Proceedings of the 2007 Industrial Engineering Research Conference G. Bayraksan, W. Lin, Y. Son, and R. Wysk, eds.

The Effects of Organizational Culture on System Reliability: A Cross-Industry Analysis

Marc L. Resnick, Ph.D. Industrial and Systems Engineering

Florida International University, Miami, FL 33199, USA

Abstract

The effects of organizational culture on system reliability cannot be understated. Many industries have experienced catastrophic failures that have been attributed to organizational culture, such as the space shuttle Columbia disaster. Other industries, such as health care, have difficulty measuring and improving reliability because of a dominant organizational culture that impedes reliability analysis by focusing on the attribution of blame. On the other hand, some industries, such as commercial aerospace, have reliability ingrained in the organizational culture and thus achieve superior reliability in their systems. This paper will present an analysis of organization culture from a variety of industries to illustrate the diverse ways in which organization cultures affect system reliability.

Keywords Organizational culture, reliability, human error, case studies

1. Background System reliability is critical for the success of most organizations, regardless of whether they are in manufacturing, service, government, education, non-profit, or otherwise. The level of reliability that is achieved by any system must meet the requirements of its users in all foreseeable contexts. In fact, high levels of reliability have become a baseline for entry into many markets, an expected characteristic before a product or system will even be considered by customers, rather than a value added that can be used as a differentiator. Systems that dont meet these reliability thresholds face either rejection by the market or lawsuits from dissatisfied customers. It is therefore imperative for system designers and managers to understand all precursors to system reliability. Historically, most efforts have focused on reliability in the design process [1]. However, more recent analysis has established that reliability is determined throughout the product life cycle, including many of the stages that precede and follow design [2]. There is considerable evidence that organizational culture affects system reliability at many of these stages, including requirements specification, design, operations [3], and incident investigation [4].

In many cases, system reliability does not achieve its potential because opportunities for improving reliability are not addressed. The concept of ultrareliability [2] [5] identifies many opportunities for reliability improvement that may not be discovered during traditional reliability analysis. One area that has not received sufficient attention with respect to its effect on reliability is organizational culture. One might think that engineering decisions are largely defined by quantitative cost-benefit analyses, however the effects of corporate culture and organizational climate can have large and unpredictable effects on the development of systems and their subsequent reliability. An examination of the system reliability context (see Figure 1) illustrates that culture can interact with many aspects of reliability. This paper will identify several of these interactions, discuss the effects of organizational culture, and suggest ways to structure the relationship so that culture has a net positive effect on system reliability. But first, a brief synopsis of organizational culture is presented.

2. Organizational Culture Organizational culture can be conceptualized as a combination of the attitudes, experiences, beliefs, values, and norms of an organization. It develops over time as the people and the environment change and organizational processes and procedures, both explicit and tacit, evolve. Culture largely defines how people behave in terms of their willingness to accept risk, comply with chains of command, delegate authority, act independently, and take personal responsibility for organizational performance [6].

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Figure 1. The context of systems reliability analysis (reproduced with permission from [5])

Management often attempts to design and control the culture, but culture is difficult to manipulate from the top down. These attempts are often viewed skeptically by the workforce at large, often because of lack of follow through and the impression that the effort is just another flavor of the month policy. In many cases, senior management does not exhibit the attributes of the culture they are trying to create within the organization, confirming these suspicions.

3. The effects of organizational culture on system reliability A complete investigation of all potential influences of culture on system reliability is beyond the scope of this paper. The areas with the greatest potential for reliability improvement will be highlighted and discussed.

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3.1 Communication Perhaps the area where organizational culture has the most significant and often negative impact on reliability is in vertical communication. Vertical communication refers to the ability of upper management to transmit corporate values, strategies, and priorities to employees as well as the ability of employees to convey relevant insights and challenges upstream to management. Technology has made communication easy by supporting company Intranets where executives can distribute mass communications to employees and employees can either respond directly or send their own communications via email to senior executives. However, this has led to a greater volume of communication, but added volume is as likely to decrease reliability as it is to improve it. The psychodynamics of management-employee relationships creates challenges that cannot be overcome through advanced communications technology. Instead, intra-organizational communication must be managed with a focus on reliability rather than simply capability.

For example the CAIB report [3] concluded that NASA did too little to encourage vertical communication from flight engineers and technical staff to mission decision makers. Management also suffered from an information cocoon in which the culture encouraged fitting in by buying into a common perspective. Research has shown that when the only information entering the deliberation process already coincides with existing consensus, there is no opportunity for deliberation [7]. This reduced NASAs mission reliability and led to the Columbia disaster.

Similarly, the 2004 report from the Senate Select Committee on Intelligence reported that the CIA succumbed to groupthink when it concluded that there was a serious threat of Iraq weapons of mass destruction [7]. In part this was due to a deliberation process that ignored or missed relevant information held by many employees. The CIA had formal methods to avoid groupthink, but these procedures were not followed because of the force of the organizational culture.

