Wednesday, 13 February 2013

The Culture Show

The last couple of weeks have seen much waffling about organisational culture. Following the Francis report on the Mid Staffordshire Trust, all and sundry were calling for a change in the culture of the NHS. This week we've had further calls for a change in the culture of banks, following the LIBOR rate-fixing fallout. What unites these two is the assumption that culture is the product of leadership, hence the focus on the suitability of David Nicholson and quibbles about Stephen Hester's bonus. Today we've seen the Health Secretary simultaneously claim that compassion cannot be "commanded from on high either by regulators or politicians" while using the example of "failing schools" to advocate "super-heads". This is the classic neoliberal mix of independence from the state and all power to the CEO. Liberty and autocracy.

Some of the fashion for cultural change stems from the popular confusion of culture with operating practice, such as the failure to distinguish between a value and an operating procedure ("care" is a value, while changing patients soiled sheets is an operating procedure). There is also a confusion between culture and power - the belief that culture is a manifestation of authority. Thus a "strong" culture is assumed to reflect a well-led organisation. This in turn reflects the belief in the efficacy of leaders, able to make an organisation turn on a sixpence and improve results overnight, which has long been the ideological cover for executive looting.

The turn to culture as the panacea for the NHS's problems follows on from the failure of targets (i.e. scientific management), which were placed centre-stage by New Labour as a managerialist substitute for prices when they decided to retain the internal market. Just as prices can be rigged (see LIBOR), so targets can be corrupted and lead to undesirable consequences (see Mid Staffs). The lamentation over culture, which is an even more complex and recalcitrant area than process management, looks like desperation and may mark the last hurrah for the NHS before the privatisation of core services. Similarly, the plea for a change in the culture of banks looks like an acceptance that the regulatory environment is inadequate and likely to remain so.

Actually existing culture, in the sense of shared values and normative behaviour, arises organically over long periods of time. Revolutions are possible, but only insofar as they legitimise values or behaviours that have been latent. You can no more change an organisation's culture quickly than you can change an individual's personality. Given the stratification and hierarchy of most organisations, there is rarely a single culture, certainly not in organisations of the scale of the NHS or a global bank. Instead, there tend to be multiple, overlapping subcultures. At the lowest levels, an organisation's culture is indistinguishable from that of the wider society. Among temporary staff, the organisation's culture usually extends no further than a logo on a building pass.

The further up the hierarchy you go, the more the culture is consciously independent of both the organisation and society, adhering to the values and norms of professional bodies or industry disciplines. Ironically, affiliation to an external culture is often strongest among those whose day job involves managing the organisation's culture (or at least curating its artefacts). The acme of this is the global culture of the executive class, which is highly conformist and pathologically averse to acknowledging cultural plurality (as distinct from "diversity", which is just CSR wibble). The paradox of culture is that top-down design and deployment inevitably bathes all organisations in the same weak solution, flavoured by business school nostrums and HR anodynes.

Starting in the 1930s, there was a vogue for forward-thinking organisations to bring in sociologists to analyse and report on the inhouse culture. This became formalised as "industrial sociology" by the 1960s, the analysis of large and complex organisations, with a focus on the informal mediation of hierarchies and the use of tacit knowledge (i.e. getting the job done while ignoring your manager). The underlying paradigm was anthropological.  This was the "social" dimension of management that complemented the "scientific" dimension, focusing on processes, that ran from Taylorism through Japanese post-war practice to BPR. As the last of these was increasingly used to provide both method and cover for the dismemberment of Fordist businesses in the face of globalisation, the practice of organisational culture shifted from a reflective analysis of "is" to an assertive imposition of "to be". This also resulted in the practitioners of organisational culture being increasingly drawn from the ranks of business consultancy and training, rather than the social sciences. A "cultural change manager" today is likely to be a HR functionary.

The history of this evolution can be seen in the current interpretative division between culture as an attribute (something an organisation has - i.e. an asset) and culture as a metaphor (a way of describing the totality of the organisation). The former view sees culture in instrumental terms as something that can be manipulated or even imported wholesale. The latter view sees culture as a medium by which the fundamental nature of the organisation is revealed, with no assumption that it can necessarily be changed. As you might suspect, the "attribute" school of thought privileges leadership and the purchase of culture (in the form of change management). Though the "metaphor" school has its roots in industrial sociology, it's as likely to be found today among consultancies pitching to undertake "cultural audits". Culture has become just another commodity.

Culture is partly a caricature, as it is selective in what it celebrates and publicly exhibits, but stereotypes are an effective shorthand for norms while symbols can be powerful tools for reinforcing values. We all know what is meant by the call for the NHS to "bring back matron" or for bankers to be more like Captain Mainwaring. The popularity of the film Boiler Room among City traders before the 2008 crash, and the current popularity of NHS nostalgia like Call the Midwife, are telling in their different ways. The NHS and banks share a common characteristic in that their culture is heavily influenced by their corporate structure. In other words (and taking a "metaphor" approach), the culture reflects the organisation. In brief, you can only radically change the culture if you fundamentally change the structure of the organisation.

The NHS has struggled to evolve from the industrial paradigm of 1948. The half-way house of the internal market was doomed to fail because the NHS was, and essentially still is, a command economy. Paradoxically, the centralisation of the NHS leaves it vulnerable to repeated government initiatives for top-down change. A more diffuse and locally-accountable structure would limit this, though that would mean acknowledging a plurality of cultures. Instead of parachuting in bullying CEOs, the NHS would benefit from bottom-up change. In other words, democracy. This has long been the elephant in the room, both in terms of healthcare workers and patients. Workplace democracy is unattractive to professional bodies, such as the BMA and RCN, that command subculture allegiance, while patient democracy is unattractive to health managers who fear that it is incompatible with rationing and would lead to an explosion in costs. The tragedy of the NHS is that these vested interests may ultimately accept privatisation as a lesser evil. Assuming services were broken down into many separate contracts (as the private providers wish), this would fragment the NHS into multiple cultures. Ironically, this would reinforce the subcultural allegiance of professionals to their external bodies, which would obviously remain monopolies.

Banking remains unstable because it combines antipathetic elements: the high street bank, which many customers still think of as closer to a para-state utility than a retailer, and high finance. The growth of financial services (such as credit cards and mortgages) led, via the deregulation of the City (and the importation of US banking practices) in the 80s, to the merger of high street and investment banking. The former got infected by upselling and commission schemes, the latter got access to very large deposits that could be leveraged for trading. The banks may now be insisting that they've mended their ways, but this is like an alcoholic insisting that the best way for him to stay sober is to carry a full hip-flask. The temptation will always be there. There is no secret that cultural change in UK banking would best be effected by fully splitting retail and investment, but equally there is no doubt that this would severely disadvantage the City unless other countries did likewise, hence the flimsy ringfence. Ultimately, a City that is "less proud" may be the only chance we have of rebalancing the UK economy, but there are too many vested interests to believe it will happen unless forced upon us.

The calls for cultural change in both the NHS and UK banking are misguided. If you want to change the culture, you must change the structure of the organisation: democratise the NHS and split retail and investment banking. The idea that cultural change is dependent on strong leadership indicates a complete failure to understand what culture really is.

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