely careful about the expectations it engenders’ (Sternberg 1995, p. 125).

Holme (2008a) outlined a number of advantages associated with organisations having ethical
business values, including:
 Ethical work environments can result in increases in job satisfaction because employees
are often satisfied with fair management practices. An ethical organisation also reduces
misconduct and limits the pressure for its members to behave unethically.
 Widely shared organisational values in relation to ethical standards and behaviour results
in employees knowing that they are supported and therefore they respond with strong
motivation and performance.
 An organisation whose members work together harmoniously enable communication
across all levels with a high degree of trust which in turn leads to greater consistency in
decision-making.

An ethics strategy
Developing an ethical strategy within an organisation involves two primary tasks:
 defining the abstract standards of behaviour
 applying these standards to business conduct.

Underpinning both tasks is the need for a management system that supports ethical values
and conduct in the organisation. The management system not only needs to define what is
acceptable or unacceptable behaviour within an organisation, it also needs to ensure its
members understand those values and apply them appropriately to complex real-world
situations. Ethical management systems or strategies can range from highly structured to loosely
defined approaches. However, according to Holme (2006b), there needs to be a balance in an
organisation’s approach: ‘it is easy to say “Rules are for children and values are for moral adults”.
There needs to be a balance and one of the determinants will be the business strategy. We may
want to give employees more freedom in support of a strategy that encourages creativity in the
business. What we don’t want is those creative staff wasting time using their imagination to find
ways around rules which are too restrictive. On the other hand an organisation that depends on
teams working together may need rules about when all the team need to be present. Size too
could be important. A small organisation may have few rules about expenses claims, a larger one
will need to be much more formal’ (Holme 2008b, p. 305).

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Therefore, an appropriate ethical strategy for a company will be dependent on a range of

factors and there is no one clear one-size-fits-all solution that can be applied for the
development of ethical organisations. Holme (2008b) outlined a number of key principles
which can be adopted as part of an organisation’s ethical strategy, including:
 The development of a values statement by top management and how it is supported is
clearly communicated and publicised throughout the organisation, which serves as a
‘road map’ to outline the organisation’s values and beliefs in relation to ethical issues.
Should new ethical values be introduced, they will need to be accompanied by some
form of training for its members. Staff competencies defined for jobs also need to include
descriptions of ethical values and expected behaviour.
 Continued dialogue, monitoring and review concerning the application of values to
further develop ethical knowledge and behaviours within the organisation and to
minimise and prevent ethical and legal violations. A ‘code of conduct’ can be developed
which explains how ethical values can be applied in representative situations.

Holme (2008b) provides a list of questions that serve as an ethical health check for
organisations seeking to conduct an audit of an existing ethical strategy to identify if their
values statement is being translated into behaviours throughout the organisation, including:
 ‘Do senior managers act as exemplary leaders of our ethical standards? Are the non-
executive directors interested in the softer aspects of their fiduciary responsibilities?
 Are our ethical values supported by an ethical values statement created by the directors,
consulted with our stakeholders and which is part of our strategy?
 Are the ethical values translated into behaviours for particular roles, explained and
trained to staff, and part of the performance review procedure? Can customers and
suppliers outside of the organisation say what our values are?
 Are managers and staff rewarded and promoted for living the behaviours associated with
the ethical values and where necessary sanctioned if they do not?
 Do we regularly discuss complex ethical decisions? Have we dismissed courses of action
that might be unethical and devoted our energies to working out how to successfully
apply our values to the business decision in question?
 Have we considered the consequences of our decisions on all the stakeholders? Would
our stakeholders consider our decisions to be fair?
 Do our decisions uphold the values we hold most dearly? Do we act with integrity? If we
were questioned about a decision by our family members would we be proud that it
would reflect our ethical values?
 When we are working across cultural boundaries, have we considered how our values and
social responsibilities will work?’ (Holme 2008b, p. 308)

Activity 2.3
Reflect on the following:
Discuss the management of ethical behaviour in construction organisations.
(d) Can you define what is termed as ethical behaviour in business?
(e) What are some of the benefits associated with achieving ethical organisations?
(f) What are the two primary tasks involved with the development of an ethical strategy within
an organisation?

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(g) What are the two key principles in achieving ethical organisations?

Summary
The effective management of organisational culture has been linked to increased performance
and efficiency in businesses. This topic introduced the concept of organisational culture in
construction and outlined the key characteristics of organisational culture. In particular the
three key dimensions of organisational culture were highlighted: social culture, technical
culture and managerial culture. The selection of an appropriate strategy to the management
of organisational culture is dependent upon a range of contextual factors relating to both the
internal and external environment as well as the perspective of the leader or change agent.
A number of key methods or strategies for the management of organisational culture were
discussed, which offer a good starting point for businesses in the management of culture in
their companies.

