To What Extent Do You Think It Is Possible for Leaders to Manipulate Organisational Culture to Achieve Improved Performance?

MSc in Security and Risk Management ‘To what extent do you think it is possible for leaders to manipulate organisational culture to achieve improved performance? Support your answer with examples from one or more organisations with which you are familiar’ 3777 words Organisational culture, which is defined by Handy (1993) as the concepts and ideas which govern the behaviour of people and organisations, has a significant impact on the effectiveness of an organisation.

Handy listed over sixty different variables which contribute towards an organisation’s culture including the style of leadership evident, the systems and structures which support the organisation and how the different sub groups within the organisation relate and work with each other. He felt that analysis and thorough understanding of an organisation’s culture could inform management decisions and make leadership more effective by taking into consideration both the environment in which people operated (physical, financial and technological) and the roles, motivations, ability and individuals who understood the work (Handy 1993).

Mullins (2007) identifies a leader as someone who focuses on the long-term goals strategically planning for the future with ? vision inspiring others to help achieve that goal. It could be surmised that if it was possible for a leader to manipulate organisational culture they could in turn achieve improved performance. This essay will investigate this concept, considering the possibility within the context of Nexen Inc, Canadian based oil and gas company’s operations in Yemen, where the author currently is employed.

Firstly organisational culture will be defined and the formal and informal organisational culture of Nexen will be evaluated. The essay will then go on to consider how these cultures impact on security and will assess the importance of culture within this environment. The essay will then explore if, in the case of Nexen, cultural changes can be implemented by identifying the benefits and process of changing organisational culture and evaluating whether the benefits of changing culture outweigh the difficulties It will conclude by assessing if it is possible for a leader to manipulate rganisational culture in order to improve performance. Canadian Nexen Inc and Canadian Nexen Petroleum is the fourth largest oil and gas company in Canada which was able to establish its operations in the Yemen, Canada, Gulf of Mexico, and off shore West Africa (Reference for Business, 2010). Canadian Nexen Inc. appears to be a successful corporation able to integrate international joint ventures in its business plan (Reference for Business, 2010).

The fact that it’s stock price has steadily increased even amidst the economic struggle indicates the sturdy management and work ethic culture of the company in mitigating the effects of even the current financial crisis (Walcoff, 2010). Although the company is involved the global business arena its management remains centralised and hierarchical in nature, this is evidenced in their organisational charts and decision making structure (Nexen Inc, 2010).

In its main office in Calgary, Canada, Marvin Romanow leads Canadian Nexen Petroleum as its President and CEO, assisted by the Executive Vice President and also a Chief Financial Officer (Nexen Inc, 2010). These two key figures represent the highest managerial positions in Canadian Nexen Inc. ’s operations and they have the power and prerogative to set the ‘tone’ in the leadership and management of the whole corporation (Nexen Inc, 2010). Nexen is a tall hierarchical structure which is bureaucratic in nature however this is not unusual in an organisation of its size (Mullins, 2007).

The organisational structure of Canadian Nexen, Inc. delegates responsibility to Country managers for the establishment of supervisorial positions in its local offices. Nexen is a tall hierarchical structure which is bureaucratic in nature however this is not unusual in an organisation of its size (Mullins, 2007). The centralized structure may be economically and administratively beneficial but there is little opportunity for autonomy or independence (Mullins, 2007) and in the case of overseas operations it may make it harder for local circumstances to be taken into account during decision making.

The organisational structure of Canadian Nexen, Inc. delegates responsibility for the operations in Yemen to the two Country managers who have in turn established supervisory positions in their local offices. The Country managers of each overseas operation report back to the head office and so there is little or often no direct communication between workers overseas and the Canadian offices. This can lead to an impersonality and lack of corporate identity (Mullins, 2007) within the overseas staff.

The two offices in Yemen are managed and partly staffed by Canadians who also work along side Yemeni staff. Historical the Yemeni workers were in junior positions but a recent government enforced initiate has lead to some of the Yemeni staff taking on management roles within the offices. Outside the office environments in the oil production and port locations there are overseas workers (UK, American, Canadian and Australian) in supervisory or specialist roles and Yemeni workers in lower more manual positions.

These management teams could be described as multinational management (Salk and Brannen, 2000) which could be seen as beneficial or detrimental to the team’s performance. Currently, within the offices and production and port areas, there is evidence of cultural clashes and the joint ventures and cultural differences are generally considered to be more problematic than helpful (From interview with Operations Manager, 18/8/10) to the company’s production.

