Organisational Culture and Performance in Project Based ... · Organisational Culture and Performance in Project Based Organisations operating in the Australian Resources and Energy

Organisational Culture and Performance in

Project Based Organisations operating in the

Australian Resources and Energy Sectors

Jennifer J Moffatt Master of Business (Integrated Marketing Communication) Bachelor of Business (Communication)

Submitted in fulfillment of the requirements for the degree of:

Doctor of Philosophy

Science and Engineering Faculty

Queensland University of Technology

Australia

2018

Abstract and Keywords

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | i

Abstract

In the extant literature the issue of whether a connection or relationship exists

between organisational culture (OC) and performance remains mixed. Despite the

interest, research is inconclusive of the links of these constructs. However, there is

little point in spending hours on ethnography, diagnostic analysis and analytics of an

organisations culture without knowing what the genuine concerns of senior

management are, and the shifting motivations and evolving norms of non-leader

stakeholders and employees (Schein & Schein, 2016). The purpose of this research is

to firstly investigate the nature or form of OC, and secondly understand OCs

relationship to the performance of a specific organisation type: Project Based

Organisations (PBOs), in a specific industry and jurisdiction: the Australian resources

and energy sector.

This is of significance as PBOs that undertake engineering projects have made a

major contribution to the Australian economy, have experienced the impact of

unprecedented market conditions, rely solely on the supply of project related work,

and how they manage and perform on projects is important. The importance has

implications to the engineering profession, the jobs PBOs create, and the greater

community they operate within. Minerals, metals and energy commodities are far more

salient to the Australian economy than they are to most other advanced nations and the

direction of commodity prices is a key influence on the economy (Eslake, 2017b). This

research advances current knowledge in an industry sector that has unique and

challenging aspects that are different to manufacturing, retail, health or other sectors

where such studies are mostly conducted.

PBOs working in this industry often compete for the same projects and specialist

productive resources, face the same pressures, conflicting demands, and supply issues.

As PBOs manage the cyclical transition from a decade long, mining investment super-

cycle, to a stressful and spiralling economic downturn it seems inevitable that certain

aspects of their culture would have been affected. It raises questions of the role of OC

and to what extent it impacts on performance, or suggests a certain type of culture may

exist, or be shared through certain market conditions.

Abstract and Keywords

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | ii

The inquiry into the nature of OC and its relationship to performance was

conducted through a linked, mixed method approach over four phases including

interviews and surveys with participants from 20 different PBOs. The research design

used a model and instrument of OC developed by Daniel Denison (Denison & Neale,

1999; Denison, 1990, 1997; Denison & Mishra, 1995). The results provide a cultural

profile of PBOs through the collection and analysis of qualitative data that aligned with

the Denison OC model’s premise, which maintains that cultural and behavioural

characteristics of organisations have a measurable effect on a company’s performance

(Denison, 1984, 1990; Denison & Mishra, 1995; Denison, Nieminen, & Kotrba, 2012).

Interviewees provided a rich insight into a sector that has experienced substantial

distress, and how this has impacted on their culture and performance. The main

contribution and point of difference of this research is that it investigated a specific

and unique organisational form in a notable and unanticipated phase in the Australian

economic cycle, and presents a model that represents the nature of a PBOs culture.

Keywords

Project based organisations, Australia, Resources and energy sector, Denison

Organisational Culture Survey, Engineering, Mixed methods, Organisational culture,

Performance.

Acknowledgements

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | iii

Acknowledgements

I would like to acknowledge and respectfully thank the individuals and

organisations that were critical to this research. Firstly, to the Queensland University

of Technology for the enormous amount of resources and support available; my

Principal Supervisor, Dr Vaughan Coffey, and Associate Supervisor, Dr Timothy Rose

for their prudent advice, assistance, and guidance. The astute individuals who

participated in the interviews and their extraordinary openness, friendliness, and

honesty deserve special mention. This group of people generously provided time,

insight and depth without which the research would not have been possible. The

participants who undertook the survey assisted to build the OC profile of PBOs and

bring the research results together. Finally, my husband, Rodney Moffatt, who has

supported me through all my academic studies.

Table of Contents

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Table of Contents

ABSTRACT .......................................................................................................................... I ACKNOWLEDGEMENTS ............................................................................................... III TABLE OF CONTENTS ................................................................................................... IV

LIST OF FIGURES ......................................................................................................... VIII LIST OF TABLES .......................................................................................................... XIII GLOSSARY AND ABBREVIATIONS ......................................................................... XIV STATEMENT OF ORIGINAL AUTHORSHIP............................................................. XVI

CHAPTER 1: INTRODUCTION ...................................................................................... 1 1.1 RESEARCH BACKGROUND ............................................................................... 1 1.2 RESEARCH PROBLEM AND RESEARCH GAPS .............................................. 3

1.2.1 Organisational Culture and Performance ..................................................... 3 1.2.2 PBOs Operating in the Australian Resources and Energy Sectors ............... 5 1.2.3 Research Gaps .............................................................................................. 6

1.3 RESEARCH AIMS, AND PRIMARY RESEARCH QUESTION ......................... 7 1.3.1 Research Question ........................................................................................ 8

1.4 SUMMARY OF RESEARCH METHODOLOGY AND DESIGN ........................ 8 1.5 SIGNIFICANCE AND CONTRIBUTION OF THE RESEARCH ......................... 8 1.6 CHAPTER CONCLUSION ..................................................................................... 9

1.7 THESIS STRUCTURE .......................................................................................... 10

CHAPTER 2: LITERATURE REVIEW ........................................................................ 11 2.1 INTRODUCTION ................................................................................................. 11 2.2 PBOS IN THE AUSTRALIAN RESOURCES AND ENERGY SECTORS ........ 11

2.2.1 Definition of PBOs ..................................................................................... 12

2.2.2 External Operating Environment ................................................................ 14 2.2.3 Internal Environment and Unique Characteristics of PBOs ....................... 19

2.2.4 Legal Environment ..................................................................................... 28 2.3 ORGANISATIONAL CULTURE: TRACING THE HISTORY .......................... 34

2.3.1 World War I Epoch: 1910s – 1930s ........................................................... 35 2.3.2 World War II Epoch: 1939 – 1940s ........................................................... 37 2.3.3 Paradigm Wars: 1950s – 1960s: ................................................................. 39

2.3.4 Cultures Cold War: 1970s .......................................................................... 41 2.3.5 The Soft Weapons of National Cultures: 1980s ......................................... 41

2.3.6 Cultures Warriors: The Occupations - 1980s ............................................. 47 2.3.7 OCs Revolution: 1980s continued .............................................................. 48 2.3.8 OCs Link to Performance Battle: 1990s – 2000s: ...................................... 51

2.3.9 OCs Battlefront in the 21st Century ............................................................ 54 2.3.10 Definition of OC ......................................................................................... 57

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2.3.11 Relevant Studies ......................................................................................... 58 2.4 MODELS AND INSTRUMENTS FOR ASSESSING OC ................................... 59

2.4.1 Identifying a Suitable OC Measurement Instrument.................................. 60

2.4.2 Selecting a suitable model to describe OC ................................................. 66 2.4.3 About the Denison OC Model ................................................................... 67

2.5 PRODUCTIVITY, PERFORMANCE AND EFFECTIVENESS ......................... 72 2.5.1 Productivity ................................................................................................ 73

2.5.2 Performance and Effectiveness .................................................................. 77 2.5.3 Selecting Appropriate Performance Measurement tools ............................ 78

2.6 SUMMARY OF LITERATURE REVIEW AND IMPLICATIONS ................... 88

2.6.1 Research Problem ...................................................................................... 88 2.6.2 Identified Research Gaps ........................................................................... 89

2.7 AIMS OF THE RESEARCH ................................................................................ 90 2.8 RESEARCH QUESTIONS AND RESEARCH OBJECTIVES ........................... 90

2.8.1 Research Questions .................................................................................... 91

2.8.2 Research Objectives ................................................................................... 92 2.9 CHAPTER CONCLUSION .................................................................................. 93

CHAPTER 3: RESEARCH METHODOLOGY & DESIGN ....................................... 94 3.1 INTRODUCTION ................................................................................................. 94 3.2 PHILOSOPHICAL WORLDVIEW ...................................................................... 94

3.2.1 Nature of Science and Nature of Society ................................................... 95 3.3 DESIGN TYPOLOGY .......................................................................................... 97

3.3.1 Merits of mixed methods ........................................................................... 98 3.4 RESEARCH DESIGN ........................................................................................... 99 3.5 RESEARCH METHODS ...................................................................................... 99

3.6 SAMPLE SELECTION ......................................................................................... 99 3.7 DATA COLLECTION ........................................................................................ 101

3.7.1 Pilot Program ........................................................................................... 101 3.7.2 Stage 1 – Mixed Method .......................................................................... 102 3.7.3 Stage 2- Quantitative Survey ................................................................... 108

3.7.4 Stage 3 – Qualitative Interviews .............................................................. 110 3.8 DATA ANALYSIS ............................................................................................. 112

3.8.1 Pilot Phase ................................................................................................ 112 3.8.2 Stage 1 Analysis ....................................................................................... 112

3.8.3 Stage 2 Analysis ....................................................................................... 114 3.8.4 Stage 3 Analysis ....................................................................................... 116

3.9 VALIDITY AND RELIABILITY ....................................................................... 117

3.9.1 Qualitative Stages (Stage 1 and 3) ........................................................... 117 3.9.2 Quantitative Stage (Stage 2) .................................................................... 118

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3.10 ETHICAL CONSIDERATIONS ......................................................................... 121 3.11 CHAPTER CONCLUSION ................................................................................. 121

CHAPTER 4: RESULTS AND DISCUSSION: PILOT PHASE & STAGE 1 ......... 122 4.1 INTRODUCTION ............................................................................................... 122 4.2 PILOT PHASE .................................................................................................... 122

4.2.1 Pilot Interviews ......................................................................................... 122 4.3 STAGE 1 - MIXED METHOD RESULTS ......................................................... 123

4.3.1 Pre-interview Survey ................................................................................ 123 4.3.2 Summary .................................................................................................. 135 4.3.3 Interview results ....................................................................................... 137

4.4 FIRST PART OF THE RESEARCH ADDRESSED .......................................... 212 4.4.1 Cultural Foundations ................................................................................ 213

4.4.2 Cultural form, or nature, of PBOs ............................................................ 217 4.5 CHAPTER CONCLUSION ................................................................................. 219

CHAPTER 5: RESULTS AND DISCUSSION: STAGE 2 AND STAGE 3 .............. 221 5.1 INTRODUCTION ............................................................................................... 221 5.2 STAGE 2 AND STAGE 3 SAMPLE STRATEGY ............................................. 222

5.3 PBOS PERFORMANCE ..................................................................................... 222 5.3.1 Non-financial performance ....................................................................... 223 5.3.2 Financial performance .............................................................................. 225

5.4 PBO PROFILES .................................................................................................. 231 5.4.1 PBO-L Profile ........................................................................................... 232

5.4.2 PBO-K Profile .......................................................................................... 237 5.4.3 PBO-N Profile .......................................................................................... 242 5.4.4 PBO-D Profile .......................................................................................... 248

5.4.5 PBO-F Profile ........................................................................................... 254 5.5 DISCUSSION ...................................................................................................... 259

5.5.1 Surface level artifacts ............................................................................... 259 5.5.2 Demographics ........................................................................................... 260 5.5.3 Data Analysis ........................................................................................... 261

5.5.4 Evaluation of the DOCS tools as valid instrument ................................... 266 5.6 SECOND PART OF THE RESEARCH QUESTION ADDRESSED ................ 270

5.7 CHAPTER CONCLUSION ................................................................................. 274

CHAPTER 6: CONCLUSION & RECOMMENDATIONS ....................................... 275 6.1 CONTRIBUTION TO THEORY AND PRACTICE .......................................... 275

6.1.1 OC’s relationship with performance ........................................................ 275 6.1.2 Established model measured OC and performance .................................. 276

6.1.3 Mixed Method Research Design .............................................................. 276 6.1.4 Specific organisations in a specific jurisdiction, and sector ..................... 276

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6.1.5 National cultures impact on OC ............................................................... 277 6.1.6 Occupations as cultures ............................................................................ 277 6.1.7 Identified Research Gaps ......................................................................... 278

6.2 PRACTICAL IMPLICATIONS OF THE RESEARCH ..................................... 279 6.2.1 Understanding the impact of national cultures ......................................... 279

6.2.2 Merger and acquisition impact on OC ..................................................... 280 6.2.3 Accountability for OC .............................................................................. 280

6.2.4 Monitoring OC ......................................................................................... 281 6.2.5 Develop a ‘Cultural Strategy’ as a way to manage OC............................ 281 6.2.6 Perception of leadership teams ................................................................ 281

6.2.7 Organisational Learning ........................................................................... 282 6.3 RESEARCH LIMITATIONS.............................................................................. 282

6.4 RECOMMENDATIONS FOR FUTURE RESEARCH ..................................... 284

REFERENCES .................................................................................................................. 287 APPENDIX A – SIMILAR AND RELEVANT STUDIES ............................................. 314

APPENDIX B – SURVEY QUESTIONS USED IN STAGE 1 AND STAGE 2 ........... 321 APPENDIX C – STAGE 3 ANALYSIS SUMMARY ..................................................... 324

PBO-L (Stage 3 interview scheduled: 29/11/16) ................................................ 324 PBO-K (Stage 3 interview scheduled 2/12/16) ................................................... 325 PBO-N (Stage 3 interview scheduled– 21/3/17) ................................................. 326

PBO-D (Stage 3 interview 18/1/17) .................................................................... 327 PBO-F (Stage 3 interview scheduled – 13/1/17) ................................................. 328

List of Figures

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List of Figures

Figure 1-1. The drafting room of the Ford Motor bomber factory in Michigan, 1942. Adapted from: “CCA Exhibition: Architecture in uniform,” by Hedrich Blessing, (1942) on display at the Canadian Centre for Architecture, 2011. ........................................................ 4

Figure 2-1. Terms of trade – Australia versus other Advanced Economies. Adapted from “The Australian economy in a rapidly changing world environment” by Saul Eslake (2017a), in a presentation to a Pathfinder Breakfast, hosted by the Sydney C3 Church, Westin Sydney, NSW, Australia on July 28, 2017, p. 9. .................................................... 14

Figure 2-2. Benchmark contract prices for Australian metallurgical coal from 2003 to 2018. Adapted from “Resources and Energy Quarterly”, (2017c), p. 38. Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence. ........................................................................................................................... 16

Figure 2-3. Iron ore price from 2008 to 2018. Adapted from “Resources and Energy Quarterly,” (2017c), p. 29. Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence. ....................................................... 16

Figure 2-4. Annual iron ore prices from 2009 to 2017. Adapted from “Resources and Energy Quarterly,” (2017c), p. 50. Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence. ....................................................... 17

Figure 2-5. Engineering job vacancies follow boom and bust cycles. Adapted from: “The State of the Engineering Profession: Engineering in Australia,” by Mark Stewart (2017), Engineers Australia, p 7. ..................................................................................................... 18

Figure 2-6. Organisational structure continuum from hierarchical to fishnet. Adapted from “Managing technology-based projects: Tools, techniques, people and business processes,” by H. Thamhain, 2014, Hoboken, USA: John Wiley & Sons, Inc., p. 80. .......................... 21

Figure 2-7. The project definition process in a staged process where each gate addresses different issues. Adapted from: “Industrial mega projects: Concepts, strategic and practices for success,” by Ed Merrow, 2011, New Jersey, NY, USA: Wiley, p 203. ......... 29

Figure 2-8. The nature of a PBOs environment. ................................................................... 34 Figure 2-9. Relay Assembly test room, Hawthorne Works of the Western Electric

Company, Chicago, 1927. Adapted from: “Management and the Worker: An account of a research program conducted by the Western Electric Company, Hawthorne works, Chicago”, by F. Roethlisberger and W. Dickson (1939), Cambridge, Mass, USA: Harvard University Press. ........................................................................................................................... 36

Figure 2-10. The Glacier Metals Company, London, circa 1950s. Adapted from: “Elliott’s Conundrum”, by T. Foster, (2014), Management Skills Blog, USA. ................................. 38

Figure 2-11. Rensis Likert. Adapted from: “Obituary: Rensis Likert (1903-1981)”, by S. Seashore and D. Katz, 1982, American Psychologist, 37(7). Source of photo: “ISR 60: Sampler”, 2009, Institute for Social Research (ISR), University of Michigan, 8(1). .......... 40

Figure 2-12. The Values Survey Module (VSM). Adapted from: “Values Survey Module, 2008 Manual”, by G. Hofstede, G. J. Hofstede, M. Minkov, and H. Vinken, (2010). Retrieved from: http://www.geerthofstede.nl/vsm-08. ........................................................ 44

Figure 2-13. Changing a Corporate Culture. Adapted from: “Changing a Corporate Culture”, cover story by Business Week, May 14, 1984, McGraw Hill Publications, pp. 82-88. (BusinessWeek, 1984). ............................................................................................ 49

List of Figures

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Figure 2-14. The Corporate Vultures. Adapted from: “The Corporate Vultures”, Fortune Magazine, 17th October, 1983, Time Inc., pp.6-72. (Fortune, 1983). .................................49

Figure 2-15. Google’s Maintain View office, California office (top left) and Google’s office lobby in Sydney, Australia (above right). Adapted from “Google company: our culture”, (2016), https://www.google.com.au/about/company/facts/culture/ .....................................55

Figure 2-16. Changing culture by changing rituals, habits and routines. Adapted from: “Building and Sustaining High Performing Organizations and Leaders,” 2016, by Denison Consulting, Denison Certification Workshop, October 2016, Ann Arbor, USA. ................65

Figure 2-17. A Model of High Performance. Adapted from: “Building and Sustaining High Performing Organizations and Leaders,” 2016, by Denison Consulting, Denison Certification Workshop, Ann Arbor, USA. .........................................................................70

Figure 2-18. William Thomson, Baron Kelvin delivering his last lecture at the University of Glasgow, 1899. Adapted from: “William Thomson, Baron Kelvin,” by Harold Sharlin, (2010), Encyclopaedia Britannica. .......................................................................................72

Figure 2-19. Performance Analysis Plan. Adapted from: “Corporate culture and organizational effectiveness,” by Dan Denison, 1997, Ann Arbor, MI, USA: Wiley, p. 56. ............................................................................................................................82

Figure 3-1. Scheme for analysing assumptions about the ‘nature of social science. Adapted from: “Sociological paradigms and organisational analysis: Elements of sociology of corporate life” by Gibson Burrell and Gareth Morgan, 1979, Heinemann, London, England, p 18. ......................................................................................................................95

Figure 3-2. Consulting engineering firms in Australia at June 2015, excluding firms that are non-employing. Adapted from: “Economic Forecast 2016: An economic forecast for consulting in the built and natural environment,” by Consult Australia, 2016, Sydney, Australia. ..........................................................................................................................100

Figure 3-3. Primary data collection, recording and analysis of the study. ..........................101 Figure 3-4. QDI Index of interviewees illustrated the sample’s dependability, transferability

and credibility (developed for this research)......................................................................103 Figure 3-5. Representativeness: 90 percent of PBOs were large with over 200

employees. .........................................................................................................................105 Figure 3-6. DOCS 60 item questionnaire. Adapted from “Diagnosing Organizational

Cultures: Validating a Model and Method” by Dan Denison, Jay Janovics, Joana Young, and Hee Jae Cho, (2006), Denison Consulting Group, p. 38. ............................................107

Figure 3-7. Data coding approach. Adapted from: “A general inductive approach for analysing qualitative evaluation data,” by D. R. Thomas, 2006, American Journal of Evaluation, 27(2), p. 242....................................................................................................112

Figure 3-8. Screen shot from QSR International's NVivo 11 software. Adapted from: Nvivo qualitative data analysis software, (Version 11.0), 2010, by QSR International Pty Ltd, Doncaster, VIC., Australia. ................................................................................................113

Figure 3-9. Triangulation over the three stage research design. ..........................................119 Figure 4-1. Stage 1 interviewees, tenure with current PBO. ...............................................124 Figure 4-2. The principal activities that PBOs typically undertook in Australia. ...............126 Figure 4-3. The stages of a project PBOs typically undertook. ...........................................126 Figure 4-4. Delivery models, or contract types, PBOs most typically undertook. ..............127 Figure 4-5. PBOs Australian employee numbers from 2011 to 2015. Source: various

including IBIS World, Company 360 (Dun&Bradstreet) and individual company Annual Reports and/or websites. ....................................................................................................130

List of Figures

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Figure 4-6. PBO entity categories for Stage 1. ................................................................... 131 Figure 4-7. PBOs Australian operations net profit margin (%) from 2011 to 2015. Source:

online database Company 360 (Dun&Bradstreet). ............................................................ 132 Figure 4-8. EBIT margins from 2011 to 2015 for Australia operations. Sourced from

Company360 database and from interviewees. ................................................................. 133 Figure 4-9. EBITDA margins from 2011 to 2015 for Australia operations. Sourced from

Company360 database and from interviewees. ................................................................. 133 Figure 4-10. Monthly resources and energy benchmark prices, US$/tonne, from 2010 to

2017. Adapted from: Commonwealth of Australia, (2017a), Resources and Energy Quarterly, Previous publications and data downloads, “March 2017 – Historic data (22)”. Office of the Chief Economist, Department of Industry, Innovation and Science, Australian Government. ...................................................................................................................... 134

Figure 4-11. Interviewees (PBO-A to PBO-T) response to question 1. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. .................................................................................. 137

Figure 4-12. Interviewees (PBO-B to PBO-T) response to question 2. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. .................................................................... 144


Figure 4-14. Interviewees (PBO-A to PBO-T) response to question 4. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. .................................................................... 155

Figure 4-15. Interviewees (PBO-B to PBO-T) response to question 5. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. .................................................................... 160

Figure 4-16. Interviewees (PBO-A to PBO-T) response to question 6. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. .................................................................... 168




List of Figures

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Figure 4-20. Net profit ratios of 13 PBO international operations from 2011 to 2015. Source: online databases: Company 360 (Dun&Bradstreet), Melbourne, Australia; and Osiris and Obis via Bureau Van Dijk, Amsterdam, Holland. Accessed on March 8, 2017. ...............190

Figure 4-21. Interviewees (PBO-A to PBO-T) response to question 10. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix: Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA. p.38. ...................................................................................195

Figure 4-22. Interviewees (PBO-A to PBO-T) response to question 11. ’ Adapted from “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. ...................................................................................199

Figure 4-23. Interviewees (PBO-A to PBO-T) response to question 12. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38. ...................................................................................202

Figure 4-24. The form of OC that exists within PBOs in this research ...............................213 Figure 5-1. Australian employee numbers. Source: PBO-D, PBO-F, PBO-K, PBO-L

Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia. Accessed on August 21, 2017. PBO-N obtained from Stage 3 interviewee on March 21, 2017. .............................223

Figure 5-2. Indicative utilisation rates against current utilisation rates. ..............................224 Figure 5-3. Net profit margin of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L

Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by Bureau Van Dijk, Amsterdam, Holland. Accessed on August 21, 2017. ..........226

Figure 5-4. EBIT ratios of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by Bureau Van Dijk, Amsterdam, Holland. Accessed on August 21, 2017. ..........228

Figure 5-5. EBITDA ratios of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by Bureau Van Dijk, Amsterdam, Holland. Accessed on August 21, 2017. ..........229

Figure 5-6. PBO-L: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, USA. .................................................................................................................232

Figure 5-7. PBO-K: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, USA. .................................................................................................................238

Figure 5-8. PBO-N: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US. .........................................................................................244

Figure 5-9. PBO-D: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US.. ........................................................................................249

Figure 5-10. PBO-F: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US. .........................................................................................255

Figure 5-11. Stage 2 participants highest level of education achieved. ...............................260 Figure 5-12. Stage 2 participants and tenure with their PBO. ..............................................260 Figure 5-13. DOCS Instrument results from a trait and indices perspective. ......................261

List of Figures

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Figure 5-14. DOCS Instrument trait and index comparison of five PBOs and patterns of preference. Adapted from: Denison (2016a) sample reports, https://www.denisonconsulting.com/sample-reports/. ...................................................... 262

Figure 5-15. Culture drives performance. Adapted from: “Building and sustaining high performing organizational leaders”, by Dan Denison, 2016, Denison Certification Workshop – October 2016, Denison Consulting, Ann Arbor, United States. ................... 269

List of Tables

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List of Tables

Table 1-1 Thesis chapter summary and description ...............................................................10 Table 2-1 The deep drivers of Australian culture, relative to other world cultures ..............44 Table 2-2 Categories of Culture .............................................................................................47 Table 2-3. Appropriateness of research instrument for this research ....................................62 Table 2-4 Instrument suitability compared to DOC Model ....................................................63 Table 2-5 DOCS Intrument measurement dimensions ............................................................68 Table 2-6 GISC Sector aligned to this research .....................................................................81 Table 2-7 Summary of Research Gaps identified in the Literature Review ............................89 Table 2-8 Secondary research questions ................................................................................92 Table 2-9 Objectives of this research .....................................................................................92 Table 3-1 Four Worldviews ....................................................................................................97 Table 3-2 Research method objectives and research methods ...............................................99 Table 3-3 Number and size of Consulting Engineering firms in Australia at June 2015 .....100 Table 3-4 Sample Categories ................................................................................................101 Table 3-5 Stage 1 Sample .....................................................................................................104 Table 3-6 Suggested job title of participants for Stage 2. ....................................................109 Table 3-7 20 PBOs from Stage 1, and participation results of the Stage 2 survey ...............110 Table 3-8 Stage 3: Sample ....................................................................................................111 Table 3-9 Stage 2 sample size, response rate and non-response errors ...............................116 Table 4-1 Indicative best and worst performers by financial ratios from 2011 to 2015 ......135 Table 4-2 Stage 1 interview results of OC trait of Involvement ............................................153 Table 4-3 Stage 1 interview results of OC trait of Consistency ............................................172 Table 4-4 Stage 1 interview results of OC trait of Adaptability ...........................................194 Table 4-5 Stage 1 interview results of OC trait of Mission...................................................205 Table 4-6 Stage 1 interviewees immediate response to Question 13 ....................................207 Table 5-1 Stage 2: Sample size and response rate for participating PBOs. .........................222 Table 5-2 PBO-N’s Net Profit (international operations) from 2011 to 2016......................243 Table 5-3 OC results and performance results of five participating firms in Stage 2 .........272 Table 6-1 Addressed Research Gaps identified in Chapter 2, Literature Review ................278 Table 6-2 Research Findings and Future Research Opportunities ......................................285

Glossary and Abbreviations

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | xiv


The following wording and abbreviations apply throughout the thesis:

x Capital investment projects - Capital investment covers discrete private and

public engineering construction, non-residential building and equipment

investment projects in all Australian industries (Deloitte Access Economics,

2012).

x Customer and client are used interchangeably and are primarily

organisations that mainly generate revenue from minerals exploration,

development, production and processing; and oil and gas exploration,

development and processing (IBISWorld, 2016).

x D&C - Design and construct.

x DOC model – refers to the overall organisational culture model designed

and developed by Denison and colleagues (Denison, 1997).

x DOCS instrument - refers to the 60 item survey instrument and process of

data collection and analysis developed by Denison and Neale (1999).

x EPC - Engineering, procurement and construction.

x EPCM - Engineering, procurement, and construction management.

x FEL - Front end loading is used to describe the project delivery process, and

refers to the work process needed to prepare a project for execution. FEL is

generally organised into three phases: business case development, scope

development, and project definition and planning (Merrow, 2011).

x FEED - front-end engineering design. This term is used primarily by the oil

and chemical industries for the third phase of FEL (Merrow, 2011).

x OC - Organisational Culture, refers to the underlying values, beliefs and

principles that serve as a foundation for an organisation’s management

system as well as the set of management practices and behaviours that both

exemplify and reinforce those basic principles (Denison, 1990; 1997, p. 2).


OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | xv

x PBO - Project based organisations undertake engineering related project

work.

x PBO, firm, organisation and company are used interchangeably.

x Project - Project is a wide definition, covering all activities from initiation

to close-out including: project proposal/initiation, project

design/development, project execution/implementation and project

commissioning/close-out, operation and maintenance. (Bosch-Rekveldt,

Jongkind, Mooi, Bakker, & Verbraeck, 2011) undertaken by engineers in

the mining, mineral resources, infrastructure or energy sectors.

x Resources and energy sector - ‘Energy’ commodities comprise of

metallurgical and thermal coal, oil, gas and uranium, and ‘Resources’

commodities are all other mineral commodities (Commonwealth of

Australia, 2017b).

x Utilisation - Labour utilisation (or indirect costs) is refers to the utilisation

rate which the percentage of hours spent on billable project work versus the

total number of hours worked in a week by staff.

Statement of Original Authorship

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | xvi

Statement of Original Authorship

The work contained in this thesis has not been previously submitted to meet

requirements for an award at this or any other higher education institution. To the best

of my knowledge and belief, the thesis contains no material previously published or

written by another person except where due reference is made.

Signature:

Date: August 2018

© Copyright Jennifer J. Moffatt 2018

All rights reserved

QUT Verified Signature

Chapter 1 | Introduction

OC and Performance in PBOs operating in the Australian Resources & Energy Sectors | 1

Chapter 1: Introduction

This chapter introduces the research in seven sections. It commences with an

outline of the ‘Research background’ leading to the ‘Research problem and research

gaps’ which highlights Organisational culture (OC) and performance, and Project

based organisations (PBOs) operating in the Australian resources and energy sectors,

and summaries identified research gaps. This leads to describing the ‘Research aims

and the primary research question’ that arises as a result of the events described. The

next section ‘Summary of the research methodology and design’ outlines the

philosophy and research methods followed by the ‘Significance and contribution of

the research’, ‘Thesis structure’ and finally the ‘Chapter Conclusion’.

1.1 RESEARCH BACKGROUND

Australia no longer critically relies on investments into the resources sector to

drive its economic activity (Commonwealth of Australia, 2015), particularly the

minerals, metals, and energy sectors. Despite the recent high commodity prices the

expectations of challenging operating conditions and an uncertain market environment

have resulted in delays to final investment decisions by mining producers for many

projects (Commonwealth of Australia, 2016).

An escalation in demand for resources since 2003 led to the biggest and most

sustained ‘resources boom’ in Australia’s history (Commonwealth of Australia, 2012)

and the rise in the price of commodities and the consequent investment flow was an

unprecedented, and largely unanticipated event in Australia (Commonwealth of

Australia, 2015). It was initiated by the urbanisation and industrialisation of China and

India presented a ‘once in human-history’ opportunity for a commodity exporting

country such as Australia (Eslake, 2011b) where mining operations basically became

‘money printing operations’, and it was so powerful for Australia that it overrode the

suffering the rest of the world experienced with the global financial crisis (Phillips,

2016). This was a period where the country’s wealthiest resources moguls increased

their affluence, others made their fortunes, and these elites hold extraordinary power

and influence.



In September 2011, Australia’s terms of trade reached the highest level in 140

years, with prices of iron ore and coal more than doubling in the decade to 2014 and

in the same period, investment in the resources sector topped AU$400 billion

(Frydenberg, 2016). While Australia’s resources and energy export earnings were

forecast to reach an all-time high of AU$215 billion in 2016-17 and 2017-18, these

price gains are not expected to withstand, and prices are already declining, although

exports beyond 2016-17 are projected to remain relatively steady due to the

continuation of the production phase of the previous mining boom (Commonwealth of

Australia, 2017b).

The impact of Australia’s mining investment boom has radically impacted on

certain organisational types, in particular PBOs that provided specialist engineering

knowledge, bespoke designs, and often innovative solutions that led the way to solve

complex technical problems for their clients. Their clients were primarily

organisations that mostly generated revenue from minerals exploration, development,

production and processing; and oil and gas exploration, development and processing

(IBISWorld, 2016).

The mining boom is often described in three phases: the price phase (higher

commodity prices and export earnings achieved), the investment or construction phase

(increased spending on new mines and capacity), and the production phase (operations

and production volumes increase), (Commonwealth of Australia, 2017b, p. 12). The

disadvantages for PBOs in the shift from a construction phase to a production phase

was that it brought a virtual end to the large capital investment projects delivered by

PBOs during the period from 2003 to 2012. By late 2011 the mining boom had started

to decline (Garnaut, 2014), and Australia had reached the end of a decade long ‘super

cycle’ of record prices fuelled by a record ramp-up in demand (Freinburg, 2016). This

was triggered mainly by decreased demand mostly from China, a plunge in the price

of commodities particularly iron ore and coal, a higher than normal Australian dollar

impacting export earnings, and the treat at the time of a proposed resources ‘super’ tax

and an increase in mining royalties.

The resultant global implication was the emergence of ‘twin-speed economies’,

i.e., the emerging markets continued to experience the strongest growth while

advanced economies were projected to stay relatively stable in growth terms (Consult

Australia, 2016).



In addition, the impact of international economic conditions on the Australian

economy were that advanced nations such as the United States (US) and Japan

struggled to return to pre-global financial crisis growth rates, China’s slower growth

rates, and the ‘Brexit’ vote in the United Kingdom (UK) together affected the demand

for Australia’s three highest resource exports: iron ore, coal and natural gas (Australian

Industry Report, 2016). The impact on the resources and energy sectors was multi-

faceted, but for PBOs it seemed inevitable one advantage was that those who

successfully managed the cyclical transition would be the new industry leaders.

1.2 RESEARCH PROBLEM AND RESEARCH GAPS

PBOs managed the cyclical transition from a decade-long, hyper ‘super-cycle’

to a downward spiralling and tumultuous economic climate by announcing profit

downgrades, shedding large numbers of jobs and cut spending. When organisations

such as PBOs had enjoyed the benefits of prosperity for many years it suggested that

a certain type of culture may have evolved. In such circumstances some PBOs seemed

to perform better, or appeared to be more sustainable, than others in terms of adapting

to the changed economic conditions and managed their OC as a result of such change.

Despite the way that PBOs have managed the downturn, it seems inevitable that such

unprecedented change has impacted on aspects of their OC and at the same time

performance. Understanding the nature and characteristics that bring a PBOs culture

together, how they manage their culture in a specific phase of the economic cycle, and

cultures impact on performance underpins and differentiates this research.

1.2.1 Organisational Culture and Performance

‘Culture’ as a concept has had a long and checkered history; laymen have used

it as a word to indicate sophistication when they say that someone is very ‘cultured’

and anthropologists referred to the customs and rituals that societies develop over the

course of their history (Schein, 2010). Although the concept of ‘culture’ has only been

explicitly used in the business world in the last few decades (Schein, 1990), the

corresponding concept surfaced in organisational and management literature at least

half a century before (Hofstede, 2001).

In the extant literature, the concept of OC has many different definitions,

dimensions, concepts and categories, (Cameron & Quinn, 2006; Chatman & O’Reilly,

2016; Coffey, 2010; Denison, 1990; Hofstede, 2001; Kotter & Heskett, 1992;



Sackmann, 2011; Schein & Schein, 2016; Trice & Beyer, 1993). There is some

agreement on the definition of OC, but there are many different ways it has been

conceptualised (Brunetto, Xerri, & Nelson, 2014) and the issues of definition and

dimension remain somewhat contested (Fellows & Liu, 2013). In this research

“Culture refers to the underlying values, beliefs and principles that serve as a

foundation for an organisation’s management system as well as the set of management

practices and behaviours that both exemplify and reinforce those basic principles”

(Denison, 1997, p. 2).

Explaining an organisations culture can be challenging. Figure 1-1 graphically

portrays the sense of culture in a professional services organisation 70 years ago. It

shows a photograph of the drafting room of the Ford Motor bomber factory in

Michigan taken in 1942 (Blessing, 1942). The image portrays an architectural practice

that appears to have a contrastingly different cultural profile from modern architectural

businesses today. The most obvious signs are drawings being undertaken manually

and the absence of any advanced computer technology, the formal dress codes and

particularly the white shirts and neck ties, the lack of female workers, the sheer level

of engagement of workers such as their posture of lying on the work benches, and their

concentration and attention to detail with shirt sleeves rolled up.

Figure 1-1. The drafting room of the Ford Motor bomber factory in Michigan, 1942. Adapted from: “CCA Exhibition: Architecture in uniform,” by Hedrich Blessing, (1942) on display at the Canadian

Centre for Architecture, 2011.



Considerable research has been undertaken over the last three decades

investigating the impact that OC has on performance, and according to many authors

a connection exists, (Bolboli & Reiche, 2014; Coffey, 2010; Denison, 1990; Kotrba et

al., 2012; Kotter & Heskett, 1992; Sackmann, 2011; Schein, 2013). However, OCs

link to performance still remains mixed and at times controversial with authors taking

assorted views. Some authors have touted they can improve organisational

performance by helping organisations create certain kinds of cultures (Schein, 2010)

and proponents of this idea argued that OC has a direct or significant impact on

effectiveness and performance (Cameron & Quinn, 2006; Denison, 1990; Kotter &

Heskett, 1992) and past research has shown a close connection (Kotrba, et al., 2012),

and while the values do not always compete they are correlated (Hartnell, Ou and

Kinicki in Schneider, González-Romá, Ostroff, & West, 2016).

Others argued that the assumption of remodelling or shaping existing cultures

with high performance cultures will lead to improved organisational effectiveness is

widely debated (Jung, 2007), and despite the widespread interest in the potential

effects of culture on firm performance there is little clarity about its connection, and

the empirical results remain equivocal (O’Reilly, Caldwell, Chatman, & Doerr, 2014)

with inconsistent findings (Yesil & Kaya, 2013), and yield ambiguous results

(Weinzimmer & Robin, 2016).

This adds to the significance of this research as the link of OC to performance

will make up part of this investigation. Generally, the terms performance and

effectiveness appear often and interchangeably throughout the OC literature. In this

research, performance covers one specific area of firm outcomes: financial

performance in the form of financial ratio analysis.

1.2.2 PBOs Operating in the Australian Resources and Energy Sectors

PBOs operating in the 21st century face more new challenges than at possibly

any other time in history. Many PBOs operating in Australia have parent companies

headquartered in other parts of the world, thus capital intensive projects are often

made-up of multi-cultural global teams. The projects that PBOs often undertake are

typified by uniqueness, uncertainty, and complexity (Ajmal & Koskinen, 2008), and

are made up of pre-eminently multi-disciplinary, pluralistic, and integrated disciplines

(Morris, 2014). The project is the primary unit for production, organisation, innovation



and competition; and major projects embody most, if not all, of the business functions

normally undertaken (Hobday, 2000). Thus the optimisation of short-term objectives

to complete projects are prioritised over longer term strategic positioning (Chinowsky,

2011) i.e., completing projects on schedule, budget and within quality expectations.

For PBOs the successful delivery of their projects is a testament to their success.

Ed Merrow, founder and CEO of the benchmarking group, Independent Project

Analysis (IPA), noted that PBOs almost always succeeded when their projects have a

strong business case, fully aligned stakeholders, bought-in sponsors, an integrated

team, and best practice implemented and practical FEL (Merrow, 2011). Similarly,

the Business Council of Australia (BCA) reported in 2012 that the IPA had evaluated

over 650 completed projects in Australia (since the mid 1990s) using four sets of

measures in assessing the success or failure of a capital project namely: safety

performance during implementation and start-up, whether the project met its business

objectives, delivery on time and on budget, and whether the capital cost and schedule

performances were competitive against global industry benchmarks (Young, 2012).

Another BCA commissioned study assessed project performance on the delivery of

large infrastructure projects in Australia stated that the successful outcome for a project

relied on the interrelationship of: schedule, budget and productivity (resources

availability, pre-planning and quality design (Evans&Peck, 2011). However, these

studies all failed to mention the softer skills, in particular elements such as OC, while

the promotion of safety culture (Evans&Peck, 2011) was mentioned in one report,

generally project performance and organisational performance metrics failed to

contemplate the part played by OC.

1.2.3 Research Gaps

The manner of how markets turn, threateningly or favourably, it seems inevitable

that some dimensions of OC, as a result of such changes, will have changed in many

established organisations. The Literature Review examined three key areas: OC,

performance, and PBOs in the Australian resources and energy sector. The research

associated with this thesis has responded to the identification of seven relevant

knowledge gaps, through the literature review, namely:



x Inquiries into the engineering-construction sector are significantly less

compared with the more mature manufacturing-based inquiries

(Chinowsky, 2011).

x Pricing was identified as an under researched topic in industrial firms (Liozu

& Hinterhuber, 2013)

x Potentially ‘hollowing out’ of many skills of engineering related work in

Australia, and the impact on OC appears to be a knowledge gap.

x Little is known of organisations which face quickly changing environmental

demands, experience high employee turnover, and hinge on geographically

dispersed labour (Giorgi, Lockwood, & Glynn, 2015).

x Inconsistent construct definition and completeness, i.e., surveying one

individual or one leader in an organisation to assess OC results in self-

evaluation bias and reporting of overwhelmingly positive results

(Weinzimmer & Robin, 2016).

x Appears to be a lack of published research that has used the chosen OC

model and instrument, in the scope of this research: specific sector (mineral

resources and energy sectors), jurisdiction (Australia) and defined

organisational types (PBOs).

x There appears to be limited research into establishing productivity metrics

and benchmarks for the engineering phase of the construction projects

(Ebrahimy & Rokni, 2010), and a lack of published research on

incorporating a combined approach of projects and company performance

in PBOs.

1.3 RESEARCH AIMS, AND PRIMARY RESEARCH QUESTION

The cyclical nature of the resources and energy sector, and the unpredictable,

dynamic and volatile environment that PBOs operate within, their specific

characteristics, and the role of OC raised a question of the cultural profile of PBOs and

how does it impact on their performance. It is plausible to accept that if OC impacts

on firm performance this could explain why some PBOs consistently performed better

than others, working in the same industry, often competing for the same projects and

specialist productive resources, facing the same pressures, conflicting demands, and



challenging supply issues. This led to the primary research question, emanated from

the detailed literature review in the next chapter

1.3.1 Research Question

What is the form of OC that exists within PBOs operating in the Australian

resources and energy sector, and what is OC’s relationship with, and impact on

performance?

1.4 SUMMARY OF RESEARCH METHODOLOGY AND DESIGN

This research is set predominately in a Constructivist paradigm as the main

methodology used was primary data collection from qualitative methods, and this was

supported by a Positivist paradigm with data collected from a quantitative OC

instrument that tests a theory. Together these paradigms, using a mixed method of

qualitative and quantitative, provide a Pragmatic worldview.

The mixed method approach incorporated qualitative phases, in order to obtain

richness and depth of data, and quantitative phases to obtain specific demographic,

performance and business characteristics and validate the DOCS instrument (Denison

& Neale, 1999; Denison, 1997). This was achieved over four phases that linked

methods, questions, PBOs and participants, namely: a Pilot Phase comprised of

interviews with experienced leaders from PBOs, Stage 1 consisted of a survey and

semi-structured interviews, Stage 2 contained a survey, and Stage 3 integrated semi-

structured interviews to assist with interpreting the results of the other stages.

1.5 SIGNIFICANCE AND CONTRIBUTION OF THE RESEARCH

While many studies have been undertaken on the topic of OC, and the link of

OC and performance, there appeared to be a knowledge gap into the specifics of this

research. In particular, a lack of research that integrates: unique organisational forms

(PBOs), industry sector (resources and energy), specific jurisdiction (Australia), in a

and in a notable phase in the economic cycle (downturned market conditions resulting

from the transition from a mining construction phase to a production phase) in which

the research was undertaken.

The Australian construction industry, part of what makes up a PBO, is relatively

stressful, characterised by long and often unsocial working hours, tight project

deadlines, often chaotic and demanding working conditions (Moore & Loosemore,



2014), and as projects bring together a variety of participants; the larger and more

complicated the project, the greater the diversity tends to be and the more complex the

relationships (Brookes, Dainty, & Fellows, 2014). Therefore, as the multi-faceted

nature of projects directly impacts on PBOs, it suggests a certain type of OC may exist,

or be shared, through the lifecycle of a project. Therefore, this research will advance

current knowledge in an industry sector that has unique and unpredictable elements

that present different challenges to other sectors such as manufacturing, retail, or

health. This suggests that PBOs may be driven in part by the characteristics of the

projects that they undertake in a way that may shape their ultimate OC.

The research makes contributions to theory and practice in the following areas:

1) provides a successful and linked mixed method research design that may assist

studies of OC and performance, 2) critiques an established OC model that measured

the impact on performance, 3) contributes to understanding PBOs in a specific sector,

jurisdiction and economical phase, 4) provides rich empirical evidence of the

relationship between national cultures and OC, 5) confirms the strength of occupations

as cultures, and 5) addresses the identified research gaps.

The research makes the following empirical contributions by recommending

PBOs leadership teams to consider the implications of OC on their business and

particularly at times of change in their market environment. It expands and develops

an understanding of ‘strong’ cultures in organisations from the viewpoint of the PBOs

members, and reiterates the importance of founders and leaders in the management,

maintenance and evolution of a firms OC.

1.6 CHAPTER CONCLUSION

This chapter introduced the research, the research problem and gaps, aims, and

research question through investigating the nature of OC and OCs link to performance,

of a specific organisation type: PBOs, in a specific industry and jurisdiction: the

Australian resources and energy sectors, and in specific economic cycle (downturn).

This led to the explaining the research methodology and design, the significance and

contribution of the research, and an outline of the thesis structure (on next page). The

next chapter presents the Literature Review in three key streams: PBOs operating in

the Australian resources and energy sectors; OC from its early origins until present

times, and models and instruments for assessing OC.



1.7 THESIS STRUCTURE

An outline of the six chapters of the thesis are contained in Table 1-1.

Table 1-1 Thesis chapter summary and description

Process Chapter Title Description

1 Introduction Summarises the research background, problem and gaps. It outlines the research aims, primary research question, research methodology and design, significance, and the contribution.

Review existing knowledge to identify

research gaps, problem discovery and

definition.

2 Literature Review

Examines PBOs and their environment; traces the history of OC; identifies a suitable model and instrument for assessing OC; and clarifies performance as a measurement construct. It provides a summary and implications, aims, research question and objectives.

Methodology defined, Problem defined,

research aims explained and

research designed and sample identified.

Secondary data collection and

fieldwork undertaken

3 Research Methodology and Design

Explains the philosophical worldview and applies a Pragmatism paradigm. Describes the research methods, sample selection and design typology. The data collection and analysis are explained along with the validity and reliability of the research and ethical considers.

Data gathered, data processed and

analysed. Results interpreted and

presented.

4 Results and Discussion

Presents the results of the pilot study, and the Stage 1 mixed method design, and addresses the first research sub-question.

5 Results and Discussion

Presents Stage 2 survey results and integrates Stage 3 interview results. It provides a discussion of the results and evaluates the DOCS model as a valid instrument, and addresses the second research sub-question.

Contributions to theory and business

explained, and future research opportunities

6 Conclusion and Recom-mendations

Explains the contribution to theory and practice, practical implications, research limitations, and future research direction.

Chapter 2 | Literature Review


Chapter 2: Literature Review

2.1 INTRODUCTION

Chapter 1 introduced the ‘Research background’ and ‘Research problem and

research gaps’ and how Australia’s recent mining investment boom has impacted on

Project based organisations (PBOs) operating in the resources and energy sector. This

was followed by outlining the ‘Research aims and primary research question’ through

investigating the relationship between Organisational culture (OC) on the

performance, of a specific organisation type: PBOs, and in a specific jurisdiction and

industry: the Australian resources and energy sector. This led a ‘Summary of research

methodology and design’ then it explained the ‘Significance and contribution of the

research’, the ‘Thesis structure’ and ‘Chapter conclusion’.

This chapter will review the extant literature in three key streams relevant to this

research: OC, PBOs and performance. It will unfold in eight more sections and begins

with examining ‘Project based organisations’, their environment and unique

characteristics. The next section is titled ‘OC: Tracing the history’, which explains the

early events that led to the study of OC from the 1910s and continues to highlight the

challenges up until the 21st Century. This links to examining ‘Models and instruments

for explaining and assessing OC’ followed by comparing ‘Productivity, performance

and effectiveness’ to clarify the most suitable construct to measure performance. The

next sections describe: ‘Summary and implications’ of the Literature Review, clarify

the ‘Aims of the research’, ‘Research questions and research objectives’ and finally a

‘Chapter conclusion’.

2.2 PBOS IN THE AUSTRALIAN RESOURCES AND ENERGY SECTORS

“Project professionals must surpass expectations of the past - delivering results and

value that achieve strategic objectives while also positioning their organizations to outpace

the competition and secure future gains. And they’re challenged with achieving all these

objectives with fewer resources, tighter deadlines and more demanding requirements.”

(Monkhouse in Thamhain, 2014, p. 39)



PBOs that undertake engineering projects operating in the Australian resources

and energy sector by association have made a major contribution to Australia’s

economy through providing specialist knowledge for capital intensive projects,

rewarding jobs for their staff, and often devised bespoke designs and innovative

solutions for complex problems for their clients. Engineers represent a highly

respected profession and the PBOs that employ them do not seem to receive the stature

that the large mining producers or oil and gas companies do, or the credit of their

contribution when the economy is in a mining resources boom. In contrast to the

extensive literature on manufacturing and service enterprises dating back to the early

1990s, the totality of inquiry is significant less mature (Chinowsky, 2011). Their

participation is important and advice critical when specific problems arise. Therefore,

it appears valuable to understand more fully the nature of their businesses and the

environment within which they operation.

The cyclicality of the resources and energy sector exposes PBOs to extreme

market conditions, from a robust and flourishing mining and resources boom to an

unexpected and sharp market downturn. In the contracting market PBOs announced

profit downgrades, shed extraordinary numbers of staff, and ruthlessly cut spending

and operating costs. This is significant, as to this day most PBOs continue to feel the

pressure to reduce overheads, others have consolidated their service lines, and many

embarked on large-scale mergers or acquisitions at the peak of the cycle and are still

managing the resultant integration of people, structures, and systems.

The purpose of this section is to describe the unique characteristics of PBOs and

why they are different from many other organisations. This is achieved over four areas

beginning with a ‘Definition of PBOs’ followed by describing their ‘External

operating environment’, the ‘Internal environment and unique characteristics of

PBOs’, and their ‘Legal environment’. This section concludes with a graphic

interpretation to assist portray what elements contribute to shape a PBOs culture.

2.2.1 Definition of PBOs

The context of this research is in Australia where the built environment is created

and maintained by the construction sector (Manley, Mckell, & Rose, 2009), the

construction sector is mostly the core of the project-based industry, and project-based

organisational forms have long been the tradition in contractor firms (Raja, Green,



Leiringer, Dainty, & Johnstone, 2013). Construction is typically a very pro-cyclical

industry, performing well when economic conditions are strong and poorly when they

are weak, and most of the engineering construction activity in Australia has taken place

in the mining sector (Australian Industry Report, 2014).

Mining companies require a large amount of engineering, the level of investment

in the sector has had a significant effect on industry revenue for PBOs, which resulted

in contracted profitability over the past five years, and a contributing factor had been

the increased competition among the major firms (Windle, 2016).

In this research PBOs are defined as: Organisations that deliver services by way

of front-end loading (FEL) studies (the ‘front-end’ planning stage of projects),

engineering, procurement, construction and project management, and/or related

services to the Australian resources and energy sector.

These organisations have been responsible for designing and planning the

construction, operation, and maintenance of infrastructure and facilities to meet their

clients’ needs (Yang & Chou, 2011) who were mostly large mining producers, energy

operators, and/or infrastructure owners. PBOs are made up of predominately

engineering professionals.

Engineers Australia described the profession as playing a pivotal role, building

modern infrastructure and driving innovation; and that engineers are problem solvers,

critical thinkers and practical innovators that challenge current thinking and

conceptualise alternative approaches (Cruickshanks-Boyd & McIntosh, 2016).

Historically, civil engineering is the oldest of the disciplines where primitive shelters

involved design, an understanding of the construction materials, and the environment

in which they had to function; next came the design of infrastructure and adaption to

human use; then electrical and computer engineering; and more recently the cutting

edge services such as bio-engineering and biological engineering (Gross, 2012).

PBOs in this context are multi-disciplined, engaged in the traditional disciplines

but also employ specialist streams such as, metallurgical, mineral processing, chemical

and mining engineers, geotechnical engineers, piping engineers, automation engineers,

hydrology engineers, environmental consultants which served the resources and

energy sector.



2.2.2 External Operating Environment

Post Mining-investment-boom

Australia no longer relies on investments in mineral resources to drive its

economy, and the rise in the price of commodities and the consequent investment flow

was unprecedented, and largely an unanticipated event in Australia (Commonwealth

of Australia, 2015) that presented a ‘once in human-history’ opportunity for a

commodity exporting country such as Australia (Eslake, 2011b). Australia’s mining

boom was one of the biggest in its history, mining operations basically became ‘money

printing operations’, and it was so powerful for Australia that it overrode the suffering

the rest of the world experienced with the global financial crisis (Phillips, 2016).

Some industries have been significantly affected by the mining investment

boom, particularly the supplying industries, or as trade-exposed industries that were

impacted by the high Australian dollar (Australian Industry Report, 2014). PBOs that

worked in the resources and energy sector were both supporting and supplying

industries, by supplying specialist engineering knowledge and supporting projects by

providing complex technical solutions.

In September 2011, Australia’s ‘Terms of trade’ reached the highest level in 140

years, see Figure 2-1, with prices of iron ore and coal, Australia’s two largest exports,

more than doubled in the decade to 2014, and in the same period investment in the

resources sector topped AU $400 billion (Frydenberg, 2016).

Figure 2-1. Terms of trade – Australia versus other Advanced Economies. Adapted from “The Australian economy in a rapidly changing world environment” by Saul Eslake (2017a), in a

presentation to a Pathfinder Breakfast, hosted by the Sydney C3 Church, Westin Sydney, NSW, Australia on July 28, 2017, p. 9.



From 2002 to 2011 the resources boom underpinned the second decade of the

longest unbroken economic expansion and provided extraordinary increases in average

incomes, however the terms of trade started to decline in late 2011 (Garnaut, 2014), as

illustrated in Figure 2-1, which meant a virtual end to the large capital investment

projects delivered by PBOs in the Australian resources and energy sector. The mining

investment boom peaked in 2013 (Eslake, 2017c) and it provided exceptional growth

in the demand for engineers, and while it is doubtful that this level of growth will be

repeated, the country now has access to a diverse, skilled workforce (Cruickshanks-

Boyd & McIntosh, 2016). Current reports state that the capital expenditure in the

resources sector is now settling into a more normalised phase where operational

expenditure dominates (Roche, 2016) and that some producing companies are bringing

forward studies and trails on key opportunities, however it is still some time away from

renewed large growth capital investment (Gachter, 2016). How PBOs have managed

to navigated through such a cyclical transition without having their OC disrupted may

depend on the extent of their exposure, or dependence, to certain commodity markets.

Cyclical Nature of Commodity Prices

Economist Saul Eslake (2011a) argued that the outlook for commodity prices is

one of the principal ‘known unknowns’ and any assessment of the prospect for the

world economy in mid-2011 would be the same now. In March 2016, media reported

the mining sector was facing one of its toughest periods, with weak domestic

opportunities, falling commodities prices, long-term threats from development in

emerging economies, the forecast of a weakening Australia dollar and subdued

investment in the industry (Hermens, 2016). In 2017, metallurgical coal contract prices

increased 67 percent from 2016 reflecting a high March quarter contract price of

US$285/tonne, but average prices were forecast to decline in 2018 to US$137/tonne,

and in 2019 to $US119/tonne as import demand and supply normalised

(Commonwealth of Australia, 2017c, pp. 36-37). Figure 2-2, illustrates the fluctuating

benchmark contract prices for Australian metallurgical coal from 2003.



Figure 2-2. Benchmark contract prices for Australian metallurgical coal from 2003 to 2018. Adapted from “Resources and Energy Quarterly”, (2017c), p. 38. Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence.

Similar price fluctuations have occurred with iron ore, see Figure 2-3. Prices

increased from US$20-30/tonne in the early 2000s and peaked at $US180/tonne in

2011 (Australian Financial Review, 2016), but prices started to fall in mid 2014 due to

a global oversupply (Allday, 2016b), and were forecast to decline to US$48/tonne in

2018 and US$47 in 2019 (Commonwealth of Australia, 2017c).

Figure 2-3. Iron ore price from 2008 to 2018. Adapted from “Resources and Energy Quarterly,” (2017c), p. 29. Licensed from the Commonwealth of Australia under a Creative Commons Attribution

3.0 Australia Licence.

Since the start of 2017, oil prices have averaged US$50-53/barrel and were

around 40 percent higher than the same period in 2016 when the market was reported

in excess global supply (Commonwealth of Australia, 2017c), see Figure 2-4. This

represents about a quarter of the 2008 crude oil price of US$145/barrel, and while

producers control production to try to match supply to demand, future prices are

unknown (Hartmann & Saji, 2016). Simply put, since early 2016 the price of oil has

plunged to its lowest level in over a decade (Consult Australia, 2016) and together with

the dual shocks of Brexit and election of a protectionist Trump administration in 2017

(Chappell, 2016) it has suggested uncertain future market conditions.



Figure 2-4. Annual iron ore prices from 2009 to 2017. Adapted from “Resources and Energy Quarterly,” (2017c), p. 50. Licensed from the Commonwealth of Australia under a Creative

Commons Attribution 3.0 Australia Licence.

In Australia, while the resources sector experienced capricious conditions,

public infrastructure, particularly in New South Wales, has received heavy investment.

The State is expected to spend AU$73.2 billion in a capital works over four years

(Berejiklian, 2016). In Queensland, final approvals have been granted for Adani’s

AU$22 billion Carmichael Coal Mine in the Galilee Basin with construction planned

to start in late 2017 (O'Brien & Mellor, 2016) which may provide economic prosperity

for certain PBOs. However, existing infrastructure projects will not be sufficient to

enable sustained productivity growth for the future, and requires avoiding the cyclical

stop-start nature to bring stability to the economy and the engineering sector

(Cruickshanks-Boyd & McIntosh, 2016) which has experienced notable deterioration.

Sector deterioration and global implications

The elevated level of commodity prices was largely a result of mismatches

between demand, with the ongoing industrialisation and urbanisation of China and

India; and supply, which for many commodities had been constrained by years of

underinvestment, changes in market structure, declining productivity or adverse

weather related developments (Eslake, 2011a). Also, the threat of a Federal

Government mineral resources ‘super’ tax and increases in State Government mining

royalties, over-inflated salaries and operating costs did nothing to help. The global

implications were the emergence of twin-speed economies with the emerging markets

continuing to experience the strongest growth while advanced economies were

projected to stay relatively stable in growth terms (Consult Australia, 2016), however,

some PBOs seemed to perform better or are more effective than others, even though

challenging and changing market conditions.



The larger PBOs, particularly with high exposure to the resources sector, have

continued to struggle with the ongoing deterioration of the sector’s conditions, such

indicators are declining share prices, profitability (Consult Australia, 2016) and wage

deflation of about 20 to 30 percent (Gachter, 2016). The impact of external factors on

PBOs in Australia is illustrated by engineering vacancies which have dropped

significantly compared to other vacancies across Australia since the downturn.

Engineers Australia reported that since December 2012 engineering vacancies have

taken a downward trend, but since 2016 it has stabilised at low levels (Stewart, 2017),

see Figure 2-5. For example, one public PBO reported it had reduced its global

workforce by 8,400 over the 2013 to 2015 period, and had spent AU$27 million on

redundancies in 2014-2015 (Dun&Bradstreet, 2016).

Figure 2-5. Engineering job vacancies follow boom and bust cycles. Adapted from: “The State of the Engineering Profession: Engineering in Australia,” by Mark Stewart (2017), Engineers Australia, p 7.

