Organisational Culture
Organisational culture and climate
Organisational culture and organisational climate are related concepts that describe different aspects of an organisation’s working environment.
Culture
Organisational culture refers to the shared values, beliefs, assumptions, and behaviours characterising an organisation. It represents the underlying beliefs, values, and attitudes that shape how people think and behave in the organisation. Organisational culture is often described as the “personality” of an organisation. It can be thought of as the organisation’s collective identity.
Organisational culture refers to the specific aspects of the work environment that affect employees’ perceptions of the organisation. It is the “atmosphere” of the organisation that employees experience in their daily work. Organisational culture includes communication patterns, leadership style, job demands, rewards and recognition, and the physical environment.
Culture can be considered as ‘How we do things around here.’
Climate
On the other hand, organisational climate is often described as the “mood” of an organisation. So the climate is ‘How we feel about how we do things around here.’
While there is some overlap between organisational culture and organisational climate, they are different concepts. Organisational culture is more deeply ingrained and enduring, while organisational climate is more situational and subject to change. In addition, organisational culture tends to be relatively stable over time. In contrast, external factors and organisational changes can influence organisational climate.
Culture and climate are essential in understanding an organisation’s working environment. They can significantly impact employee behaviour, attitudes, and performance.
Recent research by the McKinsey Global Institute emphasizes the critical importance of attracting and retaining talent[1] . Companies that excel in developing and managing their workforce, known as "people and performance winners," gain a long-term competitive advantage. These winners demonstrate more consistent earnings, greater resilience during crises, and lower attrition rates than their peers.
The study highlights key findings in this regard. Firstly, companies that successfully build human capital have more consistent earnings than sector peers and greater resilience during crises. They also excel in retaining talent, with attrition rates five percentage points lower than those of their peers. Additionally, some organizations simultaneously prioritize talent development and achieve top-tier profitability, becoming large-scale superstars across various sectors.
Furthermore, companies that combine people and performance success have a distinctive organizational signature. They challenge and empower employees while fostering bottom-up innovation, activating human capital and creating a competitive advantage. As a result, these people and performance winners are significantly more likely to remain in the top quintile of their sectors regarding return on invested capital (ROIC) for extended periods.
Investing in people's development benefits not only the organizations but also the employees themselves. Skills acquired on the job contribute substantially to an individual's lifetime earnings. As a result, companies focusing on building human capital are more likely to propel their employees into higher earnings brackets throughout their careers.
However, the research also highlights several issues that need attention. The Great Attrition, where employees leave their jobs, affects workers at all levels and across various income brackets. No role, level, or industry is immune to this trend, which is expected to continue. Moreover, the traditional perception of work is changing as alternative employment opportunities, such as being an Uber driver or social media influencer, have emerged. This creates additional competition for employers seeking talent.
There is also a disconnect between employers and employees. Employers primarily attribute employee departures to better job prospects, compensation, and work-life balance. However, employees express different reasons, such as feeling undervalued by the organization or their managers and lacking a sense of belonging at work. Employees seek greater emphasis on relational factors in their work experience.
In conclusion, the research emphasizes the critical role of attracting and retaining talent in organizations. Companies can gain a long-term performance edge and maintain a competitive advantage in the evolving labour market by developing and managing their workforce effectively, addressing employee expectations and needs, and fostering a sense of value and belonging.
This is key to creating a resilient delivery culture.
[1] The State of Organizations 2023: Ten shifts transforming organizations
https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-state-of-organizations-2023?cid=eml-web
The output of working through 'Create a resilient project management and delivery culture' and doing the summary exercises at the end is a playbook for creating or building on, or recovering, a resilient project delivery culture.
A playbook is a document that outlines a set of standardised procedures, policies, or guidelines for a particular activity or process. The term is commonly used in business, sports, and military contexts.
A playbook typically includes detailed instructions, checklists, and guidelines for specific situations or scenarios that may arise during the activity or process. Individuals or teams involved in the activity can use it as a reference guide to ensure consistency, reduce errors, and improve performance.
In a business context, a playbook may refer to a set of documented procedures, policies, or best practices for a specific business function, such as sales, marketing, or customer service. The playbook may guide employees, standardise procedures across different departments or teams, and ensure the organisation’s goals are met.
In sports, a playbook typically refers to a collection of offensive and defensive plays a team uses during a game. The playbook is developed by coaches and tailored to the team’s strengths, weaknesses, and opponents.
A playbook may refer to procedures, tactics, and strategies for various combat scenarios in military contexts. Playbooks may be developed for individual soldiers, teams, or units to ensure they are prepared for different situations and can respond quickly and effectively.
This book is both information and a workbook as we explore your project and service delivery culture. This is not a book about project management tools and techniques but rather about leadership and management of a project or service delivery organisation. We seek to walk step by step, creating a picture of a healthy project delivery culture within which project managers are empowered to take responsibility and take appropriate risks without fear of retribution. This is not a get-out-of-jail card for a project manager taking ill-considered risks that could affect the project, organisation, function, or reputation but rather taking informed risks based on experience and seeking appropriate advice from subject matter experts.
Although we see a playbook as starting with your vision and principles for a healthy project and service delivery culture, we will only address those two parts at the end of this book as you have worked your way through what good looks like for your organisation and what essential management systems and accountability structures you will put in place. We may start with an essential vision for your department. Ultimately, we will refine this with a vision and principles for a sustained improvement in culture and climate, leading to resilient project managers and consistent project delivery.
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