Management feel that there is a constant need to find a common ground with its employees to avoid conflicts that result from the cultural differences between the ex pat and Yemeni staff. Organisational culture can be defined simply as ‘how things are done around here’ (Mullins, 2007:721). On the other hand, organisational culture is also defined as ‘the collection of traditions, values, policies, beliefs and attitudes that constitute a pervasive context for everything we do and think in an organisation’ (Mullins, 2007:721).

In this second definition, ‘organisational culture arises within the context and setting provided by the structure of the organisation’ (Mullins, 2007:745). Leaders as ‘members of the group should be able to recognise and comprehend the parts of their group’s organisational culture such as its history, ethical considerations, value formations and conventions for the sake of truly being a part of the group’ (Driskill, 2005:3) They should be able to create or manipulate the organisational culture for the holistic benefits of their organisation (National Defense University, 2010).

Schein (1985) identified three levels to assess organisational culture, the ‘behaviour and artefacts, values and assumptions and beliefs’ (Mullins, 2007:722) of staff. ‘Behaviour and artefacts level represents the most observable manifestation of organisational culture’ (Mullins, 2007:722) and include the constructed physical environment (for example office space), the written and spoken language used for communication (Yemeni and English) and the overt and observable behaviour of the group.

These artefacts are used to maintain order and to make staff comply with requirements such as dress codes and hierarchy reporting lines (Department of Criminology, 2009/10). Values level may not be as observable as the level of behaviour and artefacts (Department of Criminology, 2009/10) as the values level of organisational culture reflects an individuals value and belief system which they use to guide their own (and where possible others) behaviour.

These values might reflect an organisation’s own statement of acceptable values, and they may be the underlying unannounced behaviour of the employee (National Defense University, 2010) or they may have cultural origins. The third level of culture identified by Schein (1985) is a person’s basic underlying assumptions which are accepted and repeated behaviours of individual which have become instinctive learned responses to a situation or problem. The cultural web, developed by Gerry Johnson and Kevan Scholes in 1992 is another method of evaluating an organisation’s culture.

This assesses six different areas of the organisation. The symbols used to represent the organisation and power structures within it, the formal and informal stories told about the people who work for the organisation, the formal power structures as evidenced by management positions and status symbols, the control systems used by the management to measure and reward performance, the routines and rituals which reward and punish behaviour (both work and non work related) which might be formal and informal processes and the routines and accepted ways that things are done.

Within organisational culture subcultures are also present in some companies and corporations (National Defense University, 2010) and this may be particularly relevant with an organisation such as Nexen where overseas operations are remote from the head office and there are a number of different and identifiable cultures working together. In these cases staff may identify more with the local sub culture than the image and identity of the parent firm whose norms of behaviour are remote and not obviously influential (Li et al 2002).

As an organisation seeking to be integrated in a foreign land, Canadian Nexen Petroleum Yemen tries to confront the tasks and challenges of the cultural disparity between Canada and Yemen. The management has opted to confront the problem but to do so in a non aggressive way. Instead of generalising work standards with that of the Canadian organisational culture, the Calgary-based company tried to get the trust and support of the local citizens of Yemen through education and attempts to change the social norms and acceptable behaviours.

In 2000 Nexen launched their scholarship programme that specifically caters to Yemeni students who would want to pursue a career in Nexen (Nexen Inc. , 2010). This scholarship programme includes an exchange programme so that students experience Canadian culture at first hand and so far, the programme has created young Yemeni professionals with the skills needed to operate the Yemen based Canadian Nexen Petroleum offices. Nexen have also set up an Integrity Programme (1997), which seeks to integrate ethicality and proper conscientious conduct in Canadian Nexen Petroleum’s employees (Treasury Board of Canada Secretariat, 2010).

This is mandatory for all of its employees including top ranked officials and even the newly employed staff (Singer, 2009). This programme launched with a series of workshops teaching participants basic proper workplace conduct, the need for joining productivity and ethicality and even individual accountability. Deal and Kennedy (1982) categorized organisational culture into four generic types of culture: the tough guy macho culture; the work hard/play hard culture, the bet your company culture; and the process culture’ (Mullins, 2007:723).

Oil production is a high risk activity and added to this is the risk of operating in a difficult and sometimes dangerous country and so the culture could be described as tough-guy; macho culture one in which ‘individuals take high risks and receive quick feedback on the right or wrong of their actions’ (Mullins, 2002:893). Miller (2004) described the culture of the oil industry and in particular the production side of it as a gendered organisation in which there were powerful symbols and an aggressive masculine culture.

This culture operates in a national cultural environment which is Arab in nature and based on Arab social values including traditional Arab society, a belief in and the need to practice Islam within a social, military and political context and to respect individuals regardless of social background (Ali, 1996). When seeking to explain the local culture to its ex pat employees Nexen recommends the Centre for Intercultural Learning website developed by the Canadian Office for Foreign affairs and international trade (Centre for Intercultural Learning, 2009).