A key gap in the literature identified that while the study of OC has encompassed

‘multiple conceptual strands’ there is little known of organisations which face quickly

changing environmental demands, experience high employee turnover, and hinge on

geographically dispersed labour; and such forces may challenge the development of a

cohesive OC from the beginning (Giorgi, et al., 2015). This research will bridge this

gap by investigating how PBOs have managed changes associated with the resources

downturn and how their OC has been impacted by employee turnover, geographically

spread workforces and other variables. This will be achieved through qualitative

methods to understand how PBOs have managed changing market conditions and the

impact on their OC.

This is important as the worldwide recession resulted in significant downsizing,

outsourcing, delayering, mergers and major restructurings in many countries, resulting

in fewer people in numerous workplaces and these people are feeling more insecure



and overloaded than ever before (Cooper et al., 2009 in Gibbs & Cooper, 2010) and

redefining work arrangements and relationships has increased the tendency to depict

work as insecure by employees who have lost their jobs, those who have survived, and

by those managers who have implemented such measures (Dewe & Kompier, 2010).

Not only are people experiencing more jobs in their lifetime, they are possibility

experiencing more stress than at any other time in history, and an outcome of

downsizing and layoffs tends to put more strain and pressure on the remaining

employees, often referred to as ‘survivor syndrome’ (Luthans, Vogelgesang, & Lester,

2006). Managing people is more important now than it was during the boom times,

and enhancing and sustaining the well-being of employees is critical in the coming

five to 10 years particularly if organisations require commitment, motivation and

performance (Gibbs & Cooper, 2010) and this seems just as salient for PBOs.

With stressed economic conditions continuing to prevail, questions have been

raised about how organisations can help develop and sustain a positive OC during

difficult periods (Gibbs & Cooper, 2010), particularly as the widespread uncertainty

has forced PBOs to focus on their internal environments as they have announced profit

downgrades, shed staggering numbers of jobs and cut spending.

2.2.3 Internal Environment and Unique Characteristics of PBOs

While the internal and external environments of PBOs are extremely

complicated (Cheng, Wen, & Jiang, 2014) it is important to understand that change

occurs continuously and quickly with new projects, teams, problems, solutions

(Koskinen, 2012). According to IBISWorld over the past five years industry

performance has fluctuated, revenue is expected to fall, profitability has contracted,

and competition has increased among the major PBOs, resulting in globalisation and

consolidation among the larger firms (Windle, 2016). However, a research gap

identified that the business components of the engineering-construction sector is

significantly less mature, and total inquiries are significantly less compared with the

more mature manufacturing-based inquiries (Chinowsky, 2011). The totality of this

research will contribute to that gap. While PBOs may mutually share similar

experiences, they also share a number of unique characteristics that distinguish them

from other organisations, such as their powerful clients, organisational forms, project

focus, price structures, and innovation.



Powerful clients

In general mining, minerals and petroleum ‘rights’ in Australia are reserved to

the Crown, however in some cases the mineral may continue to be owned by the

landowner; and the acquisition of the rights stems from separate legislative

frameworks in each State, and these frameworks initially provide for exploration of

the resource (through permits, licences or leases), and then actual mining is subject to

a further grant of mining or minerals production leases or licences (Austrade, 2016).

Depending on the client and other circumstances, a PBO may become involved in this

process at a number of different stages. Usually the client is the party who

commissions the work to the PBO, and the nature of the commissioning parties varies

enormously from a single individual to major organisations (Fellows, 2014).

Buyers of PBOs services in this research may vary from Government agencies,

smaller private organisations to large and powerful business customers, such as the

giant, global mining conglomerates. The most frequently stated aim of PBOs in the

realisation process of the projects they deliver is to ‘satisfy the client’, determine the

nature of client satisfaction and how satisfaction may be achieved, and the main client

functions are user, commissioner, owner and/or financier (Fellows, 2014).

Therefore, it seems critical for PBOs to clearly understand clients: their business,

decision makers, critical issues, challenges, requirements, expectations and how they

value satisfaction and measure success. However, satisfaction is dependent on securing

a benefit, and the amount of benefits (and of costs) are value judgements and depend

upon the values of the client (Fellows, 2014).

Often the ability to engage and maintain strong client relationships and negotiate

deals at the highest levels of management (e.g. CEO to CEO) are essential areas of

strategic capability (Davies & Hobday, 2005) and may be influenced by where the

PBOs leadership team sits geographically, and virtually close to its customers’

decision makers often helps. This becomes even more important as PBOs are

competing for fewer jobs in a depressed market and the clients have greater control

over the supply of work, and how and when it is released into the market and to whom.

Although mining revenue from the mining division has declined since 2011 output has

increased, and through to 2021-22 the sector is expected to increasingly focus on

output and productivity (Allday, 2016a). This means PBOs will add value by

determining how to better deliver their global services at a lower cost, while



maintaining ownership regionally and this challenges their existing operating models,

organisational structures and their culture (PwC, 2016). This implication for PBOs is

that they do not self-generate work, but rely on their clients to supply the work flow.

Organisational Forms

Enterprises have established different organisational forms and the best known

are functional, matrix and project based organisations, and typically PBOs are a matrix

structure (Stare, 2011). This is a hybrid between functional hierarchy and project

hierarchy (Schnetler, Steyn, & Van Staden, 2015; Turner & Müller, 2003), as

illustrated in Figure 2-6.

Typically in a functional (or product or hierarchical) organisation employees

have one boss (Sayles, 1976) and it is designed for the management of routine

functions compared to the matrix structure which can manage temporary organisations

and change (Turner & Müller, 2003). A pure project organisation is a unit separate

from the parent organisations, a self-contained group with its own staff who work full

time for a project, (Turner & Simister, 2000).

Figure 2-6. Organisational structure continuum from hierarchical to fishnet. Adapted from “Managing technology-based projects: Tools, techniques, people and business processes,” by H.

Thamhain, 2014, Hoboken, USA: John Wiley & Sons, Inc., p. 80.

The matrix organisation is a clever reconciliation of the need to be organised by

discipline and function, the need to respond to projects, products or services under

development, and customer needs (Trompenaars & Hampden-Turner, 2011). In a

matrix organisation employees work for the project and the parent organisation at the

same time, these two organisations will have different cultures (Turner & Simister,



2000), and they rely on resource and power sharing, thus needed resources cannot be

dedicated to projects over their full lifecycle but must be shared amongst many other

projects, which is often a source of conflict (Thamhain, 2014). The advantages of a

matrix organisation include more direct contact points among different disciplines

enabling a strong technical base, more time can be devoted to complex problem

solving, and shared authority and responsibility (Stare, 2011). However, a key

weakness is multiple reporting lines for employees such as an engineer may report to

a project manager, engineering discipline lead, business unit leader, geographical or

corporate leadership team which can be time consuming, repetitive and bureaucratic.

Therefore, projects and their managers have to compete against other projects

for support and resources, and set against a backdrop of external turbulence, dynamism

and uncertainty of the environment this provides additional challenges (Vuori, Mutka,

Aaltonen, & Artto, 2013) which can be reflected in certain behaviours such as being

distracted by internal matters, or a silo sentimentality and protectionism.

The choice of structure would depend on the size of projects, their duration,

nature of tasks, time, costs, quality expectations, and the competence and availability

of staff from the parent organisation (Turner & Simister, 2000). Consequently, PBOs

have unique organisational forms. In many ways it is the number of stakeholders and

the framework in which they come together to perform is an added dimension. Further,

a project’s organisational structure and leadership culture can have an effect on its

performance (Olaniran, Love, Edwards, Olatunji, & Matthews, 2015) and on most

projects the concept of a project culture comprises of a blend of the cultures of the

participating organisations and societies (Fellows & Liu, 2013). The number of

participating organisations would largely depend on the project, but may include a

PBOs project team, clients, clients’ engineers, government agencies, competitors,

local communities, and proponents of a project. Certain teams and engineering

disciplines may be involved in part of a project and move between projects

sequentially, and PBOs may only be contracted for a certain component of a project.

For example, the AU$16 billion Carmichael Coal Mine and Rail Project in

Queensland is anticipated to have a 189 km rail line, six open-cut and five underground

mines, various supporting infrastructure (Queensland_Government, 2018) and a

multitude of stakeholders from government, private, public, and non-for-profit



organisations. Thus the large projects PBOs undertaken often have numerous and

complex influences often out of their control.

Project focus

Delivering successful projects is the livelihood of PBOs; whether they be

focused on specific engineering disciplines, construction, or associated services in the

resources and energy sector they all share a commonality of being project centric,

which may suggest they share a certain type of OC. While projects act almost like

independent organisations (Pemsel & Wiewiora, 2013) most projects do not operate in

isolation because they have to operate within a business environment that should

complement the requirements of the project (Stare, 2011). This becomes important, as

being part of an organisation means that the behaviour of individuals is modified by

the thinking, ideas and values of the organisation (Andersen, Dysvik, & Vaagaasar,

2009), and as people move between cultures they adapt, to varying degrees, to the

cultural context which they perceive to prevail (Fellows & Liu, 2013). This implies

that OC is driven in part by project teams (assuming the larger higher profile projects

have more visibility and influence), dominant occupations within PBOs, and the

temporary nature of projects.

Optimisation of short-term objectives

The projects PBOs often undertake are typified by uniqueness, uncertainty, and

complexity (Ajmal & Koskinen, 2008) and they are made up of pre-eminently multi-

disciplinary, pluralistic, and integrated disciplines (Morris, 2014). The project is the

primary unit for production, organisation, innovation and competition; and major

projects embody most, if not all, of the business functions normally undertaken

(Hobday, 2000), and this means the optimisation of short-term objectives to complete

projects are prioritised over longer-term strategic positioning (Chinowsky, 2011). This

seems particularly relevant in tougher economic times where PBOs focus would be

foremost on ensuring people are utilised on projects, and non-fee earning roles would

become increasingly challenged and vulnerable, which may contribute to less

resources assigned to longer-term strategic planning initiatives.

Project managers influence

PBOs are made up of people, and it is the beliefs and values of their leaders

which shape their OC, hence the influence of top management on OC is enormous (Liu

& Fellows, 2008; O’Reilly, et al., 2014). Project managers in PBOs traditionally have



very high status and direct control over business functions, personnel, and other

resources (Hobday, 2000; Thamhain, 2014) and they are good at ‘cracking the whip’

to meet project performance expectations (Lloyd-Walker & Walker, 2011). Studies

have shown the behavioural competencies of project managers, that separate the top

performers (2 percent), from all others are that they act with more authority, they plan

more, and communicate more (Stevenson & Starkweather, 2010). Although others

found that project managers competence profiles were stronger, than functional

managers, on conscientiousness, sensitivity and critical analysis, but lower on

communication and development competencies, however it is expected that the project

manager’s leadership style will contribute to the success of their project (Turner,

Müller, & Dulewicz, 2009).

Project Managers often engage in transactions with several different cultures

simultaneously, from their own base organisation’s core culture and sub-cultures, or

with an external customers’ core culture (Koskinen & Pihlanto, 2008). Most project

managers know that OC influences project team performance (Thamhain, 2004), the

project management approach is affected by the OC of the PBO that sets up the project

(Andersen, et al., 2009), and the impact of OC on construction is profound (Ankrah &

Langford, 2005). Thus, understanding and speaking the language of the immediate

culture is critical for project success (Koskinen & Pihlanto, 2008) as the OC of the

base organisation will affect how project work is approached (Andersen, et al., 2009).

Consequently, project managers appear to shape and influence a project’s culture, and

in turn the performance of the projects they manage would contribute to perceptional

elements of a PBOs culture.

Temporary nature projects

Time and duration are of prime importance when considering the temporary

nature of projects, and while PBOs perform projects with different mandates all of

them generally work on project activities with a variety of time frames (Aubry, 2015).

PBOs are often involved in several projects simultaneously, and the company as an

organisation has an identity that is permanent, but its mode of production is dominated

by projects (Koskinen & Pihlanto, 2008). Therefore, managing the corporate business

with its permanent entity can potentially be in conflict with delivering schedule driven

project work that requires decisions on the number, or ratio, of permanent versus

contract project personnel employed. When structures, workforces and teams are



changing in the short term, the capabilities (or propensities) of the PBO become

important because the more permanent features of a PBO go beyond the purpose of

individual projects (Bredin, 2008). However, PBOs that focus on unique, large project

delivery, emphasising engineering and construction execution of individual projects,

the identity of organisational members may be tied more to a specific project than to

the overall PBO (Chinowsky, 2011). In other words, the degree of a PBOs established

structures and effective systems become essential in supporting projects successfully.

Virtual teams and offshoring

Another related characteristic of temporary teams is the virtual team, particularly

offshore engineering design teams where labour is considerably less expensive than

the home country. Typically, some tasks are outsourced to lower cost countries, such

as India and Russia, and the increasing use of local subcontractors to minimise wage

costs indicates wages are forecast to decline in the next five years (Windle, 2016).

Virtual teams, where team members are geographically dispersed and rely on

technology-facilitated communication, rather than face-to-face interaction (Gibson &

Cohen, 2003) are a particular feature of PBOs with international operations, and

acutely projects in Australia where labour costs are more expensive than many other

advanced economies. PBOs face specific challenges for virtual teaming such as

encouraging multi-disciplinary problem solving, using complex visualisations for

collaboration (Dossick et al., 2015), and understanding underlying attitudes, thought

patterns, assumptions and expectations of national cultures can be significantly

different when brought together in project teams (Di Marco, Taylor, & Alin, 2010).

Interaction with virtual teams disrupt a familiar oral engineering culture and puts

greater reliance on more formal written skill sets, design practices and preferences,

experiences, processes, and routines that are culturally embedded and vary across

country locations (Jarvenpaa & Keating, 2012) which raises questions about how

effective and sustainable this model is for project work.

One implication off outsourcing work to offshore work centres, which assists

PBOs manage large volumes of work and escalating prices in the boom times, is how

they manage this strategy in tough times. The emergence of what is being called the

‘hollowed out’ firm and the ‘invisible worker’ (Loosemore & Holliday, 2012)

stemmed from the loss of essential skills, shedding of jobs, contracting out, and

outsourcing resulting in a reduced capacity to formulate, plan, implement and



coordinate programs (Valle de Souza, Dollery, & Kortt, 2016). This has occurred in

the United Kingdom, United States and Australia where industries have experienced

the worst hollowing out, worst trade deficits and worst job losses in the manufacturing

and services sectors (Stamford, 2016). The future of how PBOs manage their

environment, and in particular the threat of the sector potentially hollowing-out and

the impact on OC appears an area that requires further research. This research will

bridge this gap by understanding how PBOs manage the allocation of work offshore.

The implication is potentially the loss of essential skills and shedding of jobs (Valle

de Souza, et al., 2016) and this may require longitudinal examination to identify how

this impacts Australia’s engineering skills sets within PBOs. It also means PBOs that

have been significantly affected by the mining investment boom may require more

diverse sources of economic growth (Australian Industry Report, 2014).

Price structures

Another area that impacts on a PBOs strategic position is price. Pricing was

identified as another under researched topic in industrial firms (Liozu & Hinterhuber,

2013) and this will be addressed by investigating what strategies PBOs use towards

pricing their work. It seems logical that PBOs price work such as studies and projects

generally from a bottom-up approach by forecasting and calculating the number of

hours an assignment will take, a top-down approach using the experience of relevant

past projects the PBO has successfully delivered as a guide, or it may leverage from

what competitors are likely to charge and what the client is prepared to pay. An older

method of pricing is to estimate the design fee based on a percentage of construction

costs and the Design/build contracts are a natural extension to this percentage-based

pricing approach (Sturts & Griffis, 2005).

However, fluctuations in demand encourage a focus on numerical flexibility and

a short-term view on price (also the geographical and spatial distribution of projects

and the disparate and transient nature of the workforce) distinguish PBOs, particularly

construction organisations, from those operating in more stable sectors (Raja, et al.,

2013). In project situations, value measurement and perceptions are based upon a

PBOs comparison of anticipations, forecasts, and expectations of performance: of

project management and project performance (Liu & Fellows, 2008). These

assumptions suggest a focus on numerical elasticity may prevail in some PBOs, or

uncertain market conditions may dominate such focus.



While pricing is an under researched topic, research has found that pricing

capability positively and significantly influences firm performance, and price

capabilities are notably swayed by championing behaviours, decision making

rationality, mindfulness and overall pricing orientation in industrial companies (Liozu

& Hinterhuber, 2013). While most CEOs will never set a price, they will give their

managers the ability to win price wars, maintain price leadership and hold a

competitive edge in pricing (Dutta, Bergen, Levy, Ritson, & Zbaracki, 2002), and try

to turn the client conversation around to value rather than price. This can be a challenge

when PBOs want to talk value, but the client wants and can demand certain price

structures and apply price-down pressure.

Innovation

Despite the attention OC has received, the literature does not sufficiently

document features of an OC that support innovation, as much innovation theory has

been developed within manufacturing and high technology industries, and few studies

document processes that support innovation in services firms that deliver high ‘value

added’ services (Hogan & Coote, 2014). On a lighter note, cartoons have also

contributed to a misleading image of the innovation process. Often the inventor, an

eccentric scientist, or perhaps a process engineer, is portrayed with a glowing light

bulb above his head, and a ‘flash’ of inspiration triggers a new scientific discovery,

which may be distorted but often a humorous and popular view of innovation (Trott,

2002).

Some authors argued that projects can create barriers to change and innovation,

by prioritising the short-term task performance over long-term knowledge

accumulation (Bresnen, Goussevskaia, & Swan, 2004). Others pointed out that a key

differentiator that distinguishes PBOs is the complex projects and systems they deliver

are never mass produced but are mostly designed and produced on a project basis as

one-offs, and customers of PBOs are often involved in the innovation process through

a projects lifecycle (Davies & Hobday, 2005; Turner & Simister, 2000). This appears

to be the juxtaposition, particularly in the design phase of projects, where architects

and design engineers are relied on to create, design, and innovate, particularly for

greenfield projects and devise productivity enhancements for brownfield projects.

Innovation in practice occurs as project participants engage in work that is

uncertain, risky, and demanding but conducted closely in collaboration with colleagues



who are talented, knowledgeable, and bring experience of different practices,

processes and culture/s resulting in an extension to what individuals bring to the

project (Clegg, Bjørkeng, & Pitsis, 2011) and can promote a hothouse environment.

Most firms innovate in response to the necessity to solve daily problems and while

PBOs may not invest in speculative, experimental and laboratory based experiments

they are nevertheless actively innovating (Loosemore, 2015). This may include

process innovation with the development of new methods or processes, and new

product innovation with new materials and technologies in the final delivery (Eriksson

& Westerberg, 2011).

Studies indicated that PBOs like the idea of being innovative but are poor at

identifying, nurturing, and managing innovative knowledge (Toole, Hallowell, &

Chinowsky, 2013). This may be due to project participants transitioning from one

project and immediately direct their focus on the next project (during any time of a

project’s lifecycle and at times at different geographic locations) and this can create

an environment conducive for knowledge discontinuity.

2.2.4 Legal Environment

Since the 1970s, limitation of liability clauses have been written into engineering

contracts and this practice has proven to be an extremely cost effective risk

management tool (Zoino, 1989). Whether a PBO will sign-up to certain contract

delivery approaches may be influenced by their leader’s appetite for risk. While some

authors noted that the combination of business culture and risk leads to different

approaches to contracting (Scott, 2001 in Turner & Simister, 2001), other studies

found that while the existing contractual arrangements in place can drive or dictate

behaviour, there was no evidence that contract types resulted in different culture

orientations (Ankrah, Proverbs, & Debrah, 2009). While a PBOs risk orientation may

be reflected in its OC and in turn performance, contracting terms are an important

element of a PBOs business and will be examined.

Consult Australia stated that risk allocation is at the core of the concerns relating

to onerous contract terms, and risk is frequently passed between parties as they seek

to offload a perceived liability, often without regard to how that might impact on the

delivery of the project (Motto & Schuck, 2012). This means the issues are often about

risk management, the level of perceived risk, risk allocation, insurability, and costs



associated with the risk, and how it may impact on the delivery, particularly the

schedule and budget of a project. As an extreme example, if an engineer miscalculates

a structural load the resulting error exposes the team or PBO to potential litigation or

loss of life; in subtler cases yet still costly, risks and performance measures include

adherence to schedule and budget, as well as client satisfaction thus fundamentally

risks encountered in the work of engineering design teams are extremely technical

(Sprauer, Blackburn, Blessner, & Olson, 2015).

Typical large project process

Major projects begin with a planning phase, called front-end loading (FEL) in

the mining sector and often front-end engineering design (FEED) in the hydrocarbons

sector. Typically a project would move through a process beginning with a scoping

study to establish financial investment requirements and project parameters, concept

study with preliminary engineering design, a pre-feasibility study to evaluate the

options, leading to a feasibility study to select preferred options. Each phase produces

increasing amounts of engineering and development of a forecast schedule, and cost

estimates for total capital costs and operating costs, with increasing amounts of

accuracy. Each phase moves through a rigorous toll-gating process and evaluation

before the next phase commences, see Figure 2-7.

Figure 2-7. The project definition process in a staged process where each gate addresses different issues. Adapted from: “Industrial mega projects: Concepts, strategic and practices for success,” by

Ed Merrow, 2011, New Jersey, NY, USA: Wiley, p 203.

Edward Merrow, founder and CEO of benchmarking organisation Independent

Project Analysis (IPA), argues that “FEL is the single most important predictive

indicator of project success. There are very few project professionals in the process



industries who do not agree with the basic principle that definition and planning drive

success…” (Merrow, 2011, p. 201). This is important because different contract

delivery models allocate risk to different parties to different degrees, and the FEL

phases would be the time that the degree or level of risk would be realised. The appeal

of the FEL work, for PBOs, is that it is often considered an opportunity for ‘push-

through’ work to the more lucrative project and construction management contracts,

and commissioning stages and beyond, such as operational support and maintenance

related services.

Risk Management

For some time, there has been an increasing option to more innovative models

of contracting in construction (Clegg, et al., 2011) and a significant shift in contracting

strategy, particularly regarding traditional risk allocation (McNair, 2016). However,

PBOs must limit or manage their professional liability on individual projects simply

to stay in business (Zoino, 1989). Both a firm’s financial status and industry status

impact its risk tolerance, i.e., a firm in financial distress is generally willing to gamble

in hopes of hitting it big, and similarly a firm watching its market share deteriorate and

competitors passing it by is likely to accept new projects quickly and ignore dangerous

risks in the hope of recapturing business (Kwan & Walker, 2004).

While clients want PBOs to adequately test and warrant the performance of

proposed products and services, the PBOs want their clients to be more flexible in their

expectations, and share the risk of trialling new projects and services (Rose & Manley,

2014). Thus, risk is crucial and can be a complex matter in delivering projects, and

onerous risk can be a show-stopper.

Contract Delivery Models

Every contracting approach brings with it uncertainty and possibility; it is

difficult, it is situational, and while many owners and PBOs want to believe they have

found the answer the reality is the answer probably does not exist (Merrow, 2011).

Historically, construction projects were delivered under the control of just two parties,

but as projects became larger, services more complex, materials and techniques more

varied, and with the emergence of specialisation fragmentation and risk-laden

processes, the ‘Design and Construct’ (D&C) model was introduced to create a single

point of responsibility between the client and principal contractors (Clegg, Pitsis,



Rura-Polley, & Marosszeky, 2002). It is fast-tracked where design and construction

are integrated, with the detail design and construction running in parallel and

concurrently with each other, and the cost is fixed at the tender stage and subjected to

design changes (Idrus, Sodangi, & Husin, 2011). Although, traditionally the D&C

contract was almost hostile to innovation by definition, because innovation means

variation (Clegg, et al., 2011). There are four basic types of contracts for large projects

with endless variations (Merrow, 2011), namely:

x Engineering Procurement Contract (EPC) Lump-Sum (fixed price)

contracting. The most common form of large project contract involves a

single contractor being responsible for engineering, procurement and

construction for the entire project or some portion under a single contract,

and if commissioning and start-up are included then the contractual form is

generally considered turnkey, where an operating facility is turned over to

the owner or sponsor of the project (Merrow, 2011). It was designed for an

owner to procure a major construction project, particularly one requiring

finance, where the owners and financiers expected to have a degree of

certainty regarding time and cost of a project (Loots & Henchie, 2007).

x Reimbursable EPC and EPCM. A single contractor is responsible for all,

or the majority, of the project under a contract that reimburses the contractor

based on the quantity of services and materials provided (which can create

opportunity and lots of problems for the owner), and the key attribute of the

Reimbursable EPC is that the engineering and procurement contractor

controls the construction and fabrication also (Merrow, 2011). Another

popular contract delivery method is the EPCM method. Sometimes there is

confusion between the meaning of EPC and EPCM contracts; under the

EPCM model the PBO does no building or construction as they develop the

design and manage the construction process on the Owner’s behalf, and it is

radically different in risk allocation and legal consequences from the EPC

model (Loots & Henchie, 2007). The key characteristics of these models

are that the engineering contractors control the construction activities

(Merrow, 2011), however the EPCM contractor (in this study the PBO) may

at times have a different perspective from their clients on how things should

be executed (Walker, 2015).



x Alliance Contracts. Not to be confused with a contractor consortium or

joint venture, the alliance refers to a grouping of all, or almost all, of the

contractors working on a large project under a single compensation scheme

with the primary goal to align the goals of the contractors with those of the

owner (Merrow, 2011) and share risks and rewards, pool resources, provide

and share expertise and knowledge to complete a project (Clegg, et al., 2011;

Pitsis, Kornberger, & Clegg, 2004). This approach has become most popular

for commercial buildings and public sector contracting of infrastructure

projects in Australia (Merrow, 2011).

x Mixed Contracts. Involves reimbursable engineering and procurement

followed by lump-sum contracts for construction or fabrication by

constructors or fabricators, and the key feature is that the constructors and

fabricators are independent of the engineering contractor (Merrow, 2011).

As different models are usually aligned to different sectors, Consult Australia

reported that in some cases conventional contracting has been replaced by equity and

partnership investment (i.e., Build Own Operate, Build Own Operate Transfer, and

Public Private Partnerships schemes) where risk allocation policies by governments

tend to move risk away from them (Motto & Schuck, 2012). As customers and PBOs

are seeking alternatives to the traditional fixed price and schedule driven project

delivery methods (particularly for the mega projects) and as materials and professional

resources become more difficult or expensive to source; reports indicated that

customers will choose between paying an increasing EPC profit/risk premium, or place

greater reliance on the expertise of PBOs to manage the delivery of their projects

(McNair, 2016).

Heated market influence

Lump-sum contracting was the most common approach to contracting large

projects, but Australia (and Canada) moved away from this because reimbursable EPC

and EPCM contracts were more common when local project markets were overheated

(Merrow, 2011). This is due to project sponsors, owners or financiers being so

confident about revenue forecasts in a heated market they are willing to accept risk of

significant cost overruns to accelerate the schedule to meet a market window when

demand or prices are expected to rise rapidly (Barshop, 2016). However, projects with

inherent risk are often reimbursable forms because owners and contractors are much



less likely to be able to agree on a lump sum price (Merrow, 2011) and this assumes

that as the market has changed some PBOs may have adjusted their risk appetite to

suit their clients preferred contracting models. This will be investigated as part of this

research and how it applies to a PBOs culture and in turn performance.

In summary, PBOs have made a major contribution to the Australian resources

and energy sector through designing and building modern infrastructure and driving

innovation, particularly during the resources ‘boom’ which caused a particularly

overheated operating environment. The rise in the price of commodities and the

consequent investment flow was unprecedented, and largely an unanticipated event in

Australia (Commonwealth of Australia, 2015), initiated by the urbanisation and

industrialisation of China and India. Around 2012, the capital investment phase

transitioned into a production phase and the accompanying change resulted in one of

the worst downturns for PBOs operating in Australia. With widespread uncertainty in

global commodity markets, the large resources projects in Australia came to an end,

and the end of ‘massive revenue’ and profit generation for PBOs. PBOs announced

profit downgrades, shed extraordinary numbers of staff, and ruthlessly cut spending

and operating costs.

A PBOs internal environment was characterised by their clients who often are

powerful mining or hydrocarbon producers. Their organisational forms revealed the

challenges of a matrix structure, and the impact of the multi-faceted nature of projects.

As PBOs do not self-generate their work they cannot influence the fluctuations in their

demand, and are often at the mercy of external factors beyond their control, which

directly impacts performance and the need to drive innovation. Their legal

environment described a framework of how large projects proceed, the criticality of

risk, and the impact of contract delivery methods, particularly in heated markets.

Together these elements appear to directly impact a PBOs performance and

suggested a certain type of OC may exist, or be shared in their environment. The

myriad of participants that makeup PBOs and their projects were also more susceptible

to the influence of OC and culture in general (Ankrah & Langford, 2005). More

specifically, it seems the combination of the external, internal and legal environment

may play a common influencing dimension to a PBOs cultural profile, see Figure 2-8.



Figure 2-8. The nature of a PBOs environment.

2.3 ORGANISATIONAL CULTURE: TRACING THE HISTORY

This section traces the history of OC using a battle theme to illustrate OCs many

jousts and conflicts. It unfolds chronologically in nine parts, beginning with the early

history in ‘World War I epoch: 1910s-1930s’ and ‘World War II epoch: 1939-1940s’.

Third, introduces the ‘Paradigm wars: 1950s-1960s’ which highlights the debate of

OC and organisational climate, followed by ‘Cultures cold war: 1970s’ which explains

Japan’s influence on the study of OC. Fifth, describes ‘The soft weapons of national

cultures: 1980s’ highlights Australia’s national culture and its influence on business,

followed by ‘Cultures warriors: the occupations and the 1980s’. Seventh, explains

‘OCs revolution: 1980s continued’ where the study of OC flourished, followed by

‘OCs link to performance battle: 1990s-2000s’, and finally ‘OCs battlefront in the 21st

century’ which includes a definition of OC aligned to this research.



2.3.1 World War I Epoch: 1910s – 1930s

The first known publication to have ‘culture’ in its title is a book by Edward B

Tylor, Primitive Culture: Researches into the Development of Mythology, Philosophy,

Religion, Art and Custom, in 1887 from the social anthropology discipline (Kotter &

Heskett, 1992). However, the study of OC was triggered by other events taking place

around the world, particularly, World War I, 1914-1918, which prompted studies of

group behaviour through the recognition of nervous conditions, psychological

ailments and shell-stock disorders among troops after the War, and it was hoped that

future conflicts could be avoided through a clearer understanding of human behaviour

in groups and organisations (Fraher, 2004). This was where the early foundations of

OC began.

An important contribution came out of research which began in 1927 at the

Western Electric Company’s Hawthorne plant in Illinois and became known as the

Hawthorne Studies (Robbins, Bergman, & Stagg, 1997). A consultant, named Elton

Mayo, formerly Professor of Psychology at the University of Queensland (Bolton,

1994) from Harvard Business School, and a young assistant professor, W. Lloyd

Warner, from the Anthropology Department, uncovered social structures and belief

systems through observations and interviews which provided the foundation by

sociologists and anthropologists until the 1970s (Trice & Beyer, 1993).

The research began with the selection of five ‘girls’, who were segregated from

their regular operating department for a special experiment which studied the

relationship between work conditions and the incidence of fatigue and boredom among

employees, although the participants were told that the purpose was to study different

types of working conditions so the most suitable environment could be found rather

than a study to boost production (Roethlisberger & Dickson, 1939). See Figure 2-9.



Figure 2-9. Relay Assembly test room, Hawthorne Works of the Western Electric Company, Chicago, 1927. Adapted from: “Management and the Worker: An account of a research program conducted by the Western Electric Company, Hawthorne works, Chicago”, by F. Roethlisberger and W. Dickson (1939), Cambridge, Mass, USA: Harvard University Press.

However, the inquiry developed in an unexpected fashion and provided great

stimulus for further research into human relations with the realisation that more

knowledge concerning problems with people was essential, and this resulted in the

inquiry continuing for five years, until 1932, and expanded involvement with up to

20,000 employees (Roethlisberger & Dickson, 1939). In publishing their findings,

Roethlisberger and Dickson (1939) described the informal norms of workers that

successfully frustrated the productivity goals of the management. Consequently, for

the next 20 years the principal method of research was by case study written from the

view of the social scientist, rather than the native (Ouchi & Wilkins, 1985). Thus the

academic roots of psychology, human relations and social sciences began to evolve.

Critics of the studies argued that observations of a small group should not be

used to justify a general theory of human behaviour, the results were due to operant

conditioning, similar experiments have yielded different results, the later experiments

were conducted against the economic depression of the 1930s, and Western Electric

was a non-union firm and against unionisation which may have affected workers

attitudes (Bennett, 1994). While the area of OC was not addressed in the studies

(Bolton, 1994), it appeared to contribute to and provoke further research.



2.3.2 World War II Epoch: 1939 – 1940s

During World War II, 1939-1945, in a desperate time to rehabilitate soldiers

back to the battlefield, psychological experiments began with groups. While the first

War revealed the necessity of dealing with shell-shocked soldiers, World War II

required that therapists move beyond an individual treatment model to address the

large number of soldiers who required assistance (Fraher, 2004). The impact of the

War generated further studies into group dynamics.

In a series of articles on group behaviour from 1948 to 1951, an English

psychotherapist, Dr Wilfred Bion who incidentally served in World War I, worked

with the Tavistock Institution to explore the phenomena and dynamics of small groups

and used the phrase ‘group culture’, and ‘characteristic culture of the group’ (Bion,

1948a, 1948b, 1949a, 1949b). Bion defined group culture as a function of the conflict

between the individual’s desires and the group mentality, or the unaware and

unanimous expression of the will of the group (Rice, 1951). His contribution was his

interpretation of the reactions of the group’s dynamic as a whole, not the behaviour of

individual group members, and later this method of working experientially with groups

was applied to the study of organisations; and while this work was being undertaken

theorists and practitioners in other parts of the world were continuing to develop new

ideas about groups and organisations (Fraher, 2004). Hence, groups and their culture

continued to be studied under the psychology domain.

After fleeing Nazi Germany for the USA in 1932, a young social scientist named

Kurt Lewin (Fraher, 2004) spoke of the new stage of development in social sciences

as a by-product of World War II, and the application of cultural anthropology to

modern cultures, experiments with groups, the measurement of socio-psychological of

large groups, and in 1947 wrote about the improved techniques for reliably gathering

and recording the structural properties of groups and the relations between subgroups

and individual members (Lewin, 1947). Lewin and his colleagues were interested in

examining the atmosphere, or climate, created by different leadership styles and the

consequences for behaviours and attitudes of group members (Ostroff, Kinicki &

Muhammad in Ostroff, Kinicki, & Muhammad, 2013) which required a quantitative

approach.



In England in 1948, Elliot Jaques headed a research team at the Glacier Metal

Company, an engineering company making ball bearings, to assist develop an effective

organisation and management, and boost product development (Jaques, 1998).

Representatives of the company’s mass product unit, the Line Shop, asked the research

team at the Tavistock Institute to assist investigate the reasons for an apparent apathy

of workers of the Line Shop towards joint consultation with management at a time of

increased demand for its products and pressure to expand (Rice, 1951). The research

was set against an economic background of pressure for maximum productivity, severe

limitation for expansion, and an altered social climate for full employment (Jaques,

1951). This seems not so different for PBOs today who have experienced overheated

market conditions that demanded maximum productivity, to a situation where the

social climate, or culture, has dramatically changed through massive retrenchments

due to the various external economic forces.

The Glacier Metals Company in London, England, see Figure 2-10, is where

Elliot Jaques and Wilfred Brown’s research took place, as part of the Tavistock

Institute of Human Relations, and the findings were submitted to the Department of

Social Relations at Harvard University in 1950 (Foster, 2014). Continuing through to

1951, Jaques (1953) opined later that social change was sought when the structure and

culture no longer met the requirements of the individuals of the department. The

studies showed cultural techniques that were largely unrecognised and difficult to

identify, and seldom easy to demonstrate how groups used them to bring about

observable social change (Rice, 1951).

Figure 2-10. The Glacier Metals Company, London, circa 1950s. Adapted from: “Elliott’s Conundrum”, by T. Foster, (2014), Management Skills Blog, USA.



While the work of Jaques was important to the study of OC, he did not explicitly

study the effects of social processes on the performance of the company, and his

findings proposed culture to be a serious barrier to productivity, and that culture was

not congruent with organisational structure or environment (Wilderom, Glunk &

Maslowski in Wilderom, Glunk, & Maslowski, 2000). Also, the period from the mid

1950s through to the 1960s set apart organisational ethnographers from the multi-

variate statisticians, and the academic ethos of this time favoured those who were more

quantitatively oriented, but the qualitative social scientists did not disappear (Ouchi &

Wilkins, 1985) and this has led to controversy between the two concepts and how OC

was investigated.

2.3.3 Paradigm Wars: 1950s – 1960s:

While the 1930s to the early 1950s produced research linking OC and

performance, particularly the Hawthorne Studies and the Glacier Metal Company, the

1960s (and early 1970s) research of OC, and the link to performance, attracted little

attention (Wilderom, Glunk & Maslowski in Wilderom, et al., 2000). However, the

similar concept of organisational climate, in contrast to OC was debated in the

literature. While culture and climate have been approached from different scholarly

traditions they are both about understanding psychological phenomena in

organisations, even though their roots are in different disciplines (Ostroff, Kinicki &

Muhammad in Ostroff, et al., 2013) of psychology, sociology and social anthropology,

this ensures their different theoretical, epistemological, and methodological biases are

still evident (Pettigrew in Wilderom, et al., 2000).

One reason confusion persisted is that climate and culture are both abstractions:

climate is only a useful construct if the variables are specified (temperature and

humidity ranges that influence people or can be felt), and culture as a construct if it

leads to some shared taken-for-granted dimensions of behaviour, thoughts or feelings

that are relevant to solve the problem at hand (Schein in Ashkanasy, Wilderom, &

Peterson, 2010). Some researchers have classified studies as ‘climate’ or ‘culture’, but

they represent different but overlapping interpretations of the same phenomenon

(Gillespie, Denison, Haaland, Smerek, & Neale, 2008), other studies have the two

constructs as indistinguishable, and consequently the terms culture and climate began

to be used interchangeably by some writers (Glisson, 2015; Ouchi & Wilkins, 1985).



Much of the confusion about the impact of OC could be reduced if it was clearer

whether or not the aim was to change the climate, and how the underlying cultural

assumptions were going to aid or inhibit that change process (Schein in Ashkanasy, et

al., 2010). Often referred to as the ‘paradigm wars’ (Denison, 1996; Jung et al., 2007),

the ongoing debate has been occurring among various contemporary researchers about

the value of using either climate (to examine the view of an organisation’s employees)

or culture (to analyse organisational practices that produce measureable outcomes)

when assessing organisational metrics (Coffey, 2010). The debate seemed to be driven

by authors struggle for intellectual dominance relating to the question if culture is

something ‘an organisation is’, or something ‘an organisation has’ (Jung, et al., 2007;

Smircich, 1983). The former supports a synthetic approach about understanding by

academics, and the latter leads to an analytical approach concerned with change

(Hofstede, 2001). This research takes an analytical approach, investigating culture that

an organisation has.

The 1960s also saw the introduction of the Likert scale, which has its roots in

organisational climate through a quantitative approach. Rensis Likert, Figure 2-11,

who studied civil engineering for three years, invented the scale for measuring attitude,

for sociology and psychological research, and his 1932 doctoral dissertation described

a method for measuring attitudes which was deceptively simple in appearance

(preparation of questions and ease of response), but sophisticated in conception

(because of item inter-correlations, factorial and multi-dimensional analysis

procedures) resulted in the foundation for much contemporary research (Seashore &

Katz, 1982). Likert wanted to work with organisations to monitor and promote

improvement through the use surveys which came to dominate the 1960s and 1970s

research (Wilderom, et al., 2000).

Figure 2-11. Rensis Likert. Adapted from: “Obituary: Rensis Likert (1903-1981)”, by S. Seashore and D. Katz, 1982, American Psychologist, 37(7). Source of photo: “ISR 60: Sampler”, 2009,

Institute for Social Research (ISR), University of Michigan, 8(1).



In sum, the key differences between culture and climate were revealed in their

different methods of study. Climate’s use of survey research, which was under heavy

attack as lacking in the precision of experimental methods, and culture’s use of an

ethnography approach (Ouchi & Wilkins, 1985), thus, culture requires a qualitative

approach and climate a quantitative method (Jung et al., 2009). However, using both

methods in a mixed method approach has merits for the study of OC.

2.3.4 Cultures Cold War: 1970s

Following World War II, and particularly until the 1970s, the supremacy of the

United States management went practically unchallenged. While many other societies

suffered major productivity problems, Japan emerged as a chief competitor for

economic leadership, and with a drastically different culture the question was whether

it was cultural differences that accounted for its unparalleled productivity (Trice &

Beyer, 1993). Explanations for the increasing success of Japanese firms was sought,

but what distinguished this period was a focus on the specific, more human-oriented

content of supposedly successful corporate cultures (Wilderom et al in Wilderom, et

al., 2000).

Some observers believed that the rise of studies on OC came about because of

what Japanese firms were doing during the late 1970s and early 1980s and the

perception of having superior operating characteristics (Ouchi & Wilkins, 1985). For

example the Toyota way, or Toyota’s corporate culture, was explained as a mindset of

how the thoughts and actions guide people to interact with each other on a daily basis

and this was built on two principles: respect for people and continuous improvement

(Coetzee, Van der Merwe, & Van Dyk, 2016; Stewart, 2011). Or literally, Toyota’s

former Chairman, Fujio Cho, famously stated: “First we build people, then we build

cars” (Liker, 2004 in Coetzee, et al., 2016, p. 80). Seemingly, technological advances

in aviation and cheaper airfares in this period made international travel more accessible

to more people, and interest in foreign countries and national cultures appeared to

assist the intrigue of culture within organisations.

2.3.5 The Soft Weapons of National Cultures: 1980s

The study of national cultures and OC, and their impact on performance has been

widely discussed in the literature (Jaeger & Adair, 2013). Authors noted that OC was

shaped by the cultural preferences of leaders and employees (Trompenaars &



Hampden-Turner, 2011), OC is entrenched in and shaped by national cultures (Fey &

Denison, 2003) and organisations mirror societies (Jung et al, 2007).

The best known work in this field has been undertaken by Geert Hofstede, who

has found that managers in different countries are diverse in the strengths of their

attitudes and values regarding various issues (Brown, 1998). In 1985-86, Hofstede

(2001) designed a study that compared 20 different organisational units in Denmark

and the Netherlands and found OCs differed mainly in its practices, compared to

national cultures which differed primarily in its values. Values are acquired early in

life, while practices are acquired through socialisation at the workplace (Jung, 2007)

which assumes OC and national cultures are different but linked.

Values and practices

Typically, values are not directly visible to employees, and seem to be expressed

partly in an organisations practices (Van den Berg & Wilderom, 2004). A value is

described as a tendency to prefer certain states of affairs over others and values are

held by individuals as well as by collectives, whereas culture assumes collectivity

(Hofstede, 2001). Thus, values incorporate desirable goals that direct behaviour

(Giorgi, et al., 2015), or represent preferences for more ultimate end states, and while

the term values is often used interchangeably with norms, norms are more tactical and

procedural than values and refer to standards of expected behaviour such as a speech,

presentation, timeliness, and disagreeing politely (Sathe, 1983).

Therefore, the values and beliefs of an organisation would be reflected in its

management practices – concrete activities that are usually rooted in the values of the

organisation (Denison, 1990), and the shared perceptions of the daily practices within

an organisation should be considered at the core of its culture (Hofstede, 2001).

Dimensional approaches which concentrate on values, rather than practices, are likely

to be of little benefit when studying OC (Jung, et al., 2007, 2009) and a focus on

practices may help explain how and why culture influences various organisational

processes, intentionally and unintentionally planned (Giorgi, et al., 2015). For

example, Hofstede (2001) illustrated a difference, the practice of ‘being on time to

meetings’ clearly separated organisations that value the ‘importance of challenging the

work’ (Wilderom, van den Berg, & Wiersma, 2012). Thus, focus in this research will

be on an OC definition that incorporates organisational practices.



Lencioni (2002) warned that empty value statements can create cynical and

dispirited employees, alienate customers and undermine management capability; and

the best approach in developing values (that are aggressively authentic and different

from other organisations) are driven by small teams that include the CEO, any founders

still with the company, and key employees rather than a HR driven initiative with. A

pertinent but controversial example is that of Enron’s corporate values as claimed in

their 2000 Annual Report: communication, respect, integrity, and excellence all of

which were absolutely meaningless (Lencioni, 2002). Enron’s OC was inevitably

rotten at the executive core, but no matter how artificial their values they were likely

to have been embraced by many of Enron’s employees.

The drivers of Australia’s national culture on business

While OC is a phenomenon by itself, it is different in many respects from a

country’s culture. In particular, an organisation is a social system of a different nature

from that of a nation; members usually do not grow up in it, they have a certain

influence in their decision to join a company, their involvement is only during working

hours, and they will leave one day (Hofstede, Hofstede, & Minkov, 2010). The sample

in this study will be made up of PBOs who have parent companies headquartered in

other parts of the world, and for this reason it is relevant to understand national cultures

and the link to OC.

In many respects OC can be viewed as a subset of the national culture in which

the firm operates, and operating outside of its home country can create unique

challenges in leadership, maintaining a strong OC, and while in some national cultures

there is often a tendency to become a part of the culture of the organisation, in others

managers believe that the leadership styles and OC that work in their home country

should work elsewhere (Parnell, 2014). Understanding these challenges will require a

qualitative approach in order to probe into the influences or challenges faced by a

PBOs geographical headquarters and how this impacts on OC.

The geographical location of the majority of parent companies in this research,

have their headquarters in Australia, Canada, the United States, and the United

Kingdom. In order to understand the cultural differences of these countries Figure 2-12

presents cultural dimensions from six Western nations using Hofstede et al (2010)

Values Survey Module (VSM).



Figure 2-12. The Values Survey Module (VSM). Adapted from: “Values Survey Module, 2008 Manual”, by G. Hofstede, G. J. Hofstede, M. Minkov, and H. Vinken, (2010). Retrieved from:

http://www.geerthofstede.nl/vsm-08.

The above graph highlights Australia’s cultural preferences on six dimensions,

and illustrates a nation that scores low on power distance, a highly individualistic

culture, a masculine society, a moderate uncertainty avoidance, a normative long-term

orientation, and an indulgent country. All of Hofstede’s dimensions (Hofstede &

Hofstede, 2015) are illustrated in Table 2.1 along with their relevance for

understanding the Australian business environment. Schein and Schein (2016) noted

that of all Hofstede’s dimensions, two of them are especially relevant to OC analysis,

namely: Individual versus Collectivism, and Power Distance.

Table 2-1 The deep drivers of Australian culture, relative to other world cultures

Values Australia Summary Power distance (how power is distributed)

36 - low Within Australian firms, hierarchy is set for convenience, superiors are always accessible, and managers rely on employees and teams for their expertise. Managers and employees expect to be consulted, information is shared frequently, and communication is informal, direct and participative.

Individualism (individual vs group priorities)

90 - high Australia is a highly individualistic, not a collectivist society. In business employees are expected to be self-reliant and display initiative and hiring and promotion decisions are based on merit or evidence of experience.

http://www.geerthofstede.nl/vsm-08



Values Australia Summary Masculinity (achievement, success, vs feminine drivers caring for others)

61 - moderately high

A high score (masculine) is defined by the ‘winner’ or best-in-field, a low score (feminine) means a higher quality of life is the sign of success, and standing out from the crowd is not admirable. Australians’ are proud of their successes and achievements in life, and it offers a basis for hiring and promotion decisions in the workplace. Conflicts are resolved at the individual level and the goal is to win.

Uncertainty avoidance (how society deals with the future)

51 -intermediate

Uncertainty Avoidance is how a society deals with the fact that the future can never be known, controlling the future or just let it happen. This ambiguity brings with it anxiety. Different cultures deal with this anxiety in different ways. Australia is very intermediate on this dimension.

Long-Term Orientation (dealing with the past, present and future).

21 - low and is normative

A high score is more pragmatic, encourages thrift, and uses education to prepare for the future. Normative societies, low scores, prefer time-honoured traditions and norms and view societal change with suspicion. Australia has a normative culture, a strong concern with creating the absolute truth, exhibits great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results.

Indulgence (how people control their desires and impulses).

71 - high Relatively weak control is called ‘indulgence’ and strong control is ‘restraint’. Australia is an indulgent country, it has a positive attitude, a tendency towards optimism, places a higher degree of importance on leisure time, people act as they please and spend money as they wish.

Adapted from: “What about Australia,” by Hofstede & Hofstede, (2015), The Hofstede Centre. http://geert-hofstede.com/australia.html.

x Individual versus Collectivism - While the United States and Australia

appear to be individualistic cultures, in Australia there tends to be the ‘tall

poppy syndrome’ where the tall poppies get cut down, and that a person

does not take personal credit in an individualistic culture that has strong

espoused collectivist values; in contrast the United States espouses

teamwork and building teams is seen as a pragmatically necessary not

intrinsically desirable (Schein & Schein, 2016). Similarly, in the United

States and the United Kingdom individuals tend to be concerned with

improving their status and standing out from others via competition,

achievement and power, in comparison to Australians who prefer to view

themselves as equal to others in status rather than standing out, or are more

modest (Shavitt, Lalwani, Zhang, & Torelli, 2006).



x Power Distance - Is the degree to which people in hierarchical situations

‘perceive’ a greater or lesser ability to control each other’s behaviour, and

in occupations there is higher power distance among unskilled and semi-

skilled workers than amongst professional and managerial works (Schein &

Schein, 2016). Authors noted that individuals differ in the extent to which

they expect and accept the power distance belief, that is inequality in power

and wealth (Winterich & Zhang, 2014). Research of Trompenaars et al

(2011) tested to what extent managers from over 50 different cultures saw

their leaders ‘as a kind of father’ opposed to someone who ‘got the job

done’. Of all the cultures tested, Australia scored the highest where

respondents opted to be left alone to get the job done, and these scores

correlated closely with the steepness of hierarchies where Australia was less

hierarchical than most other national cultures.

Critics argued that many areas of Hofstede’s research is fragmented, redundant

and overly reliant on certain levels of analysis, question what cultural values exist

beyond Hofstede’s dimensions, and what cultural values might be unique to particular

countries (Kirkman, Lowe, & Gibson, 2006). Others claimed the context is

oversimplified and too generalised (Shanks et al., 2000), and another had hesitations

that the work reflected genuine cultural differences (Ailon, 2008). If Hofstede’s

identification claims were reasonable then what is the quality of his verification, and

what assumptions does he rely on and are they justified (McSweeney, 2002), and

another study found that there was a clear tendency of national differences to

increasingly be evening out (Eringa, Caudron, Rieck, Xie, & Gerhardt, 2015).

While Hofstede has antagonists, a greater amount of authors support and quote

his work with unabashed confidence (Jones, 2007) and little question his results due

to the large impact that Hofstede has had on the scientific community (Orr & Hauser,

2008). From 1984 to 1993 one study found that Hofstede was one of six of the most

influential individuals on international business (Chandy & Williams, 1994). This

research will use Hofstede’s dimensions as a guide for understanding the implications

of culture on PBOs with Australian operations that have headquarters in a different

geographical location.



2.3.6 Cultures Warriors: Subcultures and the Occupations - 1980s

Determining the levels to measure, and the subcultures to assess will affect how

the research is designed. Schein (2010) explained ‘levels’ as the degree to which the

cultural phenomenon is visible to the observer, from visible artifacts; espoused beliefs;

to tacit, underlying assumptions.

Attention needs to be given to the impact of subcultures, and all organisations

have multiple, unique subcultures (Cameron, Quinn, Degraff, & Thankor, 2006) and

the degree of overlap depends on the overall culture’s potency and pervasiveness, and

the conflict and divisiveness generated by their subcultures; and occupational

subcultures are the most highly organised, distinctive and pervasive subcultures (Trice

& Beyer, 1993). Occupations such as engineering can triumph organisations and

sometimes may be thought of as macro-cultures because of their similar worldview,

common education and licensing requirements, and shared contact with others in the

same occupation, (Schein, 2010), as illustrated in Table 2-2. Further, occupations are

predominant as subcultures because entering an occupational field assumes the

acquisition of certain values and practices, or another view is occupational cultures are

halfway between the nation and the organisation, suggesting that entering an

occupation means the acquisition of certain values and practices (Hofstede, 2001).

This applies to PBOs with their dominant engineering profession.

Table 2-2

Categories of Culture

Culture Category Macro-cultures OCs Subcultures Micro-cultures

Nations, ethnic and religious groups, occupations that exist globally Private, public, non-profit, government organisations Occupational groups within organisations Microsystems within or outside organisations

Adapted from: “Organizational culture and leadership”, by E. H. Schein, 2010, 4th edition, San Francisco: Jossey-Bass, p. 2.

Therefore, to examine PBOs, the research design will comprise both qualitative

methods to provide depth when investigating values and beliefs, and quantitative

methods to provide a comparative analysis of behaviour and practices, and allow for

aggregation at a company and industry level to identify patterns and trends.



2.3.7 OCs Revolution: 1980s continued

Through the 1980s the topic of OC became progressively more popular. While

practitioner literature was always concerned with how culture might improve

organisational performance, overtime academic researchers did also (Trice & Beyer,

1993). The introduction of an anthropological concept also influenced studies on

organisational performance and methods were developed to understand, assess and

change corporate culture in the hope for better performance and ultimately gain

competitive advantage (Sackmann, 2011).

Practitioners and academics gathered momentum slowly until the early 1980s,

when interest in OC suddenly flourished (Barley, Meyer, & Gash, 1988) with three

practitioner ‘best seller’ publications: William Ouchi’s Theory Z: How American

business can meet the Japanese challenge, 1981; Terrence Deal and Allan Kennedy’s

Corporate cultures: The rites and rituals of corporate life, 1982; and Thomas Peters

and Robert Waterman’s Jr In search of excellence, 1982 (Barley, et al., 1988; Ostroff,

et al., 2013). Despite the lack of theoretical rigour, or perhaps because of this, the three

books sparked a culture ‘revolution’ (Jung, et al., 2007) and all had viewpoints on

strong cultures.

Strong cultures

All three publications suggested that strong OC was associated with

organisational effectiveness (Ostroff et al, 2013) and the thought that companies with

a history of outstanding financial performance often have powerful corporate cultures

(Fortune, 1983). Deal and Kennedy (1982) argued that the impact of values and beliefs

on company performance was very real, and similarly Peters and Waterman (1982)

claimed the stronger the culture and the more externally focused, the less need for

policy manuals, organisational charts or detailed procedures and roles; but also argued

that poorer performing companies often have strong cultures, but they are

dysfunctional and focused on internal politics.

Critics called into questioned Peters and Waterman’s conceptual and research

underpinnings, and the heavy use of secondary research sources (Carroll, 1983), lack

of evidence, and some firms reported in the study encountered serious financial

problems a few years later, and this was reflected in popular business press

commentaries (Coffey, 2010; Trice & Beyer, 1993; Wilderom et al in Wilderom, et



al., 2000). Further, a number of years later Peters confessed they had ‘faked’ the data

(Byrne, 2001 in Coffey, 2010, p. 84).

In addition, articles in Fortune (1983) and a cover story in BusinessWeek (1984)

appeared to keep the momentum going, see Figure 2-13 and Figure 2-14, or ‘pop-

management’ literature describing popular trends (Alvesson & Sveningsson, 2016)

including much of the theme of ‘strong’ cultures (Whelan, 2016).

Figure 2-13. Changing a Corporate Culture.

Adapted from: “Changing a Corporate Culture”, cover story by Business Week, May 14, 1984,

McGraw Hill Publications, pp. 82-88. (BusinessWeek, 1984).

Figure 2-14. The Corporate Vultures. Adapted from: “The Corporate Vultures”, Fortune

Magazine, 17th October, 1983, Time Inc., pp.6-72. (Fortune, 1983).

Authors argued that measuring OC on a single dimension of ‘strength’ deprived

the concept of analytic and interpretive capacity because culture is a complex meaning,

not a bundle of muscles; and the type of job, organisation, the reward structure, and

the employee’s age, gender, qualifications, and interests are more significant in

determining these norms (Alvesson, 2002). It could be argued that strength is not a

static phenomenon that can provide a linear explanation measured on a continuum

from weak to strong.

Other authors opined that having a strong OC can be an advantage or

disadvantage depending on both the content and strength of the culture (Chatman,

Caldwell, O'Reilly, & Doerr, 2014). The strength of a culture depends on the length of

time, stability of team membership, emotional intensity of shared historical

experiences (Schein, 2010; Schein & Schein, 2016; Whelan, 2016) or dimensions and

how widely they are shared and supported, and a weak culture for other dimensions

that are not supported (Chatman & O’Reilly, 2016). Also when management

objectives are adopted OC is strong and when they are not it is weak (Saffold, 1988).



A strong culture is one that is shared by all or most members of an organisation

and is closely aligned to the goals and championed values of that organisations

leadership (Whelan, 2016), and if an organisation has not experienced any significant

culture change for a long period of time it might indicate that the culture is strong

(Brown, 1998). The implications of cultural strength is that a strong culture will not

survive if the main culture carriers leave and if the majority an organisations’ members

are experiencing some conflict because of mixed messages emanating from the leaders

during the growth period (Schein & Schein, 2016, p. 139). This may be the case when

organisations experience new leadership, changing operating environments, or

frequent mergers and acquisition activity. However, strength refers to ‘norm strength’,

its substance and intensity with which the force of the norms are held, and consensus

of the extent to which members broadly agree about an organisations system of cultural

norms (Chatman & O’Reilly, 2016). In other words, it is the intensity and widespread

agreement about the salience and importance of specific values among an

organisations members (O'Reilly, 1989; O'Reilly, Chatman, & Caldwell, 1991). The

strength therefore depends on the consistency of the level of cohesion, integration or

agreement around values and norms (Kotrba, et al., 2012).

Another argument that may be of relevance to this study, is that the strength of

an organisation’s culture may work as a buffer and stabilizer against a hostile

environment (Moon, Quigley, & Marr, 2012) which assumes organisations working in

a cyclical market environment may have a distinctive set of cultural traits different to

organisations that operate in a more stable or predictable environments.

The 1980s was a period where a number of authors progressed valuable OC

models. While leading scholars such as Edgar Schein and Joanne Martin traditionally

advocated the exclusive use of qualitative methods and strongly opposed quantitative

methods for studying OC (Nieminen, Hooijberg, & Kotrba, 2017) others developed

diagnostic survey instruments, and some with linked with case studies, for accessing

OC. In particular: the Competing Values Framework (Quinn & Rohrbaugh, 1981),

Human Synergistics’ Organizational Culture Inventory (Cooke & Lafferty, 1983;

Cooke & Rousseau, 1988; Cooke & Szumal, 1993), the Organisational Culture Profile

(O'Reilly, et al., 1991), and Denison Organisation Culture Survey (Denison & Mishra,

1995).



2.3.8 OCs Link to Performance Battle: 1990s – 2000s:

The 1980s production of popular practitioner publications did not help the

discipline of OC. The outpour of OC concepts by scholarly and popular books, special

issues of academic and business journals, business press, addressed by psychologists,

sociologists, organisational theorists, strategy researchers, management consultants,

anthropologists and economists prompted the question of what accounts for this

widespread interest, and the most rational reasoning was the presumed relationship

between OC and performance (O’Reilly & Chatman, 1996). The causal link between

culture and performance was seriously questioned, however, despite this scepticism

the 1990s gave rise to a number of quantitative studies that empirically tested the

assumed culture-performance link (Wilderom, Glunk & Maslowski in Wilderom, et

al., 2000) including three key pieces:

x Kotter and Heskett (1992)undertook a number of related studies, using 207

firms over a five-year period, and found only a modest correlation between

indices of a ‘strong’ culture and long-term performance (Lim, 1995).

x Wilderom and colleagues (2000) reviewed a large-scale empirical studies

assessing this link, published from 1990 to 1996, and concluded that while

both variables had been operationalised in many, various and at times

ambiguous ways; the findings did not provide much back-up for the idea

that OC predicted organisational performance. The authors concluded that

the research evidence of the claimed predicative effect on OC and

performance/effectiveness appeared to exist, but not very convincingly.

x Sackmann (2011) reviewed 55 empirical studies published from 2000 to

2010, and found a contingency type relationship between culture,

performance and the internal and external firm context. Certain types of

culture orientations had a positive effect on financial and non-financial

performance, and other orientations had a negative impact on performance.