There are also potential challenges to horizontal communication. Horizontal communication refers to communication among and between work groups at the same level of the organizational hierarchy. Indicators that are noticed out of range must be communicated to individuals who can use that information to perform needed repairs or adjustments. Often, it is taken for granted that these individuals already are aware, particularly when the organization culture does not stress individual responsibility or it penalizes risk taking. In contrast, the Toyota Production System philosophy encourages any worker who sees a potential fault to immediately, and without fear of repercussion, halt the production process.

Another type of horizontal communication that suffers from organizational limitations are shift handoffs. Handoff errors can occur when incidents span multiple shifts and transition processes from one shift to the next are not designed to accommodate typical challenges. Often, organizations in this domain do not support effective handoff processes by providing adequate resources and incentives. At the end of shifts, workers are interested in leaving the workplace as quickly as possible and at the beginning of shifts workers are interested in jumping immediately into those activities for which their performance is judged. The mechanisms of performance evaluation thus degrade the quality of handoff communication and reduce the reliability of the system. This effect can be observed in many industries, including health care, industrial process control, and others.

3.2 Accountability and blame When personnel in an industry are motivated by fear to hide errors, this can have a significant negative impact on reliability. This is a particular challenge in the medical field because of the fear of litigation. Not only might individual errors fail to be corrected [8], but the learning opportunities to identify recurring trends [9] or to allow different facilities to benchmark their performance against each other [10] is lost. For example, hospital pharmacists described in [11] are more likely to report errors they find from other departments. Social pressures discourage reporting errors within the department and tangible penalties discourage any reports of ones own errors. In order to overcome these kinds of challenges, Daly [9] describes a voluntary system in which names are removed. By maintaining anonymity, the fear of liability is eliminated. Resolving the damage of a particular error is not supported, but identifying trends and benchmarking can still be accommodated.

Accountability can also play a role in whether employees report near misses into an error reporting system. In addition to formal rules and regulations, organizations develop psychological contracts that either supplement or supersede official policies. A psychological contract is when both parties feel an obligation to engage (or not engage) is specific behaviors, contingent on the other party engaging in a complementary set of specific behaviors

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[12]. In the safety arena, psychological contracts emerge from the organizational culture. If workers perceive that the organization will not take action to address reported unsafe conditions (part of its behavioral commitment), then workers feel absolved from reporting them, even if this reporting is required by official policy. In this way, an organizational culture can eliminate the benefits of a well designed policy.

3.3 Incident investigation Organizations must establish a culture that cherishes mistakes as opportunities for improvement. In complex systems, where root causes can only be identified after a large volume of incidents are mined for common trends, industry-wide databases are necessary. The aerospace industry has been able to achieve this through federally supported incident investigation efforts and the concomitant increase in reliability across the entire industry has been significant. It is possible for medical care to duplicate this success, however, there are additional challenges because of the complex management structure of the health care industry, in which doctors are often independent contractors for hospitals, multiple organizations, (different medical specialties, insurance providers, clinics, technical staff, medical labs) must work collectively to coordinate care, and each component has a different lexicon and process model [13].

Examples in workplace safety and injury reporting also reflect the effects of organizational culture. A reporting system is dependent on the organizational culture to encourage reporting of minor events and near misses (near hits) which are critical to achieve a sufficient sample size in the incident database to identify trends and root causes [14]. According to Heinrichs injury triangle, every major incident has a large number of similar near misses and minor incidents that have the same underlying causes. The culture must encourage the reporting of these events so that the major incidents can be prevented. But without organizational support, workers do not see the benefit of reporting such events. There is little chance that this reporting will lead to any direct benefit to the worker and there is a larger probability of negative repercussions if reporting is not supported culturally.

3.4 Enforcement An organizations normative efforts to enforce its rules and regulations also can be a major contributing factor of its culture to system reliability. When an organization has lax enforcement, rules are interpreted more as guidelines than rules. Employees then feel an unspoken sanction to violate them. This trend generally starts when the violation allows them to satisfy dominant organizational values and objectives, such as violating safety rules to increase productivity. But it can expand to include personal benefits such as avoiding fatigue or just taking shortcuts to make an activity easier.

3.5 Collaboration In many cases, inter-departmental collaboration is necessary to achieve overall system reliability [2]. This has become increasingly relevant for organizations that have geographically dispersed teams and diverse cultures. Communities of practice [15] have been shown to increase the power of collaborative activities among knowledge workers, but only when collaboration is supported by the appropriate performance evaluation system. Without a supportive organizational culture, valuable information that can be used to enhance system reliability will be missed. Similarly, knowledge databases can be used to enhance system reliability [16], but only if supported by the appropriate organizational culture. As illustrated by the CaSIDA model of knowledge management systems [17], a systematic process to manage knowledge capture and dissemination is necessary to complement the technological processes of knowledge integration. The capture and dissemination aspects of knowledge management are significantly impacted by cultural norms.

4. Conclusions There are many aspects of organizational culture that can impact system reliability. These impacts can occur throughout the system lifecycle. It is important for organizations, particularly those in reliability-critical industries such as health care and aerospace, to assess their cultures and determine how they are affecting reliability. Organizations can work towards developing cultures that enhance reliability rather than degrade it. The ultrareliability model illustrated in Figure 1 can be used as a framework through which the mechanisms that culture can impact reliability are assessed and resolved.

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