In terms of beliefs and artefacts the office environment provides more evidence of organisational culture than the port and production terminal. Managers and supervisors have their own offices and staff must make appointments to meet with their supervisor or manager. The offices are symbols of power and the bureaucratic approach to management is a method reinforcing the power structure which is in place. While the management use first names other staff use proper titles such as Sheikh and Sir when addressing superiors although this may be symptomatic of the local culture as opposed to Nexen itself (Centre for Intercultural Learning, 2009).

In the terminals and port facility the ex pat staff have separate common rooms from the Yemeni staff and they have individual as opposed to share bedrooms; again these are physical and social environments which contribute to the current culture reinforcing the power structures and symbols of separation and a ‘them and us’ culture. Attempts have been made to break down this separation and they have developed a ritual of monthly shared mealtimes and it is routine to celebrate both Yemeni and Christian festivals with the same decorations used for Eid and Christmas.

Canadian Nexen Petroleum’s management favours efforts to establish relationships in the workplace which are harmonious as the company (Nexen Inc, 2010) associates these with productivity and effectiveness. These goals are similar to the Arabic culture of respect identified by Ali (1996) and within the office the Yemeni concept of social networks and casual and professional friendships are evident as the Yemeni expresses courtesy through constant contact including the use of the telephone and other communication utilities.

Although the constant use of mobiles and chat within the workplace is accepted as routine it is an underlying value of both cultures displaying tolerance and acknowledgement of mutual cultural understanding. Within the organisational charts there are a number of control systems built into the reporting lines. Yemeni staff has responsibility for discrete areas and manage other Yemeni staff as opposed to ex pats. This is currently the accepted norm but recent government initiatives to move Yemeni staff into management positions may change this balance of power.

This may cause some difficulties as the Yemeni way of approaching conflict involves discussions in secrecy or at least in a private forum to avoid being accused of being offensive and insulting (Centre for Intercultural Learning, 2009). The Quranic principles which serve as a guide for Muslims in conducting their business and family affairs (Ali, 1996: 6) is evident in the company’s approach to gender, class and ethnicity.

These are social factors, which could be identified as values which contribute to the organisational culture in a significant way. Yemeni culture is constraining and limiting in the female sex (Miller, 2004) and male superiority is still observable in managerial positions (Centre for Intercultural Learning, 2009). Within the office female employees are in low and menial roles mainly employed as cleaners, there are no female employees within the terminal and port staff.

Adaptations have been made to working practices to accommodate religion. Prayers and religious rites that are time sensitive are conducted within the workplace and this is an accepted routine and ritual within the offices. Wherever operations and security allow these adaptations are also implemented in the terminal and port faculties. Class and ethnicity are vital in the organizational culture of the office of Canadian Nexen Petroleum primarily because Yemen is a tribal country.

Ethnic and tribal affiliations play a large part in determining the future of any employee (Centre for Intercultural Learning, 2009) and tribal affiliations can also determine bias and favouritism among the managers in almost the same weight as productivity and output. It is possible that the control systems implemented by the management are not effective within this context as privileges and favouritism based on friendship and relationship are common in the organisation (Centre for Intercultural Learning, 2009).

Whilst this may be a reason that Nexen use foreign managers in key management positions to avoid the invocation of relationship-based favouritism and privileges (Nexen Inc, 2010) it is not a long term solution. Canadian Nexen Petroleum’s choice to expand its operation in Yemen and its agreement with the Yemeni government meant that there is sometimes significant intervention in how the organisation is administered. In addition to cultural differences international joint ventures such as this involve two organisations with ifferent agendas, strategies and ways of operating which all must be reconciled for progress to be made (Li, Xin, & Pillutla, 2002). Technically speaking, Canadian Nexen Petroleum Yemen is not a joint venture since the Yemen based company simply serves as an annex of the company’s operations and ‘international joint venture (are defined as) a collaboration of two or more companies or corporations that decided to join their operations for the sake of company growth and success’ (Li, Xin, & Pillutla, 2002: 320).

However, it is inevitable to observe that organisational problems experienced by international joint ventures are similar to the problems faced by the Canadian Nexen in their expansion to Yemen and that the ‘the cultural barriers among the members of the collaborating parties impede effective communication among the members resulting to the failure of the whole venture’ (Li, Xin, & Pillutla, 2002: 321). As a general rule the ‘Western biases supersede other contexts such as that of the Arab world’ (Ali, 1996:5).

Ali (1996:8) describes the Islamic work ethic as one in which the employee ‘seeks life fulfilment and holds business motives in the highest regard’ and goes on to state that intention to act is held as highly as deeds which have been undertaken and so results may not always be forthcoming. This has significant operational impacts when applied to the context of the oil production terminal and port where the security risks to all staff are high.