The strength of an organisation’s culture can be measured through the degree to which it
is embedded in the organisation’s practices, procedures and behavioural norms. The key
differences between strong and weak cultures have been highlighted as well as the key
benefits associated with achieving strong-culture organisations. Leaders play a key role in
creating and shaping the culture of an organisation. The leader’s role becomes even more
significant in the need to distinguish between organisations with single or plural cultures in
order to develop appropriate strategies to manage the associated culture(s). The discussion
of unitarist and pluralist perspectives of organisational culture highlighted that the need to
effectively manage and deal with diversity and plural cultures is a key strategy required of
construction companies given the diverse nature of construction projects.

The importance of ethical considerations as part of company culture has been emphasised and
the consequences of unethical behaviour illustrated by the ongoing debacle of the News of
the World executives behaving unethically.

References
Alvesson, M. & Sveningsson, S. (2008) Changing Organizational Culture: Cultural Change Work
in Progress, Routledge, London.

Ankrah, N., Proverbs, D. & Debrah, Y. (2009) ‘Factors influencing the culture of a construction
project organisation: An empirical investigation’, Engineering, Construction and Architectural
Management, vol. 16. no. 1, pp. 26–47.

Barclay, A. (2010) ‘Economic organisation culture’, Journal of Management Research, vol. 2,

no. 1, pp. 1–4.

Bate, S. (1994) Strategies for Cultural Change, Butterworth Heinemann, Oxford.

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Construction Business Organisation
Topic 2: Company culture

Bates, D. & Plog, F. (1990) Cultural Anthropology, McGraw-Hill Education, New York.

Brown, A. (1998) Organizational Culture, 2nd edn, Pitman Publishing, London.

Building and Construction Industry (Restoring Workplace Rights) Bill 2008 (Cwlth).

Coffey, V. (2010) Understanding Organisational Culture in the Construction Industry, Spon

Press, London.

Cuff, D. (1991) Architecture: The Story of Practice, MIT Press, Cambridge.

Egan, J. (1998) Rethinking Construction, Construction Task Force, HMSO, London.

Harris, F. McCaffer, R. & Edum-Fotwe, F. (2006) Modern Construction Management, 6th edn,
Blackwell Publishing Company, Oxford.

Latham, M. (1994) Constructing the Team, HMSO, London.

Naoum, S. (2001) People and Organizational Management in Construction, Thomas Telford

Publishing, London.

Commonwealth of Australia (2003) Royal Commission into the Building and Construction
Industry, Final Report: Vol. 11 – Reform: Achieving Cultural Change.

Schein, E. H. (1985) Organizational Culture and Leadership, Jossey-Bass, San Francisco.

Schein, E. H. (2004) Organizational Culture and Leadership, 3rd edn, Jossey-Bass, San Francisco.

Sommerville, J., Stocks, R. & Robertson, H. (1999) ‘Cultural dynamics for quality: The polar plot
model’, Total Quality Management, vol. 10, pp. 725–732.

Strickland, A. (2004) Strategy: Winning in the Marketplace: Core Concepts, Analytical Tools,
Cases, McGraw-Hill Education, New York.

Willcoxson, L. & Millet, B. (2000) ‘The management of organisational culture’, Australian

Journal of Management and Organisational Behaviour, vol. 3, no. 2, pp. 91–9.

Further resources
Articles and textbooks
Beer, M. (1997) ‘The transformation of the human resource function: Resolving the tensions
between a traditional administrative and a new strategic role’, Human Resource Management,
Spring, vol. 36, no. 1, pp. 49–56.

Dessler, G., Griffiths, J. & Lloyd-Walker, B. (2004) Human Resource Management, 2nd edn,
Pearson Education Australia, Sydney.

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 Construction Business Organisation
Topic 2: Company culture

Suggested answers
Activity 2.1
(a) There are a number of different definitions of organisational culture available in the
literature, including:

‘Culture is the system of shared beliefs, values, customs, behaviours and artefacts that the
members of society use to cope with their world and with one another, and that are
transmitted from generation to generation through learning’ (Bates & Plog 1990, p. 7).

‘The way things are done and operated within the internal environment of the workplace.
It has a number of features including: common beliefs; pattern of behaviour, norms;
values and rules that are exercised among members of the organization. These features
are strategically driven and they are usually established through the company founders or
the new managers/leaders. The closer the values and beliefs among members of the
organization, the stronger the culture’ (Naoum 2001, p. 162).
(b) The three key dimensions of organisational culture are:
 Social culture, referring to behaviour of individuals and the ways in which individuals are
motivated. Social culture encompasses all the social activities which occur both
internal and external to an organisation.
 Technical culture, referring to the manner in which an organisation operates and more
specifically the techniques adopted in the daily procedures, practices and policies.
The techniques adopted are dependent upon the characteristics of the tasks which
has an impact on its organisational culture and structure.
 Managerial culture, referring to an organisation’s management approach in task
allocation and project coordination. The manner in which these are undertaken will
lead to positions of power and authority within the organisation which ultimately
can affect organisational culture.
(c) Some of the key methods or strategies for the management of organisational culture
include:
 ‘Recruitment, selection, replacement and promotion: recruitment of new employees
of a desired culture can be an effective method when seeking to strengthen an
existing culture or to support a culture shift whereas removal or replacement of
specific employees may be more useful when a dramatic culture change is sought.
Those individuals demonstrating or symbolizing the desired organisational culture
may also be promoted.
 Socialisation: education, development and training programs can facilitate
acculturation to an existing or new culture as well as enhanced interpersonal
communication and teamwork. This strategy is particularly useful for highly
fragmented organisations.
 Performance appraisal and reward systems: this method may be used when
organisations are seeking to achieve specific behavioural norms or practices whereby
reward systems can promote desired behaviours which may ultimately lead to changed
values.
 Leadership and modelling: Actions and behaviour of leaders can demonstrate to
members within an organisation the values, beliefs and symbols it ascribes to which
may facilitate the adoption of such values, beliefs and symbols by its members.