Alvesson (2002) argued there are four views on the relationship between OC on

performance:

1. The strength of the culture is directly correlated to company profits.

2. High performance leads to the creation of a ‘strong’ culture and success, a

common set of orientations, beliefs, values, and workplace spirit may



develop, but there may be little questioning of how things are achieved

which may form consensus, possibly conformism, and the conservatism

may be a liability in situations calling for change.

3. Under certain conditions a particular type of culture is appropriate, even

necessary, and contributes to efficiency such as bureaucracy where

regulation works and corporate control is less salient.

4. Adaptive cultures are key to higher performance, responding to changes in

the environment is linked to people willing to take risk, trusting each other,

are proactive, and work together to identify problems and opportunities; but

too much change can lead to instability, low cost-efficiency, risky projects

and a lack of direction (Alvesson, 2002).

Consequently, considerable research has been undertaken over the last three

decades investigating the impact that OC has on performance, and according to many

authors a connection exists, (Bolboli & Reiche, 2014; Coffey, 2010; Denison, 1990;

Hofstede, 1998; Kotrba, et al., 2012; Kotter & Heskett, 1992; Ogbonna & Harris, 2000;

Sackmann, 2011; Schein, 2013). However, OCs link to performance still remains

mixed and at times controversial with authors taking assorted views. Some authors

have touted they can improve organisational performance by helping organisations

create certain kinds of cultures (Schein, 2010) and proponents of this idea argued that

OC has a direct or significant impact on effectiveness and performance (Cameron &

Quinn, 2006; Denison, 1990; Kotter & Heskett, 1992) and past research has shown a

close connection (Kotrba, et al., 2012).

Another group that examined relations between OC and firm effectiveness found

the values do not always compete but are correlated, and they all relate positively to

various outcome criteria (Hartnell, Ou and Kinicki in Schneider, et al., 2016). Of

particular relevance to this study, some authors identified several organisational

dimensions, including culture, that can significantly influence project success (Brown,

2008; Cheung, Wong, & Lam, 2012), and that the OC of projects may affect the culture

of the base organisation (Andersen, et al., 2009).

Other authors were not so sanguine. The assumption of remodelling or shaping

existing cultures with high performance cultures will lead to improved organisational

effectiveness is widely debated (Jung, 2007), and despite the widespread interest in the



potential effects of culture on firm performance there is little clarity about its

connection, and the empirical results remain equivocal (O’Reilly, et al., 2014) with

inconsistent findings (Yesil & Kaya, 2013), and yielding ambiguous results

(Weinzimmer & Robin, 2016). Others argued the link remains elusive and questioned

an unresolved issue of how OC may affect an organisation’s financial performance

(Chatman, et al., 2014) and that there are many contextual reasons (social, economic

and political) of why OC will not have much, if any, impact on organisational

performance (Schneider, Ehrhart, & Macey, 2013). Wilderom (in Wilderom, et al.,

2000) doubted that if studies exploring the culture-performance link found no such

link existed, then these studies were unlikely to be published, which suggested a

possible under-representation in the literature that underscores the conclusion a link

appears to be there but not very convincingly.

This adds to the significance and the fundamental rationale for this research,

investigating the link of OC and performance, together with understanding the nature

of OC within a specific industry and jurisdiction, and organisational type. Jung et al

(2009) questioned whether there was a generic, ideal instrument for culture

exploration, and the factors related to the purpose of and context within which OC

needs to be explored are too diverse to be amenable to any single instrument or to

generic solutions.

Cultural change and organisational adaptability

While the 1980s emerged with the idea that a strong corporate culture has a

distinct and positive impact on performance, it has become increasingly widespread to

examine the relevance of OC to organisational change (Alvesson, 2002). It is an

important cultural variable (Chatman, et al., 2014). Adaptability is related to change,

reacting to market conditions externally driven, and hence takes an exogenous view of

change (Moon, et al., 2012), but it is also dependent on a firm’s strategy, and ability

to capitalise on opportunities or adapt as a function of changing conditions, in an

environment that is a force of a firm’s competitors, industry, culture and legal context

(Ployhart & Turner, 2014). Thus, adaptable companies are driven by their customers,

learn from their mistakes, reflect on their actions, decisions and the outcomes; they

have the capability and experience at creating change and continuously changing to

provide value to customers (Banto, 2014).



However, most change models recommend many areas to consider when

implementing successful change programs such as people and culture, strategy and

structure, and resources and competencies, and the complexity within the change

literature is at odds with the need for quick change in an increasingly dynamic business

environment (MacBryde, Paton, Bayliss, & Grant, 2014). Even in dynamic markets

authors such as Chatman et al (2014) explained organisations whose members have a

higher consensus and intensely embrace certain kinds of cultural norms that promote

adaptability will perform better financially than will organisations that are

characterised by lower consensus, lower intensity about adaptability, or both. To

understand or predict how an organisation will behave under varying circumstances,

such as new market dynamics or new information technology, an organisation’s

patterns of basic assumptions must be understood, in other words its OC (Shafritz,

2015). Consequently, the ability to be adaptable may help explain why some

organisations survive and others do not (Costanza, Blacksmith, Coats, Severt, &

DeCostanza, 2015; Ployhart & Turner, 2014) which reinforces the importance of

pinpointing cultural strengths and vulnerabilities in an organisation’s cultural profile.

In this study PBOs have been forced to adapt to changing market conditions to survive,

however the extent that PBOs prioritise adaptability in their business practices will be

investigated and compared, and this provides further rationale for this research.

Shafritz (2015) argued that lasting reform requires changes in OC, which means that a

direct measurement of adaptability is salient in this study.

2.3.9 OCs Battlefront in the 21st Century

Despite the importance of OC, some authors argued advances in our

understanding of the construct seem to have stagnated (Chatman & O’Reilly, 2016).

While other scholars today lean towards the idea that company culture is the basis for

a successful organisation (Adalsteinsson & Grimsdottir, 2015) the current emphasis is

how an organisation might change culture to improve performance (Schein & Schein,

2016). The reoccurring theme now seems to be change, and the ability to change

culture to be more effective. Cameron and Quinn (2011) argued that no organisation

in the 21st Century would boast about being constant, the same, or compare itself to 10

years prior, and being stable is more often interpreted as stagnation than steadiness,

and organisations that are not in the business of change and transition are generally

viewed as recalcitrant.



In the 21st Century successful companies such as Google, see Figure 2-15,

Apple, and Facebook appear to have unique and healthy cultures that are underpinned

by adaptability, advanced technological and innovative spirits, while other mature

organisations are battling with dysfunctional cultures with entrenched behaviours that

can appear to resist change. For example Google, believe that its success is largely the

result of a strong OC (Meyer, 2015).

Figure 2-15. Google’s Maintain View office, California office (top left) and Google’s office lobby in Sydney, Australia (above right). Adapted from “Google company: our culture”, (2016),

https://www.google.com.au/about/company/facts/culture/

Other examples of modern cultural orientations include General Motors, whose

CEO Mary Barra, blamed safety defects and mishandling the recall of 2.6 million small

cars in 2014 on the company’s ‘cost cutting culture’ (Durbin & Krisher, 2014), and

reports of an ‘entrenched, dysfunctional culture’ in a huge old company that has highly

evolved for survival (Colvin, 2015). In Australia, in June 2015, the Chairman of the

Australian Securities and Investment Commission (ASIC) told a Senate Estimates

hearing that it wanted to investigate and prosecute financial companies for having ‘a

poor corporate culture’ (Morgan & Clarke, 2015). ASIC’s Commissioner claimed that

research has shown that businesses with a strong culture tend to sustain higher

performance over the longer term, have a strong customer focus and satisfaction,

compete more effectively, and have better customer retention (Tanzer, 2015). All in

all, the business world appears to accept that OC is fundamental to an organisations

overall health.

Managing Culture

The OC concerns in the second decade of the 21st Century, which are not

necessarily new, include managing the impact of globalisation and international

operations, particularly as employees become geographically dispersed as this can lead

to a loss of shared assumptions and norms, because people in different countries react,



communicate and make decisions differently, and organically grown companies that

have long taken for granted cultures can begin to collapse leading to a breakdown in

trust (Meyer, 2015). The deterioration of social distance, or a lack of emotional

connection, can cause communication to rapidly deteriorate, resulting in

misunderstanding, and cooperation can wane into distrust. (Neeley, 2015). The

implications on a firm’s culture is that it takes a long time to build a positive culture

and takes a lot of effort to sustain it (Denison, Hooijberg, Lane, & Lief, 2012)

provoking the idea that the opposite may be the case, culture may take a shorter time

to decline without a lot of energy.

The nature of a particular culture is a reflection of the original strategies of the

founders of a firm (Denison, 1990; Parnell, 2014) and it is by far the most important

sources for cultural beginnings, i.e., the impact of the beliefs, values and assumptions

of an organisations founders who operate as strong leaders (Schein, 2010). Researchers

generally agreed that leaders can create culture, but also culture can constrain

leadership behaviour (Chatman & O’Reilly, 2016). The implications mean that formal

leaders of an organisation should understand and manage cultural dynamics for

organisations to function well, and “the worst examples of culture mismanagement are

organisations where the leaders turn over the responsibility for culture management

to the human resource function or to consultants” (Schein & Schein, 2016, p. 229).

This implies that incorporating a qualitative approach would be suitable for this study.

The results that would be achieved qualitatively would be by using methodologies that

provide richness, depth, nuance, context and multi-dimensionality and complexity

(Mason, 2002).

It seems to be clear that as leaders create culture and it is leaders who have to

manage culture, and particularly for organisations in their midlife and beyond with the

treat of organisational decline through changes in environmental, technological,

economic or political factors (O'Reilly and Tushman in Schein & Schein, 2016, p.

229). While managing OC may not have changed in this century, it appears that the

intensity or uncertainty of how to effectively forecast, execute, and measure the degree

of change required lies at the heart of managing and monitoring OC, the starting point

of which requires a clear definition of the OC construct.



2.3.10 Definition of OC

In the extant literature, the concept of OC has many different definitions,

dimensions, concepts and categories, (Cameron & Quinn, 2006; Chatman & O’Reilly,

2016; Coffey, 2010; Denison, 1990; Hofstede, 2001; Kotter & Heskett, 1992; Ogbonna

& Harris, 2000; Sackmann, 2011; Schein & Schein, 2016; Trice & Beyer, 1993). There

is some agreement on the definition of OC, but there are many different ways it has

been conceptualised (Brunetto, et al., 2014).

The OC perspective is a set of theories each with their own assumptions about

realities and relationships in organisations (Shafritz, Ott, & Jang, 2015) and

researchers take different approaches to its study, such as historical, behavioural,

structure, or symbolic views (Coffey, 2010). It is nebulous with a variety of

perspectives and interpretations (Koskinen & Pihlanto, 2008) because it cuts across

psychology, sociology and anthropology, thus defining culture is by no means precise

(Ashkanasy, et al., 2010).

The issues of definition and dimension remain contested (Fellows & Liu, 2013),

and the use of similar definitions results in different measures that lead to outcomes

that are difficult to compare (Sackmann, 2011), and this has been worsened by the lack

of any generally accepted, universal or a comprehensive framework to measure and

compare OC (Coffey, 2010). In addition, an identified gap in the literature appears to

be the inconsistent results in culture studies is an outcome of inconsistent construct

definition and completeness (Weinzimmer & Robin, 2016) which will be addressed in

the research design.

Why Culture Matters

While opinions may differ, culture matters because it is a powerful, latent and

the often unconscious force that determines both individual and collective behaviour,

and perception through patterns and values (Alas, Niglas, & Kraus, 2009), thus

behaviour is dependent upon values and beliefs (Liu & Fellows, 2008). Being part of

a PBO means that the behaviour of the individual is modified by the thinking, ideas

and values of the firm (Andersen, et al., 2009) and OC can affect people’s actions

without obviously being noticed (Bolboli & Reiche, 2014).

Culture pervades lives; people experience and engage in culture every moment,

it conditions behaviour and behaviour modifies culture; culture determines how people



communicate, how they regard property, interact with the environment and consider

perspectives of time, (Fellows & Liu, 2013). Above all, time is intrinsic, acting as a

performance measurement variable for PBOs. All organisations hold implicit

assumptions about the relative importance of the past, present and the future, and the

appropriate length of units of time for different types of tasks (Schein, 1988) and this

underscores the meaning attached to completing a project ‘on-time’, and the utilisation

of ‘time’.

This research adopts the definition by Denison (1990; 1997, p. 2), “culture refers

to the underlying values, beliefs and principles that serve as a foundation for an

organisation’s management system as well as the set of management practices and

behaviours that both exemplify and reinforce those basic principles’ Investigating a

PBOs values, beliefs, and management principles and assumptions enshrined in their

respective OCs is integral to the research. Its terminology of ‘values, beliefs,

principles, and management practices and behaviours’ is appropriate for PBOs, Not

only does this definition allow for the comparison of organisations from surface level

artifacts, mid-level values and behavioural norms, to deep rooted assumptions (Kotrba,

et al., 2012) it provides a framework with an appropriate OC model and instrument.

2.3.11 Relevant Studies

The link of OC to performance is tenuous at its best, and this research will

uncover how this is different for PBOs. There have been a number of studies

undertaken that are of relevant to this research, some examples include: if OC was

influenced by organisational size, type of activity and immediate environment of

Romanian public organisations (Hudrea & Tripon, 2016b), how adaptability

influences the relationship between culture consensus and financial performance in

high‐technology firms (Chatman, et al., 2014), the impact of OC and environmental

pressures on IT project performance (Gu, Hoffman, Cao, & Schniederjans, 2014), OC

in airworthiness management programmes (Trew, Trigunarsyah, & Coffey, 2013),

how cultural traits interacted with effectiveness (Kotrba, et al., 2012), the relationship

between OC and the performance of construction organisations in Hong Kong

(Cheung, et al., 2012; Coffey, 2010) and specific studies on PBOs (Beatham, 2003;

Cheng, Dainty, & Moore, 2006; Thiry & Deguire, 2007), further details and more

studies and their relevance are contained in Appendix A.



The uniqueness of this research, which is an identified research gap, is that it

will investigate (at one explicit point in the economic cycle) the nature of OC in

specific organisational types (PBOs), operating in a precise jurisdiction (Australia) and

sector (resources and energy); and OCs link to performance. This will be achieved

through integrating a mixed method and cross sectional analysis. While there are many

levels or categories for studying OC, this study will focus on integrating macro-

cultures, the aggregate OC of PBOs, and subcultures. Importantly, the last section

presented a suitable definition of OC and justified its appropriateness.

This section provided a general overview of the enormous topic of OC covering

its beginnings until the early 21st century. It highlighted cultural facets, key points,

relevant influences and challenges for organisations, and popular trends of OC to assist

formulate the methodology and research design.

It confirmed the appropriateness of using both qualitative and quantitative

approaches for the study of OC as together they will provide depth and rigour. In this

study qualitative methods are suitable to explain and gain insight into the relevance of

national cultures and the values and practices of PBOs, the influence of subcultures,

and how PBOs manage their OC, and support and explain the quantitative results. The

aims using a quantitative approach would be to identify the strength of OC, understand

how adaptable PBOs have been in a volatile market, and investigate the link of OC to

performance.

2.4 MODELS AND INSTRUMENTS FOR ASSESSING OC

The last section identified that there are many different definitions, concepts and

categories of OC and that researchers take numerous approaches to studying the

phenomena. The aim of the research is to investigate the ‘underlying values, beliefs,

principles and management practices and behaviours’ that formed the basis of

Denison’s (1997, p2) definition and assess the relationship or connection between OC

and performance.

Thus identifying a suitable model to explain the nature of culture within PBOs

that links to an instrument to assess OC and its link to performance is crucial in this

research, which this section will achieve. This section begins with ‘Identifying a

suitable OC measurement instrument’ and then ‘Selecting a suitable model to describe

OC’ and finally it explains the ‘Denison OC Model’.



2.4.1 Identifying a Suitable OC Measurement Instrument

The last section identified a research gap in the literature that inconsistent results

in cultural studies was an outcome of inconsistent construct definition and

completeness, and while this may partly explain inconsistencies, data collection and

sampling strategies also need to be clear (Weinzimmer & Robin, 2016). In other words,

the research method and research design, and particularly identifing the most suitable

OC measurement instrument, is critical to ensure results are valid, relevant and not

ambigious. For example, surveying one individual or one leader in an organisation to

assess OC results in self-evaluation bias and reporting of overwhelmingly positive

results (Weinzimmer & Robin, 2016). This means identifying the right OC model that

is aligned to a suitable OC instrument to investigate and assess OC aligned to this

research is salient.

Authors describe ‘instrument’ as a broad perspective, rather than a precise

measurement tool, it as a general measure that encompasses any method of gauging

OC (Jung, et al., 2009). Sackmann (2011) noted the availability of several standardised

questionnaires or measures of culture, influential research which has instigated

specific streams of inquiry, and two models that used an established measurement

instrument of OC based on ‘competing values’ are the: DOCS instrument (Denison,

1990) and the Competing Values Framework (CVF), (Cameron & Quinn, 2006). The

competing values is based on the theory that the poles of any given dimension are

inevitability in conflict with each other and the cultural solutions involves reconciling

them (Schein & Schein, 2016, p. 283). While there are a number of competing values

approaches for measuring OC, some models may not provide the best fit when

analysing OC (Trew, et al., 2013). This research will use an established model because

it is a practical starting point, and an efficient management of time to leverage on an

existing, proven and aligned model.

In an extensive review of qualitative and quantitative instruments, Jung et al

(2007) assessed 70 instruments for exploring and measuring OC, and found that no

single instrument was ideal for exploring culture, however, five were identified as

prominent commercial packages:

1. Corporate Culture Questionnaire, by CE Global (formerly SHL)

2. Denison Organizational Culture Survey (DOCS) by Denison Consulting



3. Organizational Culture Inventory (OCI). Developed by Cooke & Lafferty, 1983 (Sackmann, 2010), now administered by Human Synergistics.

4. Organisational and Team Culture IndicatorTM. by Centre for Application of Psychological Type (CAPT).

5. Organizational Assessment Survey (OAS) by MetriTech.

While commercial packages may incur fees (Jung, et al., 2007, 2009) it suggests

many may be proven, and/or progressively enhanced since Jung’s et al (2007)

assessment, are easily available, and possibly offer support and guidance. The

appropriateness of an instrument is dependent on many factors including:

(i) Research context and question

(ii) The underlying aims

(iii) The resources available (Jung et al 2007).

(iv) In addition, a model that has been developed for corporate business

(rather than say education or health) which assumes it will be meaningful

to participants

(v) Flexibility to incorporate into a mixed method design

(vi) Degree of changes required to adapt to this research.

These six factors have been applied to the five commercial instruments identified

by Jung (2007), and the other model offered by Sackmann (2011), namely the:

6. Competing Values Framework (CVF) instrument: Organizational Culture

Assessment Instrument (OCAI) developed by Quinn & Rohrbaugh, 1981.

Table 2-3 identifies the appropriate of the six models (with the vi criteria

identified above. It illustrates a check mark (√) to indicate suitability to this research,

and a cross indicating (x) unsuitably to this research

.



Table 2-3. Appropriateness of research instrument for this research

Name, and origin and website

i) Fits research context & question

ii) Aligned with aims of the research to investigate OC and performance, and PBOs

iii) Resources required

iv) Corporate business application

vi) Mixed method flexible

vii) Changes required

1. Corporate Culture Questionnaire Origin: United Kingdom www.cebglobal.com

×

× More of a talent management tool. This is now Culture of Quality Benchmarking survey by CEB. (cebglobal.com)

Unknown × Engineering manufacturing organisations. Intended to describe culture rather than predict outcome (Jung et al, 2007)

× Possibly

2. Denison Organizational Culture Survey (DOCS) Origin: USA www.denisonconsulting.com

√ √

√ Diagnostic tool, and competing values model, developed in 1998, links OC to performance. Denison Consulting are researchers and consultants of OC (Denison, 2016)

Training preferred

√ Accepted by the business community (Coffey, 2010)

√ Minimal

3. Organisational Culture Inventory (OCI) Origin: USA. www.human synergistics. com.au

√ √

√ Human Synergistics has been measuring OC for 30 years. Measures current OC and ideal culture (www.humansynergistics. com.au).

Training required

× Designed for health, and used in various non-health organisations (Jung et al, 2007).

× Minimal

4. Organizational and Team Culture IndicatorTM

Origin: USA. www.capt.org

× ×

× Developed in 2004 and based on principles of Jungian psychology, archetypes serve as the organising structure for an OC e.g., every person, lover, jester (Jung et al, 2007).

Training required

× Established by Mary McCaulley and Isabel Briggs Myers creators of MBIT (www.gapt.org). Myers Briggs instrument measures individuals preferred state.

× Not suitable

5. Organizational Assessment Survey (OAS) Origin: USA www.MetriTech.com

× ×

× Developed in 1985, OAS is centred on motivation theory, with Personal Investment Theory as a foundation (Jung et al, 2007)

Unknown × Applicable to the education sector, and educational assessment products (www.metritech.com)

× Not suitable

6. CVF/Organizational Culture Assessment Instrument (OCAI) Origin: USA. www.ocai-online.com

√ √

√ Developed by (Quinn & Rohrbaugh, 1981). Competing values model, assesses current and preferred OC.

Training preferred

√ Developed as a leadership framework to assess culture types.

√ Minimal

Adapted from: ‘Instruments for the exploration of organizational culture: A review of the literature’, Jung el al (2007). Working Paper.

http://www.humansynergistics/



Selected instrument and justification

The ideal OC measurement instrument has to be aligned with the second part of

the research question (in bold), namely:


resources and energy sectors and what is OCs relationship with performance?

The instrument that appeared to offer the largest degree of synergy is DOCS

(Denison, 1997). Being an established tool, the DOCS instrument is an appropriate

and proven diagnostic tool for this research. While the other models may offer similar

benefits, Table 2-4 sets out a comparative reasoning of the models and why DOCS is

most suitable for this research.

Table 2-4

Instrument suitability compared to DOC Model

1. Corporate Culture Questionnaire

More of a talent management tool rather than a diagnostic tool makes this model unsuitable.

2. DOCS Instrument While the approach to measuring culture may be based on classifications of organisational effectiveness (Chatman & O’Reilly, 2016), DOC appears to be aligned to this research.

3. Organisational Culture Inventory (OCI)

Approach to measuring culture based on human needs and leadership development, norms appear relevant to any setting for human interaction not organisations, and other items are ambiguous (Chatman & O’Reilly, 2016).

4. Organizational and Team Culture IndicatorTM

Based on principles of Jungian psychology which serve as the organising structure of OC. The archetype dimensions such as ruler, lover, jester, hero, and magician are not suitable for corporate business in this research. The possible implications and interpretations by corporate business may be that the research appears as frivolous, and precarious in the corporate context, i.e., it may be unsuitable for a CEO to seen as a jester or lover.

5.Organisational Assessment Survey (OAS)

This assessment tool is designed for the education sector and supports educational stakeholders (www.metritech.com) and is not suitable for this research.

6. CVF /Organizational Culture Assessment Instrument (OCAI)

Uses a competing values framework similar to the DOCS and appeared relatively suitable. The approach to measuring culture is based on Jungian psychology (Chatman & O’Reilly, 2016), and produces types compared to the DOCS instrument with producers profiles (Nieminen, et al., 2017). Also, CVF appeared a little more complex and expensive than DOCS instrument.

http://www.metritech.com/



The DOCS instrument is behavioural based, created within the business

environment, uses business language, links to bottom-line results, seems relatively fast

and easy to implement, is applicable to all levels of an organisation, and is designed to

give a simple yet comprehensive analysis of the culture of an organisation by

evaluating the underlying cultural traits and management practices that influence

business performance (Denison & Neale, 1999). Although researchers have argued

that practitioner developed surveys lack supporting validity research, the instruments

preferred by practitioners may be better able to convey meaning to managers compared

to academics (Ashkanasy, Broadfoot, & Falkus, 2000) and this is another reason why

the DOCS instrument is appropriate for this research as the sample frame are business

people. Other reasons of its suitability for this research include its social and cultural

fit, diagnostic benefits, and flexibility.

Social and cultural fit

Culture is largely dependent on country of origin and socio-cultural contexts

(Jung et al, 2007) and close geographical proximity is outweighed by ties of history,

culture, kinship and language (Pierson, 2003). Hence, the ideal instrument for the

cultural assessment of this Australian based research would be an instrument designed

and developed in a western country which has a similar cultural profile. The United

States has the largest cluster of instruments (Jung, 2007), providing more choice and

possibly more advanced tools. The DOCS instrument, developed in the United States,

fits this research from a social and cultural perspective and aligns with corporate

business because it was developed for business. Further the team at Denison

Consulting use the instrument in their consultancy, continue to improve its design and

application, and have developed complementary content modules. The use of language

to describe cultural traits such as adaptability, mission, consistency and involvement

seem suitable to business.

Diagnostic benefits

The chosen instrument needed to be meaningful to participants, offer beneficial

incentives or value for their time and engagement, and ideally provide predicative

outcomes. Jung (2007) explained that the DOCS instrument is a diagnostic tool, it

started with the intent to identify and assess existing culture/s and rectifying them, with

the thought to remodel or shape existing cultures to align with those characteristics



associated with high-performance cultures. In other words, a diagnostic instrument,

such as DOCS, is ideal for this research.

If an organisation’s culture reflects unwanted values such as hierarchy, rigidity,

homogeneity, power based on authority and associations in closed networks, reliance

on rules restricting flexibility (Cameron & Quinn, 2011, Shafritz, 2015) such as

hanging onto familiar tried and true beliefs, values, policies and practices; then the

logical task would be to replace these cultures where horizontal relationships, open

and accessible networks, flexibility, responsiveness, individual and group

empowerment, diversity and customer services are valued (Shafritz, et al., 2015).

Therefore, changing culture by changing rituals, habits and routines (Denison, 2016),

requires diagnosing current good, bad, new and old habits first, see Figure 2-16.

Figure 2-16. Changing culture by changing rituals, habits and routines. Adapted from: “Building and Sustaining High Performing Organizations and Leaders,” 2016, by Denison Consulting, Denison

Certification Workshop, October 2016, Ann Arbor, USA.

For participants in this research this seems to be a beneficial outcome, because

it would allow leaders and managers in PBOs to reflect on the nature of their current

culture with the view to adapting or changing certain traits, practices or behaviours to

improve performance, particularly when they can see the results of their competitors’

culture and links to performance. Or simply, the intended purpose of the DOCS

instrument was to enable leaders, key stakeholders and employees to understand the

impact of their culture on their organisation’s performance and to learn how to redirect

their OC to improve organisational effectiveness (Jung, et al., 2007, 2009). Therefore,

the underlying characteristics of the DOCS instrument seem a logical fit for PBOs,

whose traditional key drivers are aligned with high performance.



Flexibility

Authors advised that it is prudent to revise questionnaires to fit particular

organisations under assessment by interviewing people in organisations, asking them

to describe their values, then condense the results to the most frequently mentioned

and revise questions accordingly (Beach, 2006). An organisation’s behaviour cannot

be understood or predicted by studying only its structure, systems and processes while

this information will provide clues, what is required is knowledge of the unconscious,

virtually forgotten basic assumptions, and together a quantitative and qualitative

approach is more accurate and reliable (Shafritz, et al., 2015), hence a mixed method

which the DOC model allows for.

2.4.2 Selecting a suitable model to describe OC

Authors agreed that the use of qualitative methods extends the boundaries of the

application of quantitative measurements, and enhances the interpretation of

quantitative OC data (Ashkansay et al in Van den Berg & Wilderom, 2004; Wilderom,

et al., 2000). In particular, the use of a focal units own terms to describe itself, the

intensive and in-depth information obtainable (Cooke & Rousseau, 1988, p. 246),

gaining relatively fast feedback (Jung, et al., 2009, p. 1092), and it allows the

Researcher to get at the inner experience of participants to determine how meanings

of OC are formed, and to discover rather than test variables (Corbin & Strauss, 2008).

Denison (1990) note that taken alone both the quantitative and qualitative research

have substantial limitations, but taken together they provide substantial support for the

culture and effectiveness model.

The choice of semi-structured interviews seemed a practical starting point, as it

would provide depth and insight into a PBOs culture. Interviewees would also provide

an avenue to invite a PBOs participants to undertake the OC survey. The semi-

structured nature of interviews would contain a set of specific topics, but also allow

the interviewee sufficient freedom to digress, and hence questions needed to be open

ended to gain rich information about attitudes and behaviours (Miller & Brewer, 2003).

While the results from the qualitative research would not be representative or

conclusive but would add to the integrity of the overall research. Further, the in-depth

interviews would assist ensure construct validity by asking participants to give their

views on important OC and performance components, and provide feedback and

another dimension to support the survey results.



2.4.3 About the Denison OC Model

Endorsed by Edgar Schein, Dan Denison is among the early measurers of OC

with the development of a useful measurement tool built on relevant theory and choice

of dimensions to measure, which correlates culture dimensions with organisational

performance to impose a useful context for culture analysis (Schein in Denison,

Hooijberg, et al., 2012). He has been a consistent contributor to the OC domain

beginning with his 1984 paper linking OC to performance, and he and his colleagues

have generated substantial empirical evidence examining the link between OC and

effectiveness (Chatman & O’Reilly, 2016). After extensive research, Coffey’s (2010)

findings supported the premise that a relationship between ‘strong’ OC and effective

business performance existed, and Denison’s model is useful, particularly from other

ethnic and OC models which measure effectiveness.

The original design of the DOCS instrument included several stages of

refinement including adding new items, testing the validity, and refining the measures

through building on the earlier research by Denison (1984, 1990) and Denison and

Mishra (1995). They validated the quantitative measure of the construct, extended their

work through a series of case studies, the development of a theoretical model, and this

framework became known as the Denison Model (Nieminen, et al., 2017). They found

that cultural and behavioural characteristics of organisations have a measureable effect

on a company’s performance (Denison, 1984, 1990; Denison & Mishra, 1995;

Denison, Nieminen, et al., 2012).

The DOC Model

The DOC model’s purpose is to enable leaders, key stakeholders and employees

to understand the impact of their culture has on their organisation’s performance, and

to learn how to redirect their culture to improve performance by managing the tensions

and trade-offs along two dimensions: internal vs external focus, and stability vs

flexibility orientation (Jung, et al., 2007), or in other words the competing values an

organisation has to manage.

The DOC model generally uses a mixed method approach. The OC traits are

examined through qualitative case studies to identify their links to performance, and a

quantitative instrument which provides an exploratory analysis of management

perceptions of the four traits and their relationship to subjective and objective measures



of effectiveness (Denison & Mishra, 1995, Denison, 1990). The survey questions are

focused on dimensions considered relevant to measuring performance, and if those

dimensions cannot conveniently be measured with a survey, then the research can be

supplemented with interviews and observations; in other words, a diagnostic

quantitative approach to measure specific dimensions of culture, and a dialogic

qualitative approach to seek insight (Schein & Schein, 2016).

The DOCS Measurement Instrument

The DOCS Instrument measures 12 dimensions (called indices) under four

general characteristics (called cultural traits), see Table 2-5. The scores on each of the

12 dimensions are shown in a circular profile, or circumplex (Schein & Schein, 2016).

Table 2-5

DOCS Intrument measurement dimensions

1. Adaptability Creating change Customer focus Organisational learning

2. Mission Strategic direction and intent Goals and objectives Vision

3. Consistency Core values Agreement Coordination and integration

4. Involvement Empowerment Team orientation Capability development.

Adapted from: ”Corporate Culture and Organizational Effectiveness” by Dan Denison, (1997), Ann

Arbor, MI, USA.

The survey consists of 60 items (Denison, Nieminen, et al., 2012) in which

responses are measured on a 5-point Likert-type scale ranging from (1) strongly

disagree to (5) strongly agree, (Gillespie, et al., 2008). For example, under the culture

index labelled ‘Strategic direction and intent’ (Denison & Neale, 1999) the basis is to

combine employee rankings of their own organisation from the five following



questions, and the final scores in this trait can be a reliable measure of employee

perception and a valid indicator of the degree to which the sample of employees

believe that their organisation has a strong or weak strategy (Schein & Schein, 2016,

pp. 273-274).

x There is a long-term purpose and direction

x Our strategy leads other organisations to change the way they compete in

the industry

x There is a clear mission that gives meaning and direction to our work

x These is a clear strategy for the future

x Our strategic direction is unclear to me (reverse scoring).

In assessing OC, specific norms and values will be grouped into meaningful

themes or dimensions, and integrated into the DOCS instrument that will describe the

interrelationship among those dimensions (Denison, Nieminen, et al., 2012). The

scores are computed by taking the results from the surveys and calculating each items

average, the index scores are calculated by taking the raw average of the five line items

of an index then benchmarking them against other organisations that Denison

Consulting has surveyed (Denison & Neale, 1999). The scores are grouped by index,

and percentiles are calculated for each line item by computing the raw average of the

item (adding up the responses for that item and dividing the total by the number of

people who answered the question) and then ‘norming’ it against other organisations

to create the percentile score; the results are aggregated and recomputed into four

percentiles that are displayed on a circumplex through the following quartile groupings

(Denison Consulting; Denison & Neale, 1999):

x First quartile (Q1) from 1 to 25 %

x Second quartile (Q2) from 26 to 50%

x Third quartile (Q3) from 51 to 75%

x Fourth quartile (Q4) from 76 to 99% (Denison Consulting).

The higher the scores, or more colour, on the circumplex the better the financial

performance of the organisation, see Figure 2-17, (Denison, 2016b).



Figure 2-17. A Model of High Performance. Adapted from: “Building and Sustaining High

Performing Organizations and Leaders,” 2016, by Denison Consulting, Denison Certification Workshop, Ann Arbor, USA.

According to Denison et al (2015) the most effective organisations are

characterised by a strong mission and high levels of employee involvement, internal

consistency and adaptability. The vertical pairing of adaptability and involvement

relates to the capacity of an organisation for change and flexibility, the other vertical

pairing of mission and consistency conveys the stability and strategic direction of an

organisation, adaptability and mission reflect an organisations reaction with its

external environment, and involvement and consistency represent an internal focus

(Coffey, 2010).

Adaptability is the extent to which organisations can change by learning from

competitors and customers (Boyce, et al., 2015) and facilitates the conversion of

external signals and customer expectations into internal changes, and improves the

organisation’s ability to cope with the increasing dynamism and volatility in its

environments (Yilmaz & Ergun, 2008). While the adaptability trait seems to be the

most important trait, logic would suggest that the results reflected in the circumplex

would ideally need to have a relatively even balance of all traits rather than one trait

dominating.

Critique of OC models, instruments and measurement approaches

Critics of models that use a competing values approach have argued that the

suggestion that four and only four cultures represent the world of organisations is a



mistake, particularly from the viewpoint of anthropology (Cameron & Quinn, 2011).

Others warned that culture does not provide a direct explanation of performance, but

is one component of a much more complex set of relationships within the process of

competition, and that it might prove wise to treat with caution those studies from

commentators such as Denison (Brown, 1998).

Others have argued that the problems with Denison and Mishra’s 1995 study

was that it suffered from a narrow operationalisation and validation was not

convincing, and Denison’s 1990 study used scales that could loosely be labelled

culture and relied on data designed for other purposes (Wilderom, 2010). In their

review of four prominent quantitative approaches to assessing OC, Chatman and

O’Reilly (2016) argued that the DOCS instrument’s four traits are potentially

overlapping constructs, and the DOC model theory is more aligned to a model of

organisational effectiveness, and with the exception of adaptability it is unclear what

is distinctively cultural about the four traits, and certain indices assess a perception of

climate.

While the critics of the DOC model may have some valid points, it appeared fit

for the purpose of this study. It is also one of the few culture performance measures

that continues to survive the test of time, and in 2014 Denison and his colleagues

published a review of nine similar instruments and found that most had come and gone

with little empirical testing beyond the initial publication (Nieminen, et al., 2017). In

addition, the gap in the literature appeared to be a lack of published research that has

used the DOC model in the scope of this research: specific sector (resources and energy

sectors), jurisdiction (Australia) and defined organisational type (project based

organisations). This research will address this gap by contributing to this stream of

research.

While there continues to be a debate about OC, performance and ideal

instruments, and the equivocating over OC and climate, this research has focused on a

model that is practical, useful and meaningful for business leaders and managers and

the DOC model appeared to be suitable. With the use of a mixed method approach, the

ability to undertake a comparative analysis with a focus on high performance criteria,

and alignment with this research’s methodology would result in clear, valid, and

reliable findings that fit with the purpose of this research.



2.5 PRODUCTIVITY, PERFORMANCE AND EFFECTIVENESS

“I often say that when you can measure what you are speaking about, and express it

in numbers, you know something about it; but when you cannot measure it, when you

cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind”,

Sir William Thomson, Lord Kelvin, 1883 (Thompson, 1910).

Since Sir Thomson’s lecture introduction at the Institute of Civil Engineers, on

Electrical Units of Measurement, on 3rd May, 1883 (Thompson, 1910) see Figure 2-18,

authors have been discussing, defining and debating the terminology, role and

measurement of performance and effectiveness, and the similar construct of

productivity. It seems to be of as much interest now as it was decades ago. While

many views pervade, with some seeming literal and others abstract, the purpose of this

final section in the Literature Review is to gain alignment with the most appropriate

and valid construct to underpin the measurement function for the performance of

PBOs. This section is structured in five more areas beginning with examining

‘Productivity’, then clarifying ‘Performance and effectiveness’, followed by

‘Selecting the appropriate measurement approach’, ‘Research gaps’ and finally a

‘Summary’ of this section.

Figure 2-18. William Thomson, Baron Kelvin delivering his last lecture at the University of Glasgow, 1899. Adapted from: “William Thomson, Baron Kelvin,” by Harold Sharlin, (2010),

Encyclopaedia Britannica.



2.5.1 Productivity

The trend at the moment seems to lie with ‘Productivity’, but it is argued that its

loose use in ordinary language and overuse dilutes its meaning (Richardson, 2014).

Examples in political rhetoric prevail with usage to lift productivity, overlook

productivity-enhancing projects, productivity is projected as the most important

catalyst for our economy (Shorten, 2015). For added impact authors use metaphors

such as extreme productivity, maximising productivity and productivity killers (Pozen,

2011), or to create a more productive organisation, focus on productivity, and

sustainable productivity led gains (BHP Billiton, 2015).

Kendrick (1956) wrote about productivity gains and measuring total factor

productivity decades ago, and economist Paul Krugman (1997) famously wrote that

“Productivity isn’t everything but in the long run it is almost everything”. He was

referring to the trend in living standards is determined by a country’s rate of

productivity growth.

While productivity growth is used by business, media and politicians as the

solution to improve living standards, there is little agreement on what productivity

actually is; for some productivity growth comes from working harder and longer hours,

or the return from investing more in capital, e.g., infrastructure and education

investment, and it has also been associated with ‘working smarter’, but what exactly

this implies is rarely defined (Gordon, Zhao, & Gretton, 2015).

Historically, authors have agreed that the measurement of productivity is the

output per unit of input (Barton & Cooper, 1948), a measure of the efficiency in which

the economy turns inputs (labour and capital) into an output measure (output per work

or hours worked) (Vogl & Abdel-Wahab, 2015). It is the relationship, or ratio of a

measure, between quantities of output and input (Armentrout, 1986; Gordon, et al.,

2015; Panas & Pantouvakis, 2011; Yi & Chan, 2014), or input work hours divided by

the output quantity (Kim, 2007), and this has widely been accepted as a measure of an

efficient use of resources (Chau & Walker, 1988). Inputs are tangible (labour, capital)

and intangible (R&D expenditure, education), and intangible inputs contribute to the

improved quality of tangible inputs, better organisation, management and new

technology, but are difficult to identify, quantify (Chau & Walker, 1988; Sezer &

Bröchner, 2014) and obtain.



Productivity Drivers

Authors argued that while productivity is a driver for growth and prosperity, the

usefulness of productivity measurement critically depends on the identification of

underlying drivers of productivity (Vogl & Abdel-Wahab, 2015). Early researchers

argued the techniques used in developing the various measures of input and output

have a major limitation in the inability to evaluate quality changes in both inputs and

outputs (Barton & Cooper, 1948) and this is a difficulty because of the diversity of

outputs and inputs (Sezer & Bröchner, 2014).

In addition, studies into productivity in the construction sector have found it is

difficult to measure the productivity of engineers, and project and construction

managers because their work requires analytical reasoning and other types of

intellectual activities before they perform calculations; thus it is not appropriate to

merely measure output, but rather a different technique should be used for measuring

whether engineers and construction managers are managing their time effectively and

working at their theoretical maximum achievable capacity (Yates, 2014). Hence,

productivity improvement, or at least process efficiency, should be the holy grail of

construction research, but productivity in construction has multiple meanings

grounded in discipline perspectives (Kenley, 2014) and productivity factors often are

multi-dimensional and have a different emphasis depending on the subjects being

investigated (Panas & Pantouvakis, 2011).

Cross country comparisons of productivity levels in the construction industry are

highly problematic because estimates do not compare like for like and the output

differs greatly between countries (Vogl & Abdel-Wahab, 2015). This is a relevant

point, as PBOs in this research have international operations and different perspectives

on expected productivity in different geographical regions. This may potentially

present problems obtaining data and may not necessarily be applicable to use as a

comparative tool for different PBOs undertaking diverse projects, in different regions

with different levels of skilled and experienced resources charged at different rates.

Benchmarking and engineering productivity

Three organisations, the Construction Industry Institute (CII), Independent

Project Analysis (IPA) and Movement for Innovation (M4I) have collected data on the

engineering and construction phases of many projects for benchmarking purposes.



They measure the engineering productivity as the ratio of engineering hours or cost to

the quantity of engineered elements or material; and use the expected values of these

metrics to establish the productivity of a group of projects executed by a PBO

(Ebrahimy & Rokni, 2010). These benchmarking initiatives include:

x The CII developed a survey instrument, Research Benchmarking and

Metrics (BM&M) to measure project performance and best practice by

collecting a range of best practice project information pertaining to

engineering productivity for various categories: concrete, steel, electrical,

and piping instrumentation (Kim, 2007). The CII advised the measurement

of productivity should focus on those labour-intensive activities that have

the greatest impact on project cost and schedule (CII, 2011, 2014).

x IPA has a database containing inputs from more than 17,000 capital projects

to provide benchmarking services and measure the performance of projects

and project systems from collecting project outcomes for safety, cost,

schedule, and functionality and examining known drivers of project

performance such as the use of integrated teams, FEL, Value Improvement

Practices, and project controls to establish project benchmarks to compare

against industry averages (IPA, 2015).

x In 2003 a number of bodies merged to form Constructing Excellence

(including Movement for Innovation) and brought together clients with

leading industry players, universities and other stakeholders to collaborate

on: innovation and research, benchmarking and demonstrations, knowledge

transfer and learning, and networking and thought leadership. (Constructing

Excellence, 2015).

In Australia, organisations involved in research into the construction industry

include Infrastructure Australia, a body designed to improve the quality and efficiency

of infrastructure with the intention to boost national productivity and economic, social

and environmental benefits (Infrastructure Australia, 2008). Consult Australia

represents the business interests of consulting firms operating in the built environment

and has developed a survey tool which provides member firms with the opportunity to

benchmark their performance within the industry across a range of key performance

indicators (Consult Australia, 2015).



The Australian Bureau of Statistics provides data which allows research to

examine and estimate the productivity magnitudes of the construction industry and its

components (building, heavy and civil engineering, and construction services) and

findings revealed that heavy and civil engineering are very productive (Richardson,

2014).

That said, it may seem an apparently simplistic concept, but measuring

productivity is complex (Eslake & Walsh, 2011), and developing benchmarks and

productivity metrics for the construction phase of construction projects has been vast

compared to the limited research into establishing productivity metrics and

benchmarks for the engineering phase of the construction projects (Ebrahimy & Rokni,

2010). This is possibly because engineering productivity is not as well understood as

construction productivity, even though reliable engineering productivity measurement

is essential in predicting project performance and improvement (Kim, 2007).

However, in PBOs, ‘performance’ provides a clearer understanding of the issues rather

than solely focusing on productivity (Armentrout, 1986).

Therefore, measuring engineering ‘productivity’ is not suitable for this research

because of its ambiguity, complexity, potential cross country use of different

measurement tools, and perceived difficulty in obtaining specific information on

PBOs. As PBOs in this research will have different competencies, or concentrate on

specific engineering disciplines, productivity would not act as a comparative tool

because the input parameters such as ‘man hours’ would often be influenced by the

complexity factor of the scope of work, skill level requirements and quality

expectations, resulting in different overall engineering output for different projects,

studies or assignments.

In addition, productivity would be assumed to be higher if a company has more

skilled or experienced resources using more sophisticated technology to produce

technical drawings, feasibility studies, process designs, debottlenecking studies or

construction management advice. Thus, this research will turn to performance or

effectiveness as a construct for measurement. However, the other research

organisations, as stated above, may be useful for additional secondary research on

PBOs and the broader industry.



2.5.2 Performance and Effectiveness

Clarity and alignment of key constructs is critical for all research. As authors

have been discussing, defining and debating the terminology, role and measurement

of performance related terms for many decades, an array of views pervades with some

well-defined and others ambiguous. Generally, the terms performance and

effectiveness appear often and interchangeably throughout the OC literature.

Early views maintained effectiveness of an organisation was an ability to exploit

its environments in the acquisition of scarce and valued resources to function

(Seashore & Yuchtman, 1967), including both organisational characteristics and

organisational performance (Campbell, Dunnette, Lawler, & Weick, 1970). Others

noted it was a value-based judgment about the performance of an organisation and

whatever various coalitions judged it to be (Quinn & Rohrbaugh, 1981), and business

performance is a subset of overall organisational effectiveness (Venkatraman &

Ramanujam, 1986). For Denison (1990) effectiveness, or lack of it, is a function of the

values and beliefs held by members of an organisation, and agreement on specific

values, or specific values influence effectiveness. In 2007, McKinsey Consulting

reported that many leaders found it difficult to measure the impact of effectiveness

because some lacked an understanding on the specific activities required to make an

organisation more effective, and others questioned aspects of effectiveness that led to

financial improvements (De Smet, Palmer, & Schaninger, 2007). Richard, Devinney,

Yip and Johnson (2009) clarified that organisational performance is one type of

effectiveness indicator, and organisational effectiveness is a broader construct and

distinguished between the two as follows:

x Performance covers three specific areas of firm outcomes: financial

performance (profits, return on assets, return on investment); product

market performance (sales, market share); and shareholder return (total

shareholder return, economic value added).

x Effectiveness is broader and captures performance plus the overabundance

of internal performance outcomes normally associated with more efficient

or effective operations, and other external measures that are broader than

those associated with economic valuation either by shareholders, managers

or customers, i.e., corporate social responsibility (Richard, et al., 2009).



The definition of performance by Richard et al (2009) appears to be a clear,

logical and uncomplicated measurement approach, particularly financial performance

indicators. Product market performance such as level of sales and market share may

not be straight forward to obtain, and shareholder return is not suitable because of both

public and private PBOs will be contributing to this research, and organisational

effectiveness indicators such as economic valuation may also be a challenge to identify

for this research.

Role and Measurement of Performance

Early researchers, such as Deming (1982) advocated that performance (of

management) should be measured by potential to stay in business, to protect

investment, to ensure future dividends and jobs through improvement of services and

not by quarterly dividends. The benefits of which are to attract future investment,

increase share value and attract high calibre employees, but how an organisation’s

performance is measured, communicated, understood and interpreted by stakeholders

needed consideration (Kagioglou, Cooper, & Aouad, 2001). Sackmann (2011)

explained that studies often conceptualised performance as a multi-dimensional

construct and Niven (2008) claimed that 60 percent of metrics used for decision

making, resource allocation and performance management typically were financial in

nature, thus the multi-dimensions seemed to favour quantitative measures. This

research is concerned with applying a logical approach and robust performance

measurement tools which required exploring both financial and non-financial models.

2.5.3 Selecting Appropriate Performance Measurement tools

There has been ample and relevant research undertaken aligned with components

of this research, although many studies tended to either address project performance

or corporate performance, and while most focused on construction in PBOs, Willar

(2017) found there was no single performance measurement system aligned to the

construction industry. Further, there appeared to be limited studies that integrated

project performance with company performance.

Bassioni, Price and Hassan (2004) argued that as each performance measurement

model looks at different angles which may overlap or complement one another, there

needs to be comprehensive or an integrated performance measurement framework in

construction, and Yu, Kim, Jung and Chin (2007) agreed that as the construction



industry is project oriented it is necessary to develop an integrated method to measure

project and company performance at the same time, and others argued it was a

necessity to sustain continuous improvement (Oyewobi, Windapo, & Rotimi, 2015).

Beatham (2003) studied the general issue of integration of design and construction

within the industry, and concluded that the inherent adversarial nature and

fragmentation of the construction industry existed, and the sequential nature of the

construction process meant that integration is critical, yet the industry is structured in

such a way that full integration cannot be achieved, even though there is a genuine

desire to work together. Further details of relevant studies see Appendix A.

While enormous developments have occurred with performance management

and measurement frameworks, they also highlight the surplus of issues related to

organisations, popular models examined next include the Balanced Scorecard (BSC)

tool, the EFQM Excellent Model (Yadav & Sagar, 2013), and benchmarking in order

to identify the most appropriate performance measurement tool for this research.

BSC

The BSC is the most dominating and highly used of the performance

measurement frameworks (Liu, Love, Smith, Regan, & Sutrisna, 2014; Yadav &

Sagar, 2013) but it is the least criticised (Paranjape, Rossiter, & Pantano, 2006).

The BSC changed the way performance was measured by supplementing

traditional financial and operational measures with customer and learning measures to

give a more balanced view (MacBryde, et al., 2014). The ‘balance’ is attained by

looking into both tangible and intangible dimensions (Ng & Skitmore, 2014). Kaplan

and Norton (1992) designed the BSC to provide managers with a fast, comprehensive

and tailored view of their business with measurement features derived from strategy,

balance, (Soderberg, 2006) and a cause and effect principle (Bassioni, et al., 2004).

However, the BSC appears to be subjected to different interpretations

(Soderberg, 2006) even amongst managers within the same organisation (Soderberg,

Kalagnanam, Sheehan, & Vaidyanathan, 2011), and critics argued the BSC has many

shortcomings (Yadav & Sagar, 2013). It is vacuous, and at its worst misleading

(Horngren, 2004), and is a means of measuring outcomes against business goals (Ng

& Skitmore, 2014) rather than being a performance comparison tool that could be used

for PBOs in this study.



EFQM Excellent Model

The EFQM was designed to gain a holistic view of any organisation regardless

of size, sector or maturity (EFQM, 2013). It provides a framework to develop a culture

of excellence (Balbastre-Benavent & Canet-Giner, 2011) based on the TQM

philosophy (Mir & Pinnington, 2014). Its self-assessment process is used to identify

key areas for improvement and initiate performance improvement based on the

RADAR process: results, approach, deployment, assessment and review (Bassioni, et

al., 2004).

Authors reported some implementation problems, (Bassioni, Hassan, & Price,

2008), and crucial formulation issues (Balbastre-Benavent & Canet-Giner, 2011).

Beatham’s (2003) case study of global PBO, AECOM, found management were

confused with the language and complexity of the EFQM, it contained too much

‘consultancy speak’, and was not applicable for their business.

Benchmarking

The Construction Industry Institute, the major source for benchmarking the

performance of capital projects (Kang, Dai, Mulva, & Choi, 2014) defined

benchmarking as the systematic process of measuring an organisation’s performance

against recognised leaders to determine best practices that lead to superior

performance when adapted and used (CII, 2014). Benchmarking is widespread in the

construction industry and is usually aligned with a key performance indicator (KPI)

approach (Beatham, Anumba, Thorpe, & Hedges, 2005; Deng & Smyth, 2013; Horta,

Camanho, & Da Costa, 2010) and KPIs can be applied to the performance of projects,

individual firms and within the industry (Jin, Deng, Li, & Skitmore, 2013). In contrast,

others argued that KPIs are concerned with project rather than company performance

(Ali, Al-Sulaihi, & Al-Gahtani, 2013) and there are deficiencies in measuring

performance within a multiple-stakeholder environment (Liu, et al., 2014). KPIs only

examine part of an organisation’s activity and a comprehensive performance

evaluation requires a large number of indicators to be analysed for each PBO, which

can become unmanageably large, and cannot be used in a straightforward manner

(Horta, et al., 2010). Importantly, others reported difficulties in collecting data

containing hard values, such as project costs or schedule information (Kang, et al.,

2014) which suggests it would be challenging.

http://www.efqm.org/the-efqm-excellence-model



In summary, the BSC takes an internal or strategic view, the EFQM appears to

use confusing language and is complex, and benchmarking using KPIs would require

data that seemed difficult to obtain, or at worst not available. However, benchmarking

will be achieved by using the online database Morningstar DatAnalysis (Morningstar

DatAnalysis Premium, 2017) which provides a range of financial information

including annual ratio analysis of firms listed on the Australian Securities Exchange

(ASX), and uses Standard & Poor’s and MSCI Barra’s Global Industry Classification

Standard (GISC), (S&P Dow Jones Indices, 2017) which is an established global

standard of industry classifications by sector, industry group and industry. Together

these tools will provide a classification and benchmarking process, and while it only

allows analysis research on ASX listed companies it will act as a guide. The GISC

sector that is closest aligned to the sector in this research is displayed in Table 2-6.

(S&P Dow Jones Indices, 2017).

Table 2-6

GISC Sector aligned to this research

Sector Industry Group

Industry Sub-industry GICS Code

Industries Capital Goods

Construction & Engineering

Construction & Engineering

20103010

Adapted from: ‘Morningstar DataAnalysis Premium’, (2014), Morningstar Australasia, Sydney, Australia.http://datanalysis.morningstar.com.au.ezp01.library.qut.edu.au/licensee/datpremium/html/GI

CS_Structure.pdf.

Financial Approach

There was common agreement that financial measures are central in

understanding the performance of firms, but which financial measures are most

appropriate remains unclear and lacks agreement (Devinney, Yip, & Johnson, 2010).

Authors referred to profitability, as reflecting overall performance such as net income,

earnings per share, or return on investment (Daft, 2007), sales and profits (Kagioglou,

et al., 2001) and IBISWorld feature 2000 companies in Australia by revenue

(Chimbari, 2017) and use Earnings before Interest and Tax (EBIT) as a key indicator

of profitability (Chia, 2014).

Despite the wide use of these measures, critics highlighted the inadequacy of

financial measures as they reported on results and decisions made in the past, which

provide little use in improving current performance (Bassioni, et al., 2004; Kagioglou,



et al., 2001). They are lagging and lacked predictive qualities (Horngren, 2004), failed

to capture most of the intangible value of an organisation, and performance

measurement systems require other non-financial measures (Soderberg, 2006). The

overabundant use of financial measures is not reliable with today’s business realities,

as tangible assets alone no longer serve as the primary driver of value (Niven, 2008),

and contemporary performance management systems exist only if financial and non-

financial measures are used (Franco-Santos, Lucianetti, & Bourne, 2012), particularly

where organisations are multi-faceted, such as PBOs (Deng & Smyth, 2013). Authors

warned that financial metrics are open to impacts by many exogenous factors, such as

company taxes, inflation, and power-based internal assumptions (Fellows, 2014).

For PBOs other exogenous factors may include the degree of industry activity,

capital investment and funding injected into new and existing operations, currency

fluctuations, commodity prices, taxes. Thus, measurement metrics in this research will

be practical, uncomplicated, and resonate with PBOs, and more importantly figures

that can be obtained from secondary data as reinforcement as participants may not

necessarily have the knowledge, access or inclination to share sensitive or confidential

financial information. This research will obtain financial and non-financial

performance data over a five year period to allow for the longitudinal tracking and

comparative analysis of performance from a corporate perspective, see Figure

2-19Figure 2-19 as an example, but will be dependent on when PBOs release and

announce their annual financial results.

Figure 2-19. Performance Analysis Plan. Adapted from: “Corporate culture and organizational effectiveness,” by Dan Denison, 1997, Ann Arbor, MI, USA: Wiley, p. 56.



Selected Financial Measures

The use of financial ratio analysis is widely accepted when evaluating financial

performance such as net profit margin, Earnings before interest and taxation (EBIT),

and Earnings before interest, taxation, depreciation and amortization (EBITDA)

(Balatbat, Lin, & Carmichael, 2014; Pamulu, Kajewski, & Betts, 2007), and are

welcomed by the market because they can demonstrate that a company is able to

increase revenue while managing cost (Balatbat, Lin, & Carmichael, 2010). By

calculating the performance ratios from data in a firm’s financial statements allows for

the comparison of firms of different sizes by profitability in terms of their margins,

and a successful competitor’s performance ratios may be used if industry average data

are not available (DePamphilis, 2015).

Obtaining financial percentage ratios for PBOs in this research will be built into

the survey and obtained from a number of highly specialised electronic databases, and

company reports located through QUT’s library such as IBISWorld, Company360,

Orbis and Osiris that provide historical, current, and reliable company financial results.

Profitability will be the main measurement indicator suitable for this research and the

three financial ratios are: Net profit margin, EBIT, and EBITDA.

Net profit ratio

The net profit ratio, or profit after tax, is a popular method to benchmark PBOs

against competitors allowing a comparative analysis of profitability ratios of PBOs in

the same sector, which will illustrate which are the most efficient (Dun&Bradstreet,

2009). Profit may be considered a narrow or unsophisticated measure because it

measures the process from the point of view of the PBO itself, only recognises the

immediate values derived from the price a PBO charges, and is defined in terms of two

elements: revenue and cost (Bull, 2008), thus it will be used in conjunction with

EBITDA and EBIT ratios.

EBIT

EBIT is determined by adding all ‘other income/expenses items’ which are not

related to taxation or capital structure to the operating income (Yee & Cheah, 2006).

The EBIT ratio is a good indicator of cash flow from business operations, but while it

does not measure true cash flow (Dun&Bradstreet, 2009) it does measure a company’s

efficiency, indicates if a PBO is achieving success in cutting its costs, is sometimes

regarded as a better measure of its profitability than the net profit figure, and a desired



high EBIT margin implies that a company is achieving success in managing to keep

its costs low (Roth, 2007). Generally engineering firms are sold for a multiple of

between four and seven times their EBIT (Bleby, 2013), thus it is an important

indicator. A high interest-coverage ratio reveals the ease in paying interest and a low

ratio suggests difficulty (Horngren & Harrison, 2015).

EBITDA

The EBITDA ratio is well established as a financial analysis measure focused on

the profitability of PBOs earnings from ongoing operations before net income is

calculated. It provides a sense of how much a company is generating before it pays

interest on debt, taxes, accounts for non-cash changes, and as EBITDA grows over

time it is argued that investors gain a sense of long-term profitability, or in other words

it is claimed to be a good indicator of cash flow from business operations, but its

weakness is that it can be easily manipulated by aggressive accounting policies eroding

its reliability (Dun&Bradstreet, 2009). Accumulated and deferred taxes are a common

source of error with EBITDA, and it is used for making a comparative company

analysis for similar companies (Bodmer, 2015). Depreciation represents the purchase

of tangible property, plant and/or equipment and is being expensed over its useful life,

and amortization is similar except that it pertains to intangible assets the PBO may

have purchased such as patents, and EBITDA is often an excellent proxy for a

company's ability to generate cash flow (Karlson, 2015).

