ACCA Applied Knowledge · Business and Technology

Organisational culture: formula sheet

Full chapter guide

Key formulas

Definition of culture: Culture = shared values + beliefs + assumptions + visible behaviour; Use this wording to open any definition answer.
Schein's three levels: Artefacts (visible) → Espoused values (stated) → Basic underlying assumptions (hidden); Go from surface to deep. Assumptions are the hardest to see and to change.
Level 1: Artefacts: Artefacts = visible, observable features of the organisation; Examples: dress code, layout, logo, rituals, stories, language. Easy to see, hard to interpret.
Level 2: Espoused values: Espoused values = stated beliefs, strategies and goals; Examples: mission statement, code of conduct. They show what the organisation says it believes, not necessarily what it does.
Level 3: Basic underlying assumptions: Underlying assumptions = unconscious, taken-for-granted beliefs; The deepest level and the true core of culture. Hardest to see and to change.
How the levels relate: Assumptions → values → artefacts (deep to surface); Culture is consistent when stated values match underlying assumptions. A mismatch signals a gap between what is said and what is believed.
Power culture: Central control + few rules + personal authority; Spider's web. Quick decisions, but depends on the leader. Common in small entrepreneurial firms.
Role culture: Defined roles + rules + procedures + clear hierarchy; Greek temple. Efficient and stable in a predictable environment, but slow to change.
Task culture: Expertise + teams + project focus; Net. Flexible and creative, but hard to control and costly in resources.
Person culture: Individual first, organisation second; Cluster or galaxy. Few organisations are truly like this. Hard to manage because individuals resist control.
Power distance: High = hierarchy, centralised decisions, obedience | Low = flat, consultative, questioning; Look for clues about bosses, status and who makes decisions.
Individualism vs collectivism: Individualist = personal goals, individual rewards | Collectivist = group loyalty, team rewards; Look for clues about teams, loyalty and personal credit.
Masculinity vs femininity: Masculine = competition, achievement, results | Feminine = cooperation, quality of life, caring; This is about values, not about gender of staff.
Uncertainty avoidance: High = rules, procedures, job security, resistance to change | Low = flexibility, risk taking, tolerance of ambiguity; Look for clues about rules, change and risk.
Long-term orientation: Long-term = thrift, persistence, future rewards | Short-term = tradition, quick results, social obligations; Added later to Hofstede's original four dimensions.
Deal and Kennedy test: Culture type = level of risk + speed of feedback; High risk + fast = tough-guy macho. Low risk + fast = work hard, play hard. High risk + slow = bet your company. Low risk + slow = process.
Cultural web elements: Paradigm at centre + stories, symbols, power structures, organisational structure, control systems, rituals and routines; Six surrounding elements. Remember them as 'SS-POC-R': Stories, Symbols, Power, Organisation, Control, Routines.
Main influences on culture: Leadership + history + size + technology + ownership + industry/environment + national culture + people; Use this as a checklist. Pick the ones that fit the scenario rather than listing all of them.
Why change is resisted: Fear of loss + habit + unclear reason + informal group pressure + weak leadership; Link each reason to the facts given in the question.
Ways to change culture: Explain need → leaders model it → change rewards and systems → train and involve staff → reinforce over time; Culture change is slow. Never suggest a quick fix such as a single memo.
Culture in one line: Culture = shared values + beliefs + assumptions + ways of working; Use this to define culture in one sentence before applying it.
Fit test: Good fit = culture supports strategy AND structure; If either link is weak, expect conflict, slow change or weak performance.
Culture versus climate: Culture = deep and lasting; climate = current mood and short-term; Climate is easier to change and to measure.

Quick revision

Culture is the shared values, beliefs and norms that shape behaviour in an organisation.
Schein has three levels: artefacts, espoused values and basic underlying assumptions.
Artefacts are visible; basic assumptions are hidden and taken for granted.
Handy's four types are power, role, task and person culture.
Power culture centres on one person or a small group; role culture relies on rules and defined roles.
Task culture is team-based and project-focused; person culture puts the individual first, as in a partnership of professionals.
Hofstede compares national cultures using dimensions such as power distance and individualism versus collectivism.
Hofstede also uses uncertainty avoidance and masculinity versus femininity.
Deal and Kennedy link culture to risk and speed of feedback.
Johnson and Scholes' cultural web shows culture through stories, symbols, power structures, control systems, rituals and routines, and organisational structure, around the paradigm.
Founders, history, size, technology and national culture all influence culture.
Culture is hard to change, and fit with strategy and structure supports performance.

Common mistakes

Treating a mission statement as the real culture. Fix: A mission statement is an espoused value. Real culture is shown by behaviour and the assumptions behind it.
Placing dress code or office layout at the assumptions level. Fix: Anything visible is an artefact, however important it seems.
Treating a mission statement as an underlying assumption. Fix: A mission statement is written and public, so it is an espoused value. Assumptions are unspoken.
Saying artefacts are the least important level. Fix: Artefacts are the most visible and are clues to the deeper levels. They are just easy to misread on their own.
Confusing role culture with task culture. Fix: Role culture follows rules and position. Task culture follows the job to be done and expertise. Ask what gives influence: position or skill.
Saying a power culture is always bad. Fix: It is quick and decisive and suits small or entrepreneurial firms. Its weakness is dependence on one person.
Confusing masculinity with the gender of employees Fix: Remember it describes values: competition and achievement versus cooperation and quality of life.
Mixing up high and low power distance Fix: High power distance means unequal power is accepted. Think tall hierarchy and obedience.
Confusing tough-guy macho with work hard, play hard. Fix: Always check risk. High risk is tough-guy macho. Low risk with many small transactions is work hard, play hard.
Calling a bank or public body a bet your company culture. Fix: Slow feedback with low risk and focus on procedures is process culture. Bet your company needs high-stakes decisions.

Exam tips

Know the three Schein levels in order and be able to give one example of each in a few words.
In multiple choice, look for key words: 'visible' or 'observable' points to artefacts, 'stated' points to espoused values, 'taken for granted' points to assumptions.
Watch for scenarios where words and actions disagree. The deeper level is the real culture.
In multi-task questions, define culture first, then apply it to the scenario. Do not just list the levels.
Do not mix up this topic with Handy's types or Hofstede's dimensions. Answer only what the question asks.
In Section A, the question usually gives one example and asks for its level. Use the clue words: seen, stated, taken for granted.
In Section B scenarios, quote the clue from the case before naming the level. This shows application.
Look for a mismatch between what the organisation says and what staff do. Exams often build scenarios around this gap.