Because of the operating environment Canadian Nexen Petroleum Yemen must be conscious of organisational security. Henri Fayol (1916) argued ‘that management activity is divided into five major functions: planning, organising, command, coordination and control’ (Borodzicz, 2005:54) and these five functions all contribute to the readiness of the organisation to maintain the safety and security of its employees. Nexen are the largest single source of oil production in Yemen and there have been several recent major security incidents.

Current security threats include the risk of insurgency attacks, terrorism against Western targets due to the Al Qaeda presence in the region, Shiites (Houthi) rebels who are fighting government troops north of the capital and escalating civil unrest. Whilst a safety culture is a recognised framework (Parker etc at 2005 and Cox and Cheyne 2000) and there are mechanisms for embedding it within the rituals and routines of an organisation, a security culture is harder to define (Chia, Maynard & Ruighaver, 2002).

Chia et al (2002) identify six areas of organisational culture which might impact on an organisational security culture. These include motivation of staff, the control mechanisms used to implement security processes and if the security efforts were isolated or part of a combined attack. The development of a security policy can not always take local culture into account but the education of employees, security policies and collaborated management-grass root initiatives are some examples of organisational security which would be positively influenced by organisational culture (Chia et al (2002).

Training programmes which highlight the importance to all employees of following proper security procedures have been implemented and form part of each employee’s induction. Stories of security failures and their impact on the staff and company, form part of this induction which hopes to instil a joint approach to security within the terminal and port facility. It is difference between the Yemeni security workers intent to undertake security work (as per the Islamic work ethic identified by Ali (1996) compared to their actual undertaking of the work to a high standard which puts operations at risk.

For example: they might intend to stay awake on sentry duty all night but fall asleep part of the way through their shift. In their and their Yemeni superiors’ eyes this can not be disciplined as the intent was to stay awake but their lack of implementation has endangered the terminal facility and people within it, Organisational culture is not permanent, especially in cases where organisational culture impedes organisational development and progress (Banksinternational. net, 2005).

If leaders are true and worthy of their positions they should be able to easily detect situations requiring changes in the organisational culture of their organisation (National Defense University, 2010). Even if knowing that there is a need to change is dramatically different from knowing what to change in organisational culture, leaders should be up to the task of having the imperative to start necessary changes for the benefit of the whole organisation (Schein, 2004: 317).

There are two common situations where changes in organisational culture are necessities. First, ‘leaders must immediately alter some parts if not the whole organisational culture in situations where the culture appears to be dysfunctional and counterproductive to organisation as a whole’ (Schein, 2004: 317). The second situation will be in ‘during situations where there are integrated new members that have their very own assumptions and beliefs, values and behaviour and artefact’s (Schein, 2004: 317).

These situations can easily trigger negative effects toward the organisation such as resistance to cooperation, which can result in malfunction of organisational structures and even to the reinforcement of counterproductive culture based conflicts. Within Nexen this is the security situation which causes the most concern and need for change. A direct confrontation on organisational culture problems will only mitigate the problem (Department of Criminology, 2009/10).

Organisational change is being approached in a planned way through education in the hope of modifying employee’s behaviour and accepted social norms. However staff are finding it difficult to unfreeze existing behaviour (Mullins 2007) as this requires a culture change. Employees and their Yemeni supervisors display resistance to change partly because it is a change to their existing habits and an inconvenience but also because it is an entrenched cultural norm.

The majority of the organisational culture of Nexen can be analysed within the frameworks provided by Schein (2004) and Johnson and Scholes (1992) especially when the Arab culture identified by Ali is used to consider some of the more Islamic approaches to organisations and work. There is evidence that the Canadian based organisation has made significant efforts to adjust its own culture to that of the local environment and that their endeavours at educating future employees as potential managers within the formal office environment may have long term benefits.

There is, however, limited evidence that their attempts at behaviour change to improve the security culture and environment are as successful. Within an office environment leaders can go out of their way to change the organisation’s culture for the sake of insuring productivity however operational difficulties make this harder to implement within a high security risk environment. It may be that more security incidents must occur before there are sufficient stories and myths to encourage behaviour modification within the security staff although this is not a desirable way forward.

To summarise Nexen provides an example of where the leaders of an organisation have had to adapt their own culture to meet the local one, but that now they are established they are seeking through education and behaviour modification to influence and change the local culture. Thus they provide evidence to support the statement that leaders can manipulate organisational culture. However until there is evidence of better performance (and in the case of Nexen this would be improved production and / or security) there is limited evidence to say that their cultural changes are improving performance.

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