While financial indicators may be lagging, they are likely to be more accessible,

reliable and objective than forecasting future earnings or profit or subjective measures

of potential to stay in business. However, the challenge remains to access financial and

complementary non-financial indicators that are reliable while ensuring a PBOs

identity remains anonymous.

Selected Non-Financial Measurements

While some researchers have developed frameworks to evaluate firm

performance, practitioners tend to apply the most practical or useful techniques rather

than the most comprehensive techniques (Deng & Smyth, 2014) and this may be

because they are difficult to obtain and complex to measure. This research will take

heed of Neely and Bourne’s (2000) advice, to measure as little as possible but to ensure

to measure the things that matter. Other measures of performance of PBOs may include

head count and utilisation.



Head Count

Most companies react to negative financial performance by reducing their

workforces as there is an inherent assumption that human resources have a predictive

link to financial performance (Chhinzer & Ghatehorde, 2009). Studies have found that

turnover rates and performance are significantly and negatively related and warned

that turnover rates risk their workforce and financial performance (Hancock, Allen,

Bosco, McDaniel, & Pierce, 2013; Park & Shaw, 2013; Parker & Skitmore, 2005).

Obtaining accurate and meaningful numbers of employees, or full time equivalents a

PBO has, is likely to be difficult in a project driven, cyclical and fluctuating market.

Even if employee numbers are available, the actual hours worked for a given

engineering output, or hours billed to a client for perceived hours worked, may be

considered confidential, and potentially act as identifying particular PBOs. Therefore,

while this research will explore employee numbers of PBOs Australian operations it

will act to complement or reinforce the other performance measurement metrics.

Utilisation

Work allocation is a critical function in engineering consulting firms that impacts

financial performance, output quality, system throughput and capacity, client service

and staff satisfaction, and requires strategic decisions (Brennan & Orwig, 2000). Under

allocating work, or under delegation, can lead to reduced profits and competiveness of

a firm, adversely affects motivation and morale of staff, and prevents senior

professionals from spending more time with clients and on strategic planning activites

(Maister, 1993). The efficiency of a firm is strongly connected to the utilisation of

resources (Tangen, 2005), which is capacity management: the percentage of time that

is active compared to the available time, however it is possible for a group to utilise

100 hours per week but not produce 100 standard hours of work (Al-Darrab, 2000).

However, utilisation, or the percentage of available time spent on billable customer

project work, will vary between employees. i.e., a graduate may be expected to spend

around 80 percent of available time directly on projects, but a managing partner may

only spend 20 percent of their time directly on projects and 80 percent on business

development activities (Hargaden, 2011, p. 41). Obtaining expected and average

utilisation rates for this research appeared to be a valid performance and comparison

metric which is relevant, particularly for engineers who spend the majority of their

time on project related work.



Project Performance

Measuring the degree of project success or performance is not straightforward.

Project performance consists of a complex array of variables, which can be difficult to

define and measure (Thamhain, 2014). Construction projects are achieved through

combinations of great diversities of activities constituting design, construction and

regulation/control functions (Fellows, 2014). As they are unique and limited over time,

each with a one-off content and scope, it is indicative that each project is different from

others in goals, activities/tasks, resources and deliverables (Lauras, Marques, & Gourc,

2010) and this equally applies to PBOs. In other words, project success is a core

concept (Pheng & Chuan, 2006) and the objective of every project is success, which

is linked to project performance (Idrus, et al., 2011), and companies with a track record

of successfully planning and executing projects are considered the industries’ top

performers (Abraham, 2003). Thus, PBOs share a common ‘project’ motivation and

intent on delivering successful projects.

Measurement Approaches

Edward Merrow, of the IPA, argued that PBOs almost always succeed when

projects have a strong business case, fully aligned stakeholders, bought-in sponsors,

an integrated team and best implemented practical FEL (Merrow, 2011). Similarly,

the Business Council of Australia (BCA) reported in 2012 that the IPA had evaluated

over 650 completed projects in Australia (since the mid-1990s) using four sets of

measures to assess the success or failure of a capital project: safety performance during

implementation and start-up, whether the project met its business objectives,

predictability measure of a project delivered on time and on budget, and whether the

capital cost and schedule performances were competitive against global industry

benchmarks (Young, 2012). Another BCA commissioned study to assess project

performance in the delivery of large scale infrastructure projects in Australia stated the

successful outcome for a project relies on the interrelationship of three factors:

schedule, budget and productivity (i.e., qualitative measures such as resources

available, pre-planning and quality of design) (Evans&Peck, 2011). However, these

papers all failed to mention the softer skills, in particular OC, while safety and

promoting a safety culture (Evans&Peck, 2011) was mentioned in one report,

generally project and organisational performance metrics failed to contemplate OC.



Once it would have been unheard of to study a large project that relied on ‘soft’

governance processes, such as OC, as traditionally it has been based on legal contracts,

and such projects are extremely rare (Clegg, et al., 2011). Cimil & Gaggiotti (2014)

argued the problems with a project’s performance are easily attributed to cultural

clashes (amongst multiple and diverse project participants) and a lack of an appropriate

and healthy project culture; which was described as an atmosphere conducive to

cooperation, mutual understanding, transparency, no-blame attitudes and sharing

information. Others said internal environment factors that affected project success

included the OC of the parent (Raja, et al., 2013; Vuori, et al., 2013), and Thamhain

(2014) agreed that leaders must understand all areas of project management and the

organisational environment including OC. The criteria that determines a project’s

success are different for each stakeholder (Rashvand & Zaimi Abd Majid, 2014) and

while there are many frameworks for measuring performance of projects (Nassar &

AbouRizk, 2014; Yu, et al., 2007) there is no standard approach or guideline (Idrus, et

al., 2011), except for possibly the Iron Triangle.

The Iron Triangle

Project performance measures the extent to which project objectives are realised

(Ozorhon, Arditi, Dikmen, & Birgonul, 2008), it is not random, and no single set of

guidelines guarantees success (Thamhain, 2004, 2014). Projects often involve large,

expensive, unique, and high-risk undertakings that have to be completed by a certain

date and amount of money, and within some expected level of performance (Koskinen

& Pihlanto, 2008). Often referred to as the Iron Triangle: cost, time and quality

(Atkinson, 1999; Deng & Smyth, 2013; Lauras, et al., 2010; Lloyd-Walker & Walker,

2011) are the three most basic, important, and frequently used indicators for measuring

project success (Hannevik, Lone, Bjørklund, Bjørkli, & Hoff, 2013; Molenaar,

Javernick-Will, Bastias, Wardwell, & Saller, 2012).

The Iron Triangle focuses on short-term aspects of performance which is critical

for clients to immediately judge project success, it is too limited particularly for clients

with concerns for longer term competitive advantage and sustainable development

(Eriksson & Westerberg, 2011). While they are indicative as to the success or failure

of a project, they do not in isolation provide a balanced view of a project’s

performance, and usually their implementation in projects is apparent at the end of the

project, and they are ‘lagging’ rather than ‘leading’ indicators of performance



(Kagioglou, et al., 2001) and based on project outcomes (Costa, Formoso, Kagioglou,

Alarcón, & Caldas, 2006). Most industry recognised measures are lagging (Beatham,

et al., 2005) and the Iron Triangle is not sufficient to cover all the differences in

projects (Lauras, et al., 2010).

2.6 SUMMARY OF LITERATURE REVIEW AND IMPLICATIONS

This chapter reviewed the literature in four key areas: it explained PBOs

operating in the Australian resources and energy sector. It traced OCs history that

included a definition of OC construct, identified key cultural facets relevant to this

research, and selected and justified the choice of a suitable model for investigating OC

and an instrument for assessing OC. Finally it examined and identified a performance

measurement approach.

The implications of the literature review found that while considerable research

has been undertaken to understand OC in organisations, and the link of OC has on

performance, the relationship is not clear. There were many instruments for exploring

and measuring OC but studies found that no single instrument was ideal for exploring

culture. However, the DOC model and the DOCS instrument (Denison, 1997)

appeared the most suitable OC approach for this research.

There was limited understanding of OC, and OCs link to performance in a PBOs

context particularly in the Australia resource and energy sectors. This was of

significance as PBOs operating in the Australian resources and energy sector by

association have made a major contribution to Australia’s economy through providing

specialist knowledge for capital intensive projects, rewarding jobs for their people, and

often providing their clients with bespoke designs and innovative solutions for

complex engineering problems. The key point of differentiation of this research is

understanding culture within a unique organisational type: PBOs, at a specific time in

an economic cycle during which the research was undertaken. This is a clear

contribution of the research, and this significance is directly linked to the Research

Problem.

2.6.1 Research Problem

PBOs managed the cyclical transition from a decade-long hyper ‘super-cycle’ to

a downward spiralling and tumultuous economic climate by announcing profit

downgrades, shedding large numbers of jobs and cut spending. When organisations



such as PBOs had enjoyed the benefits of prosperity for many years it suggested that

a certain type of culture may exist, be shared, or have evolved. In such circumstances

some PBOs seemed to perform better, or appeared to be more sustainable, than others

in terms of adapting to the changed economic conditions and managing their OC as a

result of such change.

Research Rationale

Despite the way that PBOs have managed the economic downturn, it seems

inevitable that such unprecedented and unanticipated change has impacted on aspects

of their OC and in turn performance. The fundamental rational for this research is to

understand and explain what the underlying values, beliefs, principles and

management practices and behaviours that PBOs possess; and what relationship exists

between OC and performance.

2.6.2 Identified Research Gaps

The Literature Review identified seven knowledge gaps that this research will

bridge, see Table 2-7.

Table 2-7

Summary of Research Gaps identified in the Literature Review

Section Research Gap How the Research Gaps will be Addressed

Section 2.2 – PBOs

1. Inquiries into the engineering-construction sector is significantly less compared with the more mature manufacturing-based inquiries (Chinowsky, 2011).

2. Pricing was identified as an under researched topic in industrial firms (Liozu & Hinterhuber, 2013)

3. Potentially ‘hollowing out’ of many skills of engineering related work in Australia, and the impact on OC appears to be a knowledge gap.

1. The totality of this research will contribute to the knowledge gap

2. This will be addressed by investigating current market conditions and PBOs approach towards pricing through qualitative methods.

3. This will be addressed by exploring the extent of this trend and how it is managed.

Section 2.3 – OC: Tracing the History

4. Little is known of organisations which face quickly changing environmental demands, experience high employee turnover, and hinge on geographically dispersed labour (Giorgi, et al., 2015).

4. This research will investigate how PBOs have managed these dynamics and the impact on OC through qualitative methods.



Section Research Gap How the Research Gaps will be Addressed

5. Inconsistent construct definition and completeness, i.e., surveying one individual or one leader in an organisation to assess OC results in self-evaluation bias and reporting of overwhelmingly positive results (Weinzimmer & Robin, 2016).

5. This research will ensure a clear construct definition and completeness by having more than one individual in each PBO participate.

Section 2.4 – Models and Instruments for Assessing OC

6. Appears to be a lack of published research that has used DOCS in the scope of this research: specific sector (mineral resources and energy sectors), jurisdiction (Australia) and defined sample (PBOs).

6. This research will address this gap with the totality of the research design.

Section 2.5 – Productivity, Performance and Effectiveness

7. There appears to be limited research into establishing productivity metrics and benchmarks for the engineering phase of the construction projects (Ebrahimy & Rokni, 2010), and lack of published research on incorporating a combined approach of projects and company performance in PBOs.

7. This research will contribute to the overall knowledge base of the engineering construction section, this gap was not part of the aims and objectives but was identified as part of the literature review

2.7 AIMS OF THE RESEARCH

The aims of the research are twofold: firstly to investigate the form, nature,

characteristics, unique features and cultural facets that explain and describe the type

of culture in PBOs. The uniqueness of PBOs, their legal environment, external

environmental challenges and internal environment suggested a certain type of OC

may exist or be shared through the lifecycle of a project and in specific economic

periods. Secondly, to investigate OCs relationship, impact, link or connection to

performance in PBOs that operate in the resources and energy sector in Australia. It

aims to explore if there was a certain type of culture indicative of overall organisational

success within PBOs. It is plausible to accept that if OC impacts on firm performance

this could explain why some PBOs may consistently perform better than others.

2.8 RESEARCH QUESTIONS AND RESEARCH OBJECTIVES

Authors noted that research questions are shaped by the purpose of a study and

then this forms the research design and methods (Tashakkori & Creswell, 2007). This

research is essentially an enquiry into the type of culture and its link to performance



specifically in the context of PBOs operating in the Australian resources and energy

sector.

The purpose is to seek convergence and corroboration of results from across

different methods to enhance validity of the research, or in other words triangulation

which requires a mixed method approach (Greene, Caracelli, & Graham, 1989;

Nastasi, Hitchcock, & Brown, 2010) in order to determine a PBOs ‘values, beliefs,

principles, and management practices and behaviours’ (Denison, 1997). Mixed

method research benefits from at least one overarching question that provides the

possibility of subsequent qualitative and quantitative sub-questions (Tashakkori &

Creswell, 2007) which is how the research questions in this study have been designed.

2.8.1 Research Questions

The cyclical nature of the resources and energy sector, and the unpredictable,

dynamic and volatile environment that PBOs operate within, their specific

characteristics, and the role of OC already described raised a question of the cultural

profile of PBOs and how does it impact on their performance. This led to the primary

research question, emanated from the detailed literature review in this chapter where

knowledge gaps have been established with the question designed to collect and

analyse data to fill those gaps. The primary question driving this research is:


resources and energy sector, and what is OC’s relationship with, and impact on

performance?

The research question is in two parts, the first part designed for mostly a

qualitative approach and the second part suited to a quantitative enquiry.

The question is framed by the DOC model and DOCS instrument developed by

Denison (1990; Denison & Mishra, 1995). The organisational performance questions

will concentrate on a set of financial and non-financial indicators of the PBOs over a

five year period, with the last year to coincide when primary research is undertaken to

ensure the link of performance is current. It will use benchmarking against the higher

performing PBOs and industry average standards. The secondary research questions

and relationships to be investigated are contained in Table 2-8.



Table 2-8

Secondary research questions

OC

x Does a PBOs possession of certain DOCS traits relate to high or low performance?

x Are any of the four traits more significant in contributing to successful PBOs than others (Coffey, 2010)?

x Are any combinations of the four traits more significant in contributing to success than others (Coffey, 2010)?

x Are there common traits or patterns of OC that exist, are shared or are distinctively different in PBOs collectively?

x Are there clusters of PBOs displaying certain traits, and are the more successful PBOs distinctly displaying similar traits that are different to others not as successful?

Performance

x Do non-financial indicators have an impact on financial performance?

x Do the non-financial indicators have a relationship or impact on OC?

x How has size impacted on OC and/or revenue over the past 5 years?

2.8.2 Research Objectives

The objectives of the research are categorised into three topics, see Table 2-9.

Table 2-9

Objectives of this research

OC

x Identify and explain relevant and valid OC literature, and key themes pertinent to this investigation

x Identify or develop a suitable definition of OC

x Identify, verify and adopt an OC instrument that is proven and fit for the purpose of this investigation to access OC in PBOs.

PBOs

x Explain the business sector that PBOs operate within, the jurisdiction and characteristics of PBOs

x Describe the form of OC that exists within PBOs and other factors that impact a PBOs cultural profile through qualitative methods

x Identify a set of cultural characteristics and investigate if there is a certain type of cultural indicative of successful PBOs

x Examine if the adopted OC instrument is suitable for this investigation

Performance x Identify and prepare financial performance indictors to use as a comparative analysis for participating PBOs in this study.




In conclusion, the Literature Review was structured over nine sections and began

with examining PBOs with a particular emphasis on the Australian resources and

energy sector, their environment and influential factors on OC to justify the specific

research contribution. The next section traced the history of OC, which concluded that

the link between OC and performance was not convincing. This led to the examination

of models and instruments for assessing OC which identified a suitable OC model and

measurement instrument for this research. This was followed by comparing

productivity, performance and effectiveness to clarify the most suitable construct to

measure performance. The next section included a summary and implications of the

Literature Review including presenting the research problem and identified research

gaps. This was followed by clarifying the aims of the research, the research questions

and research objectives.

The next chapter presents the research methodology and design.

Chapter 3 | Research Methodology & Design


Chapter 3: Research Methodology & Design

3.1 INTRODUCTION

In the last chapter the Literature Review examined three streams relevant to this

research: Project Based Organisations (PBOs), Organisational Culture (OC), and

performance. It described PBOs operating in the Australian resources and energy

sector, their environment and unique characteristics. It traced the history of OC from

the early 20th Century to the early 21st Century, defined OC and highlighted many

aspects of OC. It identified a suitable model as a framework for studying OC that

linked to an instrument for assessing OC. The next section clarified the most suitable

construct to measure performance, which led to a summary and implications section

which presented the research problem and identified research gaps, explained the aims

of the research, research questions and research objectives.

This chapter explains the ‘Philosophical worldview’ followed by the ‘Design

typology’. The next section describes the ‘Research design’ including research

methods, sample selection, data collection, data analysis and the research design’s

validity and reliability, and ethical considerations.

3.2 PHILOSOPHICAL WORLDVIEW

Worldviews are a general philosophical position, and philosophically

researchers make claims about ontology that Creswell (2014) explained as:

x Ontology - what is knowledge?

x Epistemology - how we know it?

x Axiology - what values go into it?

x Rhetoric - how we write about it?

x Methodology - the processes for studying it.

Although it cannot be claimed there is a single, coherent worldview, apart from

the observations and hypothesis of scientists, there are some conceptual frameworks

about which there is no serious disagreement among the educated (Encyclopædia

Britannica, 1966).



3.2.1 Nature of Science and Nature of Society

Since the 1979 release of Gibson Burrell and Gareth Morgan’s seminal work:

Sociological Paradigms and Organisational Analysis, one of the most referenced

works in organisation theory, the world has changed significantly (Hassard & Wolfram

Cox, 2013). The authors offered a new sociological paradigm (Clegg & Hardy, 1999),

of diversity in organisation theory (Schultz & Hatch, 1996) and it received impact far

beyond what could have been anticipated, and importantly seemed to legitimise

alternative approaches to the study of organisations by bringing to light a growing

dissatisfaction with the dominant functional orthodoxy (Goles & Hirschheim, 2000).

Burrell and Morgan (1979, p. xii) brought together key assumptions about the

nature of science and the nature of society by defining two major dimensions of

analysis from the viewpoint that “all theories of organisation are based upon a

philosophy of science and a theory of society”. Conceptualised as the subjective-

objective using four sets of assumptions, the authors argued that social sciences are

embedded in different assumptions about ontology, epistemology, human nature and

methodology and these four assumptions constituted a convenient method to analyse

theory in general and particularly organisational theory (Burrell & Morgan, 1979). The

approaches viewed science as realistic, positivistic, deterministic, and nomothetic and

could be depicted as ‘objective’, and approaches that were nominalistic, anti-

positivistic, voluntarist and ideographic could be seen as ‘subjective’ (Burrell &

Morgan, 1979; Siebert, Martin, & Bozic, 2016) , see Figure 3-1.

Figure 3-1. Scheme for analysing assumptions about the ‘nature of social science. Adapted from: “Sociological paradigms and organisational analysis: Elements of sociology of corporate life” by

Gibson Burrell and Gareth Morgan, 1979, Heinemann, London, England, p 18.



The choice of a subjective or objective approach has consequences for the way

in which a social scientist develops their methodologies (Burrell & Morgan, 1979) and

the range of choice is so large that what is regarded as science by the traditional

‘natural scientist’ covers but a small range of options (Boisot & McKelvey, 2010). It

was guided by the assumption that the nature of an organisation was basically objective

and awaiting impartial exploration and discovery, using a deductive approach to theory

building (Gioia & Pitre, 1990).

While Burrell and Morgan’s 1979 model made an enormous impact, through

defining the meta-theoretical assumptions, similar paradigm models have been

produced in social science (Hassard & Wolfram Cox, 2013) but none have gained a

dominant ability to define the alternatives in organisational analysis (Deetz, 1996).

Schultz and Hatch (1996) preferred a paradigm-crossing view because of the

impossibility to ignore the multiple perspectives that make up a field of study. In other

words, paradigms can coexist in a logic of both/and with generality and conceptuality

in cooperation (Letiche & Essers, 2004).

Pragmatism Paradigm

This research is set predominately in a Constructivist paradigm as the main

methodology used is primary data collection from qualitative interviews, and this is

supported by a Positivist paradigm with data collected from a quantitative OC

instrument that tests a theory. Together these paradigms, using a mixed method of

qualitative and quantitative, provide a Pragmatic worldview. Table 3-1 Table 3-1

Four Worldviewsillustrates four worldviews that are widely expressed in the literature.

It is helpful to understand the convention in organisation theory, the relationship

between specific modes of theorising and research, and the worldviews they reflect

(Morgan, 1980). Researchers whose research is based on shared paradigms are

committed to the same rules and standards for scientific practice (Kuhn, 1970), and in

this context paradigm is used in its meta-theoretical, or philosophical, sense to

represent an implicit or explicit view of reality; and different paradigms symbolise

worldviews which favour metaphors that constitute the nature of organisations in

fundamentally different ways and which call for a complete rethinking of what

organisation theory should be about (Morgan, 1980).



Table 3-1 Four Worldviews

Positivist/Postpositivism Constructivism/Social Constructivist

x Traditional, scientific or science research x Quantitative x Deterministic (cause and effect,

experimental research) x Reductionistic (hypotheses testing) x Deductive (theories tested, verified or

refuted

x Interpretative and subjective meanings derived

x Qualitative x Relies on participants view of

situations (by historical, cultural settings and norms)

x Inductive (theory developed from a pattern of meaning) – theory generation.

Transformative/Advocacy/Participatory Pragmatism

x Research inquiry needs to intertwine with political agenda and contain an action for reform

x Concerned with specific social issues of minority groups (discrimination, racial, ethic, feminism)

x Participant involvement (design, collection and data analysis)

x World view arises out of actions, situations and consequences

x Mixed method studies (quantitative and qualitative) and triangulating data sources

x Different worldview and different assumptions, not committed to one philosophy

x May include a postmodern turn (a theoretical lens that reflects social justice and political aims)

Adapted from: “Research design: Qualitative, quantitative, and mixed methods approaches,” by John W. Creswell, 2014, Los Angeles, CA, USA: Sage 2014, pp, 6-11.

3.3 DESIGN TYPOLOGY

Teddlie and Tashakkori (2010, p. 24) described four families of mixed method

designs in their typology: parallel, sequential, conversion and fully integrated. They

explained that the fully integrated design is a complex and interactive type that can

potentially include combination of the first three types. Using this approach, this

research design used a sequential, mixed method data collection, and an integrated

data analysis approach over four phases: qual Æ quant and qual Æ quant Æ and qual.

In other words the qualitative data, and some quantitative data were collected at

one level (leaders and managers) and a larger quantitative data collection were

collected at another level (a broader group if employees), and were linked during the

data analysis stage. Consequently, the mixed method approach incorporated

qualitative phases, in order to enhance the richness and depth of data, and quantitative



phases to obtain specific demographic, performance and business characteristics and

test the chosen DOCS (Denison & Neale, 1999) measurement instrument. The

rationale of this approach for this research is that the use of a combined qualitative and

quantitative methods was due to one method alone not being sufficient to measure all

aspects of the OC phenomenon (Silver, Stevens, Wrenn, & Loudon, 2012). The merits

of mixed method also offered certain advantages.

3.3.1 Merits of Mixed Methods

The use of multiple methods in the same study is nothing new (Mertens & Hesse-

Biber, 2013) as mixed, multiple and emergent methods are everywhere today; they are

bold, innovative, energising, and disruptive, and can reflect a course to rethink terms

that were established, from validity to design, from performance to reform (Denzin,

2010). It is a humanistic methodology, which reflects everyday human problem

solving; i.e., people do not wake up each day reminding themselves to be objective

today, and subjective tomorrow; or compassionate today and aloof tomorrow; they use

mixed methods as an extension of everyday problem solving (Teddlie & Tashakkori,

2010). The iterative design, that combines the mixing of qualitative and quantitative

methods in a dynamic, changing or evolving manner over the course of the research

will result in findings at one stage that may influence decisions about methods in

subsequent stages (Nastasi, et al., 2010) and this is relevant for this research as it is

designed over four phases.

Ideally, the research outcome will be objective, valid and generalisable, although

this is never realised as human knowledge is not like that, so at best the outcomes will

be suggestive rather than conclusive, and aim to be plausible, convincing (Crotty,

2003) and provocative in ways of examining and explaining OC in PBOs and its the

link to performance. Therefore, the theoretical logic for incorporate qualitative and

quantitative methods are that these are complementary methods to study and assess

OC (Cooke & Rousseau, 1988) and taken alone they can have significant limitations

(Denison, 1990). Each method may be used for different purposes and it also enable

methodological triangulation to occur (Coffey, 2010), which is explained further in

this chapter, on page 119.



3.4 RESEARCH DESIGN

This section describes the research design, driven by the research question, and

was adopted to achieve the aims of the research and is unpacked in the following

sections: it begins by summarising the ‘Research methods’ followed by defining the

‘Sample selection’ which leads to describing the ‘Data collection’, ‘Data analysis’,

‘Validity and reliability’ and ‘Ethical considerations’ of the design.

3.4.1 Research Methods

The Literature Review outlined the Research Aims (page 90), which are twofold:

first, to investigate the nature of OC in PBOs and its relationship, impact or connection

to performance. Second, it aims to explore if there was a certain type of culture

indicative of overall organisational success with PBOs. Table 3-2 shows the aims

broken down into research method objectives and actual research methods planned.

Table 3-2

Research method objectives and research methods

Research Method Objectives Research Methods Identify target sample, obtain exploratory information on PBOs (demographic, performance and business characteristics) and industry features of their environment.

Research from secondary sources such as online databases through QUT’s library. Include demographic, performance and business related questions in the survey

Investigate the nature of OC in PBOs through examination with target sample.

Semi-structured interviews with target PBOs.

Assess and measure OC in PBOs Use 60 item DOCS instrument Identify if a certain type of OC is indicative of successful PBOs, identify industry trends and gain an explanation of the survey results.

Interviews with PBOs whose members completed an acceptable level of responses to the survey.

3.4.2 Sample Selection

The sampling method aims to select a representative microcosm of the

population, which is representative of the total empirical population (Mason, 2002) of

PBOs operating in the Australian resources and energy sectors. The first step in

determining the sample was to identify the relevant PBOs and categorise them using

company size as the criteria. Consult Australia (2016, p. 26) reported that a total of

32,305 consulting engineering firms operated in Australia at the end of the 2014/15

financial year, and categorised these into four groups: non-employing, small, medium

and large firms, see Table 3-3.



Table 3-3

Number and size of Consulting Engineering firms in Australia at June 2015

Size of firm Non employing

Small Medium Large Total

No of employees 0 1 – 19 20 -199 200 + Category: Consulting

Engineering 15,677 15,745 837 46 32,305

Source: “Economic Forecast 2016: An economic forecast for consulting in the built and natural environment”, (2016) by Consult Australia, Sydney, Australia, p26.

Non-employing PBOs are not applicable in this research, because more than one

participant was required to provide reflexivity and a multi-voice perspective.

Reflexivity or multi-vocally was sought to show a range of interpretations and voices

in the data, and a willingness to critique and question the data of the Researcher,

participants and others (Mason, 2002). Figure 3-2 illustrates PBOs in Australia,

excluding non-employing firms, using Consult Australia’s (2016) numbers and

categories. Consequently, a range of PBO sizes make up the sample selection.

Figure 3-2. Consulting engineering firms in Australia at June 2015, excluding firms that are non-employing. Adapted from: “Economic Forecast 2016: An economic forecast for consulting in the

built and natural environment,” by Consult Australia, 2016, Sydney, Australia.

Using Consult Australia’s (2016) configuration as an initial guide, the categories

were further developed to separate the large and very large PBOs, because a category

with over 200 employees was considered too broad to represent some of the larger and

global PBOs operating in Australia. This resulted in a new set comprised of four

categories that were more aligned to this research, see Table 3-4, which represents the

sample categories used as a framework for this study.



Table 3-4

Sample Categories

Sample Categories of PBOs

PBO size by employee numbers in 2015

Very large 50,000 plus Large 10,000 to 50,000

Medium less than 10,000 Small less than 1,000

3.4.3 Data Collection

The stages of the research are outlined below, followed by a graphic

representation of the timeline of primary and secondary data collection and analysis

that occurred, see Figure 3-3.

x Pilot phase – pilot interviews

x Stage 1 – online survey, and semi-structured interviews

x Stage 2 – online survey including the 60 item OC instrument

x Stage 3 – semi-structured interviews.

Figure 3-3. Primary data collection, recording and analysis of the study.

Pilot Program

The goal of the Pilot Program was to examine the overall research design, and

evaluate and refine the survey (Öztürk, Arditi, Günaydın, & Yitmen, 2016). Seven

senior practitioners, some retired, and most having spent all their careers working in

PBOs, were invited to participate. The main aim was to test questions pertaining to

demographics, business performance and PBOs features, and to identify any problems



with the overall process, access to the survey, wording of questions (ambiguities,

and/or difficult questions), their reactions to questions, time taken to complete the

survey, and any other feedback that would assist to improve the data collection and

analysis processes. Two very experienced leaders with relevant industry knowledge

and proven business acumen provided honest, valuable, relevant and practical

feedback meeting the aims of this phase of the research.

Stage 1 – Mixed Method

Semi-structured interviews were conducted with 20 different and experienced

practitioners from the selected sample categories, to investigate their perceptions of

the nature of OC, identify the extent of certain cultural traits within each of their

companies, and explore why these traits existed. This was a fundamental aspect of the

data collection as it was important to understand how industry understood, viewed and

described the phenomena of OC and cultural effects on performance. It was aligned to

the Research Objectives and the Research Method Objectives. Participants that

accepted were asked to undertake a pre-interview survey.

Pre-interview Survey

Appointments with interviewees were generally arranged through a telephone

conversation, and on acceptance a computer-based questionnaire created by the QUT

survey development software, KeySurvey (WorldAPP, 2016) was administered. The

survey consisted of 15 questions designed to identify demographical, business

performance and specific features of each PBO. This structure was designed for three

main purposes: 1) to keep the interviews focused on OC aspects, 2) manage the

interview time to 60 minutes, and 3) encourage the interviewees to start thinking about

the upcoming interview and OC. All 20 interviewees completed the pre-interview

survey. The survey questions are presented in Appendix B.

Interviews

From late 2015 to early 2016, interviews were undertaken with senior managers

and leaders from 20 different PBOs. Participants were chosen through a combination

of ‘convenience’ and ‘snowball’ sampling (Malhotra, Hall, Shaw, & Oppenheim,

2004) and began by initially using the Researcher’s own network of contacts and

‘snowballing’ by virtue of these initial participants recommending suitable others until

the sample size reached 20. Of the 20 interviewees, the Researcher had established



relationships with eight interviewees, was referred to six interviewees, and made initial

connections through social networks with the remaining six.

Interview Participants

Of the 20 participants, 56.3 percent had a tenure of more than 10 years with their

current employer, and typically held positions such as project/technical manager, or

director, CEO, Chairman as illustrated in Figure 3-4, Quality, Depth and Insight (QDI)

Index. The QDI Index plotted the 20 interviewees from different PBOs (represented

from A to T), by virtue of their job title and tenure with their employer. This illustrated

a convincingly senior and experienced sample interviewed in Stage 1. It is reasonable

to assume that the longer tenure and higher seniority of participants, the greater the

likelihood of increased quality and depth of information provided.

Figure 3-4. QDI Index of interviewees illustrated the sample’s dependability, transferability and credibility (developed for this research).

Sample and Sample Size

The right number of participants to interview would be determined when the data

stopped providing anything new about the social process under investigation, and the

interviews would cease once information in the responses reached saturation point

(Mason, 2002), and when no new insights could be gained from expanding the sample



further (Ritchie & Lewis, 2003). After conducting 10 interviews, it was decided that

more interviews were required because new information and themes were still

emerging. A new target of 20 participants was proposed. The interviews were able to

be stopped at 20 due to the data collected reaching saturation and common themes

began to emerge. Table 3-5 displays interviewee numbers in the Sample Categories of

PBOs.

Table 3-5

Stage 1 Sample

Interview numbers

Size Category

PBO size (in 2015)

Consult Australia (2016) size categories

3 7 5 5

Very large Large

Medium Small

50,000 plus 10,000 to 50,000 Less than 10,000 Less than 1,000

Large Large Large

Small, medium and large Total: 20 1 small, 1 medium and 18 large firms

Representativeness

It was determined that the sample was representative of the wider population and

while this method is less commonly used by qualitative research than by quantitative

research (Mason, 2002), it was considered valid within the mixed methods approach.

Applying Consult Australia’s (2016) classification of engineering firms operating in

Australia to this research, the 20 participating PBOs in Stage 1 comprised of:

x 1 small firm

x 1 medium firm

x 18 large firms.

Using this classification in this research indicated that large PBOs were strongly

representative in the sample. In other words, 90 percent of PBOs employed over 200

people. Consult Australia (2016) identified 46 large firms that had over 200 employees

in June 2015, and Stage 1 of this research had 18 firms with over 200 employees (90

percent), see Figure 3-5. However, whilst large firms were well represented by the

sample, small and medium size firms were not as strongly represented, (small PBOs

comprised of one PBO with 9 employees, and one medium sized firm with 40 people).



Figure 3-5. Representativeness: 90 percent of PBOs were large with over 200 employees.

Interview protocol

The interview process used convergent interviewing which Dick (2014)

described as a mix of both structured and unstructured processes, and from each

interview convergence was achieved by the Researcher asking probing-type questions

that became progressively more detailed and specific as the interviews unfolded (Dick,

1999).

The selected questions were chosen because they supported a probing approach.

Interviewees were initially asked to rank their answers from (1) strongly disagree to

(5) strongly agree, and then probed as to why they had given that particular ranking,

and this invited elaboration and examples to be given. It was anticipated this process

would reveal topics of importance for interviewees and the PBOs for which they

worked/had worked.

Each interview took approximately 60 minutes, however as most interviewees

were genuinely interested in the topic the duration was often longer with a period of

informal conversation regarding the research being undertaken. Interviewees were

asked the same set of 13 questions, 12 of which were adopted from the DOCS

instrument (Denison, Janovics, Young, & Cho, 2006). The final question put to

interviewees asked whether in their view, a link or relationship existed between OC

and performance, why they believed this, and allowed for further probing to occur.



Interview content, and selection justification

The purpose of selecting 12 questions from the DOCS instrument was to provide

a logical link, consistency and alignment between Stages 1 and 2, and also:

x Potentially providing insight into, and support for the results obtained from

the Stage 2 questionnaire, and to allow certain cultural orientations linked

to PBOs and the broader industry to be identified (triangulation).

x Ensuring that all interviews would be uniform in structure, and time

(depending on how much the interviewee elaborated), providing an efficient

means of reaching a saturation point, and allowing a uniform transcription

and coding process to assist identify common themes that were organised

and effective.

x Assisting interviewees to describe more easily the ambiguous, complex and

mostly intangible and potentially difficult phenomenon that OC is.

Therefore the questions needed to be specific, easily understood, and

encourage an appropriate answer, rather than just asking interviewees to

describe a PBO’s OC, behaviour, or values. This would inevitably risk a

response that was affected with corporate speak, unnecessarily complicated,

or be too generic possibly only revealing surface level elements. It may also

risk interviewees reverting to a PBOs promoted values, or corporate

marketing collateral, such as having a safety culture, a culture that values

people, or a project-based culture. Questions were designed to probe for the

deeper levels of OC which were unique to each firm and thus difficult to

measure and harder to generalise (Denison, Haaland, & Goelzer, 2004).

x The 13th question asked interviewees if OC was linked to performance. It

was unstructured, free flowing, and allowed for deeper qualitative probing

of participants thinking on the impacts of OC.

Figure 3-6 displays the complete 60 item DOCS instrument that was used in its

entirety in Stage 2. The 12 highlighted questions were used in Stage 1 interviews.



Figure 3-6. DOCS 60 item questionnaire. Adapted from “Diagnosing Organizational Cultures: Validating a Model and Method” by Dan Denison, Jay Janovics, Joana Young, and Hee Jae Cho,

(2006), Denison Consulting Group, p. 38.

The selection criteria for questions used in Stage 1 included:

x Questions that seemed to represent a particular OC trait.

x Reverse order questions (used in the original DOCS instrument (Denison, et

al., 2006) were considered inappropriate in interviews and were not chosen

x Questions that participants would find easy to rank, answer, and elaborate

on, i.e., Question 1 (to what extent are most employees highly involved in

their work) was chosen because a leader or manager would be expected to

reliably answer.



x Questions that were more open, potentially provocative and would resonate

with the perceived values and project focus of PBOs.

Stage 2 - Quantitative Survey

Stage 2 involved primary and secondary data collection. Financial performance

secondary data was obtained to ensure accuracy rather than having to rely on

participants’ responses. It was anticipated that some participants may not have access

to financial data, or might be unwilling to share confidential and possibility sensitive

information. Financial ratios (net profit, earnings before interest and tax (EBIT) and

earnings before interest, tax, depreciation and amortization (EBITDA) were obtained

from highly specialised electronic databases, and company reports located in QUT’s

library, such as IBISWorld, Company360 (Dun&Bradstreet), Orbis and Osiris (via

Bureau van Dijk) and Morningstar that held historical and current data for most firms.

An online survey was created using QUT’s survey development software,

KeySurvey (WorldAPP, 2016), which contained the same 15 demographical,

performance and business characteristic questions from Stage 1 plus one more

question about utilisation, shown in Appendix B, and the 60 item questionnaire from

the DOCS instrument (Denison, et al., 2006) as illustrated in Figure 3-6.


Of the 20 participants interviewed in Stage 1, 11 were willing to invite, or

organise to invite, other employees to participate in the Stage 2 online survey. Three

out of the 11 firms (PBO-B, PBO-F, and PBO-K), the Researcher had contacts within

those firms which enabled a direct email invitation to be sent to various employees

asking them to consider undertaking the survey.

The 11 representatives that agreed to invite participants to undertake the survey,

were sent a prepared email ‘briefing’ script, which included a description of the

research, and attached a ‘Participant Information Sheet’ (which detailed the research

team, contact information, description of the research, their involvement, expected

benefits, risks, privacy and confidentiality, consent to participate, the QUT Ethics

Committee Approval Number: 1500000363 (obtained on 4th August, 2015), and a link

to the survey) which could be sent to potential participants. Also, preferred participants

were suggested (distinguished by job title), see Table 3-6, which acted as a guide for

participant selection, and assisted with consistency of the sample.



Table 3-6

Suggested job title of participants for Stage 2.

Job Title of ideal participants for Stage 2

Managing Director Project Management Director Location Manager Procurement Manager Manager - Mining services Project Manager Manager Asset Management Services Manager - Construction Management Operational & Support Services Manager Marketing & Communications Manager Operations Manager Information Technology Manager Director - Bulk Materials Handling Manager Project Management Engineering Manager Business Development Manager Procurement Manager Project Delivery Manager Document Control Manager Human Resources Manager

The reasons the nine PBOs declined to participate in Stage 2 varied. One

interviewee had left the PBO shortly after the interview, and then the PBO expressed

no interest in the research. Timing was poor, particularly the resources downturn, and

certain PBOs that had downsized significantly anticipated the survey results to be

unfavourable or negative, and some smaller PBOs indicated the response rate would

be too small to be of significance. In addition, some PBOs indicated that their staff

were too busy on work matters to dedicate time to undertake the survey, and many

PBOs conducted their own regular internal surveys, which added to the most common

excuse that staff were ‘survey fatigued’ and would not or did not want to respond.

Response Rate

Of the 11 PBOs that invited staff to participate in the survey, response rates were:

x 3 PBOs returned ‘non- responses’, i.e., no employees undertook the survey

x 3 firms only had one response, i.e., only one employee responded

x 5 firms made up the sampling unit, i.e., each had more than one response.

Table 3-7 summarises the 20 PBOs that participated in the Stage 1 (coded from

PBO-A to PBO-T), sample classification and size, completed and usable surveys and

response rates. The five shaded PBOs made up the usable responses and were the only

PBOs included in Stage 2 that had a minimum of three participants complete the survey

from each PBO.



Table 3-7

20 PBOs from Stage 1, and participation results of the Stage 2 survey

PBO Code Sample classification for

this research

Sample size

Completed and usable

surveys

Response rate %

PBO-A Medium 0 0 0 PBO-B Large 11 0 0 PBO-C Medium 7 1 14 PBO-D Very large 41 15 37 PBO-E Large 10 1 10 PBO-F Large 23 13 57 PBO-G Large 8 0 0 PBO-H Large 16 0 0 PBO-I Medium 0 0 0 PBO-J Very Large 0 0 0 PBO-K Medium 12 6 50 PBO-L Very Large 25 3 12 PBO-M Small 0 0 0 PBO-N Large 16 7 44 PBO-O Small 0 0 0 PBO-P Large 25 1 4 PBO-Q Medium 0 0 0 PBO-R Small 0 0 0 PBO-S Small 0 0 0 PBO-T Small 0 0 0

Total 194 47 24%

Stage 3 – Qualitative Interviews

The aim of the Stage 3 interviews was to gain feedback, assist with the valid and

genuine interpretation of the Stage 2 survey results, and avoid any self-evaluation bias.

The staged design addressed one of the research gaps in the literature of inconsistent

construct definition and completeness, i.e., surveying one individual or one leader in

an organisation to assess OC can result in self-evaluation bias and reporting of

overwhelmingly positive results (Weinzimmer & Robin, 2016). While Stage 1

interviewees may have provided positive results, this was balanced by the data

obtained from the additional stages.

Importantly, the total data collected from all stages ranged from the smallest of

six participants from one PBO and the largest of 18 from another PBO. The staged

design also assisted with method triangulation by using more than one method to

gather data (Carugi, 2016) by the use of both interviews and surveys.




During 2016 and 2017, semi-structured interviews were conducted with

representatives from the five participating PBOs from Stage 2. Stage 1 interviewees

connected the Researcher through a referral process to the Stage 3 interviewees.

Consequently, Stage 3 participants were different people to the Stage 1 participants.

The interviews involved mostly two people, and they were often more senior managers

and/or had HR backgrounds, see Table 3-8, which outlines the sample numbers and

titles of participants.

Table 3-8

Stage 3: Sample

PBO Code Number of participants Title/s of interviewees PBO-D Two Director – Organisational Culture

Group Director PBO-F Two HR Director, Australia-Asia

HR Business Partner PBO-K Two Technical Director

Recruitment & Sourcing Manager – ANZ PBO-L Two Functional Manager

Manager of HR PBO-N One General Manager

Interview Structure

A presentation was prepared for each PBO, outlining the research design, and

introduced the OC model and instrument. The financial performance and OC results

were presented to all participants for all five PBOs and discussed at length (although

as 2016 financial results had not been released at the time of the interviews, only results

from 2010-2015 were included in the presentations, and this point is further elaborated

on in the next chapter (see Reactivity, page 225). Interviews took approximately 60

minutes, were relatively formal, but nevertheless fully interactive and the participants

freely interpreted their results and opinions of their OC, the DOC model, and the

implications of the research for the broader industry.

Other questions interviewees were asked included: ‘what do these results tell

you about your organisation?’, ‘does this culture profile fit your own picture of the

PBO?’, ‘what surprises did you see in these results?’, and ‘which findings confirm the

impression of the organisation that you already have?’ (Denison & Neale, 1999).



3.4.4 Data Analysis

The results and discussion emanating from the data analysis are contained in

Chapters 4 and 5. The purpose of this section is to explain the data analysis process

undertaken throughout all phases of the research.

Pilot Phase

The Pilot Phase gained valuable feedback on the Stage 1 pre-interview survey,

and Stage 2 survey (particularly Part 1), which sought to build a profile of each PBO

through demographic, performance and business features, rather than on Part 2, which

specifically addressed OC. Pilot interviews were held with two people that had held

very senior positions and long tenures in PBOs, were reliable, astute, and known to the

Researcher. All opinions and comments were questioned, discussed and any

implications requiring changes to the questionnaires were carefully considered.

Stage 1 Analysis

KeySurvey (WorldAPP, 2016), enabled reports to be downloaded that facilitated

a preliminary analysis of the results of the pre-interview survey prior to each interview

taking place. Interviews were audio recorded, and transcribed verbatim by the

Researcher after each interview. To facilitate sorting, classifying and coding the

transcripts the qualitative data package QSR Nvivo, version 11 software (QSR

International, 2010) was initially employed. NVivo is a sophisticated tool for

managing qualitative research data and was used by the Researcher as a form of

document copier and tagging facility as transcripts were read, interview recordings

listened to, and coded for meaning of emerging category and sub-category themes in

a continuous sense-making exercise (Walker & Lloyd-Walker, 2014). Data coding

followed the process set out by Thomas (2006) by creating a small number of summary

categories that captured all the key aspects of the themes identified in the raw data,

and then assessed the most important themes, see Figure 3-7.

Figure 3-7. Data coding approach. Adapted from: “A general inductive approach for analysing qualitative evaluation data,” by D. R. Thomas, 2006, American Journal of Evaluation, 27(2), p. 242.



NVivo allowed an aggregate report to be downloaded by question and code

sequence, and the transcripts were also aggregated into one document categorised by

interviewee and question number, which provided a cross reference analysis. As

Corbin and Strauss (2008) described, a continuous recursiveness followed by

extending, amending, and reinterpreting interpretations as new insights arose and

situations changed as a means of analysing the data in-depth. Links were identified in

answers to various questions, and the same codes were duplicated to reflect this. For

example, ‘Current market conditions’ and ‘Mergers and acquisitions’ were coded to

many interview answers as these events had substantially impacted and represented a

common theme that affected many aspects of a PBOs OC. An early example of the

initial coding process from Question 5 in Stage 1, (‘To what extent would you say there

is a strong culture in the organisation?) is shown in Figure 3-8, which is a screen shot

from the software used.

Figure 3-8. Screen shot from QSR International's NVivo 11 software. Adapted from: Nvivo qualitative data analysis software, (Version 11.0), 2010, by QSR International Pty Ltd, Doncaster,

VIC., Australia.

Figure 3-8 illustrates that the answers to interview questions could easily

produce more than 17 codes, and consequently a reduction process continued as codes

were reduced to no more than five in the final analysis and reporting of results. The



codes in capital letters represent already identified themes from earlier question results,

i.e., Mergers and acquisitions, and Current market conditions.

The questions were analysed using a streamlined codes-to-theory model for

qualitative inquiry previously developed by Saldana (2009). This analysis was

achieved by matching the themes identified in the theory, as outlined in the ‘Literature

Review’ in Chapter 2, to those common themes uncovered in the Stages 1 and 3

interviews. Each interviewee was coded as a PBO, representing each organisation and

interviewee/s simultaneously i.e., PBO-A, PBO-B or PBO-C to PBO-T, which ensured

participant and PBO anonymity.

The Researcher tended to overlook anything mentioned by just one interviewee,

unless it was substantial, relevant and objective in nature, and captured only topics

mentioned by more than one interviewee that appeared authentic, relevant and

appropriate for this research and these often defined the common themes that

contributed to the structure of the results presented in Chapter 4.

Stage 2 Analysis

KeySurvey (WorldAPP, 2016) enabled reports to be generated and exported into

Microsoft Excel (Microsoft Corporation, 2010), which allowed the development of

working spreadsheets to assist with data analysis and generate graphs and charts to

support the interpretation of detailed information. One set of spreadsheets were

designed with different worksheets used to input and summarise data, develop the

DOCS instrument circumplex, a quadrant visualisation to compare the various OC

traits, a line chart for individual question rankings, and ‘Tornado’ chart (for comparing

the relative importance of variables) and a comparison chart (for comparing two

different PBO participant groups).

The DOCS instrument traditionally uses a five point Likert type scale (1 =

strongly disagree to 5 = strongly agree) (Denison, 1990) and contains 60 items that

measure four OC traits related to performance (adaptability, mission, consistency and

involvement), each trait included three indices, and the items were equally distributed

at 15 items per trait (Slaughter, 2015), totaling 60. To compute each index score, the

raw average of the five items was compared against the norm for all PBOs for the same

index. In other words, the index scores for each PBO were derived by aggregating each

individual response to the organisational level (Denison & Mishra, 1995).



The aggregated results were then recomputed to four percentiles: displayed on

the circumplex as quartiles, and broken down as follows:

x Quartile 1 (Q1) Æ 1 - 25 percent

x Quartile 2 (Q2) Æ 26 -50 percent

x Quartile 3 (Q3) Æ 51 -75 percent

x Quartile 4 (Q4) Æ 76 - 99 percent

Limitations

One anticipated limitation of the research was the one-time survey response and

two-time interviews may not be as robust as a longitudinal investigation and would

only provide a glimpse of the OC at a single point in time. While this occurred to a

certain extent, many interviewees spoke about OC in the current downturned market

but also in the heated market conditions. In addition, all firms in the research had

experienced the same market cyclicality.

Despite the strong empirical support for the validity of the DOCS instrument,

the small number of responses raised questions about the representativeness of the

sample (Denison, Nieminen, et al., 2012, p. 8), however, the qualitative results

triangulated with the survey results assisted in addressing this concern, see page 119,

where triangulation is addressed.

As outlined in 3.6 Sample Selection, according to Consult Australia (2016) 46

large PBOs employed over 200 employees in June 2015, and this research sampled

five of those firms. In other words 11 percent of the large consulting engineering

population operating in Australia was represented in Stage 2 quantitative study which

may be argued is a relative representative sample which had a degree of randomness

through participant selection. However, it was nevertheless a non-random-probability

sampling. Non-randomised studies are difficult to analyse (Brady & Collier, 2004) and

may result in selection bias and are not recommended for descriptive or causal research

(Malhotra, et al., 2004).

While the research may have identified an association between OC and

performance, it would have resulted in measurement errors across all variables due to

the low sample values, and potentially bias regression coefficients, correlation

statistics, SEs and p-values.



Non-Response Errors

Part A of the survey generated a large number of non-response errors, incomplete

answers, or participants responded to answers with ‘don’t know’, particularly the

financial related questions. This was managed by obtaining reliable financial data from

secondary sources. Part B, on OC, resulted in two responses being excluded because

one returned a large number of non-response errors, and another did not identify which

PBO was represented. Thus, five firms formed the basis of the analysis for Stage 2,

see Table 3-9, which also highlights the response rate and non-response errors.

Table 3-9

Stage 2 sample size, response rate and non-response errors

PBO Code

PBO Size classification

Sample size

Usable completed surveys

Response rate %

Non response error

PBO-D Very large 41 15 37 7 (0.78%) PBO-F Large 23 12 52 2 (0.28%) PBO-K Medium 12 6 50 3 (0.83%) PBO-L Very Large 25 3 12 1 (0.56%) PBO-N Large 16 7 44 2 (0.48%)

Total 117 43 37 % 15 (0.58 %)

Note, the non-response errors are displayed for the OC part of the survey only,

where missing data were minimal, and managed by averaging the results against the

other questions in the same DOCS instrument index, and were included in the overall

results. The non-response error was computed for each PBO and was very small,

totalling 0.58 percent, see below:

Number of questions not answered Total questions in survey for each PBO

(60 x number of participants)

X 100 =

Non-response error rate

Stage 3 Analysis

In Stage 3, four of the five interviews consisted of two people, and one PBO was

represented by the General Manager of Australia. Many interviewees had a HR

background, which added balance to the data collected by having a non-engineering

perspective to assist interpret the results. An Analysis Summary was prepared

containing possible interpretations and explanations of the survey results, see

Appendix C, and was used to prompt interviewees for their opinions of possible



interpretations of the results from the Stage 1 and 2. In Stage 3 interviewees agreed,

disagreed and/or added further explanations of the results. All interviews were audio

recorded and transcribed after each interview. The transcriptions were summarised and

integrated into the Stage 2 results. The linked research design integrating the results of

the qualitative and quantitative added integrity to the research and construct validity

by asking participants to give their views on important OC and performance

components.

3.4.5 Validity and Reliability

Qualitative Stages (Stage 1 and 3)

Authors noted that ‘trustworthiness’ and the quality of an inquiry includes

various sets of criteria (Polit & Beck in Cope, 2014, p. 89; Lincoln & Guba, 2013b,

pp. 104-105) such as:

x Credibility - internal validity by ensuring confidence in the findings and

interpretation of the research

x Transferability - external validity or generalisability that findings will be

applicable in different contexts and subjects

x Dependability - reliable findings and interpretations as an outcome of a

consistent and dependable process

x Confirmability - objectivity and dependable process of inquiry and data

collection

x Authenticity - the ability and extent to which the researcher expresses the

feelings and emotions of participants experience in a truthful manner.

This research achieved credibility by ensuring a prolonged engagement in the

interview process. It began with an introduction email and/or telephone conversations

inviting potential interviewees to participate, this was followed up with a one page

flyer explaining the research clearly and succinctly. Once accepted, each interviewee

was sent a Participant Information Sheet (outlined on with QUT contact details of the

Researcher and research supervisors, description of the research, what their

participation would involve, expected benefits, risks, privacy and confidentiality

retention, and written consent to participate), and an email script inviting each

participant to undertake the survey in Stage 2. In all interviews, the Researcher and



interviewees often spoke casually before and/or after the formal interview to build

rapport and credibility.

Generalisability was achieved to a limited degree, due to the results obtained

being applicable to broader-based PBOs operating in the resources and energy sector

in Australia, and may possibly be relevant to similar organisations, or organisations

operating in cyclical markets elsewhere globally. Critical insights were gained from

the qualitative enquiries and appeared to be important sources of evidence for PBOs

and their industry. Generalisation occurred because the research evidence had some

relevance to settings and people outside of the context studied (Polit & Beck, 2010).

Dependability, reliability, and credibility of the Stage 1 participants was

illustrated by the seniority and tenure of interview participants as verified in the QDI

Index outlined earlier in this chapter.

Confirmability and authenticity was achieved in Stage 3 of the research, which

comprised of interviews with different representatives from PBOs in Stage 1. It also

addressed any potential bias with the Stage 2 results by asking Stage 3 participants to

validate, elaborate, disagree, and/or provided feedback and their opinions on the

research findings and theoretical assumptions of the model used in Stage 2.

Quantitative Stage (Stage 2)

Descriptive quantitative research design allows description of the sample and

phenomena of interest, in a precise manner (Silver, et al., 2012), as it seeks to quantify

the data, and generally applies some form of statistical analysis (Malhotra, et al., 2004).

Given that culture is a set of shared values, it assumes that all people in an

organisation will have a similar view of their OC, and most researchers to date expect

any one individual’s assessment to be representative of all individuals in an

organisation, which results in data that may have a systematic bias and particularly

when only one perception of upper level management is sought (Weinzimmer &

Robin, 2016). Thus, the design of this research addressed this potential limitation and

weakness by applying data collection in three stages, preceded by a pilot program,

using a mixed methods approach, conducted with multiple employees from different

organisations, in order to provide consistency, completeness and data triangulation.



Triangulation

The major advantages of applying a sequential mixed-method approach in the

same study is that each component (i.e., qualitative and quantitative) method can be

used for different purposes, and enables methodological triangulation to occur (Coffey,

2010), through the amalgamation of sources, methods, theories and researchers

(Lincoln & Guba, 2013a). Therefore, this reflects an attempt to secure a robust and in-

depth understanding of the phenomena in question (Denzin & Lincoln, 2011; Mason,

2002).

Triangulation, using mixed methods, encouraged the Researcher to approach the

research questions from different viewpoints, and explored the intellectual puzzles in

a rounded and multi-faceted way, which enhanced validity by advocating that a social

phenomenon, such as OC, has more than one dimension and this enquiry attempted to

manage various dimensions (Mason, 2002). In other words, the research used multiple

sources of data to act as an indicative test of validity and this was achieved by using

different data collection methods, amongst various participants, and this was followed

by an aggregation of the data in the analysis stage, to ensure that more information was

obtained and subsequently presented to identify more fully the relationships under

investigation. Figure 3-9 shows the links between the three stages.

Figure 3-9. Triangulation over the three stage research design.



x Stage 1 consisted of interviews with leaders and managers from 20 different

PBOs using mostly selected questions from the DOCS instrument (Denison,

et al., 2006), and a 15 item pre-interview survey.

x Stage 2 comprised of different representatives from five of the 20 PBOs

from Stage 1, used the complete DOCS instrument questions (Denison, et

al., 2006) and the same 15 questions from the Stage 1 survey.

x Stage 3, consisted of interviews with different participants from Stage 1 and

Stage 2, but the same five PBOs from Stage 2

Reliability of the DOCS Instrument

There are generally three criteria for evaluating reliability, validity and

sensitivity of quantitative measurements (Zikmund, 2003). Reliability is the extent that

an instrument makes the same measurement each time it is used, validity is the extend

that the measurements were made by an instrument that the researcher intended it to

(Watson, 2015), and sensitivity refers to an instruments ability to accurately measure

variability in responses (Zikmund, 2003).

Denison Consulting has been using the DOCS instrument for over 25 years and

has obtained comprehensive OC ratings from over 1,000 organisations around the

world (Denison, 2016c). The evidence demonstrating the reliability of the scales and

correspondence between the DOCS instrument and objective measures of an

organisations effectiveness is ‘impressive’, and the measure has established predictive

validity, but lacks a degree of construct validity (Chatman & O’Reilly, 2016).

However, Denison et al (2012) has explained that his team has been through several

phases of adding new items, collecting more data, testing and re-testing the validity of

the instrument and refining the measures. In addition, Denison and his colleagues are

continuing to improve aspects of the DOCS instrument (Denison, 2016b). In their

review of nine published survey instruments used to diagnose OC directly related to

performance, Denison et al (2012) found a number of problematic trends and gaps in

the types of reliability and validity evidence that support those instruments, and argued

the DOCS instrument was the most well researched effectiveness instruments at that

time. Also, the DOCS instrument design increases the scale sensitivity by having an

impartial response category ‘neutral’ in the five point Likert type scale.



3.4.6 Ethical Considerations

At times interviewees strayed into what the Researcher considered confidential

and/or sensitive information, which has therefore been excluded from all accounts.

Examples of these were, talking critically about certain other PBOs and the manner of

their business operations, or discussing demanding clients by name, or other people

working in the industry.

As collecting data on staff identification numbers and analysing the fluctuations

of numbers could potentially reveal the identity of PBOs and the participants, great

care was taken to avoid too much emphasis on size of firms by staff numbers. Further,

interviews were audio recorded, which did not appear to offend or distract

interviewees.

Presenting participants with results in Stage 3 anticipated potential ethical

dilemmas, such as the PBOs wanting to know their competitors’ results, a PBOs

identity, and which people had participated in the research. The Researcher managed

to avoid this dilemma by coding the identities of all PBOs to ensure anonymity and

also often reiterated that all conversations were confidential.


This chapter introduced the philosophical worldview, and the research

methodology including research design. It also addressed validity and reliability, and

ethical considerations.

The next two chapters present the research results. Chapter 4 focuses on the Pilot

phase and Stage 1, and Chapter 5 provides the results of Stage 2 and 3, and links to

certain Stage 1 results.

Chapter 4 | Results and Discussion: Pilot Phase & Stage 1


Chapter 4: Results and Discussion: Pilot Phase & Stage 1

4.1 INTRODUCTION

The previous chapter described the research methodology and research design

adopted to achieve the aims of the study including philosophical worldview, design

typology, research design, research methods, sample selection, data collection and

analysis, validity and reliability, and ethical considerations.