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Construction Business Organisation
Topic 2: Company culture

 Participation: This strategy is useful when a more lasting change in values is sought
requiring all members within an organisation to take part in cultural reconstruction
or maintenance activities and associated input, decision-making and development
activities.
 Policies, procedures and allocation of resources: Organisational policies and
procedures need to be developed or redesigned to align with the strategic direction
of the existing or new target culture. Adequate amount of resources also need to be
allocated to support this’ (Willcoxson & Millett 2000, p. 97).

Activity 2.2
(a) Strong cultures are those deeply embedded cultures that go directly to an organisation’s
‘heart and soul’, whereas weak cultures have a limited perspective of a definable
organisational character. Strong cultures can lead to better performance in terms of
organisational effectiveness and productivity. Weak cultures are highly fragmented
companies that lack consistency in establishing organisational values and beliefs, so
limited behavioural norms are seen in operating procedures and practices and its
members share few traditions. Individuals within such companies lack a sense of
allegiance to a definable organisational culture and have little real understanding of what
the company stands for. Consequently, employees in weak-culture organisations view
their company as simply a place to work and have little passion or emotional
commitment to achieving organisational goals.

Strong cultures lead to increased performance and efficiency because:

 ‘A strong culture helps to align organisational goals whereby its values are shared widely
across its members in terms of both the goals to pursue as well as how they should be
achieved. Consequently members within the organisation work together harmoniously
where there are limited communication or coordination problems often resulting from
internal conflicts. This ultimately leads to increased organisational performance.
 A strong culture results in high levels of employee motivation due to two key reasons.
Firstly, individuals prefer to be part of an organisation with a well-defined corporate
character and distinctive philosophy. Secondly, strong culture organisations tend to
create an internal environment which supports employee decision-making and autonomy
which in turn makes working for them rewarding. High employee motivation thereby
results in high organisational performance.
 A strong culture is well positioned to learn from past experiences. Given that values and
behavioural norms, integrative rituals and ceremonies and well-known stories are deeply
ingrained in strong culture organisations, these are often used as the basis for decision-
making throughout the organisation which helps meet new challenges. An organisation
which is able to ‘reflect on its development and … draw on a stock of knowledge encoded
in stories, rules-of-thumb and general heuristics is likely to perform better than
competitors unable to learn from their past successes and failures’ (Naoum 2001, p. 179).

The key characteristics underpinning weak cultures include:

 ‘a highly politicised internal environment in which many issues get resolved and decisions
made on the basis of which individuals or groups have the most political clout to carry
the day
 hostility to change and a general wariness of people who champion new ways of doing things
 a ‘not-invented-here’ mindset that makes company personnel averse to looking outside
the company for best practice, new managerial approaches, and innovative ideas’
(Strickland 2004, p. 302).

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 Construction Business Organisation
Topic 2: Company culture

Activity 2.3
(a) Ray et al. (1999) defined ethical behaviour in business as: ‘legal behaviour and a collection
of moral principles or a set of values being shared not only with the business community,
but also within society as a whole’ (Ray et al. 1999, p. 140).
(b) Some of the benefits associated with organisations having ethical business values include:
 Ethical work environments can result in increases in job satisfaction because employees
are often satisfied with fair management practices. An ethical organisation also
reduces misconduct and limits the pressure for its members to behave unethically.
 Widely shared organisational values in relation to ethical standards and behaviour
among its members results in employees knowing that they are supported and
therefore are able react with strong motivation and performance.
 An organisation whose members work together harmoniously is able to communicate
across all levels with a high degree of trust. Improved trust leads to greater
consistency in decision-making.
(c) The two primary tasks involved with the development of an ethical strategy within an
organisation are:
 defining the abstract standards of behaviour
 applying these standards to business conduct.
(d) The two key principles that can be adopted as part of an organisation’s ethical strategy to
achieve ethical organisations are:
 The development of a values statement by top management and how it is supported is
clearly communicated and publicised throughout the organisation, which serves as a
road map to outline the organisation’s values and beliefs in relation to ethical issues.
Should new ethical values be introduced, they will need to be accompanied by some
form of training for its members. Staff competencies defined for jobs also need to
include descriptions of ethical values and expected behaviour.
 Continued dialogue, monitoring and review concerning the application of values to
further develop ethical knowledge and behaviours within the organisation and to
minimise and prevent ethical and legal violations. A code of conduct can be
developed, which explains how ethical values can be applied in representative
situations.

© Deakin University 2.17