This chapter presents the results in two key areas: first, ‘The Pilot Phase’

provides an overview of the sample and pilot interview results. Second: ‘Stage 1 –

Mixed Method Results’ presents the results of a pre-interview survey and the

interviews. The interview results are presented around 13 questions participants were

asked, 12 of which were taken from the DOCS instrument designed to measure

employees beliefs and assumptions around four specific traits (Denison, et al., 2006)

and an additional question that directly enquired about OC and performance. A

summary at the end of each of the four OC traits provides the results of all the three

indices (of each corresponding trait), and highlights clever and innovative initiatives

of certain PBOs. This is followed by addressing the first part of the research question.

4.2 PILOT PHASE

4.2.1 Pilot Interviews

Interviews were held with two senior and experienced practitioners to test the

research instruments, particularly the pre-interview survey questions. One participant

suggested the following improvements:

x The structure of a question about education was said to be unclear because

it appeared to be two questions in one, this was accepted.

x The PBOs country headquarters question had limited drop-down options

and more were added.

x The financial performance related questions were anticipated to be

challenging because only financial directors were likely to know the



answers. However, these questions remained because many senior people

were anticipated to make up the sample.

x A questions regarding contract delivery models required to be made clearer

and more options were added to the answer.

x Another question (that was removed) described a current example in the

media that used language such as ‘fraudulent’ and ‘prosecution’ was

considered negative and may have been alarming to some participants.

x The wording between an organisation and an individual was considered at

times unclear and this was improved.

The second participant agreed with the first participant that obtaining financial

data would be a genuine challenge as some PBOs were very protective and did not

allow this type of information shared, and many participants would not be aware of

their PBOs financial results. The participant also recommended adding a question

about indirect costs (labour utilisation) as indirect costs drive an engineering business

and how they manage their overhead rate impacts on behaviour, and in turn this could

assist with analysing performance. Therefore, a question about utilisation was added.

4.3 STAGE 1 - MIXED METHOD RESULTS

Stage 1 of the research process comprised of secondary data collected to

complement a pre-interview online survey, and 20 face-to-face interviews with

participants from different PBOs was conducted.

4.3.1 Pre-interview Survey

The 20 interviewees undertook a 15 item questionnaire seeking participant

demographics, and PBOs performance and business characteristics prior to interviews

taking place. The survey aimed to save interview time and prompt participants to think

about OC and performance prior to their interviews.

Participants demographic profiles

Of the 20 leaders and managers interviewed in Stage 1, 60 percent held

postgraduate qualifications, 95 percent had engineering related degrees (40 percent

were civil engineers, 40 percent were mechanical engineers, 15 percent had

metallurgical, engineering management or environmental science qualifications, and



the remaining 5 percent had a trade certificate). In addition, 15 percent of the sample

had non-engineering degrees in business, IT, HR, management, accounting or law. Of

all the participants, 60 percent had 10 years or more tenure, representing a strong

sample of people who knew the PBO and its OC, see Figure 4-1.

Figure 4-1. Stage 1 interviewees, tenure with current PBO.

With over half the participants holding postgraduate qualifications and long

tenures, together with occupying senior roles (presented in the last chapter: Figure 3-4.

QDI Index of interviewees illustrated the sample’s dependability, transferability and

credibility (developed for this research).. Together, this contributed to a high quality

sample. Thus the research was valid as it observed, identified and accessed what it was

intended to do (Mason, 2002) and met the criteria of trustworthiness which supported

the significance of the Stage 1.

Business Characteristics

Principal activities

6 months to 12 months

10%

1 to 5 years25%

5 to 10 years5%

More than 10 years60%

Stage 1 participants tenure with the PBO



The principal activities of PBOs in Australia are illustrated in

Figure 4-2. The principal activities that PBOs typically undertook in Australia..

However, some interviewees were not precisely clear of the exact distribution of work,

but maintained that the highest allocation of work type was engineering, 22 percent

(chemical, civil, electrical, marine/port, mechanical and hydraulic), followed by

mining related infrastructure and process engineering, 19 percent, and then other 18

percent (water, property and buildings, transportation, maintenance contracting,

surveying, mining operations, project execution, building engineering, and feasibility

study work).



Figure 4-2. The principal activities that PBOs typically undertook in Australia.

Stages of involvement in the lifecycle of projects

PBOs in this research typically performed a range of work throughout the entire

lifecycle of a project. Figure 4-3 provides an illustration of the activities PBOs

typically conducted with detailed engineering being the highest at 26 percent, followed

by FEL/FEED type studies at 24 percent, and then construction or construction

management at 13 percent.

Figure 4-3. The stages of a project PBOs typically undertook.

Contract types and delivery models

PBOs generally delivered a range of projects using different contracting models,

see Figure 4-4. Engineering formed the highest percentage of work conducted at 25

percent, followed by EPCM 18 percent, and D&C contracts at 12 percent.



Figure 4-4. Delivery models, or contract types, PBOs most typically undertook.

The three charts above provided a framework which illustrated the complex

aspects of PBOs in this research. While PBOs may share some similar characteristics

with each other, they are also relatively diverse in their services offerings, or principal

activities; they are both strategic in the manner in which they preferred or targeted

specific and at times multiple stages of a project’s life; and complex in the manner in

which they structured their businesses reflecting the delivery models they preferred or

typically committed to.

These factors may be driven by client demands and market conditions, but also

by OC embedded in their leadership’s mission and values. This is important because

the implications are that the characteristics of PBOs are not equal for all firms, which

raised a need to be somewhat cautious about treating them as a homogenous group.

The next section has integrated the three business characteristics to gain an

overall picture of the current environment being experienced by PBOs. To reiterate

this is a key point of differentiation of this study, as the cross-section of data collected

was at a specific phase in the economic cycle, and results may be different in a robust

or heated market.

State of the Market

Interviewees were asked to rank how their PBO had reacted to the recent mineral

resources downturn in Australia. In particular, had their PBO increased, decreased, or



remained unchanged with how it conducted its principal activities, worked in the

various stages of a project’s lifecycle and types of contract delivery models?

Principal activities

x 25 percent of interviewees said that market forces had meant their PBO had

to consolidate, and now it provided and/or focused on fewer offerings.

x 25 percent of interviewees said principal activities remained unchanged and

the activities and offerings their PBO provided remained the same.

x 50 percent said that market forces now demanded more flexibility and their

PBO now provided, a broader range of activities and offerings.

Stages in a projects lifecycle

x 10 percent of interviewees said that market forces have meant their PBO had

to consolidate, and now provided and/or concentrated on fewer offerings.

x 30 percent said their PBO’s activities and offerings remained the same.

x 60 percent said that market forces now demanded more flexibility and their

PBO now provided a broader range of activities and offerings across the

lifecycle of projects.

Contract types/Delivery models

x 5 percent of interviewees said their PBO now provided and/or concentrated

on fewer offerings.

x 45 percent said the contract types or delivery models their PBO performed

remained unchanged and these activities and offerings remained the same.

x 50 percent said market forces now demanded more flexibility and their PBO

now provided and/or offered a broader range of contract delivery models.

The results suggested that as the resources market experienced a downturn, more

flexibility was demanded, and the majority of PBOs now provided and offered a

‘broader range’ of principal activities, worked in more stages of a projects lifecycle,

and offered a broader range of delivery models.

Multi-project handling ability

Interviewees were asked to rank their PBO’s multi-project handling ability that

would reflect the firm’s capability to manage simultaneous work at different locations,



and in various different mineral and metal resources projects, in order to increase their

market share, volume of business and profit generation.

PBOs multi-project handling ability revealed that the majority of firms, 70

percent, undertook projects in numerous locations, but not all states in Australia.

Almost half of the PBOs indicated that the work they performed was in a large variety

of minerals, metals, and energy sectors. The implication is that the ability to win and

deliver multiple projects, often for multiple clients in various locations and

commodities, requires a sophisticated understanding of the market and an ability to

align specialist skills and technology in a complex and precise manner, in order to be

successful. The characteristics of PBOs are often unique in that they are faced with

many challenges in bringing together project teams to deliver projects, satisfy clients

and staff while generating revenue, remaining profitable and productive, and

constantly being scrutinised on their performance.

Performance

Non-financial performance

Two non-financial performance indicators, utilisation and head count, were

identified as a potential means for detecting how PBOs had performed from 2011

through to 2015. However, participants in Stage 1 were not asked about their utilisation

because it was anticipated that many interviewees that held senior positions (including

Director, CEO, and Chairman) would not necessarily allocate time to project work that

would make meaningful comparisons, or their expected utilisation rate would be

unique to their role and outside of a company’s average expected target rates.

Head Count

Of the 20 PBOs in Stage 1, employee numbers were only available for 17 firms.

Plotting all the 17 PBOs in one chart resulted in a difficult to read and extremely

intricate display of numbers. In addition, providing exact employees numbers with

PBOs codes in such charts may have potentially revealed the identity of PBOs to the

astute reader. However, Australian employee numbers (rather than global numbers)

provided some indicative patterns see Figure 4-5.

Most of the PBOs had experienced a downward shift in employee numbers

between 2012 and 2014, and many seemed to still be declining in numbers. However,

the largest PBO experienced a downward trend only in 2015.



Figure 4-5. PBOs Australian employee numbers from 2011 to 2015. Source: various including IBIS World, Company 360 (Dun&Bradstreet) and individual company Annual Reports and/or websites.

Obtaining employee numbers was more difficult because certain Australian

PBOs with international operations tended to only report international numbers, some

international PBOs reported by business segment and not geographically, or did not

report numbers at all. Recent mergers and acquisitions often did not report employee

numbers immediately before or after such a transaction, and smaller PBOs employee

numbers were often not available. Thus, Australian employee numbers for only nine

PBOs were available,

Financial Results

Australian financial results were obtained from secondary resources for nine and

10 PBOs from 2011 to 2015. Results were not available for all firms because of

different entity structures of PBOs impacted on how, what, and when figures were

released to the market. Therefore, to analyse a meaningful comparison the 20 PBOs in

Stage 1 were categorised into four specific categories, see Figure 4-6.



Figure 4-6. PBO entity categories for Stage 1.

x Secondary data available for Australian public companies (25 percent) listed

on the ASX generally reported financial ratio figures on their international

results, and did not separate Australian operational results.

x Secondary data available for Australian private companies with global

operations (15 percent), was often difficult to obtain, out of date, or the PBO

released financial ratio figures for global operations only, and not Australian

operational results separately.

x Australian private companies (15 percent) with all or the majority of

operations in Australia made up three PBOs. Financial ratios were available

for two of the three firms.

x Foreign owned private or public companies (45 percent). Eight out of nine

PBOs in this category had established an Australian entity which reported

Australian operational results and financial ratios.

Therefore, financial ratio data was obtained from two of the Australian private

companies, and from eight foreign owned private or public companies which together

totalled 10 firms, which equalled half of the sample size in Stage 1. The results are

presented for: Net profit, EBIT, and EBITDA in Figure 4-7, Figure 4-8, and Figure

4-9 respectively.



The aim of obtaining financial results was to understand PBOs performance of

their Australian operations which would assist ascertain how the higher and lower

performing PBOs described or evaluated their OC, and to support the quantitative

Stage 2 results. Specific financial results were not discussed with the Stage 1

interviewees, which avoided interview bias. That is, if interviewees were presented

with performance results while reporting on their culture it may have affected how

interviewees described their organisation, or in other words this avoided reactivity.

Net profit margin

Figure 4-7. PBOs Australian operations net profit margin (%) from 2011 to 2015. Source: online database Company 360 (Dun&Bradstreet).

The strongest performer in 2015 was PBO-H (red graph line) that returned 21.5

percent, however in 2014 it returned 3.5 percent, and from 2011 to 2013 a downward

trend occurred. PBO-H’s strong results were assumed to be from the completion of a

major project/s in Australia. Overall, the strongest and most consistent performers

appeared to be PBO-L (blue graph line) and PBO-F (green graph line). The worst

performers were PBO-G (yellow graph line) and PBO-D (black graph line). Note,

PBO-G’s figures were not available for 2015, but it reported negative figures in 2013

and 2014.



EBIT

Figure 4-8. EBIT margins from 2011 to 2015 for Australia operations. Sourced from Company360 database and from interviewees.

The strongest EBIT results in 2015 were achieved from PBO-H (red) at 30.53%.

The most consistent good performers were PBO-L (green), PBO-F (blue) and PBO-R

(pink), whom all returned double-digit margins for the entire 2011 to 2015 period. The

worst performers were PBO-G and PBO-D. There was no result for PBO-G in 2015.

EBITDA

Figure 4-9. EBITDA margins from 2011 to 2015 for Australia operations. Sourced from Company360 database and from interviewees.



The strongest EBITDA was PBO-H (red) at 30.53 percent, but prior to this PBO-

H had significant fluctuations. The more stable results came from PBO-L (green),

PBO-R (pink) and PBO-F (blue) that returned double-digit EBITDA for the entire

2011 to 2015 period. The worst overall performance came from PBO-G (yellow) and

PBO D (black). There was no result for PBO-G in 2015.

The best years for PBOs Australian operations from 2010 to 2015 were in the

2011/2012 period. This coincides with the decline of key commodity export prices in

2011 and 2012, as illustrated in Figure 4-10. The graph plots the monthly iron ore and

coal benchmark prices from 2010 to 2017.

Figure 4-10. Monthly resources and energy benchmark prices, US$/tonne, from 2010 to 2017. Adapted from: Commonwealth of Australia, (2017a), Resources and Energy Quarterly, Previous

publications and data downloads, “March 2017 – Historic data (22)”. Office of the Chief Economist, Department of Industry, Innovation and Science, Australian Government.

The Australia Government (Commonwealth of Australia, 2017b, p. 12)

described Australia mining boom in three phases:

x The ‘price phase’ - prior to 2004 Australia had not experienced a sustained

period of resources price growth for many decades; prices peaked in 2008

and again in September quarter 2011

x The ‘investment or construction phase’ - which ended in 2015

x The ‘production or operation phase’ - is forecast to peak in late 2019).

The three highest performers and worst performers over the five year period are

summarised in Table 4-1, for ten PBOs Australian operations. It is worth noting the

high performance PBOs were made up of very large, large and small sized firms. The

worst performing PBOs were made up of very large and large firms.



Table 4-1

Indicative best and worst performers by financial ratios from 2011 to 2015

Net profit EBIT EBITDA Australian Operations PBO-L PBO-L PBO-L PBO-F PBO-F PBO-F PBO-R* PBO-R PBO-R PBO-P PBO-P PBO-P PBO-D PBO-D PBO-D PBO-G PBO-G PBO-G

*Note: PBO-R had missing figures for net profit, however PBO-R performed very well and consistent with EBIT and EBITDA it could be assumed to be a higher performer with a healthy net profit. While PBO-H returned strong results for 2015, this was assumed to be due to the completion of major projects and it did not produce consistent or stable results across the five year period.

4.3.2 Summary

In summing up, a pre-interview survey revealed the Stage 1 sample were all

educated and experienced participants, with over half holding postgraduate

qualifications all and long tenures with their PBOs which contributed to the high

quality sample. This supported the validity, met the criteria of trustworthiness which

reinforced the significance of the Stage 1 interviews.

Three indicators examined the business characteristics of PBOs and the state of

the market in which they operated, namely:

1) ‘Principle activities’ revealed that the highest allocation of work type was

engineering, then mining infrastructure and process engineering, and other related

engineering work. Fifty percent of interviewees revealed that market forces now

demanded more flexibility and the PBO now provided, or offered, a broader range of

activities and offerings.

2) ‘Area of work in a project’s lifecycle’ found that PBOs typically performed a

range of work throughout the life of a project; detailed engineering was the highest

work function followed by FEL/FEED studies, and construction or construction

management. Sixty percent of interviews said that market forces demanded more

flexibility and the PBO now provided a broader range of activities and offerings across

a projects life.

Wor

st

Best



3) Contract types and delivery models resulted in the majority of PBOs tended

to prefer engineering, EPCM, and D&C type contracting models. Fifty percent, said

market forces now demanded more flexibility and the PBO now provided a broader

range of contract types/delivery models.

PBOs multi-project handling ability revealed that the majority of firms, 70

percent, undertook projects in numerous locations, but not in all states or territories of

Australia. Almost half of the PBOs indicated that the work they performed was in a

large variety of minerals, metals, and energy sectors. PBOs characteristics are often

unique as they have faced many challenges in bringing together teams to deliver

projects, satisfy clients and staff while generating revenue, and remaining profitable

and productive. The implication is that while PBOs share a number of business

characteristics, they are not equally the same for all firms, which raised a need to be

somewhat cautious about treating them as a homogenous group.

The size of the PBO was not considered to be a valid and appropriate means to

measure against other performance indicators. It was difficult to report on why some

PBOs had large employee fluctuations without potentially revealing the identity of

certain PBOs. Likewise, interviewees in Stage 1 said that the engineering, construction

and mining sector is relatively small in Australia, and experienced people working in

the industry are fully aware of the current large projects, which PBOs were involved,

and the number of people required to deliver certain projects. Australian results

showed a decline in employee numbers since the downturn in 2011/2012,

corresponding with the downward trend of the prices of iron ore and coal.

Using financial indicators, there appeared to be some degree of consistency

amongst the top performers and the worst performers. Certain PBOs had

comparatively large upsurges and falls, which may be attributed to merger and

acquisition activity, or large projects surging forward or winding down and ending. By

scrutinising such financial results, the research can compare how these PBOs

representatives describe, or evaluate their OCs, which was obtained mostly from the

interview results.



4.3.3 Interview results

The Stage 1 interview results are presented in 13 sections, corresponding to the

13 questions each participant was asked. Twelve questions were adopted from the

DOCS instrument (Denison et al, 2006) as highlighted in Chapter 4 (Figure 3-6) plus

a final question on OC and performance. Interviewees were asked how they ranked

each of the 12 questions, on a scale from 1 (strongly disagree) to 5 (strongly agree)

and asked why they assigned that particular ranking. Each section portrays the results

by common themes, followed by a discussion, which links to theory and addresses

applicable identified gaps. A conclusion of each trait highlights genuine and innovative

initiatives certain PBOs have adopted. A final conclusion of this chapter briefly and

graphically summaries key findings linked to the research question.

1. OC Trait – Involvement. OC Index: Empowerment

Question 1. To what extent are most employees highly involved in their work?

The results revealed that participants’ views varied slightly on employee

involvement; 18 out of 20 interviewees, (90 percent) strongly agreed or agreed that

most employees were highly involved in their work and there was a genuine sense of

ownership and responsibility. The remaining two interviewees (10 percent) remained

more neutral, see Figure 4-11.

Figure 4-11. Interviewees (PBO-A to PBO-T) response to question 1. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey:

Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38.



Five common themes that impacted most on these results are summarised as: a)

A volatile market mostly drives involvement, b) Restructuring in response to market

conditions, (c) The nature of work both of PBOs perform, d) Employment contracts

and ownership structures, and e) Company size.

a) A volatile market mostly drives involvement

The downturn in the resources sector has had a substantial impact on PBOs with

most being forced to shed large numbers of employees. Findings revealed that one

PBO reduced staff from 500 - 600 people to 20 in one region, another PBO reduced

staff from 2,500 to 500 nationally, and one more stated it had peaked at around 2,200

employees in the boom and reduced to about 1,200 people. One interviewee claimed

their competitor analysis showed that typically its competitors had shrunk between 70

and 95 percent. This sentiment was supported by a report that stated a large Australian

PBO had made 8,000 workers redundant and spent AU$ 27 million on redundancies

in 2014-2015 (Dun&Bradstreet, 2016).

In addition to workforce reductions, the available work for PBOs, particularly

the large and more profitable assignments, had diminished, but client expectations had

intensified. Interviewees explained that while there was work, staff would be highly

involved, but when the work dried up they started to become anxious, i.e., “… the fear

at the moment for people in our industry is if the projects dry up I will lose my job, and

that has nothing to do with culture of the business” (PBO-G), and “It is still a painful

period in the organisation, people are still uncertain about their roles” (PBO-F).

Another interviewee said that there had been a lot of job reductions, and the people

that survived the job cuts were the ones that were keen, engaged in their work, and

understood that if they were not keen and engaged they would ultimately not have a

job, in the current market.

The feeling from interviews was that in comparison to attitudes during the more

robust market a few years prior, there was now a much higher level of engagement in

the workforce, and eagerness to meet customer requirements. One interviewee

described how their PBO had reduced approximately 50 percent of its employees

during the downturn, but compared itself to another company that reduced staff from

1300 to 200, and added, “It is so hard to come out the other side of a reduction like

that and survive, with your culture intact … the economy has gone through the

gurgler…” (PBO-P).



It appeared that most people employed in PBOs took their job seriously and

made their best effort, whether that was influenced by the current business cycle or

other matters was not exactly clear. It was claimed that the largest factor that drives

engagement is that work had significantly been reduced. PBOs tended to let employees

go if they were not so driven, particularly in difficult market conditions; or employees

usually moved on of their own volition - a type of “natural selection process”. The

stronger employees were generally more engaged, better workers, provided better value

to the company and were still employed, explained one interviewee. Another agreed that

staff were more engaged now because of the downturn, and the people the PBO kept

were its best and it was in their nature to be fully engaged.

Another interviewee described how in flourishing times people were employed

“…if they could sit at a desk, had a pulse and could breathe” because of the sheer

volume of work. However, in arduous conditions one interviewee maintained that staff

were more inclined to step up, and younger members took leadership roles earlier than

they would have normally, “… it is a sign of the times when things are in adverse

situations real leaders step up…” (PBO-Q). This interviewee added that staff were

working harder now and were generally engaged more than in the previous good times.

At the height of boom, this leader added he had received negative feedback from

clients about employees, because they had only been with the PBO for a short time,

they clearly did not understand the PBOs culture, and were delivering services below

the PBO’s expectations. Comparatively, now the PBO received positive feedback from

clients about their employee’s high level of engagement.

b) Restructuring in response to market conditions

Changes in market conditions resulted in one group of PBOs that had re-

examined and restructured their businesses in order to improve involvement and

performance. One interviewee revealed that their PBO had “… recently been through

a realisation…”, engaged an external consultant to examine the organisational design

resulting in a restructure and a large amount of communication with all employees

about the process and why. “… it was basically driven by the fact our profit margins

were very low compared to a lot of our peer companies… there was a whole focus on

overheads, adding value to the customer, and a lot of conversations with our

employees about that...” (PBO-H). As change occurred and people left the business,



the remaining employees were expected to do more, be more effective, and that tended

to engage people particularly when they understood what was driving the change.

Another PBO also restructured their operations that emphasised a customer

refocus, a concentration on delivering, and cutting back on internal costs. An

interviewee from this PBO explained, “…the analysis was pretty stark, when you are

making a total profit margin of about 2 percent, it’s a big company so your overheads

are in the hundreds of millions of dollars…” (PBO-B). One more PBO was still going

through a transitional stage, had changed some roles within the business, and recruited

new people to fill roles that had not existed in the past, the interviewee stated “…we

built an organisation focused on big project delivery and there are no big projects left

in Australia, so we are changing the organisation from big projects to smaller

projects… that means we have had to reduce the size of the business…” (PBO-F).

Another recognised a need to convince people that change was required. While there

was more engagement at the leadership level, the lower ranks required attention

because there was comfort in doing things the same way, and that was stressed as not

being acceptable, “… our iceberg is melting…”, the interviewee revealed (PBO-E).

For others, stimulating project work in other parts of the world and diversifying

services was a means of addressing the downturn.

c) The nature of work PBOs perform

Traditionally the work of a PBO was project based; most employees worked in

teams, seemed to appreciate delivering work, and enjoyed the pursuit of the iconic

projects. The majority of people who worked in PBOs were technical and enjoyed the

people they worked with. The nature of their work is problem solving, which requires

participation of many parties and that is the value they provide. The specific work or

tasks they generally undertook meant they were engaged, which indicated a sense of

ownership and responsibility. “The work itself requires problem solving and you can’t

solve a problem unless you are fully engaged in the understanding, analysis and

investigation...” (PBO-T). Many PBOs undertook engagement surveys annually and

the results generally supported this.

Interviewees spoke about the successful completion of projects as evidence of

how deeply employees were engaged. Project teams primarily impacted involvement,

engagement and empowerment and this was positively enhanced if team members had

worked together previously compared to a new team of people who were fresh to an



organisation, project and/or client, which required a level of professionalism to ensure

staff ‘on boarded’ quickly. Another example of involvement was that PBOs often had

employees that were prepared to go to less desirable or remote locations around the

world to demonstrate commitment and gain experience.

d) Employment contracts and ownership structures

A uniqueness that impacts involvement is a PBOs employment strategy.

Generally, project personnel were recruited either as permanent staff or contractors

under contract for the duration of a study or project. The ratio of staff to contractors

in some PBOs appeared to influence involvement and empowerment.

A contractor’s main concern tended to be the source of their next income, and

while some stayed with a PBO for a long duration, many moved regularly without

much loyalty. An interviewee explained that a contractor may obtain a three month

assignment and half way through the contract be offered another 12 month contract to

start work somewhere else because the money was better resulting in movement and

disruption which was the nature of industry.

The interviewee claimed that the contractor mentality, “…typically it is very

much, I work for a job, I don’t work for a company, they just move wherever the project

work is, they’re not loyal to [the PBO]” (PBO-R). Once a project was finished, PBOs

did not want contractors on their books as full time employees, so there was no real

expectation of loyalty, said the interviewee. The ratio of staff employees to contractors

was different amongst PBOs. For example, some PBOs had 60, 85 or 90 percent staff

employees and corresponding contractors, which was likely to influence a certain

culture because having more staff would result in the majority of employees being

more loyal to the PBO compared to contractors.

Ownership structure was another direct indicator of employee involvement,

according to some interviewees. PBOs had different models of ownership, i.e., “…20

percent are shareholders, by invitation, at the discretion of the Board” (PBO-M). “…

a number of people have a large stake in the outcome, so yes that definitely impacts.

A large financial stake but also an ability to impact the business to make a difference”

(PBO-F). One larger PBO had a bonus system, but very limited staff members

benefited from it, “…it is a very small pool of people who get the major money...”

(PBO-L).



Another PBO’s ownership structure was a unique model compared to other

PBOs. All employees had an opportunity to purchase shares and retain share even after

they left the company. In other words, the shares did not have to be sold when a staff

member left the PBO, or reached a certain age, and everyone had the opportunity to

become a shareholder immediately or in the future. This was observed as a motivation

for staff to be involved in their work and the work of the PBO, “…a number of us are

shareholders and are directly connected to the outcome, both our own reputation and

[PBOs] but also financial incentives…” (PBO-I).

e) Company size

Smaller PBOs attributed that size provided a better opportunity for staff to be

engaged without the need to initiate anything overly complex. Primarily the smaller

PBOs tended to focus on meeting regularly, good IT communication to remote sites,

and having processes in place that allowed information to be distributed about the

company’s intent, status of its projects, and keeping staff informed. The interviewee

explained, “We are a relatively small company, so with good communications and

small teams, it is not difficult to have engagement with your people. It is a lot easier

than it is in a large firm” (PBO-R). Size also seemed to influence involvement and

empowerment through access to leadership teams and this connection kept staff

engaged. Another interviewee of a smaller PBO explained that “… being a small

firm... 20 percent who are shareholders… so access to senior management... they feel

part of the ownership…” (PBO-M). This view was concurred by another interviewee,

i.e., that being small enabled the participation and contribution of all staff in

comparison to larger PBOs, where at times size could hinder involvement.

Discussion

The ‘Empowerment’ index is chiefly concerned with identifying if individuals

have the authority, initiative and ability to manage their work, reflecting a sense of

ownership and responsibility toward the PBO (Denison & Neale, 1999). PBOs tended

to be aligned, and agreed that most employees were involved in their work.

The results assisted address one gap identified in the literature that little is known

of organisations which face quickly changing environmental demands, experience

high employee turnover, and hinge on geographically dispersed labour (Giorgi, et al.,

2015). Volatile market conditions appeared to impact employee involvement and

engagement, as PBOs had been forced to downsize, and some had extraordinary



numbers of staff reductions. The implication was that it was especially difficult for

organisations to go through significant staff reductions and survive with their OC

preserved. Such conditions made people anxious, uncertain, and in fear of losing their

jobs.

The people who remained seriously managed their jobs and tended to be higher

performers. While the downturn had agitated workforces, a type of ‘natural selection’

had occurred where the best people were retained who were more engaged, better

workers, and provided better value.

The work of engineers appeared to directly impact involvement as it requires

problem solving, and they needed to be fully engaged to understand, analyse and

investigate problems, thus they tended to be involved and empowered. This is aligned

with the OC theory that engineering as an occupation may be thought of as a macro

culture, because engineers hold similar worldviews, common education and licensing

requirements, shared contact with others in their profession, and that the dominant

occupation is an influence that drives a business (Schein, 2010)

2. OC Trait: Involvement. OC Index: Team Orientation

Question 2. To what extent do people work like they are part of a team?

Of the 19 interviewees that were asked this question 16 participants (84 percent)

strongly agreed or agreed that most employees worked as part of a team, particularly

for project related work; and three interviewees, (16 percent) remained neutral, see

Figure 4-12. This question was added after the first interview took place. Initially it

was assumed that the nature of project work and working in teams would be absolute,

however the question was added to actually test if this was the case.

The results are summarised below in five themes: a) Fundamental but dependant

on project features, b) Clients’ influence, c) Long term team membership and

experience, d) Silos and internal competition, and e) Integration and a ‘One Company’

approach.



Figure 4-12. Interviewees (PBO-B to PBO-T) response to question 2. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38.

a) Fundamental, but dependent on project features

The strength and importance of team orientation underpins the work of PBOs; it

is the nature of their business. Interviewees emphasised that teamwork was fundamental

to everything they did and the type of work PBOs undertook was driven by projects,

thus staff needed to work as teams. Interviewees said: “We promote people who

operate in teams, we reward that sort of behaviour” (PBO-Q), “… those who don’t, get

asked quickly to leave…” (PBO-L), and “We have tended to shed people who are less

experienced…” (PBO-J). Some PBOs relied on teamwork more than others and it

depended on the types of projects they undertook. Many PBOs did few contracts that

were delivered by individuals, but some advisory and consulting services were

traditionally delivered by one person providing advice, rather than teams. Managing

teams from a single location was relatively easy compared to larger project teams, which

at times required a virtual data room with people working from various locations around

the world. Collaboration was challenging with larger projects. Generally the type of

work the PBO undertook and the relative number of people involved impacted on team

orientation. The implication on OC was that certain project teams had long durations

and others had short, as one interviewee described, “… so a long team duration often

has more of a team culture, and a short duration team you can finish a job before the

culture is fully developed” (PBO-T).



b) Clients’ influence

A consequence of teamwork could either have a positive or negative impact on

team orientation. If the team was located in a client’s office or the client set up a project

team, it could intrinsically be influenced by the client. The project team could be

vulnerable and adopt the norm, or take on the culture of the client team, and if that team

was performing in a different way it could have a negative impact, i.e., “… almost like

‘Stockholm Syndrome’ – you become part of their team, so you have to be careful…”

(PBO-T). The implications for PBOs are teams could actually work less hours, or adopt

other undesirable behaviours, and the PBO has limitations of how it can manage this.

However, generally on a site-based project, the team would work set hours and everyone

would begin and finish at the same time.

However, the power of the client should not be underestimated. If the PBO had

more of a transactional approach with obtaining contracts then the relationship between

the PBO and the client may not necessarily be as strong as compared to a client that a

PBO had a long term relationship with, beyond any of the individuals involved. One

interviewee explained that for long term clients the PBO took a different approach,

“…You tend to bend over backwards for those sorts of clients, and as a consequence

you know the relationship in these longer term arrangements are generally much better

than the short term ones…” (PBO-J). The people who worked for the client generally

were longer term workers and not contractors seconded into the owner for the project,

suggesting higher quality people led to higher quality relationships. One PBO was

described as mostly a transactional type PBO, and thus after a major acquisition it had

relationships with major organisations and did not spend a lot of time or effort on anyone

else. “That is a corporate directive and that tends to come through. Generally, people

get on to these projects because of their performance and functioning as a team, that is

what it all comes down to. If the fit is not there you are off the job…” (PBO-J).

c) Long term team membership and experience

Having a high concentration of long-term employees who understood what made

projects succeed was essential according to some PBOs. When many staff members

knew each other, were familiar with the projects they had worked on, or had worked

on projects together previously it led to a strong team environment, good

communication and success. Another project manager had a similar view, and said

the best teams were formed by people that had worked together in two and three



different organisations. This promoted good cultures, good performance and

recognition of people’s strengths and weaknesses. Staff members helped each other,

were not overt about it, and this worked very well.

One PBO’s site managers were akin to business managers, were fully

accountable for the profit of the project, and this generated ownership and focus within

teams. One interviewee said they “… have projects out in the field and they are led

with their own management team… So short lines of good communication, projects

that have clear objectives and business goals, and they are empowered” (PBO-H). All

corporate support personnel were encouraged to take a team approach, understand the

project and project team which assisted with strong team orientation.

d) Silos and internal competition

One group of PBOs explained that the dynamics of project work often led to

project teams getting separated into ‘silos’. It could be prompted by internal

competition and having two groups that undertook similar services, resulting in business

groups being siloed, the company becoming siloed and some individuals who looked

out for themselves and not the PBO.

The depth of silo mentality and behaviour could be influenced by the way a

company was put together, including acquisitions. Avoiding this required an emphasis

on systems that allowed employees to readily discuss and interact with others outside

of the silo. Some interviewees argued that all organisations had employees looking to

their careers rather than focusing on the project, and this was always a competing issue.

Interviewees said, “…there are multiple companies measured against P&Ls [profit

and loss], so it’s protecting my patch somewhat” (PBO-E), and teams within larger

teams led to “… not really animosity, but an approach of: I am going to look after my

team and not regard the broader team…” (PBO-B). The cause may be due market

uncertainty and “… that people are really keen to hold on to their jobs at the moment

and they are protecting them” (PBO-S) or having technical specialists that did not work

well in teams and worked better alone.

One interviewee revealed that a large PBO had a ‘disconnect’ between the

corporate level and the lower levels, and this had led to some employees not committed

to the direction set by the leadership team. However, it had identified this was an issue,

“… when you are working on projects there still tends to be much of a silo mentality,

when working within a silo there can be quite a high degree of job ownership, and



everyone is happy…” (PBO-D). Another said once a project was won, it was the project

manager’s responsibility to get people aligned, “through sweet-talking, or cajoling, or

screaming” (PBO-N).

e) Integration and a 'one company' approach

Three PBOs had a similar strategic approach designed to enhance team

orientation and address silo behaviour. The ‘one company’ approach was triggered for

one PBO by a recent cultural and strategic change designed to align acquired

companies with a common goal and direction. Another interviewee explained their

PBO was a relatively diverse organisation and for a number of years had a strategy

that tried to have everyone in the company “to think as one”. Another PBO had adopted

the ‘one company’ strategy after listening to clients. The PBO found that it had not

met client expectations, did not manage projects well, and had lost money and

delivered poorly. The fallout resulted in a number of personnel changes, and

implementation of more robust systems. The three PBOs had in common the same

titled strategy with a ‘one’ in front of the organisations name, i.e., ‘One PBO-E’, ‘One

PBO-H’ and ‘One PBO-M’.

Discussion

‘Team orientation’ is the value placed on organisational players working co-

operatively towards common goals, where all employees feel mutually accountable

and the firm relies on team effort to get work completed (Denison & Neale, 1999). Not

surprisingly, PBOs tended to be aligned and mostly agreed that employees worked as

part of a team. As the primary activity of PBOs was working on projects and project

related matters, this was fundamentally embedded into the ways of working and

thinking of PBOs. However, this also often depended on specific project dynamics and

other factors that impacted directly on the extent to which staff worked as part of a

team. These results are aligned with the views expressed by Schein (2010) who argued

that getting cross-functional project teams to work well together is difficult as

members often bring their functional cultures into projects, resulting in difficulty in

communicating, reaching consensus and implementing decisions effectively.

The 16 percent of interviewees who rated ‘neutral’ for this question pointed to

internal competition and protectiveness affecting their teams. This supported the view

that projects and their managers have to compete against other projects for support and

resources (Vuori, et al., 2013), which was reflected in certain behaviours such as being



distracted by internal matters, silo sentiment, and/or protective behaviour. The

implication may be double-edged, because while silos may encourage internal

competitiveness, this dynamic seemed difficult to change once it was embedded. This

may explain why a number of firms have implemented strategies around a ‘one

company’ approach that has attempted to integrate processes, systems and teams.

3. OC Trait: Involvement. OC index: Capability Development

Question 3. To what extent would you say the ‘bench strength’ (capability of your

people) is constantly improving?

Of the 20 interviews, 12 (60 percent) strongly agreed or agreed that their bench

strength was improving, seven interviewees (35 percent) remained neutral, and one

interviewee (5 percent) disagreed, see Figure 4-13.



The results are summarised in five themes of: a) No investment in staff, b)

Investment priorities, c) Leverage: ‘balancing the bench’, d) Constant improvement,

and e) Skills investment occurs on the job.

a) No investment in staff

Certain PBOs admitted that they were not currently investing in their people,

upgrading their skills, training or knowledge because of current market conditions. For

these PBOs it was more important to focus on business critical activities, staying



afloat, winning work and delivering it well, and preserving their cash. One interviewee

argued that all PBOs were in the same position of not making money, and thus PBOs

were generally not investing in, or spending money on, developing staff. “… the only

thing they are doing at the moment is retrenching. There is no commitment to

development” (PBO-N). Another interviewee said as profitability was not where it

should be there was a large concentration on, “…being lean, getting rid of dead

wood…” (PBO-E).

However, some PBOs claimed they were taking advantage of the adverse market

conditions by improving their ‘bench strength’. Certain PBOs were recruiting high

quality people who had been made redundant by other PBOs in order to strengthen

their organisation. One CEO said it was a costly investment to keep that enhanced

strength in the current market, but previous experience had shown such short-term

costs had long-term benefits.

b) Investment priorities

If investing in ‘bench strength’ meant providing a bigger talent pool of personnel

by investing in ongoing training to have a reserve skilled set available (Singh

Sandhawalia & Dalcher, 2011), for one PBO it was not viewed as such a high priority.

This PBO tended to invest in staff who were currently working on existing projects,

described as on ‘the frontline’. Others indicated that they were rebuilding their ‘bench

strength’, or the quality of individuals had improved because the PBO had tended to

‘off-board’ those who were not performing.

c) Leverage: balancing the bench

One interviewee contented that despite all of the training and investment in staff,

this did not in itself provide a sufficient pipeline of work, and these activities were

particularly challenging when PBOs were also downsizing. The problem with the

current resources downturn was that it directly impacted on the talent of a business,

and the balance comprising of that talent. One PBO had a lot of talented people leave

the business, including those it had invested in with training. The challenge then

became which people did a PBO keep and which did it let go. “… you end up with a

lot of people with grey hair, very senior, very experienced and very expensive and that

is the piece that is the downfall, and customers will not pay for that…” (PBO-H). The

interviewee continued to explain that “balance” for a PBO required a spread of

talented people including juniors, graduates, and senior people. If a PBO was full of



“stars” it became too expensive and could as a result not win work, even though the

team could effectively deliver projects. “… no one wants to pay those rates… its real

dilemma, you are letting people go but want to keep the capability when you get to a

certain size…” (PBO-H).

On the other hand, PBOs still needed some staff who were known to clients, to

the industry, and had recognised kudos and were winning work. PBOs may have

retained some of these people because they were difficult to replace, but they were still

very expensive and thus “hard to sell”. If people were not undertaking fee paying work

then they became a costly overhead. The interviewee continued, “… it’s pressure on

overheads as well. When times are tight the belt has to be tightened. Overheads get

scrutinized. If you have too many people on overheads you get told you have to cut

your overheads, it is just a choice of how do I do that” (PBO-H). If PBOs did not get

this balance right, then they ended up with the wrong mix of employees. While this

was a dilemma for this particular large PBO, it was not for other PBOs.

A smaller PBO’s Chairman declared improving the ‘bench strength’ was

achieved by winning work and bringing more brains and experience into the

organisation, rather than by investing in training current employees. The interviewee

advised that the PBO tended to recruit people who had a strong depth of industry

experience, indicating that ‘bench strength’ was constantly solid and consistent.

Generally, clients selected PBOs based on the alignment of the best employees to the

assignment, and as competitors were also using a similar strategy, the interviewee

suggested that “…you are rather particular about trying to find the right person, which

means you have the bench strength…” (PBO-R). Accordingly, PBO-R had good

‘bench strength’ aligned with the services it offered. Its reputation was based on the

last job it had undertaken.

This was similar to most companies, thus PBOs had to be very mindful and

respectful of that, and ensure that they had effective ‘bench strength’. Another PBO

also employed few graduates because it tended to favour experienced people. Another

interviewee argued that it was not so much which staff members a business let go, but

which staff members it kept, because that was going to determine what would happen

to the business in the future. The people that were employed for a short time were

probably the change agents, rather than the other long term people who tended to prefer

comfort and compliance.



d) Constant improvement

Certain PBOs constantly invested in their people to ensure their skills were

improving. One PBO placed its focus and investment in high potential staff that were

more committed. However, this was not available for the majority of staff, and only

for key members who the PBO viewed as being fundamental to its success. Other

PBOs had programs to up-skill staff and invested in training as a priority. Other

interviewees described various programs, i.e., employee assistance programs where a

PBO contributed 50 percent of course fees and materials when individuals undertook

further studies, mandatory training for topics such as privacy and data security, quality

systems, and health and safety. Engineers required a range of competencies

(supervision, estimating, and conflict resolution) and PBOs tended to use a range of

training for different levels of management and personal development.

A common theme amongst those interviewed was the concept of creating a

company styled university as a way of constantly improving the capability of people.

One PBO’s training program included online courses designed to assist people who had

a weakness in a particular area. Others described an online learning approach, “We

have something we call [PBO] University, which is basically a collection of online

training materials. It is structured like a university, there are Deans of different things,

there is engineering, HR, contracts and things like that” (PBO-H), and another PBO’s

university was an online portal development program with a range of training

available. However, the interviewee said that the online learning was not effective and

certainly did not motivate staff.

Another PBO had historically seen itself as a differentiator in technical

excellence and often recruited a lot of “techno geeks”. To encourage technical

excellence and career progression, this PBO set up an initiative called the “[PBO]

Fellow”. This title is outside of regular roles such as a group or sector leader, but

designed for people who were not necessarily operationally strong, but had outstanding

technical excellence, and/or people who were highly regarded in their field and were

technically strong. One individual had tremendous geotechnical skills, and the PBO

“… said we want you to continue investing in your technical excellence, so we are

sending him to Berkeley [University of California] to do a research project” (PBO-P).

This was another example of operating a university style initiative in which the PBO

invested heavily, and communicated its programs to key stakeholders.



e) Skills investment occurs on the job

For many PBOs, skill development occurred on the job, by doing regular work

and also by doing different work, taking on more responsibilities as they became

available, as opposed to online training. PBOs needed the skills required to perform a

job and at times began an assignment without the required skills fully developed, but

at the end of the assignment those skills would have been developed. Ideally those

newly developed employees should be retained, but that remained the challenge for

one PBO. The interviewee said the approach was that skills development occurred 70

percent on projects, 20 percent internally, and 10 percent using providers (70, 20, 10).

While skills improved on projects, some employees expected development to occur by

attending external conferences and training. Another PBO had a tendency to invest

more in graduates, future leaders, and senior technical staff rather than on external

training.

Some PBO’s took the view that training was an individual’s responsibility, and

held that as they were all “scientists” and consultants, they had a responsibility to learn

themselves. Further, PBOs tended to get absorbed in the delivery of projects, meeting

deadlines, and often did not always challenge fully the outcomes being achieved,

because of time limits. This could be a significant constraint on a consulting business.

One interviewee described their business as effectively trading in time; but that time,

profitability, and quality all needed to be balanced. “You don’t always get the outcome

of an improved capability at the end of a project, which is not ideal, but that is the

reality…. You always want that to happen, but it does not” (PBO-T).

Discussion

Capability Development is concerned with the extent that PBOs continually

invest in the development of their employees’ skills in order to stay competitive and

meet ongoing business needs (Denison & Neale, 1999). In a stable market, the results

may have been different, but in an uncertain market some PBOs argued there was more

focus on business critical issues; remaining solvent, preserving cash, and so the need

to concentrate on winning work.

Many PBOs had as are result of this thinking, reduced outgoings on developing

bench strength and an overall investment in staff. One PBO reported its only activity

at the moment was creating redundancies. As profitability was down for many PBOs,

they became leaner by consolidating and directly focusing on improving efficiencies.



However, some claimed they were taking advantage of adverse market conditions by

hiring good people that other PBOs had let go, to be market ready for the next upturn.

These results bridged a gap in the literature, that little is known about how

organisations function when facing rapidly changing environmental demands,

experiencing high employee turnover, and that hinge on geographically dispersed

labour (Giorgi, et al., 2015). Some PBOs developed a complete portfolio of training,

with an online emphasis, and had a structure similar to a university, with branding such

as the ‘[PBO] University’. Others had a less sophisticated approach, but many did have

a dedicated learning group which facilitated training.

Involvement Summary

The central idea of ‘Involvement’ is an organisation’s effectiveness, and

performance is based on the involvement and participation of its members (Denison,

1997). Effective organisations empower and engage their staff, build their

organisations around teams, and develop their human capability at all levels (Denison,

Hooijberg, et al., 2012), and involvement is the strongest predicator of employee

satisfaction (Denison, Nieminen, et al., 2012). The results of the three indices of

Involvement are summarised in Table 4-2.

Table 4-2 Stage 1 interview results of OC trait of Involvement

Empowerment Team Orientation

Capability Development

Strongly agreed or agreed 90% 84% 60% Remain neutral 10% 16% 35% Strongly disagreed or disagreed 5%

‘Empowerment’ had the strongest agreement of all three indices. Most

employees appeared to be involved, engaged and empowered. Current market

conditions and the nature of engineering work were the main influences. Engineers are

primarily problem solvers and a problem cannot be solved unless the person is fully

engaged to understand, analyse and investigate the imminent problem.

‘Team Orientation’ also had relatively high level of agreement and this seemed

to be due to the nature of project work being performed mostly in teams. PBOs tended

to keep, promote, or reward teamwork. If people were not inclined to engage with team

orientation, they were probably not suited to this type of work, unless they had a



particular or exceptional skill, or undertook work that required a more individual

response.

‘Capability Development’ did not receive the same commitment as the other two

indices, mostly due to the current market where all costs were under scrutiny, or there

was intense pressure on overheads, and this did not lead to a pipeline of work. The

nature of the work also indicted that PBOs managed bench strength by improving

engineers’ skills and knowledge mostly through working on projects and studies, with

teams of experienced or senior practitioners that had a depth of industry experience to

share.

In the summary of each OC trait, key PBOs have been identified that appeared

to have a clever, genuine and unique attribute that seemed to contribute to their culture.

For example, it may be an initiative that a PBO had spent considerable time and

resources designing, planning, and developing that was authentic, added depth, value

or rewarded their employees, the company and/or the wider community. The

Involvement trait results identified seven PBOs who appeared to have such an

initiative as revealed by the interviews, namely:

x PBO-I’s model of employee ownership was unique. It reflected a genuine

regard for all their current and past employees that was equal, fair and honest

compared to other models which were for selected or elite groups.

x While a number of PBOs had established a company ‘university’, PBO-P

had taken this initiative to a higher level outside of what its competitors were

doing with the design of the company ‘Fellow’.

x PBO-Q and PBO-S were taking advantage of adverse market conditions by

preparing for the next cycle by hiring good quality people who had been let

go by other PBOs in the downturn. This could be costly in the short term

but may be beneficial in the longer term.

x PBO-H, PBO-E and PBO-M responded to silo mentality and behaviour by

introducing an integrated communication strategy or ‘One Company’

approach designed to enhance team orientation and aspects of OC.



4. OC Trait: Consistency. OC Index: Core Values

Question 4. To what extent would you say the leaders and managers ‘practise what

they preach’?

Most participants, 16 out of 20, (80 percent), strongly agreed or agreed that

leaders and managers practised what they preached, three interviewees, (15 percent)

remained neutral, and one interviewee, (5 percent), disagreed with this question.

Figure 4-14 illustrates interviewees’ responses on a scale from 1 (strongly disagree) to

5 (strongly agree). The responses are summarised in five common themes: a) Diligent

and consistent behaviour, b) Changing work environments and opportunities, c)

Inexperienced leaders and ‘fair-weather sailors’, d) Consistent wrong behaviour, and

e) Inconsistent bad behaviour.

Figure 4-14. Interviewees (PBO-A to PBO-T) response to question 4. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38.

a) Diligent and consistent behaviour

For most PBOs, the results appeared to be aligned with consistent

communication and business practices. Interviewees that were shareholders or

directors of a PBO tended to say they practised what they preached. One interview

explained that staff in senior roles typically had a significant stake in the business and

the ultimate success was more than just being employed, it was more about personal

achievement, and that the predominant management style was collaborative. For this

PBO, leadership teams were appointed by the Board and ideally people whom could



influence culture, and members endeavoured to hold each other to account for

behaviour that was not consistent and collaborative.

Other interviewees described a strong culture of leadership by example, their

CEO encouraged that behaviour, and managers did not tend to say one thing and then

do something completely different, i.e., there was consistency in leadership. One CEO

said he selected the right leadership team, i.e., one that was a cultural fit, “…I have

had to evolve numerous leadership teams, depending on size and type of organisation

we have been at the time, and I have had to part company with certain leaders because

there was not a cultural fit, they did not talk the walk/walk the talk” (PBO-Q). This

leader explained the importance and priority placed on this type of behaviour and noted

he was quick to address inconsistency. PBOs tended to promote their good people that

showed potential and absolutely ‘practised what they preached’ and thus progression

occurred, based on reputation.

PBO-L was described as very diligent with consistent behaviour, and it was not

unusual to have staff removed from the company that no longer fitted into its way of

working. There was a consistent management style, employees took responsibility for

their work, and there was a constant conversation around performance, quality,

schedules and budgets. For example, “…if someone walks in from a fourth tier

company wanting to do a gold project in Africa, we go sorry that is not in our

business… the [PBO] does not target bulk, it targets preferred numbers. It knows it

might only run in mining and metals four or five projects a year in any one time. We

have learned, that if we go to seven, the competency of the team starts to fall apart and

we get caught in non-performance issues, therefore it is not worth the grief going after

a big, we don’t have a wide mouth, we have learnt over time.” It understood its target

clients and projects, its core competencies and what it should be doing. It was very

clear in its strategic direction, particularly from a project point of view, and the

message to employees was consistent. PBO-L was a high performing company as

identified earlier.

b) Changing work environments and opportunities

Physical configuration of work environments such as open planned office

designs were a visible indicator that leadership teams led by example, because in such

a setting, leaders were exposed to projects, staff and clients. One interviewee explained

that leaders today are required to manage in a transparent style, not be aloof or



separated, and this was motivating for staff. As the business environment had changed,

it had opened up for a lot of younger people, they were more confident, have high

expectations, arrived at the workplace open to being involved in senior management,

and there are no barriers anymore, e.g.,. “…when I started you felt the separation and

quite comfortable to leave management to who they were, but young people here have

high expectations” (PBO-T).

Changing market conditions for another PBO resulted in the expectations on

management being much higher. With increased staff turnover, a lot of the managers

who remained employed had become high performers, and they understood what was

required to do the job.

Another element that impacted on consistency, and at times even on core values,

was the matrix structure of many PBOs. People may have a number of reporting lines

within their business unit, based on their engineering discipline, or on a specific

commodity, geographical location, or interest. For example, one interviewee said,

“…people have more than one manager, because you have that person who you are

functionally responsible to, but then you might be seconded to a project where you have

a manager there, or multiple managers there, so I mean people tend to have a lot of

exposure to people managing them” (PBO-J).

c) Inexperienced leaders and ‘fair-weather sailors’

The results indicated some PBOs were not as progressive as others, symptomatic

of inexperienced leadership teams that still had room to improve. A consequence of

the downturn for some PBOs had been a shift in staff numbers and management

restructures resulting in new people in new leadership roles. This could result in

leadership teams that were experienced at the technical level, but inexperienced in a

leadership role. The interviewee, whose provide a ranking of ‘disagree’, argued that

consistency of a business was driven largely by the market. For example, in the

downturn, PBOs had leaders that did not know which way to turn, or perhaps came

into leadership roles in the strong market conditions and had not experienced

downturns, “… they are fair-weather sailors… they tend not to know how to manage

in a downturn…” (PBO-G). This presented a situation where leaders did not lead by

example, resulting in poor decision making and decisions driven by “sentiment”.



d) Consistent wrong behaviour

Not all PBOs were consistent when communicating their intentions and

following through. One interviewee revealed a PBO sometimes “lost its way”, and

blamed this on being a group of people who were ‘not’ good at calling people to

account, and lacked managing poor performance and behaviour. This weakness was

attributed to a difficulty to have critical conversations with staff because they

associated accountability with a blame culture. While this PBO appeared to have

shared beliefs around failure and blame, these stemmed from the belief that people

were all in it together, looked out for one another, and if someone failed everyone

thought they were part of that. When something went wrong the PBO’s style was to

ignore or overlook the behaviour by not addressing the issues and hoping they would

go away. This was consistent behaviour in assignments that went bad.

Another said consistency varied throughout business units and questioned the

motivation of some leaders, as it was often left unclear how they were going to achieve

certain outcomes. A different interviewee took a similar view, and argued that

organisations are similar, with a focus on profitability meant sometimes management’s

motivating factors were debatable, “…sometimes they seek openness from all their

employees but don’t necessarily return that openness and give you an understanding…

that is a failure of leadership in terms of saying we are here, we want to get there, and

this is how we are going to do it” (PBO-N).

According to another interviewee, the legacy of the leadership of their PBO had

entrenched it in poor behaviour. The poor behaviour had been due to a sense of

entitlement of shareholders versus non-shareholders. Some long-term employees that

were shareholders felt they had a right to step around their immediate line manager

and go directly to the Managing Director due to this perceived entitlement. This

resulted in consistent, but the wrong behaviour.

e) Inconsistent bad behaviour

For one large PBO, inconsistency occurred across the firm, although there were

pockets of consistent behaviour within some business units. The interviewee

explained that certain groups tended to be more open, respectable and interactive and

others tended to be protective of their ‘turf’ and cautious of others becoming deeply

involved. Inconsistency could lead to silo thinking, stemming from a lack of clarity of

direction. Another interviewee explained that in the past the behaviours within the



PBO were much more silo driven with different managers worried about their own

P&L. This became more apparent when some areas of the business used outside

consultants instead of their internal personnel, because they considered internal

support teams more expensive than external providers. This inconsistent behaviour led

to margins leaking out of the company and going to outside providers, where the right

and equitable decision should have been to use internal providers. This was addressed

by talking with employees, being open and reminding people the impact of

inconsistent behaviour on the business.

In another example presented by one interviewee was that a potential client had

approached representatives in one office, in one region (Office A) because it

understood the PBO had staff with certain expertise and experience in a specific field.

When Office A prepared a proposal for the work which outlined the team, their expertise

and experience, it then sent the proposal to another office in another region (Office B)

for finalisation and sign off. The next thing that happened was that Office B changed

all the team members in the proposal to people who were located in Office B. The

outcome was that the people in Office A did not understand why this had occurred, and

were puzzled by the behaviour of leaders in Office B. One thought crossing the minds

of the team located in Office A was that perhaps the PBO had the intention to close the

operations of their office and this scenario was a precursor to this action. However, it

seemed the inconsistent behaviour of Office B was a result of protecting their core

people, which may have been an exaggerated reaction in the current tight market.

Discussion

‘Core Values’ was explored by asking interviewees did their leaders and

managers ‘practise what they preached’? Denison and Neale (1999) emphasised

members of an organisation that share a set of values will create a sense of identity and

a clear set of expectations. The strong agreement results to this sample may be due to

most of the interviewees were leaders and managers, who had not unexpectedly

responded most positively to this question (80 percent agreement). However after

further investigation some contradictory examples emerged such as typically people

who tended not to exhibit consistent behaviour were often let go, and a PBOs matrix

structure often resulted in staff having multiple reporting lines cultivating inconsistent

behaviour. Some PBOs allowed a sense of entitlement to emerge in their OC causing

conflict between subcultures. Inconsistent and imprudent leadership occurred by



promoting leaders for their technical excellence and not necessarily their leadership

skills, or promoting people in a strong market climate who lacked the skills to lead

satisfactorily in a market downturn. Ambiguous behaviour was also revealed when

leaders failed to call people to account for bad behaviour.

5. OC Trait: Consistency. OC Index: Agreement

Question 5. ‘To what extent would you say there is a strong culture in the PBO?’

A strong culture was elaborated as having a high level of shared meaning, and a

strong sense of the ‘company’ or the company way of doing things. This question was

asked to 19 interviewees, nine of whom, (47 percent), strongly agreed or agreed, eight

(42 percent) remained neutral, and two (11 percent) strongly disagreed or disagreed.

Figure 4-15 illustrates the results. The results are summarised in five themes: a) Failed,

diluted or ‘no culture’, b) Leadership impacts on OC, c) Mergers and change, d)

National cultures, and e) Describing strong cultures.

Figure 4-15. Interviewees (PBO-B to PBO-T) response to question 5. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38.

a) Failed, diluted or no culture

One interviewee argued that their PBO had “no culture”. The interviewee said

about the OC, “…I don’t pick it up, I think there are really good individuals who have

their own element of culture, but I don’t see an [PBO] imparted culture…” (PBO-N).

The interviewee argued that strong cultures generally came with smaller start-ups

where employees grew up together, culture was a difficult phenomenon and was more



than just the individuals who worked in an office. Projects tended to have a culture

and this was often driven by the project manager who generally imparted a sense of

obligation, assurance and teaming around project delivery. The interviewee continued

to reveal, “… so there is no culture. If there was it has gone, if there was any culture…

I don’t see it here, in this office, other than the logos on the doors etcetera” (PBO-N).

The PBO employed up to 500 or 600 people in the region not that long before the

interview, and after severe cut backs reduced staff to about 20 which may have

accounted for the culture evaporating. In addition, PBO-N’s EBIT and EBITDA ratios

displayed a mostly downward trend from 2010 to 2015.

Size seemed no barrier when it came to cultural strength as a smaller PBO

outlined it was trying to turn around a deteriorating culture. The PBO failed to define

the “company way”, did not have the right leadership team, and had made some poor

decisions regarding acquisitions and investments which made a number of employees

sceptical (PBO-M).

According to another interviewee, their PBO had also “lost its way” mostly

because of the “decade of crazy project activity”. The PBO had grown significantly

where people were allocated to projects but never really connected with the PBO, and

it appointed new leaders that were never fully inducted to the PBO’s culture. New

employees were given a branded shirt and expected to behave as if they understood

the company and its cultural values. The interviewee revealed, “It does not work like

that, when it grows that much there is not sufficient DNA to be shared around… it gets

diluted to the point… where you lose that way” (PBO-F). One more PBO was

described as not having a strong culture, but it was probably worse in the boom times

when a lot of people were coming and going, but as “work kept flowing through the

door” that was overlooked. However, it had recently restructured and was trying to

restore its culture.

b) Leadership impacts on OC

The sample PBOs tended to be led by engineers and/or accountants. According

to one interviewee, a leadership team made up of people with accounting backgrounds

managing teams of engineers was an identified reason for not having a strong culture.

The interviewee said the leadership team lacked the depth of understanding of an

engineering business and the necessity to foster innovation in project teams, which

resulted in a highly bureaucratic organisation with a silo mentality. This was in contrast



to working in more liberal organisations where leadership teams were sincerely

committed to the employees (PBO-D). Another interviewee argued the composition

of a PBOs Board and whether people had an engineering background or an accounting

people impacted on OC. The interviewee explained that engineers concentrated more

on safety than an accountant who would be more focused on the financial position of

the organisation. This raised questions about how a Chairman selects its Board

members, their background, and their degree of interest in the business. It also raised

questions on their ability to mix with staff, frequency of sites visits and who they talked

to such as customers or “… are they just talking to the analysts and putting up graphs,

revenue and backlog and margins” (PBO-H). According to this interviewee how this

is perceived and communicated impacts OC.

c) Mergers and change

Some PBOs were going through changes instigated by merger and acquisition

activity. One interviewee described a reinvigoration process of their culture due to a

number of acquisitions, which required managing local cultures and customs in various

parts of the world. Another PBO had an acquisition at the height of the boom, and not

long afterwards the market turned. Timing had a substantial impact on this acquisition,

a significant variance of price in a robust market compared to a downturned market.

The CEO, with tenure of over a decade, left months after the acquisition, implying a

negative reaction or perception associated with the acquisition. The implication was

that the decision to acquire a PBO at the peak of the resources boom may have cost

the CEO his job. Another interviewee said their PBO was also working on the

integration of the two businesses, it was slow and still had “a two business feel”.

Another interviewee revealed that their PBO had orchestrated a number of

mergers and acquisitions without addressing the need to change. One acquisition in

“… South America has undone them and it's caused a bit of grief” (PBO-C). While

the PBO’s culture was described as not strong, its business unit culture was stronger.

Another interviewee described a merger of two companies from different parts of the

world, with different national cultures about three to five years ago, and it still had not

integrated. The interviewee said, “They have not got there yet, they browbeat and say

they are the best in the world… that culture is in every company… it is still us and

them… there is very little way of empowerment in this company” (PBO-K). Another

interviewee said that their PBO was conservative, and that one of the downsides of



having people with long tenures was a certain resistance to change leading to “success

complacency”.

d) National cultures

Interviewees described the challenge of managing national cultures. This was

particularly insightful as the first three interviewees (presented below) were from the

top three performers as identified earlier in this chapter, PBO-H, PBO-L, and PBO-F,

and all had their parents and headquarters in North America.

One interviewee claimed the PBO often had problems with Australians. The

PBO found change difficult because people would agree to undertake initiatives and

then ignore the directive, and this meant that any change process the PBO tried to

introduce was difficult, resulting in certain negative aspects of OC having a definite

and detrimental impact. The interviewee explained, “…one of the things we are

struggling with here in Australia is passive resistance, it is incredibly strong, and it is

an Australian thing, and it is still in pockets of the organisation here in Australia”

(PBO-F). According to this interviewee, it was unclear if this was a result of market

conditions and if change in a stable market was an issue. An Australian viewpoint of

a North American parent said, “…Australians are good at pushing back…” (PBO-L),

and another interviewee explained there was a different style between Australia, North

America, the UK, Asia, and that national culture influenced policy and OC to a rather

large extent. In this PBO, everything was driven from North America and their view

of the world, “…as a manager here, with an Australian business unit with Australian

customers, Australian environment and Australia workers, we have to sort of push

back against some of that…” (PBO-H). The North American style of management was

described as “… very much one of don’t question your superiors, toe the line,

sometimes it can be shoot first ask questions later, and finding someone to blame. The

interviewee continued to explain that “… in Australia we don’t tend to be like that, we

do push back, we do challenge authority, we don’t look for someone to shoot when

things go wrong, we tend to be more focused on finding out what happened, and how

to stop that from happening again” (PBO-H).

Another example from PBO-N occurred when it was finalising contract

negotiations with a tier-one client to secure a project. After sending the contract’s

terms and conditions to North America for commercial legal review, the directive

came back with a list of about 24 pages of exceptions. The Australian team argued that



they could not present these to the client, because the client would exclude it on that

basis alone. “… what I was able to do, and this is about the ‘push back’ on core

values… if I went to the client with that we would be dismissed despite the fact we may

have the best people, the cheapest and everything, they will dismiss us on commercials

alone…. Let us highlight the top 5, which ended up being over a page”. This way the

team reached agreement and typically talked about the usual things such as limits of

liability, insurances, by being able to change the North American thought process to

have a local focus.

Similarly, an Australian PBO was described as ‘Australian dominated’, not by

staff but by revenue and compared itself to larger PBOs, “… when people sometimes

… feel like they are a passenger” (PBO-I), where the decisions are made in other parts

of the world. In contrast, another PBO took advantage of national cultures. The

interviewee said that an Australian culture in an Australian environment is not unique,

but an Australian culture in Hong Kong, Dubai or London is different and this was

something the PBO leveraged as a point of difference. The PBO found it could

influence a job through the Australian culture, i.e., “Australians are very motivated

people and that is why we succeed when we go overseas …we are prepared to look at

things less constrained, so probably the thinking is less constrained by the

environment, because this idea of lateral thinking is more encouraged in an Australian

environment, but less encouraged in a bureaucratic environment like the Middle East

or in a lot of those Soviet, or ex-Soviet countries…” (PBO-T). The benefit for the PBO

was it facilitated better and more efficient outcomes. PBOs operating in Australia were

influenced by the Australian values and management, even if the people were from

other parts of the world, they did not act entirely as a person from another country,

they acted as the face of an Australian PBO and they were influenced by that. Another

interviewee described their PBOs operations in Australia tiny compared to the rest of

the world, and said when PBOs do not inject a unique cultural profile it could be when

a business was “an outpost of an outpost”, (PBO-N).

e) Describing strong cultures

The leaders of one PBO believed it had a very strong culture, partly because it

operated globally as one business, had one ownership globally, and had consistent

behaviour with its leaders (it never had experienced a merger). It has had a strong



connection with the founder, and the steady movement of staff through secondments

or permanent relocations assisted the momentum.

Another PBO was also described as having a very strong culture, however, the

culture was not always right and at times it made poor commercial decisions due to

overconfidence. The uniqueness of this PBO was a strong value system established by

its founders based on ‘reasonable prosperity for all’. The current leaders were striving

to “… be the best company in the world in consulting engineering…. because our

profit share we are starting to realise is that we probably pay the best in the

industry…” (PBO-P).

Very successful, dominate and accountable was another portrayal, although

sometimes clients said the PBO “steam rolls them” by demanding decisions. The

interviewee said the PBO had “… a very strong culture, and it works, they know their

knitting...” (PBO-L). The strong culture was attributed to consistency around systems

and procedures, ability to service where market demand was strong, flexibility and

success in moving people into various roles as demand increased. Another PBO was

described as having a certain directness and hands on feel about its teams, and OC for

another PBO was influenced by “high degrees of local decision-making and autonomy

that was good.” (PBO-I).

Others found culture difficult to describe. According to one interviewee their

PBO had worked on its culture and the translation of its values, but when members

spoke about OC and the PBO’s “spirit” everyone had a different view (PBO-I).

Another interviewee said it frequently talked about “the [PBO] way”, but if people

had to describe what that meant, a lot of people would fail to understand and express

its significance and value.

Further, another interviewee claimed the implications of having an effective OC

where people were engaged and involved, meant managing the business was smoother.

Another claimed there were three levers working in unison to improve performance:

people, systems and culture. “All of our Tier 1 competitors have good systems, have

good people and they are all very competent. The success in the market is the culture,

and how you bring that capability to bear is inherently tired together” (PBO-I). Good

cultures were also described as having a strong leadership team, voices were valued,

and this was critical to success and growth (PBO-M). One CEO led a culture about

honesty and the right solution, not additional billable hours, and sometimes it was not



in their best commercial interest it was overall successful. Another interviewee said

that, “… everybody wants to bottle the culture of a successful organisation” (PBO-T).

Others compared successful cultures in PBOs to sporting teams, where culture

is pivotal. One interviewee said, “…any team, whether it is a sporting team or a team

here, culture is key…” (PBO-O). Another PBO was a proponent of a major State level

football team, and culture was all that the coaches talked about. Coaches said they can

accept the best football player, but if they did not fit culturally in the team then they

were out. “The coaches will move players on who just do not fit that culture of team,

of mateship, of passion for the State…These coaches can’t teach players how to throw

footballs…they know all of that… they just work on the cultural piece, the value set,

what it means” (PBO-Q).

Discussion

‘Agreement’ referred to the PBO being able to reach agreement on critical issues

including both the underlying level of agreement and the ability to reconcile

differences when they occurred (Denison & Neale, 1999). A lot of discussion, interest

and mixed results were generated around the strength of OC, which suggested mixed

levels of agreement within PBOs. The results showed the closest outcome between

agreement and neutrality (or the lowest agreement 47% and highest neutrality 42%)

more than any other index. This could indicate that the majority of PBOs did not have

a strong culture.

Market conditions appeared to impact cultural strength. The assumption was that

as companies continued to grow, win work and attract new employees easily, the

outcome would be a healthy, strong or successful culture. However, if that scenario

was amplified, such as interviewees described: “company grew so significantly”,

“more work than people”, “people coming and going”, “people chasing the highest

dollar and jumping between jobs”, “people were put on projects but were never fully

inducted”, “work kept flowing through the door”, “a crazy decade of project activity”;

then it seemed inevitable that some aspects of cultural strength would be impacted.

Added to this frenzied project activity were mergers, acquisitions and the timing of

such transactions in a robust market could mean the impact may not be felt until years

later, particularly for the large acquisitions. Indeed, some acquisitions occurred toward

the end of the resources boom, advantageous for some and disastrous for others.



Also, the decade long activity was probably the best income PBOs and their

people would receive in their lifetimes, and the concentration of power, knowledge

and wealth along with the grand narratives of delivering mega projects (accompanied

by technology optimised performance) was almost a hyper-real environment. The

successful period seemed to drain or dilute many PBOs culture. It could be argued that

many organisations underlying values, beliefs and principles, and their behaviours

(Denison, 1990) were shaken, tested, stretched or flouted by the force of the market

and the allure of profits, power and growth. Perhaps some PBOs faced a type of

cognitive dissonance and needed to clarify and reinforce their essence, or “DNA”, in

the aftermath of the hyper-market conditions.

The consequence, if one accepts that the strength of an OC can act as both a

buffer and a stabiliser against a hostile environment (Moon, et al., 2012) is that PBOs

have to build their cultural in stable times because it seemed inevitable that OC will

be fractured, diluted or negatively impacted in boom times. Also PBOs have to

consider the potential damage of merger and acquisition activities particularly in boom

times when OC is often at its worst.

National cultures were found to impact on OC in a number of ways, and this

directly supported the literature. In particular, PBOs with North American parent

companies tended to “push back” and could be passively resistant which was

particularly challenging for some managers. The North American style of management

was different to the Australian approach. It could be argued that the North Americans

often seemed to overlook, or lacked the wherewithal to understand the significance of

their style and its impact on Australian business culture. Leaders in Australia “had an

Australian business to manage, with Australian customers, in an Australian

environment, and with Australian workers” all set in a similar but different national

culture.

The connection of national cultures and OC supported the Literature Review

(page 41) where authors noted that that OC is shaped by the cultural preferences of

leaders and employees (Trompenaars & Hampden-Turner, 2011), and national cultures

(Fey & Denison, 2003). Organisations operating outside of their home country can

create unique challenges in leadership, maintaining a strong OC, and that some

managers believed that the leadership styles and OC that work in their home country

should work elsewhere (Parnell, 2014). Hofstede and Hofstede (2015) identified six



dimensions of national culture (page 43) and Schein and Schein (2016) argued that of

all Hofstede’s dimensions, Power Distance and Individual versus Collectivism, were

especially relevant to OC analysis.

6. OC Trait: Consistency. OC Index: Coordination and Integration

Question 6. To what extent would you say (all things being equal or remaining

constant) it is easy to coordinate projects across different parts of the organisation?

The results found that 12 interviewees, (60 percent), either strongly agreed or

agreed that projects were easy to coordinate, six interviewees, (30 percent), remained

neutral, and two interviewees (10 percent) strongly disagreed or disagreed that these

tasks were easy. The results are illustrated in Figure 4-16.



The results are unpacked into four themes: a) Established and consistent

processes, b) Coordination and integration difficult, c) Impact of mergers and

acquisitions, and d) Coordinating with offshore work centres.

a) Established and consistent processes

Coordinating projects for PBOs generally was interpreted as the ability to bring

together different engineering disciplines to effectively deliver to a client’s scope and

expectations. While most PBOs agreed it was easy to coordinate projects, others

disagreed. One interviewee said it had established processes that were consistent



around the world, and everybody followed the system. Another said that culturally the

PBO was formed out of big projects, it drew on multiple teams, attracted resources in

and outsourced, and competently performed well. One more interviewee explained

their PBOs data systems were pre-eminent, it operated sophisticated technological

systems internationally that worked well.

Another PBO claimed it had substantially improved, and if it did not bring

different groups together, then the opportunity to innovate was lost. Bringing teams

together allowed innovation to occur more effectively than employees working

singularly. For smaller PBOs, size seemed to work in their favour to easily coordinate

projects, i.e., one PBO had an operations support group that provided project assistance

across the business to ensure uniform processes. Another PBO did not have teams

working on projects in different locations as often occurred in larger PBOs, and its

projects typically were independent, “…that is how we run our business and it’s

effective” (PBO-R). Similarly, one interviewee said depending on the type of job, the

PBO liaised with the client directly, managed all the arrangements and executed the

work to the scope, and it was controlled and relatively easy to coordinate projects as a

small company.

b) Coordination and integration difficult

One PBO revealed coordination and integration was extremely difficult, in

comparison to how other PBOS managed projects, and another PBO had a complex

network of business models and structures which was challenging. The interviewee

said, “…there are different companies, contractual teaming agreements, rate tables

intercompany, profit sharing arrangements, different levels of margin acceptance,

past practices of always working with an outside contractor or engineering

consultant…” (PBO-E). Another interviewee claimed that delivering projects and

coordinating teams from different areas of a business was never easy to execute,

particularly internationally, and it often depended on the document management

system. Another agreed and said it took effort when people were not face-to-face and

it depended on IT services, social media, communication, and thinking beyond silos.

Another interviewee’s view was that “it works well when there are discrete packages

of work… and it is nicely defined…” (PBO-A).

One more interviewee argued that having mega projects in different markets was

always tough, and it depended on numerous factors. The big major projects, the iconic,



were often the marketing tool for the future which ensured people were available.

However, some projects that were discipline driven, such as a transport project or a

large tunnel, it was not possible to transfer a mechanical engineer who had worked in

mining because they would not have the skill set. “… it is specifically related to the

technical discipline that they have, but the major PMC [project management

consultant] type work, whether it be a mining project or a rail project, it is well on its

way to good collaboration” (PBO-G).

c) The impact of mergers and acquisitions

Mergers and acquisitions could be deemed as a coordination exercise also. It

seemed logical that consistency would be disrupted when a major acquisition

dominated a PBOs landscape. One interviewee explained it was a private company

with all its shares held by employees, it was sold to public listed construction company,

and then sold to a professional services business. “So it is a fundamental shift in

direction, and it has only been 12 months… So it does take time for that culture to

cascade through the business” (PBO-G).

Another interviewee ranked a PBO’s ability to acquire other companies as “A

triple plus”, but its ability to make the most of those acquisitions was quite poor. One

more interviewee argued it took a long time to acquire a company and assimilate it,

and said in a recent large acquisition the acquired party was steady, stable, trying to

win work and make money, and had more secure relationships and structures. It was

difficult for the acquiring company, which constantly purchased companies, and

because of its different style the outcome of the acquisition was probably not as good

as expected, and the turnover of people was significant.

d) Coordinating offshore work centres

All major PBOs outsourced work to offshore low-cost centres in countries such

as India, Manilla or China. Some claimed coordinating work with these centres was

relatively easy, while others said it was difficult. Although outsourcing work offshore

is not a new exercise, the challenge for PBOs was setting up the process, and for some

this was a laborious process, particularly when the host country’s first language was

not English. One interviewee revealed … that is part of the cost of doing overseas

work, cost centres or high value engineering; it’s not necessarily that high value by

the time you have someone here go over and organise it...” (PBO-A). Other challenges

were time zones and the quality of document management systems.



The development of offshore work centres were argued as a deliberate and

important business decision, now and into the future. One PBO’s outsourcing allowed

different parts of the firm to regulate its staff by sending to a central documentation

centre in India. This PBO’s model was purely support, and used outsourcing centres

to grow a business. According to one interviewee, most PBOs had outsourcing centres

somewhere, and unfortunately the choice of destinations were places where people

were paid less for it to be a successful model. The suggestion was that these centres

may evolve into something more, because wages will regulate over time, and it may

not necessarily be a low cost driver, but a competency driver. Thus, PBOs may

become better at outsourcing and not only dependent on cheaper labour.

Another interviewee referred to distributed work centres. Accordingly, it had

taken the PBO about 20 years to master distributing that work. The interviewee

claimed all major PBOs outsourced to remain competitive as clients did not like paying

AU$50 or $60 per hour for drafting, they wanted to pay less than AU$20 at times. The

level of establishment or sophistication of these centres depended on their lifecycle

stage. In the development phase they were managed by expatriates, and in the mature

phase they were managed by employees from the host country who obtained work for

themselves independently. One interviewee explained, “… the longer that they are

there, the more sustainable they become… …” (PBO-H). Another interviewee claimed

that a lot of PBOs only undertook offshore design work, but their PBO had a

localisation strategy. It delivered a project in a country or a region and built up a local

business in and around that foothold. “… we have countered the current trend, a lot of

other organisations have big resource bases in India, the Philippines and China at the

moment, and they are there only to do offshore design work, ours is the complete

opposite…” (PBO-I).

Discussion

The ‘Coordination and Integration’ index referred to the different functions and

areas of organisations and their ability to effectively work together to achieve common

goals, and organisational boundaries not interfering with delivering work (Denison &

Neale, 1999). The ease of coordinating projects across different parts of a PBO was

generally interpreted as bringing different engineering disciplines together to

effectively deliver to a clients’ scope and expectations. Some PBOs found this easy

and others found it difficult. The ease of coordinating disciplines depended on the



specifics of a project, i.e., some projects required coordinating international resources

in multiple geographical locations, others could be in a single location, and the size,

capital investment, complexity, schedule and location could impact a projects

progress. Essentially coordination relied on established and sophisticated document

management systems, clear project team expectations, and excellent communication.

Whether it was called value engineering, central outsourcing, low cost centres,

work-sharing, global sourcing, or distributed work centres, it was all about allocating

work to countries where people are paid less. All major PBOs were engaged in this

practice, some with established, integrated and more sophisticated models and others

with merely an interest in support centres. Maintaining quality, setting up processes,

language alignment, time zones, skills coordination and not competing with the centre

was the challenge. However, as most PBOs outsourced somewhere in the world, how

successful this exercise would be in the future was questionable as wages regulated.

Consistency Summary

The popular explanation of consistency emphasises the positive impact of a

strong culture (Denison, 1997), but organisations are most effective when they are

consistent with shared values, efficient systems and processes that are integrated well

(Denison, Hooijberg, et al., 2012). While these elements may provide the ideal or

optimum position for successful PBOs, the technical nature of their work, the

complexity of their environments and industry all contributed to various degrees of

consistency. The combined results of the three indices are illustrated in Table 4-3.

Table 4-3 Stage 1 interview results of OC trait of Consistency

Core Values Agreement Co-ordination and Integration

Strongly agreed or agreed 80% 47% 60% Remain neutral 15% 42% 30% Strongly disagreed or disagreed 5% 11% 10%

Behaviour appeared to be rooted in a set of ‘Core Values’ (the strongest index)

with strong affiliations to founders and the past. This was the case for many PBOs

ownership structures, where the majority had clear sets of supported and shared core

values. As the core competency of a PBO is its ability to manage project teams

effectively, it would be expected that the ‘Coordination and Integration’ index would

be relatively strong. However, there were many influencing factors such as the



sophistication of document management systems and effective communication. The

‘Agreement’ results suggested that PBOs may find it challenging to reach agreement

at times and this may be often due to the complexity of projects and their delivery.

Two PBOs revealed innovative attributes contributing to their OC, such as

something they had spent time designing and shaping that was authentic, added depth,

value and rewarded their stakeholders and/or the wider community, namely:

x PBO-P appeared to have a genuine and strong OC. It was confident with a

strong value system established by its founders based on “reasonable

prosperity for all”. Its current leaders were striving to be the best

engineering company in the world, and tried to pay their people the most it

could. This seemed to embody the essence of a healthy OC designed by

authentic founders and respectfully embraced by its current leaders.

x Many PBOs only conducted offshore design work, but PBO-I had a

localisation strategy and it seemed to take a genuine approach to corporate

social responsibility.

7. OC Trait: Adaptability. OC Index: Creating Change

Question 7. To what extent has your organisation responded well to competitors

and other changes in the business environment, particularly since the downturn in the

mineral resources sector? Participants’ views varied about how PBOs have responded,

as illustrated in Figure 4-17.

Of the 20 interviewees, 14 (70 percent) strongly agreed or agreed that their PBO

responded well, five interviewees (25 percent) remained neutral and one interview (5

percent) strongly disagreed. Five themes summarise the findings: a) First priority the

market, then competitors, b) Aggressive approach to competitors, c) Reactive as a

means to survive, d) Death spirals and price wars, and e) Resisting competitive

pressure.





a) First priority the market, then competitors

In summing up the events of the last seven or eight years, one CEO explained

when the resources market accelerated, many organisations emerged that were not

genuinely positioned in the mineral or mining space and, “… did not have a pedigree

in mineral processing or mine site development…” (PBO-Q). Hence, there were many

competitors. Although clients did not mind because they wanted work completed

quickly. As the market turned, many of these competitors failed to survive because

they had little depth, or no expertise, and nothing to show from having a short term

strategy in strong market conditions. Very quickly capital became tight, clients

preserved capital, and some projects were deemed uneconomical. The clever PBOs

seemed to gain the attention of their clients because they clearly understood how to

provide valuable services, such as assisting clients reduce costs and turnover projects

by innovatively resolving their financial problems. The survivors seemed to have

managed the adaption process effectively and many claimed to have a genuine point

of difference. Some interviewees said the current market was better for them now

compared to the last seven or eight years, and another claimed “… we are doing very

well, we are counter-cyclical at the moment” (PBO-I).



Some PBOs were more concerned with the greater market rather than competitor

activity. Interviewees argued the focus, drive and strategies were on clients and what

the clients wanted, not on the competition, and they did not respond to competitors.

The business environment and market were more important rather than monitoring

their competitors and “…we try and develop our strategy not to match what our

competitors are doing, but more to match what the marketplace is doing” (PBO-B).

b) Aggressive approach to competitors

Certain PBOs seemed to take a shrewd approach towards competitors. They

appeared to be proactive when anticipating and competing for new work, were

concerned with competitor activity, and had a strategic emphasis on the greater market,

and the opportunities and forces which impacted the future pipeline of work. They

clearly prioritised focused activity around winning work, and explicitly moved

strategy towards where demand was being formulated and generated. This group

seemed to be strategically clear and unperturbed by competitor activities or market

rivalry whether it was by size or technical prowess. Interviewees explained they

“absolutely” took notice of what their competitors were doing but only how they

delivered their services, or when competitors developed good ideas. One interviewee

revealed their approach was clearly aggressive, “… we are an aggressive competitor

and there is no doubt about it …we are hard at football when it comes to winning

business, and we are passionate about what we do” (PBO-Q).

c) Reactive as a means to survive

Another group of PBOs responded to competitors and other activities in the

market in a more reactive manner with a clear agenda of survival. One interviewee

spoke frankly about its response to change. It was a challenge, but they responded by

completely restructuring the organisation by reducing staff numbers to bring overheads

down, refocused business lines, and streamlined all the pay rates which meant virtually

everyone received a pay cut. “We have certainly responded. Whether it is well or not,

you have to measure that against your success of winning work” (PBO-H). Another

interviewee argued that it knew its competitors were really hurting because no one

predicted the downturn would be as severe and long lasting as it had been. This PBO

claimed it benefited from having a reasonable level of diversification, but like other

firms reacting quickly and rigorously had been difficult to manage, and it had been

more reactive than proactive.



A larger PBO rapidly reacted to changing conditions. The interviewee claimed

that “As soon as red ink started coming on to the page, and as much as it sounds

ruthless and horrible, there were retrenchments, there was no room for softness or

argy bargy, …it was slash and burn, and that is the strength of an accounting type

culture…and at the end of the day the business survived” (PBO-D). Another PBO was

hit hard in terms of not having work, but found a way to keep people utilised by having

roles in client organisations such as trusted advisor roles and managing other

consultants. The PBO understood what their competitors were doing and attuned to

what was going on in the market, “… we know they are cleaning up floors of people…”

(PBO-G).

Some PBOs gave examples of market responses. When competitors began

closing regional offices one PBO developed a deliberate strategy to maintain all their

regional offices, regardless of individual problems but had reduced staff numbers.

Another said the most activity in the resources sector at the moment was procurement

orientated and re-negotiating supply contracts to drive down operating costs. Another

revealed their PBO had won a project it had marketed very well, but “…there is no

other work going…” (PBO-N). Effectively utilising technical resources indicated how

a PBO adapted and performed. If engineers were not fully utilised they were likely to

be on the departure from a PBO, and that was the nature of project work. Often good

people left a PBO because of this, and expendable people stayed, “… utilisation is

king” (PBO-K).

d) Death spirals and price wars

Rivalry on price was a thorn in the side for many PBOs, and indicative of the

deteriorating resources investment market where customers pushed prices down.

However, it seemed enviable that some PBOs were prepared to joust on price.

Described as a “race to the bottom” one interviewee said in the current environment it

was relatively easy to get to a position where there was a price war about the lowest

cost regardless of service output, quality or innovation, and the PBO had tried

“incredibly hard” to resist that force. Its overheads ran about 10% higher than its

competitors, and to offset this it would often joint venture with companies that had lower

overheads as a way to manage price wars. Other PBOs revealed their strategy was not

to repeatedly cut prices, but tried to design a service offering in another space, or region

where their competitors were not strong. Another interviewee said it tried not to



compete on price, “We try and position ourselves more on the value or on the

relationship…” (PBO-G). Sometimes it needed to respond, but did not spend a lot of

time analysing its competitors pricing, and this approach seemed to work.

Further, the Chairman of one PBO said that at times PBOs lacked rational

judgement by attempting to buy jobs, they became so desperate because of

commitments and overheads, and marginal costing became irrational thinking. “…

because eventually you will be doing the work for nothing and no one will be covering

the overheads and paying costs… so people end up in the horrible ‘death spiral’ where

the incremental costing model does not work… when it comes to cut, cut, cut, to win

work then it is time to be saying ‘well it is time I closed a big chunk of the business

and go fishing’” (PBO-R). This PBO had a reasonably good idea of what its

competitors cost structures were and the margins they normally operated at, “…

everyone is cutting margins and doing silly things in the current market. So when you

get into that position, sanity does not always prevail” (PBO-R).

With demand for engineering services in decline, it has become a customer’s

market and while some PBOs appeared to have a more disciplined approach and the

ability to negotiate with clients, others were more vulnerable. However, the nadir of

price was not the view held by all. One interviewee claimed the PBO had to shift

strategy and accept lower profit margins, to remain competitive. While it had not lost

money, it was not achieving the revenue it had made five years ago.

Another interviewee admitted that while it was not interested in a race to the

bottom for rates, one recent project it had priced at cost. It was the front-end loading

(FEL) phase of a project it priced at cost in an attempt to win the work for the next

phase. This was a strategy many PBOs would contemplate.

e) Resisting Competitive Pressure

Not all PBOs choose to respond to competitors directly. While they appeared to

be cognizant of competitor activities they relied on their underlying beliefs or

leadership principles with historical processes to manage adaption. One interviewee

explained that their PBO choose not to go head on, and that it was part of their

positioning, “… we don’t position ourselves to be head-on. We position in areas we

don’t have competition …” (PBO-F). Another interviewee argued that PBOs were

reducing staff numbers including engineering personnel. “… we have not followed suit

in a sense that a number of our competitors have gone through a redundancy process



over the last two years where they have reduced, and reduced and reduced… you need

to have those technical people to remain in the game…” (PBO-G). .

Alternatively, some interviewees admitted that their PBOs were insular or

internally focused, responded slowly to competitors and other changes in the market,

or lagged and were slow to transition. “... we are not using the current downturn to

transition quickly enough… it is hard to move, because we work across three or four

business units. We have always been known as a conservative company. So we don’t

tend to move rapidly” (PBO-L). A smaller PBO agreed, ”…we looked internally, and

said what do we need to do, it is very much about keep doing what you are doing and

do it better…”(PBO-O).

Discussion

‘Creating change’ refers to an organisations ability to create adaptive ways to

meet changing needs and their ability to read the environment, react quickly to current

trends and anticipate future changes (Denison, Nieminen, et al., 2012). This index is

particularly significant for this research, as the market has changed distinctively for

PBOs. A consequence of the unprecedented demand for their services at the height of

the resources boom was due to the volume of competition and the persistent emergence

of new competitors. This was confirmed by IBIS World, that reported the industry

displayed a high level of competition, and this had increased over the past five years

due to the entry of large scale global consultancies, and the constant entry and exit of

smaller scale PBOs (Williams, 2016).

The results established that most PBOs observed competitor activity, and how

competitors delivered their services or formulated good ideas. However, other changes

in the business environment such as demand-driven changes and client behaviour were

more of a priority. Certain PBOs were prepared to compete ‘head on’ and aggressively

with competitors, others were reactive, or slow to transition to change.

The exploration of how PBOs approached price assisted bridge an identified

research gap that price was an under-researched topic in industrial firms (Liozu &

Hinterhuber, 2013). Rivalry on price was a thorn in the side for many PBOs, where

customers were pushing prices down in an unsustainable manner. PBOs generally tried

to resist competing on price by joint-venturing with other PBOs who had lower

overheads, or tried to work in regions or areas where competition was not as fierce,

shifting strategy and/or accepting lower profit margins. Some PBOs engaged in price



wars to buy work, particularly the FEL work in order to position themselves for the

future stages of projects. Although competing on price and the focus on the lowest

price, regardless of service output, quality or innovation can became irrational thinking

and once this commenced can end in a ‘death spiral’. Astute PBOs were aware of their

competitors cost structures and the margins they normally operated within. As the

sector is narrow, and people move between organisations, many experienced

practitioners knew each other well. Understanding competitor activity was important

but market insight was considered more important.

8. OC Trait: Adaptability. OC Index: Responding to Customers

Question 8. To what extent do customers’ comments and recommendations often

lead to changes within the organisation?

The findings confirmed that most PBOs appreciated the importance of

customers’ comments and recommendations, yet the extent to which they managed

feedback varied. Of the 20 interviews, 16 (80 percent) strongly agreed or agreed that

customers comments often lead to changes, one (5 percent) remained neutral, and three

(15 percent) strongly disagreed or disagreed, see Figure 4-18. The findings are

explained in four themes: a) Strategic and proactive, b) Slow to respond, c) Most

commonly requested: price and people changes, and d) A customers market.

Figure 4-18. Interviewees (PBO-A to PBO-T) response to question 8. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey: Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA, p.38.

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Organisational Cultural trait: AdaptabilityCultural index: Customer Focus



a) Strategic, and proactive

Certain PBOs appeared to tailor their business to their customers’ needs, aimed

at a state of alignment by understanding their issues and anticipating their future

requirements reflecting a genuine concern to satisfy them. One CEO succinctly said if

a PBO was not listening to their customers “they were dead before they started” and

explained as part of its strategic plan it spoke with about 30 or 40 of its customers to

gain insight about their current issues and future requirements. For this PBO, it was

important to understand the issues now and three to five years’ time, and gain insight

into the broader future industry prospects.

Similarly, another leader argued that if a PBO was repeatedly told by their

customers they missed out on work because they were AU$10 an hour too expensive,

and heard this enough times, they had to accept it. Consequently, that became a driver

to adapt their business case. “…Basically you have to respond to your customers’

needs, if you don’t listen to your customer you won’t have them very long” (PBO-H).

Another interviewee, whose PBO had an American parent, preferred a longer

term approach rather than short term revenue generation, which allowed it to develop

a common alignment of goals and benefits. The interviewee explained, “being a good

American company the customers were always right” as their underlying values. Their

strategic approach was very focused on a few key clients and a long-term orientation

to major relationships, “…that is where they put all their effort, and you would not

make all that effort if you were going to disregard what your clients’ requirements

were…” (PBO-J).

In contrast, another PBO was over reactive in trying to satisfy customers, was

submissive and at times allowed project teams to be dictated to by customers. The

interviewee had observed behaviour in project teams where the customer was

demanding, rather than taking the advice of the engineering team. “… we tend to be

subversive…in some cases the relationship with clients is good and some projects the

client becomes too dictatorial… We are not firm with clients, like other

organisations…” (PBO-K). The team’s submissive behaviour often led to rework and

a lot of extra work, which was described as “haemorrhaging” in some projects. Often

customers did not have the engineering knowledge or were risk adverse resulting in

the PBO’s conservative behaviour, said the interviewee.



b) Slow to respond

Some PBOs admitted they were slow to respond to customers. One interviewee

said sometimes their PBO was slow to react because they did not manage customer

criticism well. “… we say that because they are stupid, they don’t understand. That

is a flippant statement but it is that sort of sentiment” (PBO-P). Another interviewee

said it was because of the complexity of projects and there were always reasons given

for not delivering, i.e., it may be perceived that a PBO had not delivered adequately,

when in fact it had performed as much as it could, because of other changes or impacts

on the project. Thus, the nature of the work provided many assumptions that a PBO

had not delivered when often it had. Another interviewee specified that while client

complaints received a strong reaction, feedback on commercial matters was slow. “… I

don’t think we listen well enough... we have had feedback on certain aspects of our

commercial approach for many years, and I would say we are only responding to that

now” (PBO-F). Others described high levels of bureaucracy and leadership styles

underpinned by accounting principles, “… it just gets bogged down in the

bureaucracy… it’s very good at responding to short term ‘red ink’ issues, it is very, very

reactive rather than proactive” (PBO-D), and not responding to customers “…as often

as you might think” (PBO-T). No matter how PBOs responded to customers’

comments, they could not overlook requests to reduce rates.

c) Most commonly requested: price and people changes

Price, particularly reducing rates, was a topical conversation with PBOs

customers and it did not depend on market conditions. It was relevant whether the

market was booming, busting or indifferent. In a contracting market, customers

seemed to be more overt about PBOs reducing fees, and it was not uncommon for two

or three requests in one year, or blatant requests to drop rates by specific amounts.

Examples included, “They don’t write to us much, they just tell us... in the mining

industry, we have received letters saying ‘sharpen your pencil’ and they have used

those words...” (PBO-T), “…we have had clients say to us sharpen your pencil, and

we have within reason…” (PBO-R), “We have all had those letters…” (PBO-I), and

“…we have got that one as well, so we did … this is a tough one for us… we don’t have

the cheapest rates, and we often struggle with it…” (PBO-O). The extent of requests

was also shared across PBOs, i.e., “…our largest client we probably had three rate

reductions this year [2015]” (PBO-M), and “Last June, plus Christmas, we had letters



from customers requesting us to drop our rates by 20 percent” (PBO-A).

The challenge for PBOs in accepting to reduce rates was the expectation, or

assumption from clients to maintain the same level of service quality as a PBO was

renowned for providing. One interviewee explained, “…the assumption is if they come

to a company like ours, the quality is guaranteed, whether you do it for this price or

that price” (PBO-T). One smaller PBO shrewdly responded after it had received a

letter from one of its main clients to reduce rates. It not only reduced rates for that

client but reduced rates for all their clients. That was considered a positive strategy

and the interviewee noted that clients remembered this and reminded the PBO of the

initiative. However, the PBO had reduced rates to levels before the boom, and had

slowly reduced salaries also.

When customers requested PBOs cut rates part way through a project it could be

awkward. This situation was not unique. A larger PBO revealed they had clients,

during the term of a contract say ‘I can get an engineer AU$20 an hour less than what

I am paying you at the moment. I want you to do something about it’. This tended to

add pressure and potential stress to all involved, as the interviewee noted, “In

Australia, we have industrial relations laws which means I just can’t sack someone

and bring someone else to do the role for $20 an hour less, that is unfair dismissible…”

(PBO-H). PBOs cannot easily and quickly respond to this state of affairs by cutting

existing teams. However, for a brand new contractor that was new to the project this

was a different matter, because it could begin with a new team of people and agree to

pay different rates and terms in a new contract. But, if PBOs had an existing

workforce, with existing rates of pay, the situation was more problematical. While

some clients appreciated the situation others appeared to be very demanding “… or

sometimes they just have to shoot you to lose the contract… or engage a new and fresh

workforce at lower rates of pay” (PBO-H). Another interviewee said typically, “We

are responsive to it, but there is only so much we can do, but we do take it on board…”

(PBO-R).

Another issue that occurred in boom times was inferior work undertaken by

some competitors. This could be serious particularly when other PBOs were engaged

to correct problems, i.e., “… a lot of the work we have been doing lately is about people

dropping the ball…. If you don’t listen to your client and you don’t deliver in a way

that is good for both, you get found out…particularly in this market than in the peak…”



(PBO-O). This confirmed what the CEO from PBO-Q said at the introduction to the

Adaptability trait in the last question, that in the boom times a number of competitors

emerged that did not have a “pedigree” to work in some areas of the resources sector.

d) A customers market

Inherently, the large first-tier mining producers have the market power to

stimulate demand, cut supply for engineering related services, and manoeuvre on price.

Hence, currently it was a customers market, where their requests may be demanding

and unfavourable to PBOs. The Chairman of one PBO explained that one of the big

mining companies had a 60 day payment policy, which was difficult to accept

particularly when a PBO paid their contractors within 15 days. While some of the

larger PBOs may be able to buffer such contract terms, these type of underlying

business principles can add pressure to a relationship and do not enhance a PBOs OC.

Another example was that a first-tier mining company wanted a particular person to

perform work and said, “…this is the rate we are prepared to pay…” (PBO-R). This

was not aligned to the principles of the PBO, devalued the work required to be

undertaken, and hence the PBO declined the assignment. Another PBO had declined

contracts when the terms were unfavourable e.g., generally around liabilities,

guarantees, or consequential damages. However, other PBOs accepted certain

conditions and were willing to manage the associated risk, and others said that in the

resources downtown they accepted conditions they would have not in the boom times.

Generally, PBOs said they never ignored their customers’ comments, but with

Government clients it was increasingly perplexing and they did not always respond to

every comment. Interviewees said pursing Government work could be an arduous

process and that “… Government clients in particular have a lot to answer for… where

[a certain client’s] panel arrangements are asking for rates that are so low they are

ridiculous….” (PBO-P).

Discussion

‘Customer focus’ suggests that PBOs understand and react to their customers

and anticipate their future needs, and reflects the degree to which the organisation is

driven by a concern to satisfy its customers (Denison, Nieminen, et al., 2012). PBOs

tended to listen to their customers and mostly responded to their comments. The PBOs

who appeared more client centric seemed more optimistic and took a longer-term

strategic view. While some PBOs were slow, repeated messages from clients forced



them to react. One PBO was over-reactive in trying to satisfy their clients, and at times

was submissive which seemed to add a layer of disappointment and duplicity to project

teams caught in a situation that often led to a lot of rework.

It is reasonable to argue that the nature of the work engineers often perform can

be described as possessing credence qualities, because customers may be unable to

evaluate or understand the complexity, technical density, or reasoning behind certain

aspects of project design or execution.

In developing a framework for describing ‘complexity’ in large engineering

projects, Bosch-Rekveldt et al (2011) found a total of 50 elements contributed in three

categories and 14 subcategories:

x Technical complexity: goals, scope, tasks, experience, risk

x Organisational complexity: size, resources, project team, trust, risk

x Environmental complexity: stakeholders, location, market conditions and

risk.

Few participants in their study mentioned project size, such as engineering hours

or capital expenditures as contributing to project complexity (Bosch-Rekveldt, et al.,

2011). Thus, the work of PBOs can be complex beyond what some clients may

anticipate or appreciate, and this may help explain why some PBOs were slow or

declined to respond to customers.

The most common client request was for PBOs to reduce rates and this topic

assisted fill a research gap identified by Liosu and Hinterhuber (2013) that price was

an under researched topic in industrial firms. As the current market conditions were

more favourable to customers, than the project organisations that service them, it was

currently a customers market, indicative of their overt behaviour towards rate cuts and

changing project personnel. Customers had demanded rate reductions, more than once

a year, and at times specified what rates they expected to pay. The challenge in

accepting to reduce fees was the assumption the quality was guaranteed. Expecting

PBOs to reduce rates and change project team members midway through a project

could potentially sour a relationship. Some situations often meant a PBO could not act

quickly, particularly if the contract was supported by a legal framework, and

Government clients could be more arduous with tendering processes.



9. OC Trait: Adaptability: OC Index: Organisational Learning and change

Question 9. To what extent are innovation and risk taking encouraged and

rewarded?

This last question in the ‘Adaptability’ trait was anticipated as potentially

problematic for PBOs. To address this issue, risk and innovation were asked to be

thought of in the context of a PBOs adaption to contract delivery methods. The

relevance to OC was outlined in the Literature Review (2.24 Legal Environment),

where (Ankrah & Langford, 2005) noted that the nature of the industry with its project-

based arrangements, contractual arrangements, joint-venturing, internationalisation of

procurement, and the need for cooperation of the myriad of participants make PBOs

and their projects more susceptible to the influence of OC and culture in general. The

results of this question were different from many of the other questions, with a 50:50

split between agreement and neutral/disagreement.

Only 10 interviewees (50 percent) strongly agreed or agreed that innovation and

risk taking were encouraged and rewarded, six interviewees (30 percent) remained

neutral, and four interviewees (20 percent) strongly disagreed or disagreed see Figure

4-19. The results are explained in five themes: a) Engineers and innovation, b)

Contract delivery models, c) EPCM, d) Lump sum, and e) Risk appetite: healthy or

averse.



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Organisational Cultural trait: AdaptabilityCultural index: Customer Focus



a) Engineers and innovation

Innovation and risk taking in the same question was claimed to be contradictory.

One interviewee explained risk taking is a dichotomy, if it is around commercial risk

it was not encouraged at all, but if it was around trying new things within a controlled

way it was very much encouraged and rewarded. Similarly, others said, “Innovation is

encouraged to a great extent, with risk we are encouraged to manage risk” (PBO-H),

and “technical innovation is rewarded” (PBO-C). Interviewees tended to agree that

innovation for PBOs operating in the resources sector was difficult to demonstrate

compared to other sectors. One interviewee said everybody wanted to be innovative,

“it’s a catch phrase ‘bingo…” (PBO-G), and unless PBOs were occupied by R&D type

activities their traditional work was considered a challenge to be innovative, particularly

in the current market. Usually, the opportunities for innovation were how the work was

contracted or procured for clients, or being creative with delivery, design, and execution.

Another interviewee argued that engineers tended to think they were “beaten up” with

the term innovation, and “innovation is in the eye of the beholder…” (PBO-L). Much of

the work a PBO performed could be innovative i.e., how they applied their skills, and

innovation could be integrated into a project team but members may not realise it, such

as working on a smart design or new technological development, which was almost

impossible to document. Others concurred that although they offered good ideas, it was

not recognised as well as it could be.

Certain firms described innovative delivery methods such as working with

offshore delivery teams, outsourcing, modularisation, and saving clients’ money could

contribute to innovative processes. Interviewees said, “… innovation is important, but it

is more how we execute the work, and costs savings in a relatively traditional delivery

format...” (PBO-J), and “We have low cost engineering centres, low cost purchasing

centres; we are always looking at low cost countries. New Delhi is booming” (PBO-L).

Another PBO was holding an international ‘Innovation Summit’ inviting employees

to submit ideas, concepts to address change, and the future.

One group of interviewees spoke about the obstacles for being innovative and

bringing the learnings into a PBO. While some companies did not want to stifle

innovation, their structure and their culture often obstructed innovation, particularly

large PBOs, i.e., “… if they are really hierarchical and bureaucratic they are going to

stymie innovation…” (PBO-B), and the level of compliance can “stymie innovation”



(PBO-E). One PBO had created a new Board position of Innovations Leader reporting

directly to the CEO, and one more encouraged innovation through its business

development and tender process.

b) Contract delivery models

At the height of the mining investment cycle, it could be argued that large mining

companies accepted more risk, as their rewards were greater with many external

environmental factors working in their favour. As the market shifted, so may have their

tolerance for risk. However, mining by its very nature is risky due to many factors

such as what is being mined, whether the resource is going to sell, its value, how and

where it will it be mined and processed, and potential risk to the environment. This

can mean that in difficult times mining companies can be risk averse and aim to

maximise the sharing of the risk.

Risk tolerance was addressed through identifying a PBOs choice or selection of

different contract delivery methods (this topic was explained in the Literature Review,

2.2.4 Legal Environment) which may in turn impact on performance or OC. Thus, a

PBOs ability to be innovative with creating new or different models to deliver projects,

such as with a reward element built-in if certain risks were managed exceptionally

well. One interviewee said that decisions about contract suitability for PBOs were

influenced by many factors, i.e., BOO (build, own, operate) would work well if a PBO

was building a road and planned to own it afterwards, but it would not work in the

mining environment because if the PBO built, operated and owned a mining operation

then it would be seen as a competitor to its mining clients.

In the current market, certain sectors preferred certain models. One interviewee

explained that their power projects and LNG (liquid natural gas) plant projects were

undertaken on the lump sum turnkey basis, but mining projects were performed doing

an Engineering, Procurement, Construction Management (EPCM) approach. “…our

customers don’t like us doing EPC as part of the project, the big tier-1 miners don’t

see you have an EPCM guy, and then a contractor installing, they don’t see the wrap.

Whereas in the power business and the LNG business that is the done deal, if you are

in that market you do it that way” (PBO-L). This large PBO examined their portfolio

and ensured the balance of risk was shared across its business and it had undertaken a

lot of schedule risk and reward, but less price risk and reward. Another said its



strategic drive was ‘EPC delivery’ in the coal seam gas sector, and that was the market

of the future although it was running a higher risk profile.

c) EPCM Model

A group of PBOs claimed that the EPCM model would no longer be a popular

model. One interviewee argued that in the next five years the industry was going to

struggle with that sort of model. The EPCM model is currently under a lot of stress

because customers were questioning the amount of risk they took with various delivery

models, particularly when PBOs were often encouraged to sell more hours. There were

likely to be modifications to that model, “The financiers are now demanding fixed

price security and price type guarantees…” said the interviewee (PBO-Q).

Accordingly, the first-tier miners requested an EPC “hard money” delivery. Some

PBOs were engaged in those discussions, and said that it was the first time that first-

tier mining companies were talking about this, although the second and third-tier

miners it regularly occurred, continued the interviewee. The first-tier mining houses

were going to drive that discussion and that agenda, particularly preferring the full

fixed price approach, hence the whole way the industry had operated was likely to

change. In addition, this interviewee believed that the industry had changed with the

emergence of competitors from non-traditional parts of the market, such as accounting

firms buying consulting businesses, and said it remained to be seen what these types

of organisations will bring in terms of competition to companies operating in the

consulting space. In other words, the future for PBOs depended on how they adapted

to changing forces, and “…if you have not got the flexibility and are not prepared to

take some sort of risk in these tough times you are going to struggle…” (PBO-Q).

Others agreed, one large PBO was open now to more risk than it had experienced

for a long time, because a lot of clients looked for more security. “The EPCM model,

which has performed well for many years, is under a lot of scrutiny because it does

not limit the amount of expenditure, and clients are trying to find a way to secure their

capital expenditure costs…” (PBO-N). Clients looked at PBOs that were more

innovative in the way they delivered projects, and it all came back to the ability to

“lump sum” the project or secure the price in some way, or a portion thereof, said the

interviewee.

Another interviewee described their PBOs change of values, beliefs and

principles came through a recent acquisition. Prior to the acquisition, the PBO was



driving EPCM delivery due to it being very lucrative for it in the past. However, the new

owners were willing to accept less favourable conditions of contract. Previously the PBO

was not happy to accept liabilities that were too high or uncapped, but if there was a

reward at the end of the day then the PBO was now more willing to accept conditions

that were a little onerous or less favourable.

d) Lump sum

Certain PBOs said that a lot of customers now asked for “lump sum” pricing.

One interviewee explained that when customers required a small job they did not

request the amount of hours, but wanted a price. This method avoided “haggling over

the hours, the outcomes are more easily agreed, and the deliverables are going to be

reached” (PBO-R). Another interviewee described their large PBO as having evolved,

“…we used to be all reimbursable EPCM, now it’s lump sum…” (PBO-H). It had

realised if it wanted to improve margins it needed to take more risk, and that was the

direction. The PBO had studied the whole supply chain: engineering, managing

construction, procurement; examined where the margin goes, and where it could make

and keep margins. “…we recognise we have to accept more risk in our contracts, our

customers are demanding it, and our competitors are doing it, however we have to

manage that risk. We are not going to go under. It’s a very strong management issue;

we have stubbed our toe a few times…” said the interviewee (PBO-H).

The majority of another PBO’s engagements were lump sum deliverables, where

the risk laid with them, and its appetite for risk was probably greater than other PBOs.

For example, the interviewee explained that other PBOs, “… will look at a $2 billon

mineral processing job with process guarantees and see no risk at all, or look at an

independent verifying role in transportation and see nothing but risk…” (PBO-I). The

interviewee said their PBO was the complete opposite, and that every business was

different. In contrast, another interviewee explained their PBO would not do anything

lump sum. “It comes back to this long-term view of clients, it is still very much EPCM,

still EPCM…. The margins is where it is probably tougher, selling at the margins is

where the pain comes from. We have not necessarily changed our delivery model or

tried to get into areas because there has been a change in business conditions” (PBO-

J). Most PBOs did not encourage or reward risk taking due to their underlying principles

of conservatism, although some seemed to be more risk adverse than others. With the

downturn there seemed to be greater demand for lump sum work which could impact on



some PBOs more than others, and this seemed dependent on a PBOs underlying values,

beliefs and principles towards risk.

e) Risk appetite: healthy or averse

Of the 20 PBOs, net profit results for international operations were available for

14 firms. Figure 4-20 illustrates a possible link of risk tolerance and performance. The

results suggested that some firms that have a larger appetite for risk have suffered

financially, but this may not necessarily be due to contracting types they undertake,

but other internal and external environment factors as well. Of the 14 firms, three of

the worst performers, three moderate performers, and three of the best performers are

examined by their net profit margins in 2015.

Figure 4-20. Net profit ratios of 13 PBO international operations from 2011 to 2015. Source: online databases: Company 360 (Dun&Bradstreet), Melbourne, Australia; and Osiris and Obis via Bureau

Van Dijk, Amsterdam, Holland. Accessed on March 8, 2017.

Worst Performers

x PBO-Q’s (red line) competitive advantage was their appetite for risk. The

CEO explained the company would do EPCM, engineering hours at a

rate, combinations of risk on an EPCM, incentives against performance

on an EPCM, fixed price lump sum turnkey, and EPC contracting where

it would accept total construction risk. It would also provide performance



guarantees, process guarantees, and accept liquidated damages. However,

PBO-Q’s financial performance was the worst of all of the 13 PBOs as

illustrated in Figure 4-20. Interestingly, PBO-Q’s CEO declined to invite

staff to participate in the Stage 2 OC survey because he anticipated it

would produce unfavourable results. When asked (later in the interview)

to what extent would you say there is a strong culture in PBO-Q, the

interviewee ranked the answer “Neutral” and that the company was going

through a “reinvigorating process”, which suggested a possible link of a

poor OC and disastrous performance (the last three years it had returned

negative results) and reported -35.0 percent net profit in 2015

x PBO-C’s (pink) interviewee said the firm would accept different degrees

of risk in its contracts but did not take construction risk. PBO-C’s poor

performance in 2015 (-10.2 percent) may have been due to a South

American acquisition that did not go well for the firm as the interviewee

mentioned earlier in the interview.

x PBO-D (purple) was depicted as bureaucratic and risk adverse, “… you

can’t really take a risk… getting anything to change is extremely difficult.

There are that many restrictions… the restrictions of its bureaucratic way

of operating” said the interviewee. PBO-D returned -0.8 percent in 2015.

Moderate Performers

x PBO-P (black) interviewee’s revealed the PBO was a project managers

on a project a number of years ago when a fatality occurred. “… everyone

folded; our CEO went before the judge to be charged with criminal

offences. So construction risk, people are very, very nervous about, so that

has driven a culture of don’t deviate from the safe model”. Consequently,

this PBO preferred to do direct engagements, and design and construct.

“They are our two business models, we don’t do EPCM or anything like

that” (PBO-P). PBO-P’s returned 2.91 percent in 2015.

x PBO-J’s (dark blue) interviewee argued that the PBO would never sign up

for lump sum project work in Africa, “… there is none of that, it is very

conservative”. PBO-J’s net profit for the five year period was more stable

than some of the other PBOs, it returned 3.6 percent in 2015.



x PBO-H (light blue) had strong principles about understanding and

managing risk. This PBO had a corporate process for managing business

risk, that assessed contractual risk, terms and conditions, liabilities, and

execution risk, schedule, cost and quality and the like. “…That is one of

the reasons we have been in business for over 100 years… it is a company

that does not take crazy risks” PBO-H’s net profit results were relatively

stable, and returned 4.0 percent in 2015.

Best Performers

x PBO-O (yellow) undertook contract models that included risk and reward,

but tried to mitigate the risk. The interviewee argued that the PBO

probably had more of an appetite for risk than its competitors. “…we do

our assessment and if it stacks up we will do it, or maybe we come up with

a different model where we say we are happy to do the design and supply,

maybe we do the construction on a cost plus or something like that…”

PBO-O returned fluctuating net profit over the five year period, and

returned 4.6 percent in 2015.

x PBO-N (light green) had a recent acquisition with two companies holding

different beliefs and principles about risk. One company had a “…hard

money, blue collar, construction background, they will go in and lump sum

jobs whereas [the other PBO] is very conservative…”. PBO-N profit

fluctuated over the five year period, it returned 5.4 percent in 2015

x PBO-A (dark green) was described as “risk averse” but will do lump sum

work such as water treatment plants, tunnels, but the risk had to match

the reward. It returned 5.5 percent in 2015

Other interviewees said that their PBOs accepted jobs they would not have

considered prior to the downturn, including higher reward jobs as well, such as due

diligence work that was considered high risk. In tough times, this PBO would not

decline these opportunities, because it needed the work. This appear to be a common

theme and a reflection of a contracting market.

The above results showed the PBOs that appeared to have a larger appetite for

risk performed worse than the PBO who seemed more risk adverse. However, these

results were for their international operations, and whether they encouraged or



rewarded innovation and risk taking depending on many other variables (i.e., a large

project under performing, specific contract terms and conditions, country risk, size and

type of projects, experience of project manager and team, mineral resource specifics)

that are beyond the scope of this paper. The results were included to provide a useful

comparison against the results of Australian operations, discussed in the next chapter.

Discussion

‘Organisational learning’ indicates how a PBO receives, translates and interprets

signals from the environment into opportunities for encouraging innovation, gaining

knowledge and developing capabilities (Denison, Nieminen, et al., 2012). Innovation

was viewed as difficult to demonstrate in the traditional engineering space. There was

an expectation for PBOs to be innovative, but a perception that engineering was not

innovative. The juxtaposition was that some PBOs felt “beaten up” by expectations of

innovation. However, the results revealed that engineers were relatively innovative in

many of the core tasks they performed. For example, how the work was contracted,

procured, delivered, designed, or executed and innovation could be integrated into a

project team without being realised such as working on a smart design or new

technological development.

Risk in this paper emphasised risk associated with different contract delivery

models that PBOs typically performed. It is plausible that a PBO’s tolerance for risk

is embedded in their values, beliefs, behaviour and management practices: their OC.

A small group of PBOs had a higher tolerance for risk, and this seemed to be reflected

in their 2015 net profit margin. However, most PBOs were not prepared to take undue

risk.

It was argued that the large mining companies accepted more risk at the height

of the mining investment boom, but were now discussing limitations in their contracts.

The implications for PBOs were they may have to be flexible in their delivery models,

or were likely to struggle in the future. The mere wording of risk and innovation in the

same question, adapted from the DOCS instrument (Denison, et al., 2006), was

considered ambiguous and appeared not suited to PBOs in this context.

Conclusion of the Adaptability

‘Adaptability’ refers to employees ability to understand what customers want,

learn new skills, and change in response to demand (Denison, Hooijberg, et al., 2012),

it is about reacting to market conditions, is externally driven, and reactive (Moon, et



al., 2012). Interviewees tended to strongly agree and agree that PBOs responded well

to competitors and other changes in the business environment (75 percent), and

customers’ comments and suggestions often led to changes within the organisation (80

percent).

However, whether their intelligence gathering led to correct interpretation and

ability to translate the learnings into meaningful strategic intentions and/or implement

actions was mixed between agreement (50 percent), and neutral or disagreed (50

percent), see Table 4-4.

Table 4-4 Stage 1 interview results of OC trait of Adaptability

Creating Change

Responding to customers

Organisational learning and

change Strongly agreed or agreed 75% 80% 50% Remain neutral 20% 5% 30% Strongly disagreed or disagreed 5% 15% 20%

Five PBOs appeared to have an innovative, genuine and unique strategy or

attribute that contributed to its OC through adaptability, namely

x PBO-F struggled to complete for work on price, as its overheads ran about

10 percent higher than its competitors, thus to offset this it often joint

ventured with PBOs that had lower overheads to manage price wars.

x One of PBO-R’s approaches to obtain market intelligence reflected its

integrity and respect in the market. It worked with owner clients in an

advisory capacity and this provided exposed to competitor activities.

x PBO-J’s long term strategic intent of being focused on a few key clients and

a long-term orientation to major relationships. That was where PBO-J put

all its effort, and it would not make all that effort if it was going to disregard

its clients needs.

x PBO-S demonstrated how it prudently acted on customers comments. It

received a letter from one of its main clients to reduce rates and thus reduced

rates for all of its clients.

x PBO-L, and possibly other PBOs, examined their entire portfolio to ensure

the balance of risk was shared across their business.



10. OC Trait: Mission. OC Index: Strategic Direction and Intent

Question 10. To what extent is there a long-term purpose and direction, within the

organisation?

The results to question 10 indicated that of the 20 interviews conducted, 15 (75

percent) strongly agreed or agreed that their PBO had a strategic direction and intent,

and five interviewees, (25 percent) remained neutral, see Figure 4-21.

Figure 4-21. Interviewees (PBO-A to PBO-T) response to question 10. Adapted from: “Diagnosing organizational cultures: validating a model and method. Appendix: Organizational culture survey:

Items by index and trait”, by Denison et al (2006). Denison Consulting, Ann Arbor, USA. p.38.

The results are explained in three themes: a) Short term, market driven, b)

Managing change, and c) Clear strategy published and communicated.

a) Short term, market driven

Some PBOs were more focused on short term goals mostly because of the current

business climate and poor financial performance over the past two to three years. One

leader explained it was vital the PBO focused on short term revenue and winning

business, while trying to maintain strategic direction and goal achievement. However,

while the PBO continued to have the conversation on their strategic direction, purpose,

and what it wanted to achieve in the next five years, the interviewee said it was difficult

to have when people were being made redundant. Another interviewee agreed that it

was a tough market as PBOs announced write downs and let staff go, “… how can

anyone implement that in parallel with the people that are still shell-shocked, they

have been hit by lightning at the end of the boom…”. Accordingly, employees were



nervous about what was going to happen next, particularly as many of their colleagues

“have all been marched out the door…” (PBO-A). Another interviewee described its

long term direction was to cement its position, strengthen its teams, and prepare for

the next cycle, particularly as commodity prices increased. Its strategy was focused

on business development and networking, and expanding in new lower paying work

which the PBO would not have undertaken before the downturn.

The implication for PBOs was that some appeared to genuinely diversify in order

to manage the cyclicality of the resources market. A good example was PBO-N, which

had a competitive advantage and a genuine point of difference due to its infrastructure

assets and had the ability to invest in private infrastructure and at times financed some

of its projects suggesting the leadership had an astute strategy.

b) Managing change

Interviewees spoke about the state of the market and how this made strategic

planning challenging. It was seen as difficult to plot a direction and then communicate

it. One interviewee said their PBO had high level aspirations but the detail of

implementation was not clearly articulated, communication was poor, and market

uncertainly made it tough for staff to define at the moment. Another PBO had recently

appointed a new CEO; the third CEO in one year! The change tended to influence the

long-term outlook because the impact on OC of the past leaders was obvious. One long

term CEO brought a certain culture to the PBO and it was not unusual to hear legacy

comments, i.e., the interviewee explained the firm did not undertake any work for a

certain client, because in the past the PBO performed a project for that client and it

went very badly. Accordingly, the CEO “fired” the entire team, and commanded it

would never work for that client again. The results indicate that PBOs are not adept at

managing change, particularly the transition from the resources boom to the downturn.

c) Clear strategy, published and communicated

Many interviewees said their PBOs strategic direction was well defined.

Interviews said engineering businesses liked to plan and every year a strategic plan

was prepared for the next three to five years with a global focus. Another interviewee

described a committed focus; and another said their PBO had core values and global

strategic initiatives and received messages from their CEO of what the group should

be doing and its long term purpose.



Another group of interviewees explained how PBOs communicated their

strategy and direction. One PBO referred to ‘Strap Plans’ from two to five years at

different levels in the PBO, that were published, clear, and communicated. Another

interviewee said it had a regional strategy up to 202 that was published, checked, and

presented to all staff regularly and it was tied to a global strategy. Another interviewee

stated its long term plan was also to 2020, it was well publicised using a global internet

page with goals identified and well articulated, and the CEO and local leadership team

conducted regular live webinars communicating to staff. The interviewee stated that

“… it is almost overkill the amount of sharing they do with where the business

direction is, it is well done…” (PBO-G). Similarly, others said there were long-term

plans, but improved communication was needed.

Some interviewees spoke about their PBO’s strategy, such as around Create,

Build and Operate, which was communicated through the intranet and information

sessions, and a sector and service stream strategy around infrastructure, energy, mining

and metals; and projects, technology and consulting, and operational services. Another

PBO was focused on specific business lines: advisory and project management

services, operating in minerals, infrastructure and oil and gas. This PBO became a

little distracted if it identified a worthwhile opportunity. The Chairman revealed it had

identified an opportunity that was not on their plan, from a client request, and they

provided the service and a business line grew from that incident. Now it had an

experienced team delivering that particular service offering. The PBO was adaptable,

if it had the skills to service a client well, then it was prepared to meet the challenge.

As a smaller PBO it understood the importance of “… being nimble and having to

broaden your services in a shrinking market…” (PBO-R). The leadership team spent

focused time reflecting, discussing and mapping out who they are, but growth planning

was difficult in the current market. However, they tended to identify and target where

clients were investing rather than “Sitting around waiting for the next call from BHP

or Rio gets a bit disappointing” (PBO-R). Another PBO had planned growth though

diversification which had been strong, but it had not always worked, “… it has been

caught out with its pants down a bit with this downturn” (PBO-M).

One PBO that undertook large projects, often in remote parts of the world, had

a strategy of leaving a legacy or something of value for communities where they

worked. This involved employment, developing power stations, refineries, or roads in



Africa, or water projects that benefited local communities. Its strategic intent was to

assist local communities where it worked. The PBO had mission statements and

visions, but its priority was about building, and a passion to build. The interviewee

revealed that similar to most PBOs there were not many employees who lived and

breathed their mission statement.

Another group of PBOs had a strategic intent and direction on mergers and

acquisitions. One PBO had a long term plan around acquisitions, and another said “…

the long term purpose and direction: it's acquire, acquire, acquire” (PBO-D). Another

interviewee explained how a recent acquisition brought much more of a long term

purpose focused on a certain number of clients, and the long term relationships with

those clients automatically forced staff into a mindset that was aligned with its strategy.

Discussion

The questions asked in the Mission trait were conducted towards the end of the

interviews. Many interviewees did not elaborate as much, answers were repeated or

key themes reiterated from some of the previous answers, and saturation emerged.

The Strategic direction and intent index is focused on clear strategic intentions

that convey purpose and make it clear how everyone can contribute and make their

mark on the industry (Denison, Nieminen, et al., 2012). While PBOs varied in the

extent of their strategic development, market conditions and visualising the future

made planning challenging, particularly in the longer term. External change often led

to internal change, and when redundancies were occurring focus tended to be on short

term initiatives. This view was aligned with the literature that PBOs optimise the short

term objectives to complete projects and these are prioritised over longer term strategic

positioning (Chinowsky, 2011).

11. OC Trait: Mission. OC Index: Goals and Objectives

Question 11. To what extent has the leadership gone ‘on the record’ about the

objectives you are trying to meet across different parts of the organisation?

The majority of participants, 18 (90 percent), strongly agreed or agreed that

leadership had actively communicated the PBOs objectives, and two interviewees (10

percent) remained neutral, see Figure 4-22. The three themes include: a) Visible and

clear objectives, b) Communication methods, and c) Poor communication around

implementation of strategies.



Figure 4-22. Interviewees (PBO-A to PBO-T) response to question 11. ’ Adapted from “Diagnosing organizational cultures: validating a model and method. Appendix. Organizational culture survey:


a) Visible and clear objectives

Publicly listed PBOs appeared to manage communication around objectives

more visibility, but that was not to say private or smaller PBOs were not overt about

their aims and objectives. One interviewee explained as a public company there was

no avoiding communicating to the market and this filtered down within the PBO.

Another said their leadership “go on the record” and the PBOs goals were cascaded

through the business, but whether they were believed or not was another matter

because everyone had a different view. The priority target audience of public PBOs

comprised of shareholders and customers and this often meant their communication

style and tone was more formal said another interview. The corporate image the PBO

aimed for was “…more for the shareholders rather than the employees, unfortunately”

(PBO-H).

Another interviewee said that a private PBO’s leadership team was driven by

market conditions, communicated shorter term objectives, rather than long term

strategy that was “primarily around the changing market conditions” (PBO-L).

b) Communication methods

The style of communication was mostly through regular updates, town hall

feedback sessions, leaders filmed and uploaded to intranets, and digital media. One



PBO sent emails to staff in three languages, another described a structured process of

high performance planning that was “…visible and clear…. and becoming

institutionalised” (PBO-F). Smaller PBOs described a reasonably easy process, that

“...whatever we present to the market is whatever we want to be seen to be, and the

group’s input is high” (PBO-R) and another described the PBO as very consultative,

collegial and inclusive.

Some PBOs, who appeared to over communicate or were on task, had recently

been involved in mergers or acquisitions. One interviewee disclosed that due to the

takeovers and activity in the market there was constant communication, “… there is

just a constant banging away that this is the direction we have to go…it just gets

drummed into everyone all the time” (PBO-J). This PBO wanted to ensure their staff

were clear on the direction of the business and to manage the cultural shift. Similarly,

the leadership of another PBO was ongoing with its communication, it was a continual

process involving the most senior people down to regional leaders. One PBO was

ruthless in its measurement approach, as revealed by the interviewee, “...if they are

not seen as performing or delivering they get removed from this team… you either

perform or you get out” (PBO-K).

c) Poor communication around implementation of strategies

Certain interviewees were sceptical of their PBOs ability to follow through with

their intentions. “It is the implementation where they fall down… it is such a huge

animal to try and reach those goals…” said one interviewee (PBO-D). The PBO’s

accounting leadership was considered the detriment of engineering because it appeared

to lack an understanding of engineering details and contract delivery methods, and this

was often displayed through ambiguous leadership language. “…you end up with these

quite strange edicts coming out, and people walk away and say what is going on, how

is that going to be implemented… they come up three word slogans… this company

loves the three word slogans and acronyms…” continued the interviewee. If the

leaders were able to achieve balance between the accountancy and engineering

approach it would “…be absolutely formidable” (PBO-D).

Others believed employees were more interested how PBOs would implement

their intentions, and often the communication was inadequate, another interviewee

said. “It is never fully implemented or communicated, but it is an endeavour to make



it happen” (PBO-T). Another smaller PBO’s objectives were discussed in Board

meetings but the strategy was not in a written formal document.

Discussion

Goals and objectives concentrates on a clear set of goals and objectives that can

be linked to the mission, vision and strategy; and provides a PBOs members with a

clear direction in their work (Denison, Nieminen, et al., 2012). In many ways this

means a PBO is effective at execution which is more immediate than Strategic

direction and intent, and the longer term Vision of the PBO.

The extent of leadership ‘going on the record’ about their objectives was

different for publicly listed companies. These leaders’ image, style and tone of

communication was more formal and predominantly targeted shareholders rather than

employees. This could potentially drive a 'disconnect' and disappointment for some

employees and possibly influenced aspects of OC such as the priorities of the PBO

were beyond employees. Some PBOs communication was focused on short term

objectives designed to address current market conditions. This could be interrupted as

reassuring employees and the market on their stability, or address uncertainty and

nervous stakeholders. PBOs that had recently been involved in a merger or acquisition

often had leaders communicating about direction, and appeared to be driven by a need

to manage the cultural shift. Whether leaders were effective or ineffective in their

communication, some staff were sceptical. Scepticism was particularly relative for

large PBOs implementation ability, and others seemed to monitor their progress in

varying degrees against strategic objectives.

12 OC Trait: Mission. OC Index: Vision

Question 12. To what extent do leaders have a long-term viewpoint?

The final question from the DOCS instrument resulted in 16 participants (80

percent) strongly agreeing or agreeing that leaders had a long term view, two

participants (10 percent) remained neutral, and two more (10 percent) disagreed, see

Figure 4-23. The results are presented as follows: a) ‘Here and now’ focus, b) Long-

term perspective, c) Implications of a long-term vision, and d) Market trends.





a) ‘Here and now’ focus

Participants that disagreed with this question said their PBOs were focused on

short term goals due to the recent impact of the downturn. Interviewees argued they

were not hearing conversations about the long-term vision because everyone was

concentrating on the short term, the “here and now”, and focus on 12 to 18 months as

PBOs were unsure what the opportunities beyond that would be. Poor financial returns

meant organisations could not invest heavily in strategic growth initiatives, and current

market fluidity meant it was common to have a shorter term view.

According to one interviewee, local leadership may have a medium-term

outlook, but not long-term in downturn conditions. This interview also expressed that

in the past this was different, where leaders had a longer term view and strategy was

aligned with some clever thinking of the future. Others agreed, that at the corporate

level there was a longer term view, but at an operational level it was normally short to

medium term, “… if you asked them where they are going to be in three years’ time,

it all depends where the market is” (PBO-L).

b) Long term viewpoint

In comparison to the short-term thinking, other interviewees said PBOs had a

long-term view to a great extent. “We certainly do spend a lot of time on strategy and



looking out for long term… five years is often what our normal strategic planning …”

(PBO-H), and for another a long term stance was well indoctrinated “…it is almost to

the point where they can probably stop saying it because everyone knows it now. You

know it has become part of the culture and you don’t need to keep telling yourself”

(PBO-J). Further, this interviewee revealed a recent acquisition had resulted in a vision

that had changed the culture and the behaviours of people, which was perceived that

PBO-J had achieved its goals. Other PBOs appeared to have confidence in their

leadership teams and understood the markets peaks and dips.

One leadership team had been established for a long time and seemed assured of

the future, and the more senior the leaders the more they appeared to have a longer

term view, said one interviewee. Another interviewee said as the leadership were

shareholders and directors of the business they “absolutely” had a longer term vision.

Another CEO described a strong leadership team driven by their strategy and long term

thinking, and that was why he had selected that team.

c) Implications of long term vision

Having a long term approach was questioned by some employees, particularly

the relevance and realism of such an outlook. One interviewee said a long term aspect

could be dampened by the short term need to maintain a profitable business. Another

interviewee also suggested there was not as much vision in the five to 10 year period,

and similarly others argued that five to 10 year plans were a waste of time, as generally

people could only forecast 18 months to two years ahead. However, some believed it

was wise to have a picture of the future market, so staff had a sense of connection.

d) Market trends

The final theme addresses views of interviewees about the state of the industry,

the market and where they believed the future work or trends would emerge.

x One interviewee questioned the direction of the oil price, and that everyone

was expecting it to increase. The infrastructure and property business had

stepped up to take the lead role in the PBOs performance (PBO-M). Another

said that transportation was becoming a growth area with infrastructure from

government roads, rail, and tunnels (PBO-A).

x Another interviewee argued there were mega trends in the world now and

that people were not adapting. As the world was changing their were future



opportunities in Defence and border control, agribusiness and water in

Northern Australia, roads and rail, and that New Zealand was a huge

opportunity, particularly around Auckland (PBO-P).

x Some PBOs leaders said the Middle East was a strategic investment that was

starting to “bear fruit”. One PBO had strong relationships with a number

of key clients, had preferred suppliers, and were regularly winning work,

but it was hard building relationships over a six year period (PBO-F).

Another interviewee said the Middle East had grown tremendously in the

last five years, with a lot of work and many customers had capital ready to

invest in building mining businesses, smelters, refineries (PBO-L).

x In the past, many clients automatically appointed the large PBOs for work

possibility because of the liabilities or insurance they held. Smaller PBOs

were seeing a big shift in that behaviour. One firm was conducting a lot

more business development, particularly with the large mining companies

(PBO-S). Another interviewee explained that many senior and experienced

people in the industry had worked for the large contractors and heavy

industry, they were highly respected, and known by clients. Some of these

people now worked in smaller PBOs and clients approached them rather

than the larger PBOs who were inherently more expensive and did not

necessarily have better experience (PBO-R).

x Market activity in the resources area at the moment was procurement

orientated where PBOs were negotiating supply contracts in an effort to

drive down operating costs, according to another interviewee (PBO-G).

x Offshore outsourcing centres, in parts of the world where people were paid

less, may evolve as wages regulated over time. It may not necessarily be a

low cost driver, but a competency driver, because those centres may become

more effective and efficient, not just cheaper (PBO-T). However, the

implication is that the work sent off shore may be ‘hollowing out’ and

become a lost skill set in Australia. Generally the conceptual, ideology and

innovative type thinking has been applied in the FEL studies in Australia,

then it is sent to an offshore centre for the detailed engineering which is

basically a lot of mundane, repetitive and reproducible work such as detailed

design, isometrics, shop detailing, drafting. While the skills may not be lost



in a PBO, it may be potentially lost in Australia. “I look at it as a soufflé, it

looks good on the outside, but you poke it, and inside the depth is not there”

opined one interviewee (PBO-N).

x Some PBOs had a group or core of top-tier people, and lacked a depth of

skills below that group, mostly the middle tier of 30 to 40 year olds that were

missing. The implication in 10 to 15 years time is likely to impact the

industry. Some PBOs needed to hire graduates to ensure the industry does

not experience a void or hollow, said another interviewee (PBO-N).

Summary of Mission Trait

Mission refers to the organisations purpose and direction and reflects an external

focus (Denison, Nieminen, et al., 2012) and stability and success is more likely to

occur when individuals and the organisation are goal directed (Denison & Neale,

1999). The majority of interviewees tended to strongly agree and agree that PBOs had

a Strategic direction and intent, Goals and objectives, and a Vision.

However, it seemed that market conditions impacted on the extent of taking a

long term approach, and immediate business critical matters appeared to override the

longer term vision. This is illustrated in Table 4-5. Overall, while PBOs had a mission,

a purpose and sense of direction, they tended to use similar methods to communicate

their intent, some appeared to be more experienced or more effective in their tactical

application than others.

Table 4-5 Stage 1 interview results of OC trait of Mission

Strategic direction

and intent

Goals and objectives

Vision

Strongly agreed or agreed 75% 90% 80% Remain neutral 25% 10% 10% Strongly disagreed or disagreed 10%

Three PBOs appeared to have had an innovative, genuine and unique attribute

contributing to its OC through their vision, namely:

x PBO-N had developed a strategy and competitive advantage with its ability

to manage its finances, particularly its infrastructure investments.



x By being genuinely nimble, flexible and experienced, PBO-R had

broadened its service offerings in a shrinking market. The leaders spent

focused time reflecting, discussing and mapping strategy and growth plans,

and had identified where clients were investing. PBO-R had responded to a

client driven opportunity and a business line developed. It was a small

consultancy and its financial results illustrated a strong performer, it had

genuine competitive advantage, and its leadership appeared genuine,

prudent, experienced and astute.

x PBO-H often undertook large complex projects in difficult parts of the world

and had a strategy of leaving a legacy behind or something of value for local

communities, such as employment or investment in a local area. It took a

genuine approach to corporate social responsibility. This was similar to what

PBO-I had adopted, as outlined in the Consistency trait.

Discussion

‘Vision’ refers to an organisations shared view of a desired future state, and it

embodies core values that captures the hearts and minds of their people while providing

guidance and direction (Denison, Nieminen, et al., 2012). Some PBOs had a shorter

term vision, focusing on the “here and now” and opportunities in the immediate future

because of market uncertainty. Not all agreed. More senior leaders appeared to have a

longer term view, and spent time on strategic planning. Others argued long term

planning was a waste of time as generally people could only forecast about two years

ahead.

The Vision trait also highlighted some potential market trends and opportunities

for PBOs in areas such as infrastructure (transportation, Defence and border control);

and procurement related. Some smaller PBOs reported gaining the attention of major

customers that had traditionally worked with the larger PBOs.

Another trend assisted bridge a research gap of the potential “hollowing out” of

some of Australia’s basic engineering skills as PBO outsourced work offshore,

particularly repetitive and reproducible work. Also some PBOs were not employing as

many engineering graduates which may have implications in the future. The results

suggested that PBOs leadership culture influenced their perspective on Vision, in

which some appeared to have a longer term view than others.



13. Organisational culture and performance

Question 13. Do you think that OC has an impact on performance? And why?

Of the results, 18 people (90 percent) took the view that OC had an impact on

performance. The remaining two interviewees (10 percent) were not as sure. The final

question provoked a lot of interest possibly because it was the last question or it was

less-structured, or alternatively as all interviewees had experienced OC they had an

opinion. Also all interviewees appeared to have given thought to the topic prior to the

interview and this may have prompted the rich discussion. Initial and first responses

to this question are presented in Table 4-6. Note that PBO-B and PBO-G were the two

interviewees who were not ‘absolutely’ convinced that OC had a relationship with

performance. However, the results clearly illustrate that senior managers and leaders

in PBOs have the view that OC has a link, relationship and/or impact on performance.

Table 4-6 Stage 1 interviewees immediate response to Question 13

PBO Immediate response whether OC impacts performance

PBO-A Yes, absolutely.

PBO-B It depends on how you define culture

PBO-C The short answer is yes. PBO-D Definitely, absolutely culture is everything.

PBO-E Yes, absolutely

PBO-F Extremely strong correlation.

PBO-G Yes and no.

PBO-H Yes, no doubt about it

PBO-I Absolutely. PBO-J It has to

PBO-K Definitely, strongly agree.

PBO-L Absolutely.

PBO-M Yes absolutely, very much so.

PBO-N I think it does. I think very, very strongly it does.

PBO-O Definitely. PBO-P Absolutely.

PBO-Q Yes, absolutely, 100%, good and bad

PBO-R Yeah, absolutely.

PBO-S Yes

PBO-T Yes, for sure



This section unfolds in four themes: a) Culture definitely results in better

performance, b) Managing dysfunctional culture, c) Ownership and management of

OC and d) Defining OC.

a) Culture definitely results in better performance

Interviewees expressed that projects with a good culture definitely resulted in

better performance; and had a positive impact on delivering, meeting contractual

obligations, and being informed by clients. While OC is often perceived to be difficult

to measure, for PBOs there were examples where it was more tangible and visible.

One interviewee explained that when OC was working well on projects it was visible,

particularly with safety. Safety was relatively easy to measure culture on site, and

especially a new customer’s site and the first visit onsite because of what was

noticeable i.e., housekeeping, how people talked and dressed, and the type of

equipment and tools they used. It was evident where companies had different values

and expectations. It was also visible when people arrived at work and when they left a

site, as some tended to work longer hours, be on site well after the client had left, and

others believed the week ended noon Friday.

Another interviewee agreed. Culture was easier to manage on-site. This PBO

had regular on-site safety recalibration (retraining) sessions and if people did not pass,

they were asked to leave. The PBO was very clear about success and safety, if people

were not doing that, then “…that person is almost a rogue in the business, and unless

they sign on to the culture that we want, it is no value having them there because

something will happen there, and someone will go home injured…” (PBO-L). The

impact of OC on performance was quite evident and compelling for the PBO. The

interviewee continued to explain their management principles were clear “if there is

failure in the culture, [the PBO] will change out the team management, and the culture

will change”. It was quick to recognise where OC was working well and when it was

not. This was a direct example of OC impacting performance. It was the company

way, it did not matter the disposition of a person, if they were not doing their job well

the company acted. Examples the interviewee gave how the PBO identified this, if “…

you are not a good team player, you are not talking to the other departments, you are

not looking after them as well…” (PBO-L).

Another interviewee said that conversations with people from other PBOs on site

could provide a window to assess OC, particularly when a project or team was not



performing well. Staff often asked “…how is the culture of the JV or that alliance

rather than that of the mothership…” (PBO-I).

Another interviewee referred to the office hours staff worked, start and finish

times. Some employees started to pack up their bags, stand up and as the clock turned

4.30pm they left, while others could be still working at 7.00pm or until they had

completed the task at hand. One CEO said it depended on having the right business

strategy and model, and the market. If the culture was right then everything else took

care of itself, and it should be revealed in the bottom line. Others considered the impact

of OC on performance, “…I don’t know if you can correlate it back to the bottom line

of the business, whether the culture impacts the financial performance of the business,

I guess it does, it has to correlate back somehow or other” (PBO-N).

In contrast, if the culture was poor, purpose and care level was low, then the best

practice could fall over, claimed another interviewee. Also a PBO could have the best

software and tools but if OC was poisonous, it will fail because the customer would

realise this.

The two interviewees who were unsure said creating an OC that met or exceeded

customers expectations was absolutely crucial to performance (PBO-B). The other

interviewee claimed when it came to staff actually doing their work it did not matter

if OC was poor, there was low engagement, or nobody was excited. However, if the

culture resulted in staff leaving the business then that would have a large impact on

performance (PBO-G).

b) Managing dysfunctional culture

One PBO had managed a cultural change program from a dysfunctional OC to a

successful, high performance OC. The interviewee explained the PBO had a group of

44 people, “… completely dysfunctional, one was committing fraud, another was an

absolutely lunatic, we had all sorts of inappropriate behaviour going on…” (PBO-P).

The change program took over three years to complete. The PBO examined the

construct of the team, identified its needs, best people, and coaches were appointed to

assisted staff adjust. Of the 44 people, 24 no longer remained with the PBO. The

business went from AU$9 million to $40 million p.a. business, “…The fish was rotten,

and the head of the fish, was just rotten” (PBO-P). This is another example of how

culture directly impacted on performance.



In contrast, another interviewee revealed that their PBO was “really bad” at

having critical conversations with employees. While a person may be a genuine with

great skills, the PBO lacked an ability to let them know they were in the wrong role

c) Ownership and Management of OC

Views on cultural ownership and management differed. One compelling view

was that OC was driven from the Board. It was argued Boards that were interested in

safety, publish safety information in their Annual Reports and are safer companies

than Boards that do not. “… culture starts in the Boardroom, and if the Board members

don't really care if people are getting hurt or getting killed then they are unlikely to

put ‘the heat’ on the CEO to make change, he is unlikely to work with his present

GM's, … if it is not an agenda item at the Board meeting” (PBO-H).

Another leader put it succinctly, “… I am the owner of the culture, the CEO owns

the culture at the end of the day; and it is the job of the executive to make it happen

within the group – not the HR group…” (PBO-Q). Accordingly, a lot of failures

occurred because OC often became a HR project, with posters in foyers, tearooms and

lunch rooms promoting their OC. The interviewee suggested this type of approach did

not work. Rewarding the right behaviour, and simultaneously holding people to

account on unacceptable behaviour was how PBO-Q managed its culture. This view is

aligned with the literature (explored in 2.3.5 OCs Battlefront in the 21st Century). In

particular, Schein and Schein (2016, p. 229) argued that “the worst examples of culture

mismanagement are organisations where the leaders turn over the responsibility for

culture management to the human resource function or to consultants”.

However, other PBOs had certain departments managing aspects of their culture

suggesting they did not fully understand the importance of ownership. One interviewee

said its “People Group” managed culture (PBO-B). Another said its marketing and

branding division assisted manage OC. Another interviewee in Stage 3 had the title of

‘Director – Organisational Culture’ and was part of the HR group.

Some PBOs appointed “champions” for OC. This was said to work for one PBO

because the champions identified areas that needed developing and were allocated

funds to show the PBO was committed. Another PBO’s Associates were the

“custodians of culture”. However, the interviewee claimed it did not always work as

the head office culture tended to be stronger and often that was not translated well into

the regions.



d) Defining OC

It was apparent that all interviewees had thoughts about what OC was, and some

defined it very clearly. One interviewee said that while it was difficult to define,

“…culture drives discretionary effort… it is about work ethic and discretionary effort

that has people enjoying their job” (PBO-R). “It is all about expectations and

alignment, alignment of people to those expectations…” (PBO-E), and “Culture is not

something that is easily emulated. It has to be driven by the top, the right people have

to be throughout the organisation to ensure culture is permeated through the

organisation, and they need to have the right systems in place to reinforce that cultural

ethos” (PBO-D). Another interviewee explained that one facet of OC “… would be

determined by the way people respond to leadership. If it’s a very autocratic style of

leadership people will respond in a certain way. You use the culture to instil behaviour

in people, and if you have the correct culture that behaviour becomes an automatic

thing, it is a lot easier to make things happen” (PBO-F). One more interviewee said

that the culture of a PBO attracted certain people and it dispersed people, “… you

either fit with the culture or you don’t” and if a PBO did not set the culture it wanted,

a culture would form (PBO-L).

Discussion

Interviewees held the view that OC impacts performance in PBOs. Interviewees

provided examples of where culture was visibly working, particularly on-site, and

safety was a measure used to identify a successful culture. A PBOs culture on-site was

a strong driver of performance and an example of OC impacting performance. The

behaviour of staff on-site or in a corporate office also revealed if a culture was working

well. Another example of how culture directly impacts on performance was one PBOs

change program, which resulted in turning around a dysfunctional culture and poor

performance, to a successful culture and high performance team. Some PBOs

demonstrated OC accountability through ownership and management of culture, and

others delegated the responsibility to other teams, such as HR and marketing. Certain

interviewees provided rich descriptions of culture. One in particular: “…culture drives

discretionary effort… it is about work ethic and discretionary effort that has people

enjoying their job” (PBO-R). The common themes in this last question support the

argument of a link between OC and performance. All of these themes together have

assisted address the research question.



4.4 FIRST PART OF THE RESEARCH ADDRESSED

The introduction of the thesis highlighted the cyclical nature of projects and a

PBOs environment paralleled to overheated market conditions at one extreme to

stressful and spiralling economic downturns at the other. This raised questions of the

nature of OC in PBOs, and to what extent it impacted on performance in such an

unpredictable, dynamic and volatile environment. This led to the primary research

question:


resources and energy sectors; and what is OC’s relationship with, and impact on

performance?

The first part of the research question (in bold above) is addressed by

deconstructing the definition of OC to build a configuration of OC in PBOs, namely:

‘culture refers to the underlying values, beliefs and principles that serve as a

foundation for an organisation’s management system as well as the set of management

practices and behaviours that both exemplify and reinforce those basic principles’

(Denison, 1997, p. 2). The key parts of the definition of OC are summarised in Figure

4-24. The Cultural Foundations highlights how Stage 1 interviewees described PBOs

values, beliefs and management practices. These would be relatively static, or stable,

and would unlikely change radically unless of major change, such as a large

acquisition, merger, or completely new leadership. The Cultural Foundations underpin

the form or nature that exists within PBOs, or their cultural profile, which may be more

flexible or dynamic depending on their environment factors.



Figure 4-24. The form of OC that exists within PBOs in this research

4.4.1 Cultural Foundations

Espoused and Shared Values

The literature reviewed highlighted that ‘values’ are not directly visible to

employees, (Van den Berg & Wilderom, 2004), incorporate desirable goals that direct

behaviour (Giorgi, et al., 2015) ), and preferences for more ultimate end states (Sathe,



1983). The Cultural Foundations, in Figure 4-24, includes values contained in

engineering occupations, a priority on safety, managing risk of which would typically

be not directly visible, guide desirable goals and behaviours, and direction for end

states. These facets seem to be typically embedded in a PBOs foundation, which would

be established, and managed as a serious and important component of their culture that

make these organisational types different to many others.

Occupational values of engineers - It appeared that most engineers employed in

PBOs took their job and profession seriously, and made their best effort. This may be

due to the values embedded in the engineering occupation, the nature of project work

or working in teams, or possibly to a lesser extend the current business cycle. The

engineering occupation seemed to embed values of pride of working on project work,

a genuine sense of commitment to perform, taking responsibility and interacting with

clients and project teams, and a sense of accountability by taking ownership of their

projects. Many of these values appeared to come naturally to most people working in

PBOs. The majority of people who worked in PBOS were technical, and the nature of

engineering work was problem solving, which required participation of many parties

and that was the value engineers provided and appeared to value. The actual work

requires problem solving which demands engineers are fully engaged and attentive in

understanding, analysing and investigating the problem at hand.

Safety first, Risk management, contract delivery models, and innovation –

Certain values are embedded, well known and understood in PBOs, such as safety first,

managing risk, alignment with certain contract delivery methods, and valuing technical

innovation. PBOs shared an espoused value towards safety throughout the organisation

and this could be relatively tangible particularly on site with how PBOs assessed and

managed safety. All PBOs have visitor sign-in procedures, not necessarily unique to

this profession, but it is another example of a priority on safety. PBOs manage risk,

and this seemed to be reflected in the profession, and working on mining and

infrastructure projects.

Projects and team work and commitment to deliver – Generally PBOs work

mostly involves delivering project related work, and collaborating in teams was

fundamental. A commitment to deliver appeared to be an entrenched value. The

implication was that engineers tended to get absorbed in executing work that was more

immediate. This means, this value with its concentration and priority on projects could



overshadow other long term planning, training and investment initiatives. However, at

the more senior level employees appeared to have a longer term strategic view.

Beliefs

Volatile Market - The consequence of a volatile market was the belief of many

employees was one of fear and uncertainty. If projects dried up or if they were not

engaged in their work they would lose their job. As work had radically reduced and

client expectations had intensified, people tended to be working harder now, believed

they were expected to do more and be more effective, and this appeared to drive

another level of engagement than in a robust market.

Heated market - A belief existed that OC was worse in heated market conditions

compared to stable conditions. In heated conditions PBOs did not have sufficient

“DNA” to share, and lacked the time, wherewithal or inclination, to fully explain and

induct new employees with their culture. Consequently, the essence of a PBOs culture

could become diluted and damaged as many people changed jobs, particularly when

there was more work than people in hyper-real market conditions. It seemed over

heated market conditions and strong financial performance risked driving an

“artificially enhanced” culture.

National cultures - PBOs with North America parents, or headquarters, often

found Australians to have a passively resistant attitude. Australian’s tended to believe

that the North American business culture was more harsh and directive. Whereas

Australian’s tended to “push back”, challenge authority, did not look for someone to

blame when things went wrong but were inclined to investigate a problem, identify

how to stop it from occurring again, and were more relaxed.

Training - Some people in PBOs believed that management should invest in

employees with external training and conference participation. Management tended to

take a 70: 20: 10 approach to training, where people learned on the job, internally, and

by external providers respectively.

Management practices

The literature highlighted that the values and beliefs of an organisation would be

reflected in its management practices – concrete activities that are usually rooted in

the values of the organisation (Denison, 1990), and the shared perceptions of the daily

practices within an organisation should be considered at the core of its culture



(Hofstede, 2001). Management practices identified seven consequences of certain

behaviour which tended to make up PBOs cultural foundation.

Leadership and Cyclical market – Leadership teams led by engineers or

accountants implied a different set of behaviours. Accountants tended to lack an

understanding of the complexity of engineering, the need to foster innovation in

project teams, and appeared to be more concentrated on financial matters compared to

safety. The implication of an accounting style leadership approach questioned how a

Chairman would select his Board members, their priorities, backgrounds, interests,

integration with people throughout the business or preference to revenue and profit

margins. In addition, some PBOs had inexperienced leadership teams, some were

experienced at the technical level but inexperienced in a leadership role. The

implication was “fair weather sailors”, leaders who lacked the ability to lead in a

difficult market.

Staff v contractor ratios and Ownership structures - The ratio of employees to

contractors in some PBOs could influence OC particularly as many contractors moved

regularly and often lacked the degree of loyalty to a PBO compared to full time

employees. The assumption of more contractors could influence OC. How and why

management designed and structured ownership and bonus systems was another direct

indicator of a PBOs culture. The ratio of ownership, equality of schemes appeared to

reflect the authenticity of management, i.e., the culture may be more inclusive, elite,

sense of entitlement, or silo mentality designed to increase internal competition, drive

performance or reward only a minority of people.

Work location and Clients - The customers a PBO choose to work with and the

relationship could also impact on OC. If a project was being conducted in a customers’

office, then the values and beliefs may impact the project team and its behaviour

(Stockholm syndrome). If the relationship was long-term and strong then PBOs tended

to be more accommodating and prioritise activities for those clients, however

demanding.

PBO Characteristics - Publicly listed companies at times seemed to prioritise

shareholders and customers rather than employees. Smaller firms tended to provide a

better opportunity for people to be engaged with leaders, and leaders to interact more

with staff, but it did not necessarily reflect a healthier or better OC. PBOs structural

components, business processes and systems impacted on OC. The degree of teams



that delivered the same service offerings within the same PBO risked becoming more

internally competitive, protective and display silo behaviour.

Mergers and acquisition – One of the major and direct impacts on OC was when

acquisitions occurred and they tended to be mostly negatively perceived in the short

term. Timing of an acquisition in a heated or downturned market, the amount of

acquisitions, their sheer size, the business models and operational focus of parties, and

staff turnover all were consequences that impacted on OC. National cultures of

participating PBOs also influenced OC because of different values, beliefs and

management practices.

4.4.2 Cultural Form, or Nature, of PBOs

Figure 4-24 brings the three Cultural Foundations together to provide a

framework of various facets of a PBOs culture. The nature or form of OC that exists

within PBOs has been built on 10 facets, each on a continuum. A PBOs cultural

approach or orientation on each facet may vary, and these seem to be more pliable

depending on the degree of impact from a PBOs external operating environment,

internal environment and legal environment (as discussed in the literature, particularly

Figure 2-8). The cultural facets that are circled in Figure 4-24 provide an example of

the cultural form of one PBO, PBO-Q to illustrate how its cultural profile is reflected.

i) Competitive Approach - Some PBOs had an aggressive approach particularly

about winning work. Others teamed-up, or joint ventured, with other PBOs,

and some seemed opportunistic such as monitoring how competitors delivered

projects or were innovative, and others were desperate to win work and would

price work at cost. PBO-Q revealed it was aggressive.

ii) Customer Orientation – Some customers of PBOs said certain PBOs were

arrogant and at the other extreme some PBO’s project teams were submissive

to their clients. Other PBOs seemed to take a strategic approach to customers

such as identifying their future needs, or selecting a group of preferred

customers and directed all their attention to those customers. Others were

adaptable and if a customer required particular work, that the PBO did not

necessary offer, they would meet their needs, or be accommodating to their

requests. Consequently, the OC of PBOs had to increasingly adapt to changing

customer demands. PBO-Q was currently strategic in its orientation.



iii) Cultural ownership - Taking responsibility and accountability for OC was

important, selecting the right leadership teams that ensured OC was managed

properly and not delegated to HR which had implications for OC. PBO-Q’s

CEO was the owner of its culture. Perhaps if a different CEO was appointed,

or had an accounting background, some of the orientations may change for

PBO-Q.

iv) Communication Approach – This orientated depending on the PBO’s entity

and structure. Public companies tended to be more formal in their

communication style and tone, others that were large and bureaucratic had a

different style, smaller PBOS were inclusive and open, and others send

confusing messages. PBO-Q is a public listed company.

v) Cultural Strength- The strongest cultures occurred with PBOs operating

globally as one business, had one ownership globally and consistent behaviour,

connection with founders and steady movement of staff, and allowed

“reasonable prosperity” for all employees. Other contributions to strong

cultures included consistency around common systems and procedures,

flexibility and honesty, high degrees of local decision making and autonomy,

employee recognition where voices were valued. In addition, PBOs where staff

knew each other and worked well together, had long term staff, advanced

communication technology, and strong leadership teams that fostered

innovation. PBOs could have strong cultures but not necessarily the right

culture and OC could drive bad outcomes, silos, and inconsistency. PBO-Q

revealed it was undergoing a reinvigoration process and declined to be part of

Stage 2 because of result may have been unfavourable results, therefore its

culture required attention.

vi) Strategic Focus – Some PBOs culture was disrupted by mergers and

acquisitions, others had developed a focus on customers, and another group

was consolidating due to the economic conditions, and other seemed to be

tactical and reactive rather than having a strategic focus. PBO-Q had a strategic

focus on its customers, it had met with 30 or 40 of its customers in order to

implement a strategy. Once again this orientation may move across the

continuum.



vii) Leadership Attitude – Some PBOs tried to leave a legacy when delivering some

projects and took a genuine approach to corporate social responsibility, and

one PBO’s founder designed a process that provide a reasonable prosperity to

all staff. Others focused on benefits for elite group only, and others appear to

promote a competitive orientation risking a silo or protective attitude within

the PBO. As a public company, PBO-Q attitude appear to favour shareholders.

viii) Systems and Procedures - The nature of OC in PBOs was also influenced by

the degree of sophistication and integration of systems and procedures. Added

to this was decision making orientation, the manner in which projects were

managed, the attitude of the organisation, and influence of the projects they

delivered. PBO-Q appeared to have a sophisticated orientation, it delivered

projects in different parts of the world and said that worked well.

ix) Risk Approach – This ranged from a large appetite to risk adverse. This

orientation would depend on how a PBO managed risk, the contract types it

preferred, where it undertook projects and for whom. PBO-Q has a large

appetite.

x) Cultural impact from Downturn – As PBOs responded to market conditions,

reduced large numbers of staff, cut overheads (preserved cash, and other cost

cutting exercises) it was difficult to keep their positive culture alive, healthy

and strong. Many seemed to have lost the sense of trust, loyalty and respect

from employees reflecting an OC that had been diluted, damaged, or weak.

Most PBOs in this study were hurting. PBO-Q was hurting.

In summary, this section outlined a model to represent the nature or form of a

PBOs culture. It began with PBOs Cultural Foundations made up of shared values,

beliefs and management practices that were embedded in a PBOs culture. The cultural

form identified 10 orientations, each on a continuum. Some orientations appeared to

be more controllable, or pliable, and could change depending on the forces and change

within a PBOs environment.


The chapter began by presenting the results of the Pilot Phase and Stage 1 of a

three staged mixed method approach. The ‘Pilot Phase’ section provided an overview

of the sample, and results of the pilot interviews held with two experienced



practitioners who made a number of valuable and relevant recommendations which

were mostly implemented.

‘Stage 1 – Mixed Method Results’ provided the results of a pre-interview survey

which presented demographics of participants, business characteristics, and

performance figures. The next section ‘Interview Results’ was structured around 13

OC questions that interviewees were asked. Finally, the first part of the research

question addressed the nature of OC in PBOs by highlighting their values, beliefs, and

management practices, and integrated these to provide an orientation, or profile, of OC

in PBOs.

The next chapter presents and discusses the results of Stage 2 quantitative survey

and integrates the results with the Stage 3 interviews.

Chapter 5 | Results and Discussion: Stage 2 and Stage 3


Chapter 5: Results and Discussion: Stage 2 and Stage 3

5.1 INTRODUCTION

Chapter 4 presented the results of the Pilot Phase and Stage 1. The ‘Pilot Phase’

provided an overview of the sample and results of the pilot interviews. ‘Stage 1 –

Mixed Method Results’ reported the results of the pre-interview survey that identified

demographical, business and performance characteristics of the sample. The interview

results were presented around 13 questions asked to participants mostly adopted from

the DOCS instrument (Denison, et al., 2006), key themes were identified followed by

a discussion. At the end of each of the four traits a summary of index results was

provided which also highlighted unique and clever initiatives of certain PBOs which

appeared to contribute to their OC. Finally, the first part of the research question was

addressed regarding the nature of OC that exists within PBOs operating in the

Australian resources and energy sectors.

In this chapter the results of Stage 2 and Stage 3 are presented. Stage 2 comprised

of the distribution of an electronic questionnaire created via the online survey software

KeySurvey (WorldAPP, 2016). The survey was in two parts. Part 1 consisted of 16

questions that identified demographics, organisational performance and business

characteristics of each PBO (mostly the same questions as used in the pre-interview

survey in Stage 1), and Part 2 was dedicated to a 60 item questionnaire adapted from

the DOCS instrument (Denison, 1997). Stage 3 comprised of a series of five interviews

designed to obtain feedback and inform the interpretation of the results from a different

set of representatives of PBOs to those who had participated in Stage 1.

The chapter is structured in the following sections. First, ‘Stage 2 and Stage 3

sample strategy’ describes the nature of the sample, followed by ‘PBOs Performance’

presents the financial and non-financial performance results. This leads to ‘PBO

Profiles’ which presents OC results of the five firms in Stage 2, and integrates Stage 3

interview results. The next section, ‘Discussion’ unpacks PBOs artifacts and

demographics, OC quadrants and instrument used, and addresses the second part of

the research question regarding OC and its link to performance.



5.2 STAGE 2 AND STAGE 3 SAMPLE STRATEGY

Of the 20 interviewees from Stage 1, only 11 PBOs invited staff to undertake the

Stage 2 survey, with the following ultimate responses obtained:

x Three PBOs returned ‘non-responses’, no employees undertook the survey

x Three firms only had one response, only one employee responded

x Five firms provided more than one response which formed the sample unit.

The sample size of usable completed surveys from the five different PBOs

totalled 43, with a response rate of 37 percent, illustrated in Table 5-1. All of the five

firms are international companies with global operations, and four of the five firms

have headquarters in North America.

Table 5-1

Stage 2: Sample size and response rate for participating PBOs.

PBO Code Size of PBO Sample Usable

Responses Response rate (%)

PBO-D Very large 41 15 37 PBO-F Large 23 12 52

PBO-K Medium 12 6 50

PBO-L Very Large 25 3 12

PBO-N Large 16 7 44

Total 117 43 37%

Stage 3 consisted of interviews with different people within these five PBOs.

While the sample size was relatively small, the combination of the Stage 1 and 3

interviews provided rich empirical evidence to support the interpretation of the results.

5.3 PBOS PERFORMANCE

The performance data of the five PBOs comprised of collecting secondary

financial ratio data which were presented to the Stage 3 interviewees for feedback and

comment. Non-financial performance results were obtained from a combination of

primary and secondary data sources.



5.3.1 Non-financial performance

Non-financial performance in this research included employee number results

over a five year period, and a comparison of expected and actual utilisation ratios.

Employee numbers

All PBOs experienced staff turnover and fluctuations in their Australia

operations from 2011 to 2016, presented in Figure 5-1. Employee data figures obtained

generally corresponded with the time of year each PBO released their financial results

which varied for all PBOs, and not all years for all PBOs were available. A large

fluctuation of numbers suggests projects surging forward, winding down, or being

completed, a lack of fee paying work, and/or merger and acquisition activity.

Figure 5-1. Australian employee numbers. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia. Accessed on August 21, 2017. PBO-N obtained

from Stage 3 interviewee on March 21, 2017.

x PBO-D’s figures for 2013 were unavailable. Its highest reported numbers

were in 2012 of 4,076 employees and lowest in 2015 of 2,494, and it had a

slight increase in 2016 of 100 additional employees.

x PBO-F had a continuous downward trend since 2012. Its highest report

numbers were in 2012 of 1,884 employees, and lowest in 2016 of 625.

x PBO-K reported its highest number of employees in 2012 of 4,276 people,

and its lowest in 2015 of 3,567, but increased by 172 people in 2016.



x PBO-L’s employee figures had substantially reduced since 2014. In 2014 it

reported its highest complement of 11,550 people, and in 2016 it reported

3,302. The large decrease was due to the completion of some large projects

by the PBO. Its 2016 figures of 3,302 were similar to its 2011 figures of

3,345 suggesting a return to pre-boom numbers.

x PBO-N’s numbers were difficult to obtain. It increased more than 20 fold

from 182 staff in 2015 to 4,500 in 2016, and this was due to an acquisition

in late 2014, where the acquired firm was larger. Without the numbers of

the acquired company PBO-N would have had substantially less people in

that period, and confirmation of this was from Stage 1 interviewee, and also

a media report that stated the firm’s Brisbane office fell from 156 to 71

people between August 2012 and March 2013 (Byrnes, 2013), more than a

50 percent reduction.

Utilisation

A key challenge for all PBOs was maintaining labour utilisation, or containing

indirect costs, regardless of prevailing market conditions. The utilisation rate is the

percentage of hours spent on billable project work versus the total numbers of hours

worked per week. If PBOs are to meet economic goals they require their people to

allocate a certain amount of their time to fee paying work. Participants were asked

what their PBOs targeted or expected utilisation rate was per week, and what their

current utilisation rate was. The results are presented in Figure 5-2. The implication of

utilisation expectations and actual utilisation not being aligned is that jobs come under

threat when utilisation rates are continually not meeting a PBOs expectations.

Figure 5-2. Indicative utilisation rates against current utilisation rates.



Target utilisation rates and actual current utilisation rates were aggregated and

averaged for each participating PBO by dividing the number of responses. The chart

suggests that employees in PBO-F were performing slightly above the expected

utilisation rate, PBO-L was aligned, and in PBO-D and PBO-K expectations of

utilisations were not being met. PBO-N in particular appeared to have some serious

concerns as either it did not have enough work to keep people utilised to the expected

rate, or the figures were skewed by a recent acquisition of another PBO. This also may

be due to the recent completion of a large project. These rates are indicative only as

the sample size of responses was small. Therefore, these results could have various

interpretations, such as where in their lifecycle of certain projects were, merger and

acquisition activities, and being prior to, or post retrenchment activities.

5.3.2 Financial performance

A number of questions in the survey addressed financial performance, market

share, quality of products and services, and employee satisfaction. However, the

results varied significantly within each PBO, and there were many non-responses.

Therefore, the research relied on secondary data to compile the performance analysis

which consisted of three financial profitability ratios: Net profit margin, Earnings

before interest and tax (EBIT) and Earnings before interest, tax, depreciation and

amortization (EBITDA), presented below.

Reactivity

At the time of the Stage 3 interviews (four of which occurred in 2016 and one,

PBO-N, in 2017 as presented earlier in Figure 3-3), interviewees were presented with

all five PBOs financial results from 2010 to 2015. Financial figures were unavailable

at that point in time, for 2016. PBOs balanced, released and reported to the market at

different times of the year. In the course of the presentations, interviewees commented

on their PBOs 2016 performance generally, such as expect to see an improvement,

recovery or decline. Interviewees were unable to provide their exact financial results.

This is an important point because it avoided any reactivity, which is the bias of

knowing the PBOs performance while reporting on its culture. Knowing their results

may have risked how PBOs described themselves and how the Researcher described

the organisation. Furthermore, the financial figures were gathered separately from the

source (the interviewees), but by the Researcher from specialised financial databases.



After the interviews took place the financial results were replotted for the five

year period from 2011 to 2016, which provided a very different results to the link of

OC to performance, which can be realised in the next section.

Net profit margin

Net profit margins from 2011 to 2016 were plotted for the five PBOs, illustrated

in Figure 5-3. All results were prepared for Australian operations except PBO-N which

represents international operations because Australian figures were unavailable. While

this may have led to a limitation in the financial analysis, it was addressed with the

interviewee in Stage 3, who was the most senior representative of PBO-N’s Australian

operations. The interviewee was unwilling to provide the Australian financial results

(due to company policy), but willingly commented on the results.

Figure 5-3. Net profit margin of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by

Bureau Van Dijk, Amsterdam, Holland. Accessed on August 21, 2017.

The results are explained from the best to worst performers as follows:

x PBO-L (purple line) had the strongest net profit margin from 2013 to 2016,

all in the double digits. It returned a high of 13.4 percent in 2013 and a low

of 8.46 percent in 2012. In 2016 it returned 9.25 percent. These results are

consistent with employee numbers that decreased by more than 50 percent

between 2015 and 2016 which suggested the completion of some large

project/s. Secondary data confirmed this but was not included because the

identity of the firm would have been revealed.



x PBO-K’s (green line) had the next highest net profit margin with a return of

6.19 percent in 2016. Its strongest year was 2012 with a return of 18.61

percent. These results are consistent with the Stage 3 interviewees who said

they generated “massive profits” in the boom, and while there had been a

downward trend after the boom, 2016 had improved.

x PBO-N’s (blue dotted line) net profit margin for its international operations

peaked in 2014 with a huge net profit of 20.1 percent. However, this spike

was due to a merger and acquisition, and gains from the disposal of some of

its infrastructure concession investments (as advised by the interviewee in

Stage 3). The interviewee said that PBO-N’s large spike in 2014 for is global

operations would not have impacted its Australian operations to that extent,

he said “… would not have been anywhere near that…it would have been

flatter”. Its extraordinary reduction in staff numbers, as revealed in Stage 1,

and its low utilisation rates also suggested that its Australian operations were

probably less favourable than its international figures. Although, the merger

in late 2014 suggested its Australian performance may have improved by

2016, and an increase in employee numbers supported that.

x PBO-F (red) returned double digit results from 2012 to 2015 with a high in

2014 of 14.28 percent. In 2016, it returned its lowest result for the six year

period of 2.55 percent. This downward trend was supported by the large

reduction in employee numbers for the same period.

x PBO-D (black) was the worst performer. It returned results all in the single

digits from 2011 to 2016, with a low -4.9 percent in 2014 and a recovery to

3.7 percent in 2015, and then dipped to 2.23 percent in 2016. Its highest

result for the six year period was in 2011 of 5.63 percent.

Using benchmarking comparison index, Global Industry Classification Standard

(GICS) of all firms operating in the construction and engineering industry (including

the resources and energy sector) and listed on the ASX, the highest net profit margin

was reported as 15.63 percent in 2016, and in 2012 (the strongest years for PBOs in

this research) at 12 percent (Morningstar DatAnalysis Premium, 2017). These

benchmark figures suggest that PBO-L and PBO-K’s results were higher that ASX

listed firms in strong economic conditions, but 2016 performance was below the

highest performing firms.



EBIT

The five PBOs EBIT results for their Australian operations (except PBO-N) from

2011 to 2016 are presented in Figure 5-4. An explanation follows from best to worst

performing PBOs.

Figure 5-4. EBIT ratios of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by Bureau Van Dijk,

Amsterdam, Holland. Accessed on August 21, 2017.

x PBO-L (purple) returned double digit margins for the entire six year period

with a high of 19.28 percent in 2013, and 13.9 percent in 2016.

x PBO-K (green) the next best performer, returned 9.45 percent in 2016. It

reached the highest margin of all PBOs over the six year period in 2012 of

23.6 percent, but its results have fluctuated since.

x PBO-N’s (blue dotted line) Australian EBIT results may have been higher

than its international results, according to the Stage 3 interviewee. The

company “…had some good projects, some very big projects and then came

2014 all those projects dried up…” The firm had addressed operating costs

that had become a “massive drain” on the business and while its results had

been poor, after 2015 it expected an upward trend.



x PBO-D’s (black) performance compared to the other PBOs was notably

lower in 2014 of -5.11 percent. It had recovered in 2016, with a 2.97 percent

return. It never achieved double digit results for the entire period.

x PBO-F (red) achieved double digit EBIT from 2011 to 2015, however in

2016 it was the worst performer returning only 0.75 percent. The

interviewees in Stage 3, who only saw the results up to 2015, expressed

surprise and said they had not been performing at that level recently.

Benchmarking performance, using GISC of companies operating in the

construction and engineering industry and listed on the ASX, the highest EBIT margin

was reported as 18.2 percent in 2016, and 17.3 percent in 2012 (Morningstar

DatAnalysis Premium, 2017). The results implied that PBO-L and PBO-K would have

had little difficult servicing their debts, however PBO-F may have had considerable

difficulty servicing its debt, that is paying liabilities (Horngren & Harrison, 2015) and

PBO–N (which the interviewee acknowledged) and PBO-D may been challenged.

EBITDA

The five PBOs EBITDA results for their Australian operations (except PBO-N)

from 2011 to 2016 are illustrated in Figure 5-5. An interpretation follows from best to

worst performing PBOs.

Figure 5-5. EBITDA ratios of PBOs in Stage 2. Source: PBO-D, PBO-F, PBO-K, PBO-L Company 360 (2017) by Dun & Bradstreet, Melbourne, Australia; and PBO-N Osiris (2017) by Bureau Van

Dijk, Amsterdam, Holland. Accessed on August 21, 2017.



x Once again PBO-L (purple) led the five firms in its ability to manage its

operations and generate long term profits reporting double digit EBITDA

results for the entire six year period. In 2016 it reported 13.27 percent.

x PBO-K’s (green) performance fluctuated from the highest EBITDA result

of all PBOs in 2012 with 22.1 percent, but it then continually dipped.

However, in 2016 it returned a stronger result of 9.45 percent.

x PBO-N’s (blue dotted line) international results showed a downward trend

from 2012. The Stage 3 interviewee said that it was aiming for an EBITDA

of “…7 percent is the minimum, with a view that 8 and 8.5 percent is where

we need to be”. This was interpreted that its Australian operations were less

or around 7 percent EBITDA.

x PBO-D (black) returned results all in the single figures for the six year

period. It dived to a -5.1 percent in 2014. In 2016 it returned 1.11 percent.

x PBO-F (red) was the worst performer returning -0.38 percent EBITDA in

2016. It seems to have encountered some problems because from 2011 to

2015 its results were all in the double digits.

Benchmarking performance, using GISC of companies operating in the

construction and engineering industry and listed on the ASX, the highest net EBITDA

was reported as 19.46 percent in 2016, and 23.55 percent in 2012 (Morningstar

DatAnalysis Premium, 2017). The stronger performer may have investments that they

managed well, or if returns were the same as EBIT then they may not have had

substantial investment portfolios, and poor performing PBOs may not have managed

their investments effectively.

Aggregated performance

The financial ratios identified the highest to lowest performer, as follows:

1. PBO-L was the strongest performer with all financial ratios in the double

digits from 2011 to 2016 and was clearly a high performance organisation.

2. PBO-K results fluctuated, but it returned stronger results in 2016. This is

consistent with the Stage 3 interviewees who said they generated “massive

profits” in the boom and while there had been a downward trend after the

boom, in 2016 its profitability had improved.



3. PBO-N was difficult to analyse due to its international figures, but appeared

to sit in the middle between the highest and lowest performers. The company

undertook its largest merger and acquisition in late 2014 and the interviewee

in Stage 3 said the 2016 results would have improved. In this light PBO-N

was positioned in the middle as it appeared not to have performed as badly

as PBO-D and PBO-F, particularly in 2016.

4. PBO-D returned its poorest and negative results in 2014, and while its

results had improved they still were not strong. Even PBO-L’s worst year in

2012 was still in the double digits, and better than PBO-D’s strongest year.

The interviewee in Stage 1 had referred to a “disconnect” with leadership

and lower ranks, lots of acquisition activity, and an accounting based

leadership. Even in the boom times its results were relatively weak.

5. PBO-F was a strong performer up until 2015, but its 2016 EBIT and

EBITDA results were the worst of all PBOs, and it returned a weak net profit

margin in 2016. This is consistent with a large decrease in employee

numbers, particularly in 2016. It is also consistent with the Stage 3

interviewees' views, who were surprised at the strong financial results from

2011 to 2015 and said to expect a decrease in 2016. The interviewees said

the international leadership team had recognised problems and had put a

strong emphasis on communication in the PBO recently.

It is important to note that had the financial analysis reported on the financial

results of PBOs from 2010 to 2015 (rather than from 2011 to 2016) then the position

from best to worst performance would have been significantly different.

5.4 PBO PROFILES

The results from Stage 2 are presented by profiling each of the five PBOs

covering demographics, performance, and the DOCS instrument results (Denison, et

al., 2006) and integrating Stage 1 and 3 interviews in an overall cultural interpretation.

The profiles are presented in a hierarchy from highest to lowest financial performers.

The results are then aggregated in a discussion commencing with surface level

artifacts, demographics, quadrant analysis including index results and patterns or

similarities. An evaluation of the DOCS tool as a valid instrument is provided, and

finally the second part of the research question is addressed.



5.4.1 PBO-L Profile

Sample size: 25, response rate: 3, and percentage response rate: 12 percent.

Demographics and business performance

The Stage 2 participants who undertook the survey all held post-graduate

qualifications, two were non-engineering and the other held an engineering related

degree. One participant had tenure of over 10 years and the other two between one and

five years tenure. In addition, the two interviewees from Stage 3, a senior HR manager

and a senior engineering professional, said in 2012 PBO-L’s dip in financial results

was due to the downturn during which the industry had contracted. Also in 2012, one

of the large mining companies started to withdraw all of their project work which

impacted directly on the PBO. Its strongest years were 2013, 2014 and 2015 when the

firm leveraged from a number of projects in execution.

Interviewees raised concerns that the cultural snapshot was potentially only

conducted in one business unit, which may have either highlighted the cultural profile,

or subculture of a particular group, and was not necessarily an accurate reading of the

PBO as a whole. In other words, the small sample size may have resulted in only a

“composite” of the findings. However, that said, the interviewees agreed with the

DOCS results as presented to them in the circumplex, in Figure 5-6.

DOCS Instrument Results

Figure 5-6. PBO-L: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, USA.



Involvement: All indices in the Involvement trait reached high in Q3.

Empowerment and Team Orientation results were the same, 71 percent, and Capability

Development was 68 percent. The results suggested that PBO-L’s employees were

empowered, had the opportunity to contribute their knowledge and skills, were

committed to their work and their teams, and that the company invested in the

development of its employee’s skills. The interviewees explained that the company

continually built teams and after projects were completed they dismantled them, and

then started the entire process again.

While Empowerment was relatively strong, PBO-L was described as a very

bureaucratic organisation, and almost quasi-government in some regards. The amount

of check points and approval processes could be interpreted as a company that did not

trust people enough, and when things went wrong there were very serious implications.

It seemed the company was risk averse and attentive to detail. The interviewees were

in agreement with the results of Capability Development, as they believed there was

not much development in that area in the last couple of years, particularly in the mining

part of the business.

Consistency: The Core Values index results reached Q4, 79 percent, indicting

strong historical foundations and roots, ties to the past, desired commitment to clear

and consistent values, and a strong ethical code. The interviewees said this result was

“spot on” and the company was diligent when it came to ethics and there was no

compromising. One interviewee said, “… we talk about sawing libs off when that

happens…”. The company was strong and direct with its expectations, and the

traditions were deeply rooted in the company’s ethos. As Agreement was lower at 59

percent, and lower than Core Values (79 percent) and Coordination and Integration

(65 percent), this suggested that reaching agreement may be difficult when conflict or

different viewpoints emerged. The interviewees explained the company had various

business lines that did not have much commonality either geographically or technically

prior to construction, and that may have resulted in the lower score for Agreement.

The fragmentation of the company’s operations meant it could be difficult to gain

consensus. This appeared to fit with Denison and Neale’s (1999) claim when

Agreement is lower than Core Values, and Coordination and Integration, an

organisation may become divided when conflict or differing opinions arise.



Adaptability: Customer Focus at 64 percent was the strongest dimension,

followed by Organisational Learning at 60 percent, and Creating Change at 59 percent

which all sat in the middle of Q3. However, Creating Change was the lowest of all the

five PBOs which suggested that the way PBO-L conducted business was not very

flexible, it may be reluctant or resistant to change. Organisations with a strong sense

of purpose and direction such as PBO-L, are often the least adaptive and most difficult

to change. Denison and Neale (1999) claimed that when Customer Focus was higher

than Creating Change and Organisational Learning, this tended to signify that an

organisation may be good at meeting customer needs today, but was probably not

prepared for what the customer may need tomorrow, and it represented a passive or

status quo approach to customer focus. The result may have been influenced by the

challenges associated with forecasting future work in a downturned market.

The interviewees explained that PBO-L tended ‘not’ to change and was very

structured, and this was a contradiction to Consistency. In other words, the

interviewees identified the existence of competing values, particularly Adaptability

and Consistency. They revealed that PBO-L was “wrestling” with the changes in the

market, the market crash, and the fact that all of the big projects had ended. Being a

large PBO it was difficult to move fast, especially when there were entrenched

behaviours and cultures, and people with long tenures did not want to change.

Both interviewees took the view that this result would not change greatly in a

different market, and in the boom times the Adaptability trait could result in weaker

overall results. One interviewee explained, “I don’t think it would change… our

company’s goals reflect that, we don’t tend to listen; we are seen as arrogant as a

company, and we don’t really listen to what the customer wants… that is a reality of

what the culture is and the feedback we get from our customers and it is just not a

factor of the market, it is a long held view. If it was in the boom times, I don’t know if

you would see much difference”. The interviewees said that while Adaptability was

already their weakest trait, in stronger economic conditions it would be worse because

in the slower times companies needed to adapt and understand customers requirements

and then win work, but and in the strong boom times it was a PBOs market and there

was less of a need to be adaptable.

One interviewee explained that when the boom began the large clients had two

problems: they could not get enough people to undertake the work, and the work



exhibited inconsistency due to appointing many different PBOs. One mining client

acknowledged that this inconsistency was not working for them, and appointed PBO-

L in a specific region of Australia to manage all their project work to ensure a

uniformed and consistent process that all projects followed. Ultimately, this meant sole

sourcing. As PBO-L had a pipeline of projects it did not have to competitively tender

for work, and the client did not go to the market seeking other PBOs. The implication

was that as the market heated up PBO-L did not adapt, it hired many new people, and

its structured processes and procedures allowed people to on-board quickly. PBO-L

needed to provide consistency of service, and that particular client wanted PBO-L to

follow its processes. In other words, its structure and consistent processes had assisted

sustain its success and high performance resulting in a high score for Consistency but

its lowest score in the Adaptability trait.

Mission: The Goals and Objectives index results reached the Q4, 80 percentile,

the highest score and strongest index for PBO-L. This suggested that PBO-L was able

to define organisational goals clearly, was very good at execution, and operating in a

similar manner to the highest performing organisations. Goals and Objectives refer to

the short–term, specific goals established that help employees align their daily

activities with the organisational vision and strategy (Denison, 2016c). The results

suggested that PBO-L had widespread agreement about goals, and the leadership had

clearly communicated the objectives that the company was trying to meet. Strategic

Direction at 64 percent suggested that PBO-L’s strategy was relatively clear and gave

meaning, purpose and direction to the organisation.

Vision lower at 57 percent suggested that long range planning was not a strength.

The interviewees said they did not see themselves as having a long term vision,

particularly the projects side of the business where they tended to live from project to

project. As their projects were typically two to three years duration, and the industry

was very cyclical, unlike retail consumer producers, the company did not think very

long term. Also, some employees tended to take a silo view and did not see the bigger

vision of the company, particularly in Australia, and would typically be thinking about

their own customers and the PBOs pipeline of projects and project execution. The

interviewees also said they were not surprised with these results. While the company

displayed its mission, vision, and covenants on posters around the office, its mission



statement had not changed for a long time. This also supported the Adaptability results

that PBO-L was not a change agent.

The vulnerable areas were personified by the perception that leaders lacked a

long-term view point, and shared vision of what the PBO would be like in the future.

Denison and Neal (1999) argued that when Goals and Objectives were higher than

Strategic Direction and Vision, this was often indicative that the organisation was good

at execution, but lacked any real sense of direction, purpose or long range planning;

and the focus was usually short-term on the bottom line. Examples of some of the

highest question scores included all traits except Adaptability (blue), and lowest

question scores included Adaptability.

Highest Scores 4.3 Work is organised so that each person can see the relationship between his or her job and

the goals of the organisation (Q 10) 4.3 There is a clear and consistent set of values that governs the way we do business (Q 18) 4.3 There is an ethical code that guides our behaviour and tells us right from wrong (Q 20) 4.3 There is widespread agreement about our goals (Q 51) 4.3 Leaders set goals that are ambitious, but realistic (Q 52)

Lowest Scores 2.3 It is easy to reach consensus, even on difficult issues (Q 23) 2.3 The way things are done is very flexible and easy to change (Q 31) 2.3 Learning is an important objective in our day-to-day work (Q 44) 2.3 Leaders have a long term viewpoint (Q 57) 2.6 We have a shared vision of what the organisation will be like in the future (Q 56).

Stage 1 Alignment

The Stage 1 interviewee described PBO-L’s culture as very successful and solid

that had worked well for a long time, “…it is a very strong culture and it works, they

know their knitting” (PBO-L). The interviewee revealed how the PBO was very

accountable for the work they performed, and at times could be seen as aggressive.

They were well known in the industry for the type of work they undertook and seemed

to attract people to that business model of work, “There is no doubt it’s culture, it

attracts people and it disperses people, you either fit with the culture or you do not”.

The interviewee further described the underlying culture as being very focused on

getting a job completed which at times demanded that clients made decisions quickly

to ensure projects remained on schedule, “So sometimes, some clients will say, you

guys are steam-rolling us…”.



In summary, the overall picture for PBO-L indicated an emphasised capacity for

stability and direction due to indices for both Mission and Consistency being in the

Q4. Mission and Consistency tended to impact financial performance measures when

their rankings fall within the third and fourth quartiles. The organisation seemed to

know where it was going and had the systems to create leverage. Referring to the

performance data illustrated earlier, PBO-L was the best performer in terms of

profitability, efficiency in managing to keep its costs low, and managing cash flow.

5.4.2 PBO-K Profile

Sample size: 12. Response: 6. Response rate: 50 percent.


Of the six respondents, 67 percent held postgraduate qualifications and 33

percent secondary and/or tertiary education. All participants had engineering

backgrounds either in chemical, mechanical or civil engineering. Also, 83 percent had

over 10 years tenure with PBO-K, and 17 percent had five to 10 years tenure. While

all participants in Stage 2 were engineers, one of the Stage 3 interviewees had a HR

background. Overall PBO-K had a strong cohort of educated participants.

In 2012, PBO-K returned the highest financial ratios of all five PBOs, with net

profit 18.6 percent, EBIT 23.6 percent, and EBITDA 22 percent. The interviewees

explained that the huge spike in 2012 was due to a lot of projects finishing at around

the same time. PBO-K had about five major projects plus a number of other projects

winding up in Queensland, and it was “generating massive profits”. PBO-K prospered

in the boom and when the market turned it experienced a significant retraction in staff,

particularly in Queensland.

The interviewees expressed surprise at the continual decline in results since

2012, and while 2015 was their worst year they claimed the company results had

improved in 2016.

This was confirmed when the 2016 results were obtained. PBO-K’s OC profile

was relatively strong with all results high in Q3 and one result in Q4, as illustrated in

Figure 5-7.



DOCS instrument Results

Figure 5-7. PBO-K: Stage 2 survey results analysed through the DOCS circumplex. Adapted from:

“The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, USA.

Involvement: The three indices of the Involvement trait all reached relatively

high in Q3, and was PBO-K’s second highest trait with Team Orientation at 75 percent,

Empowerment at 74 percent, and Capability Development at 62 percent. These results

suggested that PBO-K’s teams worked well together possibly due to individuals being

relatively empowered and having a sense of authority.

The lower Capability Development score suggested that the organisation

probably did not invest in its employees skills as much as it could. One interviewee

explained that while opportunities existed, the organisation tended to get so caught up

in delivering projects that did not have time to consider investment opportunities for

employees, although this was not necessarily discouraged.

Consistency: The Core Values index scored 82 percent reaching Q4,

Coordination and Integration was 65 percent, followed by Agreement at 62 percent

both in the Q3. These results implied that behaviours may be rooted in a set of core

values, or there may be strong historical foundations, solid roots, and ties to the past.

One interviewee said they were not surprised with this explanation because of the

company’s ownership model. However, that would most likely be an owner’s

viewpoint, and staff may have a different opinion. Denison and Neale (Denison &

Neale, 1999) claimed that when Agreement is lower than Core Values, and also lower



than Coordination and Integration, reaching agreement may be difficult, particularly

when conflict arose or people had different opinions. The interviewees held a

somewhat different view and said they did not think there was any conflict around the

Core Values, and believed that Coordination and Integration in their organisation was

generally reasonable.

With Involvement and Consistency the highest scored traits, this suggested that

PBO-K was stronger at internal integration than external focus. In other words, PBO-

K seemed well-integrated and controlled, staff were aligned and engaged, and their

systems appeared to create leverage. These traits tend to be traditionally strongest

when the market is in a depression. When the rankings fall within the Q3 and Q4

quartiles this generally suggests higher levels of quality, fewer defects and less rework,

good utilisation (which all appeared reasonably aligned), and higher levels of

employee satisfaction.

Adaptability: The results of Adaptability trait all reached Q3, with Customer

Focus at 69 percent, Creating Change at 64 percent, and Organisational Learning at 55

percent. Adaptability is about identifying signals in the market through customers,

competitors, other changes, and adapting work systems to the changing conditions.

PBO-K appeared to have moderately strong customer focus encouraged direct

interaction with customers, but while it may be good at meeting its customers’ needs

today, it may not be prepared for what the customer may need in the future. The

interviewees posited that there was a lot of variation in this score. When they had

undertaken research the results varied, from being excellent but sometimes the results,

similar to this research, were not as good. It depended on the market, the region, and

it was variable across the entire group.

The most vulnerable index was Organisational Learning indicating that PBO-K

may be good at reading the market with customers and competitors, but translating

those readings into learnings may be challenging. Alternatively, PBO-K may be poor

at identifying opportunities for learning and improvement, or learning may not be

considered a priority. The interviewees agreed with this interpretation and said that the

results sounded “accurate”, and reflected that the company had not been effective at

translating the knowledge gained from the market into action throughout the

organisation. While they tended to recognise opportunities in the market, they lacked

the wherewithal to be truly adaptable.



The interviewees of PBO-K expressed a similar view to those of PBO-L, that in

a heated market PBOs tended to be less adaptable. “…in the boom times you become

less adaptable because you keep doing the same things, they are working…” The PBO

tended to change what it needed to in order to obtain work and questioned what

‘adaptability’ meant. In slow times the PBO tended to be internally focused as it tried

to restructure again, having restructured many times. It was a situation where

significant restructuring had occurred in the industry in response to the downturn, and

with such change, people had not really understood how the change and their roles

would align with the needs of the market. “… in the boom times people are busy, they

are getting paid more, they are a lot more engaged, so that artificially enhances the

culture and engagement… they might say yeah I am aligned to the mission, but I think

internally you spend a lot more time, effort and spending money focused on the

mission, but people might respond more positively because they are more engaged in

discretionary actions”. In other words, when the market is bullish or overheated, and

PBOs are prospering with solid financial performance and growth, this can

“artificially enhance” an organisation’s culture because on the surface everything

seems fine, project work is keeping staff busy and leaders tend to not look beneath the

surface, because the organisation is fully occupied, or utilised.

The interviewees claimed that when a boom was emerging, PBOs could

generally foresee it. It was predictable and drove a positive attitude and culture. They

had experienced that and had witnessed other firms experience that: when morale

drops significantly it affects performance. “So you sort of beat yourself up on the way

down, and on the way up”, and that seemed to summarise the implications of the

cyclical project market. One interviewee argued that culture is driven a lot by the

market, and a PBO could be the best services company in the world, but if the market

was not performing OC could not be invented. “If the market is there, if the work is

there, we really are a service organisation, we respond to whatever is out there, we

don’t tend to self-generate work… in a service driven organisation, you respond more

to markets”.

Mission: The results of the Mission also reached Q3. Goals and Objectives were

at 74 percent, Strategic Direction and Intent, 68 percent, and Vision at 51 percent. This

suggested that PBO-K was good at execution, but it possibly did not have long term

vision. The interviewees believed that all PBOs were trying to reinvent themselves,



thus many people lacked having a really good connection with the vision because the

market had changed so rapidly. They felt that vision is something each company tries

to establish in order to align to the market.

PBO-K had a relatively new CEO with an accounting background, and

communicated the mission and strategic direction more than the interviewees had ever

experienced before. “…he brings a different perspective because he is not from an

engineering background and tries to bring in ideas that are challenging people”. The

interviewees said there was a struggle with the vision and alignment, even though it

was communicated and everyone understood it. It focused specifically on how things

were approached, such as dealing with clients and the PBOs future.

Examples of some of the highest and lowest question scores from the survey

follow, where Mission traits (red) do not appear in the highest scores, and Consistency

(yellow) does not appear in the lowest scores.

Highest Scores 4.6 There is an ethical code that guides our behaviour and tells us right from wrong (Q 20) 4.6 We encourage direct contact with customers by our people (Q 40) 4.3 Teams are our primary building blocks (Q9) 4.3 There is a characteristic management style & a distinct set of management practices (Q 17) 4.3 Customers comments and recommendations often lead to changes (Q36)

Lowest Scores 2.6 Work is organised so that each person can see the relationship between his or her job and the

goals of the organisation (Q 10) 2.6 Authority is delegated so that people can act on their own (Q 11) 2.6 We view failure as an opportunity for learning and improvement (Q 41) 2.6 Leaders have a long term viewpoint (Q 57) 2.6 Our vision creates excitement and motivation for our employees (Q 59)

Stage 1 Alignment

The Stage 1 interviewee said that generally staff were motivated to “do the best

they could”. PBO-K had a good brand, its HR people worked with employees, career

paths had clear definitions of the required skill sets. Generally, ownership and

responsibility, and project development processes were all in place. However, a recent

merger and acquisition of two PBOs with different cultures meant there was still work

to be done. “It has not come together yet; it is still us and them…”. From a project

perspective, the interviewee said that in some cases PBO-K had sound client

relationships, but on some projects the customers became too dictatorial, PBO-K was



often “subversive” to customers, was not firm enough compared to other PBOs, and

this resulted in rework and a lot of extra work.

In sum, PBO-K was slightly more inclined towards stability than flexibility. The

interviewees said the results were what they had expected, and there were not any

mismatches or exceptions. However, one interviewee believed that while culture may

influence performance, he anticipated that performance influenced culture, i.e., “…

people at senior levels if their culture is right it would affect results in the future, but

I imagine on the ground level it is probably the reverse. People feel better about their

position with a company that is doing well”. Authors have long recognised that

organisations include an executive culture (Schein, 1996; Schein, 2010), and executive

teams tend to have stronger and more positive views of their culture (Denison, 2016b).

Consequently, first line managers, or supervisors, are expected to bridge this impact

on culture (Brown, 1998; Silverzweig & Allen, 1976). Thus, it seems inevitable that

astute and authentic leadership will drive the right culture, which may impact

positively on performance in the right environment. However, for the frontline workers

it could mean that if people are busy and continued to be employed, then performance

is more important than OC. Alternatively, as one interviewee said earlier, in the boom

times performance may “artificially enhance culture”, but people will accept that if

they are busy, getting paid more, and are genuinely engaged.

5.4.3 PBO-N Profile

Sample size: 16. Response rate: 7. Response rate: 44 percent


The sample comprised of 14 percent people with secondary and/or tertiary

education, 57 percent had undergraduate degrees, and 29 percent held post graduate

qualifications. All had civil, mechanical or metallurgical engineering degrees. The

tenure of participants included 8 percent with one to five years, 33 percent with five to

10 years, and 58 percent with more than 10 years.

The financial results presented for PBO-N were their international figures and

the interviewee from Stage 3 said the Australian figures were probably not as strong

as their global results. The interviewee’s title was General Manager, he was mostly

optimistic, and it appeared that sometimes he was more confident about the PBO’s



performance compared to what the actual figures indicated. PBO-N’s net profit results

from 2011 to 2016 are presented in Table 5-2.

Table 5-2 PBO-N’s Net Profit (international operations) from 2011 to 2016

2011 2012 2013 2014 2015 2016 6.7% 4.7% 1.0% 20.1% 5.4% 3.19%

The huge spike in 2014 was the result of the divestment of an infrastructure

investment which would not have impacted or appeared in the Australian profit, and

also at that time a major acquisition occurred. The interviewee revealed the company

had experienced a tough couple of years but had changed focus and managed certain

areas to improve. It had moved toward a contracting staff model rather than retaining

direct employees, cancelled leave loading because they “…were really getting

smashed on selling and general administration costs…”. These initiatives may have

implications for the PBO in the longer term, particularly the perception by employees

(as outlined in the last chapter) of having a large complement of contracting staff,

which risked impacting perceived loyalty, rather than engaging full time employees.

Recapping on the EBITDA results, the interviewee from Stage 3 said that PBO-

N was aiming for a result of 7 percent minimum, or even up to 8 or 8.5 percent, for its

Australian operations. The Australian EBITDA results for all the PBOs in 2016 were:

x PBO-L – 13.27 percent

x PBO-K – 9.45 percent

x PBO-N – potentially between 7 percent and 8.5 percent

x PBO-D – 1.11 percent

x PBO-F – - 0.38 percent

Even if PBO-N’s results were 7 percent in 2016 (or between 2 and 9 percent) it

still would be in third position. The aim of 7 percent EBITDA may have been realistic

as a result of the announcement of a large merger in late 2014, and was supported by

employee numbers that increased 20 fold in 2015-16 indicating PBO-N had a portfolio

of work. Thus, for that reason it was considered in third place. Also, PBO-N’s

quantitative and qualitative OC results also appeared stronger than the poorest

performers, namely PBO-D and PBO-F. Figure 5-8 presents PBO-N’s OC results.




Figure 5-8. PBO-N: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US.

Involvement: The Involvement trait was PBO-N’s strongest trait. Empowerment

reached 75 percent, Capability Development 68 percent, and Team Orientation 66

percent, all in Q3. The results suggested that PBO-N had relatively high employee

satisfaction. Involvement being the strongest indicator of employee satisfaction, and

Empowerment refers to individuals that have the authority, initiative and ability to

manage their work, and have a sense of ownership and responsibility (Denison,

Nieminen, et al., 2012). The interviewee said PBO-N’s Empowerment was something

that started from the top within the organisation. The team that had largely undertaken

the survey were located in Brisbane, and at that time there were people who had been

asked to step-up and take on responsibility because the leadership team was in another

geographical location and that appeared to be reflected in the results. The results were

different to those of the other PBOs, suggesting that employee Empowerment was the

most important followed by Capability Development (support in the investment and

development of staff) and then Team Orientation.

Consistency: Core Values was the strongest index at 75 percent, followed by

Coordination and Integration at 66 percent, and Agreement at 56 percent. These results

followed the same pattern as in all other PBOs. The results suggested that PBO-N

followed ethical codes and guidance, had solid historical foundations and roots, strong

core values, and ties to the past. The interviewee in Stage 3 thought the results would



have been stronger than they were. However, he said at times core values were “rolled

out” from the corporate headquarters in North America and there were occasions when

they did not apply in Australia, and as a result it was a regional responsibility to move

in a slightly different direction when that occurred.

Coordination and Integration results suggested that PBO-N was able to bring

different areas of the business together to deliver projects effectively, organisational

structures did not interfere with the ability of staff to perform well on projects, and

staff across the business coordinated their work effectively. However, the results

suggested that as Agreement was lower than Core Values, and Coordination &

Integration, it may be difficult to reach agreement when conflict or different opinions

arose or there was disagreement about core values. The Stage 3 interviewee said the

Agreement score could be low because the North Americans and the Australians often

took different approaches to business. For example, North Americans attitude to

contract terms and conditions was a “hard line stance” and if that same approach was

applied in Australia the PBO “would win no work”. Sometimes the firm stepped away

from the North American “standard” and tailored terms and conditions aligned to an

Australian environment, while still managing the key issues. That appeared to be part

of the reason for the poor Agreement and Coordination & Integration results.

With Involvement and Consistency being PBO-N’s strongest trait, this implied

it was more internally than externally focused. It was trying to integrate and align

people and create leverage through a reinvigoration process. The interviewee said that

ultimately the business was about people, their intellect and the value of human capital.

If a PBO could look internally and identify ways to improve efficiency and gain

alignment it would improve. After the high of the boom times, it needed to fully align

people with its culture and values, and ensure all staff were operating on a common

platform. In particular, staff that had not been indoctrinated, it was facilitating a

process of helping them understand its values, vision, and what had changed. Every

three months the PBO introduced new initiatives aimed at refreshing people and

driving initiatives for new business and improved results which suggested PBO-N

understood the importance of managing its culture.

Adaptability: Results from the Creating Change index was 65 percent, Customer

Focus 62 percent, and Organisational Learning 55 percent, all in Q3. This indicated

that PBO-N was moderately flexible to change, customers had limited influence on



decisions, and the company was conservative when it came to implementing change

through learnings related to its environment. Similar to PBO-L and PBO-K, the

interviewee said that Adaptability would be stronger in a weaker environment because

in boom times things were going well and there was no need to change. Whereas now

in a volatile market PBOs had to adapt and it was “adapt or die”. “… in boom times,

it is tough to stop and smell the roses, because things are going so quickly, you are

just taken with the tide so to speak… in a cooler market you would be looking for other

ways to get back on the heat if that makes sense, put on the gas”. The interviewee’s

interpretation of Creating Change being the highest index was that PBO-N needed to

do better.

Mission: The results of the Goals and Objectives index reached 66 percent,

Strategic Direction and Intent 65 percent, and Vision 51 percent, all in Q3. Although

Vision was on the cusp of Q2. Significantly, the impact that the leadership ideals had

on performance suggested that PBO-N’s vision, or desired state, impacted its

performance outside what might be attributed to actual leadership practices (Denison,

1979). The interviewee took the view that after working in the industry for about 30

years, it was difficult to know what the future looked like. While a PBO can set its

vision as a company, where and who it wanted to be, the world was fundamentally

changing, and PBO-N had refocused its vision because it had not been working. It

would be difficult for any organisation without projects to stay true to their vision, as

they had to keep adapting because clients were evolving and changing. “ Because it is

such a complex multi-dimensional, multi-variance sort of business… all of our clients

react on commodity prices, if commodity prices are down… the industry is down… so

our clients literally ride on the sentiment… , movement in commodity prices, which is

the wrong methodology”, said the interviewee.

One initiative PBO-N promoted was to prepare for the next cycle of the market

by trying to recruit employees it had let go, because they had already made the

investment in them. Often people left the business, not because of poor performance,

or unhappiness with the PBO, but due to market circumstances. “… I have said to my

team to make sure they stay in contact with at least 10 people, because when the market

turns … you want to reach out to those 10 people”. Examples of some of the highest

scores shows the strength of the Involvement trait (green) and the lowest question

scores show the Mission traits (red).



Highest Scores 4.7 There is an ethical code that guides our behaviour and tells us right from wrong (Q20) 4.2 Most employees are highly involved in their work (Q1) 4.1 The capabilities of people are viewed as an important source of competitive advantage

(Q14) 3.8 Everyone believes that he or she can have a positive impact (Q4) 3.8 The ‘bench strength’ (capability of people) is constantly improving (Q12)

Lowest Scores 2.2 There is continuous investment in the skills of employees (Q13) 2.4 We view failure as an opportunity for learning and improvement (Q41) 2.4 Leaders have a long-term viewpoint (Q57) 2.5 We have a shared vision of what the organisation will be like in the future (Q56) 2.5 We are able to meet short term demand without compromising our long term vision (Q60)

Stage 1 Alignment

While Involvement was the strongest trait, Team Orientation returned a

moderate score. This indicated that PBO-N’s involvement seemed healthy, employees

had the opportunity to contribute their knowledge and skills, and were committed to

their work, particularly project work. The Stage 1 interviewee said that it was stronger

in some project teams, but this may have been due to a project being delivered at the

time the survey was undertaken. He was a senior project manager that had recently

completed a 12 month assignment, the team ramped up to 35 people, and it had been

“one of the most successful projects I have been involved with”.

However, PBO-N had experienced significant change. In late 2014 it had

undertaken a large acquisition. Although, prior to the acquisition, the Stage 3

interviewee had said that the PBO“…had some good projects, some very big projects

and then came 2014 all those projects dried up…”. In addition, the Stage 1 interviewee

said in December 2015 that while the acquisition had occurred the full integration had

not occurred. He described PBO-N as having “no culture” and explained that not long

before the interview the firm shrank from 500-600 staff to 20 in one region. Those

elements may have accounted for the relatively low score in the Agreement. In other

words, PBO-N appeared to have had a deteriorating OC and its performance had

suffered accordingly. However, at some point after the acquisition it seemed the

company had improved. Its culture had improved, hence the firm returned a culture

profile in Q3, and in turn its financial performance appeared to have recovered.

Further, the Stage 3 interviewee thought the Core Values index would be higher,

and anticipated it would have been the standout spot. Although, the core values in the



head office were assumed to be stronger. The interviewees said that PBO-N was

considered an “outpost” in Australia, and far away from cultural central HQ in North

America. Vision was also expected to be higher. That said, the interviewee from Stage

3 was a senior leader and consequently had a very optimistic view of the PBO’s vision.

He said that his predecessors had not been as open and had not communicated the

vision as he currently did, and this may have been why the Vision score was relatively

low. The interviewee was also surprised with the close results of all the PBOs average

scores and thought there would have been a few stand outs ‘to give us the hope’. PBO-

N was nurturing its culture and trying to deepen it with building “a what matters”

campaign where staff were encouraged to regularly post digital media of themselves

at work.

5.4.4 PBO-D Profile

Sample size: 41. Response: 15. Response rate: 37 percent.


PBO-D’s participants comprised 27 percent with secondary and/or tertiary

education, 13 percent with undergraduate degrees, and 60 percent with postgraduate

qualifications. Of the sample, 27 percent had non-engineering roles, 73 percent were

engineering professionals, and 7 percent held more than one degree. Length of tenure

comprised of 7 percent with six to 12 months, 7 percent with one to five years, 20

percent with five to 10 years, and 60 percent had more than 10 years. One of the Stage

3 interviewees held the title of Director – Organisational Culture, with an HR

background, and was the only person with OC in their title of all participants.

PBO-D had the worst financial performance from 2010 to 2015 with mostly a

downward trend, all ratios were in the single figures, and negative results in 2014.

While there was improvement in 2015, the 2016 net profit margin returned 2.2 percent,

but it was not as poor as PBO-F’s that dived to 0.6 percent. The interviewee from Stage

1 summed it up, “…You would have expected in the mining boom, flush with funds,

innovation, systems, let’s get in front of the pack and all that sort of thing. But, really

they have come out of the mining boom with very little to show for it. They are in the

same market, doing the same sort of thing, moderate improvements but nothing that

takes us above and or beyond the others in the market”. Figure 5-9 illustrates the PBO-

D’s DOCS instrument results.




Figure 5-9. PBO-D: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US..

Involvement: All three indices in the Involvement trait reached Q3, the PBO’s

strongest trait. Team Orientation led at 74 percent, followed by Empowerment at 68

percent and then Capability Development 64 percent. The results suggested a strong

team orientation which may be expected from a project organisation. The interviewees

from Stage 3 were pleasantly surprised at the results but said that they were not correct.

Accordingly, managers and team leaders were there to maintain the values and

expectations within a team, and recently the PBO had focused on breaking down

internal silos and aimed to have a one team approach and ‘sing’ as a company. “… I

am a little surprised that it is that high to be honest, my perception is that while we try

to set those ambitions we still have a way to go, so it is interesting to see it as high as

that”, said one interviewee and the other agreed and realised there was room for

improvement.

The results for Empowerment also exceeded the interviewees expectations. The

organisation’s previous years engagement surveys identified that people “craved more

empowerment”. Some processes, such as risk management, tended to put up internal

obstacles because management required certain checks and approvals, there was a

perception that employees sense of empowerment had eroded, and they felt there were

too many obstacles to move things forward. One interviewee explained, “… we tend

to find that in a large, global organisation, people feel that a lot of the decision making



is actually pre-determined or there are multiple challenges that they have to go

through, and the local level empowerment is missing, what we are hearing is that they

want more of that…”.

PBO-D’s Capability Development (or investment in people) tended to be

notoriously low on their engagement surveys and the interviewees disagreed with the

DOCS Instrument results. One interviewee argued, “I would love to think that was the

case, but I think that is the sample size giving that response… Because we have tried

to push more than anything the 70, 20, 10 principle of learning… for 10 years we have

always scored low, on training and development and we have not broken through that

piece…”. The 70, 20, 10 model refers to 70 percent of learning occurs by experience

working on projects, 20 percent within the PBO, and 10 percent obtained through

external formal training. According to the interviewee, staff had not realised the type

of organisation PBO-D was, and how it actually presented people with opportunities

to actively learn when they applied themselves.

Further, the interviewee argued that HR people believed that employees

expected investment to be around external training courses, or conferences, and that

staff should approach HR about their needs, a type of self-help, rather than expecting

HR to provide that service. Consequently, HR tended to have a pessimistic outlook on

Capability Development. The interviewee noted, “HR has a more negative view of the

world of all factors because interaction with staff tends to be when things go wrong or

when they are unhappy. It is very rare for someone to say can I have a cup of coffee

with you because I want to tell you how delighted and engaged I am…”. PBO-D had

undertaken a lot of retrenchments in the previous five years, and the association of HR

and management had not been perceived positively, said the interviewee.

Consistency: All indices in the Consistency trait reached Q3. Core Values 75

percent, Coordination and Integration 63 percent, and Agreement at 60 percent.

Overall, Core Values appeared to be relatively strong as observed from the company’s

historical roots, connection to its founders, and consistency with processes and

procedures. Once again, the interviewees were surprised with the high score,

particularly with Coordination and Integration. One interviewee proposed that the

lower score on the Agreement index could potentially occur in the case where a leader

made a call, and the consensus was that the team would not support that call, and in an

organisation such as theirs that happened. Accordingly, there was not a lot of



consensus around decisions, and that was attributed to the change that had occurred.

“… when you are trying to drive change, trying to become a global organisation and

act like a global organisation… somebody has to make the hard call, and we just have

to get on board, and often that is the feeling… because this is the way the organisation

is heading and there is a bit of acceptance of that but not necessarily happiness about

it”, said the interviewee.

Adaptability: All three indices in the Adaptability trait sat in Q3. Customer Focus

at 64 percent, Creating Change at 61 percent, and Organisational Learning at 54

percent. The most positive result was around the encouragement of direct interaction

between clients and staff. The most vulnerable aspect was learning which appeared not

to be a major organisational goal. Denison and Neal (1999) explained that when

Customer Focus is higher than Creating Change and Organisational Learning, this

tended to indicate that the PBO may be good at meeting customer needs in the short

term, but probably not in the longer term, and it represents a passive or status quo

approach to customer focus. This certainly appeared to be the case for PBO-D. The

company appeared to be addressing customer focus, and the results from their other

externals surveys and the views of the interviewees confirmed that it was steadily

improving. One interviewee put it bluntly that customer focus had been “banged on

for three years now”.

Implementation of learnings was said to lag, but the PBO was listening and

understood more, but had not effectively translated that into acting differently.

Historically, the PBO did not tend to have “massive conversations and focus around

our clients” and poor external survey results identified that was an area of weakness.

It had discussed and raised awareness about client relationships and understood they

were not as strong as they could be. One interview said that feedback from clients

over the last four to five years about the PBO, “… I have heard informal feedback

from clients around us collectively being rather arrogant which implies to me that it’s

our way or the highway, and we are not as flexible as others they have worked with”.

This perceived arrogance may be correlated to the state of the market because the

interviewee went on to explain that when the market was “hot”, [we] … thought we

were pretty good, we were actually in a very good market then…”, and the more work

PBO-D won, it appeared to “breed” a different type of confidence, thus an altered

perception of itself. As the market turned, PBO-D realised its actual strengths and



weaknesses. The interviewees explained that recent mergers and acquisitions, and

particularly the resultant changes that had occurred, meant staff were internally

focused as they became accustomed to managing new processes. This resulted in

having “less bandwidth for managing the clients’ realm” and the shrinking market led

to a situation where staff were expected to “wear more hats”, and their ability to adapt

had to be tempered by their ability to survive.

Mission: Goals and Objectives scored 71 percent, Strategic Direction 69 percent

both in Q3, however, Vision was lower at 50 percent in Q2, which was the lowest

index score of all PBOs in this study. These results suggested that PBO-D’s weakness

was that its leaders lacked an ability to plan long term, or ineffectively communicate

its vision, or there was not the same shared vision of the future within the organisation,

and it was better at short term strategic direction, and better again at execution as

reflected in the Goals and Objectives results. The interviewees agreed with the results.

They felt that the context of the organisation’s direction had changed about two years

previously, when leaders changed the vision and strategy of PBO-D almost

“radically”. There was a large merger, which led to an “overhaul” of the mission for

the new combined business. There had been significant change and the interviewees

were not surprised that staff felt that the vision was inconsistent, or perhaps was being

poorly explained.

One interviewee stated that the leadership managed strategic direction well but

had not articulated it adequately, “… we rely on a branding tag line to convey our

vision to staff and I think that has changed so many times over the years. You ask

somebody what is the vision, I can go out now and ask 10 people and I will get 10

different answers and I think that is why that is probably lower…”. This confirmed the

Stage 1 interviewee’s description, that the PBO tended to use “three-word slogans and

acronyms” when communicating messages to staff.

The strongest traits of Involvement and Consistency supported PBO-D’s mainly

internal focus. This focus tends to impact quality, employee satisfaction and return on

investment when their rakings fall within the Q3 and Q4 quartiles (Denison & Neale,

1999). However, this was partly the case for PBO-D, it had poor performance ratios,

but its OC scores were mostly in Q3 but the interviewees expressed surprise at the

strength of results. Of significance, it was the only PBO that returned a result in Q2.

The interviewees argued that everyone was accused of being internally focused over



the last five years, and as PBO-D became more global during that time it tended to

bring a lot more implementation of processes that demanded an internal focus.

Examples of questions results show the highest lacking Mission (red) and lowest

scored questions (including Mission) were presented to the interviewees who agreed

the scores were not unexpected. One said, “There is nothing there that stands out to

me that is not quite right, I would say that is a really good reflection” (PBO-D).

Highest Scores 4.5 There is an ethical code that guides our behaviour and tells us right from wrong (Q 20) 4.4 We encourage the direct contact with customers by our people (Q 40) 4.2 Cooperation across different parts of the organisation is actively encouraged (Q 6) 4.2 The capabilities of people are viewed as an important sources of competitive advantage (Q

14) 4.2 There is a clear and consistent set of values that governs the way we do business (Q 18)

Lowest Scores 2.0 Leaders have a long-term view point (Q 57) 2.2 We have a shared vision of what the organisation will be like in the future (Q 56) 2.3 Learning is an important objective in our day-to-day work (Q44) 2.5 We view failure as an opportunity for learning and improvement (Q 41) 2.5 We are able to meet short term demands without compromising our long term vision

Stage 1 Alignment

The interviewee in Stage 1 described PBO-D as having a high level of

bureaucracy in its culture, it was a big organisation with a top down approach driven

mainly from an accounting perspective. This resulted in bureaucratic roadblocks, lack

of innovation and entrepreneurship, its risk adverse approach, and the formation of

many silos mostly with business units. However, once that was accepted it was clear

that “… you are not going to get far or fast, and if you want change it has to be change

at the rate the system will let you,” and so as a result the atmosphere was pleasant and

it created a relatively happy work environment.

In summary, PBO-D was one of the worst performing PBOs and it appeared to

have a relatively poor OC. This was aligned with the theory espoused by the DOC

model that organisations that did not score high on OC generally displayed poor

financial performance (Denison & Neale, 1999). PBO-D’s Stage 3 interviewees were

repeatedly surprised at the higher scores, even arguing that the scores should be lower,

which suggested that OC was actually worse than the results indicated. The

interviewees were particularly surprised with the relatively high scores of the

Involvement and Consistency traits, and agreed and accepted the poor Mission trait



scores. Regarding the Adaptability trait, they revealed that the PBO had “banged-on”

about the topic for years, did not historically have “massive conversations” or focus

on clients and many of whom expressed they were “arrogant”. This perceived

arrogance may have been stemmed from the leadership team, demonstrated by the

patronising manner of how they communicated to staff which seemed to have created

a disconnection (i.e., often used three-word slogans and acronyms), or delegating OC

to the HR team, or the negative attitude of HR. It was clear PBO-D had a number of

opportunities, or challenges, ahead for improving both its OC and performance.

5.4.5 PBO-F Profile

Sample size: 23. Usable Responses: 12. Response rate: 52 percent.


The participants comprised 50 percent with postgraduate qualifications, 17

percent held undergraduate degrees, and 33 percent with secondary and/or tertiary

education. Further, 58 percent held non-engineering qualifications and 42 percent

obtained an engineering related degree (chemical, civil, mechanical, structure

engineering or project management). The tenure of participants included 8 percent

with one to five years, 33 percent with five to 10 years’ service, and 58 percent with

more than 10 years. The sample reflected a strong cohort of educated people, mostly

engineers, and staff with a long tenure.

The interviewees in Stage 3 held titled of HR Director and HR Manager. They

explained that PBO-F had experienced substantial change through restructuring and

rebranding, and there was a lot of communication regarding this in the past 12 months.

They expressed their surprise with PBO-F’s Australian financial performance results

and said they expected them to be considerably worse. PBO-F’s net profit results in

the years from 2011 to 2015 were all in the double digits except for 2014, and EBIT

and EBITDA for the entire period were all in the double digit figures. However, the

2016 profitability ratios supported the views of interviewees from Stage 3 that PBO-F

was not performing well, i.e., its net profit had substantially plunged from 13.79

percent in 2015 to -0.38 percent in 2016; the worst of all of the five PBOs. Its employee

numbers in 2012 were 1,884 and in 2016 fell to 625, reflecting almost two-thirds of its

workforce had left over that period. Both interviewees in Stage 3 generally agreed but

were also surprised with some of the results as presented to them in Figure 5-10.



DOCS Instrument Results

Figure 5-10. PBO-F: Stage 2 survey results analysed through the DOCS circumplex. Adapted from: “The Denison Organizational Culture Model,” (2016c), by Denison Consulting, Ann Abor, MI, US.

Involvement: Team Orientation was the dominant index at 68 percent, the PBO’s

highest score in the DOCS Instrument model and the only PBO who did not return

scores in the 70 or 80 percentiles. Empowerment followed at 62 percent, and

Capability Development at 61 percent, all were in Q3. The results suggested employee

commitment, coordination between business units, and teamwork impacted

performance. The most vulnerable element indicated a lack of continuous investment

in the skills of employees. Denison and Neal (1999) advised when Team Orientation

is higher than Empowerment or Capability Development, this is often an indication

that there may not be much substance to the team, people may comply to perceived

team norms without much commitment or ownership, and team-up purely for the sake

of appearance.

The interviewees found the results surprising, because being in HR they tended

to hear that staff were not empowered enough, there was too much control from the

CEO and the Board, and a sense of insincerity. They said that “there is a bit of lip

service played to empowerment at times”. They argued that employees believed there

was not enough training and development, or external course attendance. Consistent

with the HR interviewee’s view from PBO-D, the HR interviewees argued when they

heard a particular view from staff then that tended to “colour” their perception, hence

they were surprised that the firm scored in Q3 for Capability Development.



However, they said it depended on the sample, and assumed very senior staff

would be a lot more positive than perhaps the Millennials and more junior staff who

may be more demanding with higher expectations. The researcher explained that the

survey sample had not been undertaken by Millennials or junior staff. This suggested

that the Capability Development score may be inflated. The interviewees explained

that PBO-F’s approach to training was based on the 70, 20, 10 model; the same as

PBO-D’s approach.

Consistency: Indices scores were Core Values 66 percent, Agreement 55

percent, and Coordination and Integration, 57 percent. Scores were positioned at the

lower end of Q3 and the poorest scores of all indices of all PBOs. Core Values had the

most impact particularly related to ethical codes and guidance. The results suggest

shared core values, or links to the past and its foundations, were weaker compared to

other PBOs, i.e., Core Values for most PBOs represented their strongest index score

and/or was ranked in Q4. Agreement was lower, which suggested that reaching

agreement at times may be challenging and despite good intentions it was difficult to

reach agreement when there were challenging views or conflict. The interviewees

agreed and said, “Absolutely true, and the matrix structure makes it more difficult

because there are a lot of people to consider and consult and trying to reach agreement

with a lot of people… and across different cultures as well”.

Adaptability: All three indices in Adaptability reached Q3. Creating Change 63

percent, Customer Focus 60 percent, and Organisational Learning 57 percent. It is

possible that as Creating Change was higher than Customer Focus and Organisational

Learning, PBO-F was trying to react to patterns and trends in the environment, and in

tandem, focus on customers’ needs. However, in the process it had found it challenging

to transfer what it had learned, or possibility it considered that learning was not as

important as other variables. Alternatively, with Mission higher than Adaptability, it

is possible that PBO-F knew it needed to change, and was not changing for change

sake. One interviewee said, “Change because we need to change”. Market conditions

required change, and “Yes, we have had to go into new sectors”.

Interviewees explained that the resources downturn had changed the overall

industry for PBOs, and had particularly impacted on PBO-F. The firm had been forced

to change, from traditionally delivering large projects now focused on undertaking

small projects in certain areas such as operational improvement, asset management



and optimisation, understanding the operational data and finding ways to increase

productivity. The PBO was recruiting “data scientists” as quickly as it could, although

10 years ago that role was ambiguous. However, research in that period indicated this

would become a job of the future, and an area that would develop, but nobody knew

how that was going to impact the market and the industry until change occurred.

Mission: The results of the Mission trait reached Q3. Strategic Direction and

Intent 66 percent, Goals and Objectives 62 percent, and Vision at 54 percent. With

Vision being at the lower end of Q3, this suggested that PBO-F lacked any real sense

of long term direction, purpose or long range planning, or its North American

headquarters did not communicate its vision effectively, thus the focus was more on

the shorter term. The interviewees agreed that “… you can’t really have long term

vision because it is changing all the time”.

All other PBOs strongest index in the Mission trait was Goals and Objectives,

which was not unexpected as PBOs tended to be focused primarily on project

execution. However, PBO-F’s strongest trait was Strategic Direction and Intent which

suggested it was putting more effort into defining or implementing strategies, or it had

a clear strategic intent, or that staff knew what the company was trying to achieve in

the short term (such as focus on service offerings around operational improvement) in

order to manage uncertainty. This may have been driven by the need to address its

recent performance.

The interviewees said the firm had been through a period where there was very

little communication, but now the global leadership team was communicating more

regularly about success and the resultant celebrations, and staff understood the PBOs

direction. This demonstrated increased transparency and effort. The interviewees

explained, “I would put it down to a real intensive communication commitment from

the Board and from the leadership” and “communicating the mission, and the vision”,

which seemed to support PBO-F’s stronger scores in Strategic Direction and Intent,

and Vision indices.

Involvement was PBO-F’s strongest trait followed by Mission indicating a

combination of internal and external focus, a bottom-up and top-down style. With

Involvement higher than Mission it indicated that PBO-F’s staff were involved in the

firm’s strategy, goals and vision. However the interviewees did not agree and said that

staff “…are hearing it, but they are not seeing it or feeling it ….. or having input”.



Examples of some of the highest scores shows a lack of Mission (red) presence,

and lowest score questions were dominated by Adaptability (blue).

Highest Scores 4.25 We encourage direct contact with clients by our people (Q40) 4 Cooperation across different parts of the organisation is actively encouraged (Q6) 4. There is an ethical code that guides our behaviour and tells us right from wrong (Q20) 3.83 The capabilities of people are viewed as an important sources of competitive advantage

(Q14) 3.75 Most employees are highly involved in their work (Q1)

Lowest Scores

2.33 Work is organised so that each person can see the relationship between his or her jobs and the goals of the organisation (Q10)

2.33 Leaders have a long-term viewpoint (Q57) 2.41 We view failure as an opportunity for learning and improvement (Q41) 2.5 Learning is an important objective in our day-to-day work (Q44) 2.5 We respond well to competitors and other changes in the business environment (Q32)

Stage 1 Alignment

An explanation of PBO-F’s poor OC results seemed related to what the

interviewee in Stage 1 referred to as losing its way in a decade of “crazy project

activity”. As the company grew significantly staff were put on projects but never

really connected with the PBO, and new leaders were never properly inducted. When

growth occurred rapidly there were insufficient people, systems, time and/or

inclination to fully orientate new staff to the PBOs culture. Its culture appeared to “…

get diluted to the point, where we were 3 years ago, where you lose that way”. It

appeared that while PBO-F had returned its strongest financial results in 2012-13 it

had also lost custody of its espoused values and this may be one reason it scored the

lowest score in Core Values than any other PBO, and thus its performance had also

declined since the high results of 2012-13.

Another interpretation was that PBO-F’s leadership had perhaps unintentionally

orchestrated a deteriorating OC, through large retrenchments, and lacked the means to

manage change effectively and win new work. It developed a communication strategy

to assist with addressing performance, or it may not have managed its culture and the

culture instead began controlling part of the firm (i.e., strong passive resistance in

Australia the interviewee in Stage 1 revealed). The interviewees said PBO-F’s

leadership team and Board had made a substantial effort in communicating across the

group. Knowing that its worst financial returns were to be 2016, this may have been



the trigger point for the leadership to act on elements of its culture, particularly

improving communication, and start the journey to improvement. While PBO-F’s

results were all in the Q3, they tended to be in the lower part of the quartile.

In sum, the highest impact for PBO-F came from the conflicting traits of Mission

and Involvement. This was different to all other PBOs that scored highest with

Consistency and Involvement. PBO-F may have more of a bottom-up approach,

evident in their struggle with the expressed “passive resistance”. The meaning and

direction established by the changes PBO-F had implemented may have included the

involvement of its staff in its mission. Although simply declaring a new organisational

mission does not necessarily imply the support and commitment of an organisation’s

employees, and high involvement among an organisation’s members does not

necessarily imply a clear sense of direction and purpose (Denison & Neale, 1999).

5.5 DISCUSSION

5.5.1 Surface level artifacts

All the interviews in all stages were conducted in the PBOs offices. Schein

(1990) noted when entering an organisation one observes and feels its artifacts such as

the physical layout, the dress code, the manner in which people address each other, the

smell and feel of the fitout. In other words, the surface level artifacts and what were

visible to the Researcher on entering a PBOs office.

Some PBOs premises were located in prime CBD positions with office fitouts

that were spacious, sophisticated and modern, other PBOs were not so grand, or

located in a space that was dedicated to a project team. The first impression gained

was the reception area and the visitor signing-in procedure, which varied from older

style hand-written methods, to electronic sign-in methods and/or almost a mini safety

check, and others were already expecting visitors.

As PBOs all offered professional services all of their offices provided a certain

level of professionalism. However, it is difficult to compare and contrast each PBO in

an objective and like for like manner because: the Reseacher only made two or three

visits to each PBO, some PBOs offices were corporate headquarters and others were

not, some were project offices which means the comparison would not be effective.



5.5.2 Demographics

Education Level

When aggregated, Stage 2 respondents’ education levels comprised of 56 percent

with postgraduate qualifications, 19 percent had undergraduate degrees, and 25 percent

secondary and/or tertiary qualifications. In addition, 10 percent of all participants held

more than one degree. Figure 5-11 reflects the high quality sample of educated people.

Figure 5-11. Stage 2 participants highest level of education achieved.

Engineers and Tenure

The representativeness of the Stage 2 sample was reflected in 71 percent having

engineering related qualifications. While the majority of participants held engineering

qualifications, the Stage 3 study added balance by having many senior participants

with a HR background. In addition to participants qualifications, the reliability of

results of Stage 2 was also illustrated through participants tenure with their current

PBO, 50 percent had more than 10 years, see Figure 5-12.

Figure 5-12. Stage 2 participants and tenure with their PBO.



5.5.3 Data Analysis

Traits and Indices: At a glance

Quartile scores plotted by OC trait and index illustrates the priority PBOs placed

on certain cultural elements associated with performance, see Figure 5-13.

Figure 5-13. DOCS Instrument results from a trait and indices perspective.

x Mission - The Vision index scored low for all PBOs, but Goals and

Objectives appeared to echo the execution strength of PBOs, and Strategic

Direction tended to reflect their relative short term focus.

x Consistency - Core Values appeared to be important for all PBOs, followed

by Coordination and Integration or co-ordinating projects seemed

challenging for PBOs. Agreement fluctuated between PBOs.

x Involvement - Empowerment and Team Orientation scores reflected that

engineers seemed to be empowered and engaged. Generally, Capability

Development was not as strong and this may have been due to the volatile

market conditions during which the research was undertaken.

x Adaptability – All indices scored relatively lower, particularly

Organisational Learning and that implied PBOs are not change agents and

some PBOs claimed this score would have been worse in the boom times.



Traits and Indices: Patterns and similarities

The quartile results identified a number of patterns and commonalities of PBOs.

The index results ranged from the lowest score of 50 percent to the highest 82 percent,

and reveal four distinct patterns as illustrated in Figure 5-14.

Figure 5-14. DOCS Instrument trait and index comparison of five PBOs and patterns of preference. Adapted from: Denison (2016a) sample reports, https://www.denisonconsulting.com/sample-reports/.

PBO-D PBO-F PBO-K PBO-L PBO-N(All 3 stages) n= 18 15 9 6 9

MissionStrategic Direction 69 66 68 64 65

Goals & Objectives 71 62 74 80 66

Vision 50 54 51 57 51Consistency

Coordination & Integration 63 57 65 65 66

Agreement 60 55 62 59 56

Core Values 75 66 82 79 75Involement

Capability Development 64 61 62 68 68

Team Orientation 74 68 75 71 66

Empowerment 68 62 74 71 75Adaptability

Creating Change 61 63 64 59 65

Customer Focus 64 60 69 64 63

Organizational Learning 54 57 55 60 55Average 64.42 60.92 66.75 66.42 64.25

60 63

69 66

Ada. Mis.Inv. Con.

60 61

64 59

Ada. Mis.Inv. Con.

63 64

70 70

Ada. Mis.Inv. Con.

61 67

70 68

Ada. Mis.Inv. Con.

61 61

70 66

Ada. Mis.Inv. Con.



1. All results in the Vison index returned scores in the 50 percentile. It was the

least favourable of the three indices in the Mission trait for all PBOs.

2. The Consistency trait showed the priorities of all PBOs were Core Values,

then Co-ordination and Integration, and lastly Agreement.

3. Four out of five PBOs had an internal focus with their strongest traits

Consistency and Involvement

4. The average (mean) for each PBO showed closeness of results.

The potential implications of these patterns are explored and contribute to

addressing the second part of the research question, addressed later in this chapter.

Mission - The Mission trait had the largest scale of scores, from the highest of

80 to the lowest of 50, spanning Q4 down to Q2. Four of the five PBOs ranked Goals

and Objectives the highest index, followed by Strategic Direction and Intent, and then

Vision, with the exception of PBO-F. In other words, the results of the four PBOs

followed the same patterns in their order of priorities.

x Goals and Objectives suggested that execution was a priority and a relative

strength for most. If execution is interpreted as project execution this result

is not unexpected because it is a fundamental competence of PBOs. PBO-

L, which was the highest performing firm, scored its highest index in Goals

and Objectives, reaching the Q4, and the highest score of all PBOs in the

Mission trait.

x Strategic Direction and Intention implied a medium term view (between

short term Goals and Objectives and longer term Vision). All PBOs scored

in the 60 percentile. This may be attributed to uncertain and tough market

conditions, historical reliance on the mining and energy sectors, or

difficultly forecasting new work in the future, or the challenge of managing

the change into other services lines and areas where demand had shifted to.

x Vision was the most vulnerable area, as all scores were ranked in the 50

percentile for all PBOs. It could be argued that PBOs did not hold a shared

view of a desired future state (Denison, Nieminen, et al., 2012), or they had

a poor ability to forecast longer term future economic conditions.

Alternatively, as all PBOs were international organisations their Vision may



be formulated by leadership teams in other parts of the world, or that PBOs

were challenged with creating a compelling vision and innovative ways to

complement their earning capacity.

Consistency - The Consistency trait illustrated that all PBOs place the same

pattern of index priorities. Core Values was the highest scored index, followed by Co-

ordination and Integration, and then Agreement.

x Core Values as the highest score suggested that PBOs had a clear sense of

espoused values, strong historical roots or ties to the past, and/or owners or

founders that had effectively communicated. Alternatively it is an index that

could be more tangibly promoted and communicated i.e., management

teams communicating their PBOs core values, and core values displayed in

foyers and meeting rooms.

x Coordination and Integration appears to stem from the inherent nature of

PBOs abilities to coordinate projects and service offerings across

engineering disciplines and geographical locations.

x Agreement was the lowest scored index and suggested that agreement was

not always easily or consistently achieved. This may be due to the unique

organisational forms of PBOs and their multiple reporting lines, global

operations, and the complex technical work they often performed.

Involvement – Most PBOs ranked Team Orientation their first priority followed

by Empowerment.

x Team Orientation as the highest index seemed logical considering PBOs

continuously have teams working on projects and studies, and appear to

encourage, reward and emphasise a team approach.

x Empowerment tended to be relatively strong. This indicated that engineers

have authority, initiative, and accountability towards their work and PBO.

x Capability Development through training and development tended to be

considered less of a priority, particularly if this was an external expenditure.

If it was learning on the job and skills gaining through working on a project,

then this tended to be important and supported.



Adaptability – The Adaptability trait was the lowest scoring cultural trait from

an overall perspective. Being externally focused, some PBOs claimed that Adaptability

would have scored even lower in heated market conditions, which suggests that PBOs

may be more internally focused in heated market conditions. Alternatively, as the

results were all in Q3, this may be the best results that can be achieved because PBOs

are now responding better to customers, their competitors and changes in the market.

Also traditionally PBOs do not self-generate demand for their services, so they need

to especially focus on adapting to a downturned market. However, it may also be the

case that Adaptability may not fluctuate much in heated, uncertain or stable market

conditions for PBOs.

x Customer Focus was the strongest trait for three PBOs, but not for PBO-N

and PBO-F, whose priorities were Creating Change in this trait.

x Creating Change was either a first or second priority for all PBOs. However,

if PBOs were more externally orientated they may have been more prepared

for the downturn, and the resultant challenge of managing change, reducing

staff numbers, altering spending habits, and identifying new areas of

demand. This challenge may have been the result of a cognitive dissonance

in promoting core values, empowerment and team orientation at the same

time as they were shedding employees.

x All firms with an internal focus, except PBO-L, had experienced a larger

and/or frequent mergers or acquisitions. The juxtaposition is that prior to an

acquisition, the logic would seem that leadership teams would require an

external focus on the greater market in order to understand customer

demand, competitor activities, industry trends, potential acquisition

opportunities, and other relevant changes (i.e., price of raw resources,

demand, currency fluctuations, and taxes), but this was not the case.

x Organisational Learning was the not a priority for PBOs in the current

market, particularly when it was considered an expense.

Quartile Focus

Four of the five PBOs results showed an internal focus with Involvement and

Consistency their highest scoring traits. All but one, PBO-F, ranked Involvement and

Mission as its highest scoring traits, and appeared to be actively addressing poor



culture and performance. The implications of an internal focus are the exhibiting of

traditionally better predicators of operating performance, such as profitability

(Denison, Nieminen, et al., 2012) especially when rankings fall within Q3 and Q4

(Denison & Neale, 1999) and the results certainly support this view.

These results suggested that PBOs understand the importance of stability,

particularly for their staff, but need to be flexible to meet the demands of the cyclical

environment they operate within. While they inherently may prefer to be externally

focused, it is probable that the recent downturn has forced them to manage internal

elements as a matter of survival. When PBOs reduced their workforces in large

numbers, clearly there needed to be a period of stability and empowerment to preserve

or nurture the cultural elements that a PBO espoused. This may also explain why the

Consistency trait followed the same pattern of priorities as the PBOs promoted core

values, and concentrated on projects and integrating teams.

Average Mean

Another area of observation in Figure 5-14 was the overall mean average of each

of the PBOs scores is very close. If these were displayed without decimal places the

scores would be:

PBO-L = 67 | PBO-K = 67 | PBO-N = 64 | PBO-D= 64 | PBO-F = 61.

This may indicate the similarities of the culture of PBOs, the industry,

occupations, staff moving between projects, the jurisdiction and the external market

environment. Alternatively it may reflect the DOC model’s influence, i.e., question

structure and wording, as well as being related to the sample size.

5.5.4 Evaluation of the DOCS tools as valid instrument

Overall the DOC model worked well and was suitable for this research.

However, some limitations of the model include its benchmarking approach, the

Adaptability trait being open to interpretation, the implication of performance driving

OC, and that some of the DOCS Instrument questions may not be suitable for certain

organisations and industries. Each point is addressed in turn.

Benchmarking - The DOC model is based on over two decades of research,

during which the Denison Consulting group has developed and continued to add to its

benchmarking resource that compares scores in a Global Normative Database



representing a subset of over 1,000 organisations (Denison Consulting, 2009;

Nieminen, et al., 2017). The database comprises organisations across many industries

such as medical, airlines, utilities, consumer goods, banking and financial sectors

(Denison, 1997), food franchisers, manufacturers, banking, healthcare, mining, and

automotive (Denison, Nieminen, et al., 2012). It could be argued that the DOC model

was designed to specifically analyse various industries, or that it works more

effectively when benchmarking different organisational types, rather than

concentrating on one specific type of organisation, in one specific industry, and in one

specific jurisdiction. PBOs have unique characteristics that do not appear to be

applicable to other organisations and sectors. Therefore, it may be the case that the

DOCS Instrument results may render close results for similar organisational types, in

the same industry and jurisdiction.

Adaptability - The DOC model’s premise is that companies that are internally

focused will have difficulty adapting to external conditions and that organisations that

score strongest in the Adaptability (and Mission) traits have an external focus, and can

translate the demands from customers, competitors and the market into action. A key

characteristic and dimension of an adaptable culture includes an external focus

(Costanza et al, 2012), reacting to external market conditions (Moon et al 2012), and

the ability to receive, translate and interpret those signals through up-taking

opportunities (Denison 2012). The PBOs in this research all reached Q3 in

Adaptability, but were mostly internally focused and this was evident in the DOCS

Instrument results and also the responses of interviewees that described their PBO not

being particularly customer focused. However, all PBOs had survived the downturn,

even if some had reduced staff to such an extent that they seemed to be operating with

a minimum core of people.

There are two ways of conceptualising firm adaptability: adaptive performance

(Ployhart & Turner, 2014) such as change in net profit (EBIT and EBITDA in this

research), and adapting internally by structuring the resource portfolio: acquiring,

accumulating and divesting (Sirmon, Hitt, & Ireland, 2007). All PBOs had been forced

to respond to their environment and had adapted and changed at various degrees.

Organisations that fail to respond to changes in their environments will face disorder,

decline and possible death (Costanza, et al., 2015). Some of the PBOs in this study

appeared to display disorder and were also facing a decline in performance.



Some interviewees argued the results would be lower in a heated market. In other

words, PBOs would be less ‘adaptable’ in a heated market and more ‘adaptable’ in an

uncertain market. It could be argued that in a heated market PBOs would be more

engaged with customers (more activity with increased client meetings, contract

negotiations, site visits), managing and bidding for work (more competitors in the

market, further visibility with competitor activities such as more formal competitive

tendering, pitches, alliances and joint venturing, and working relationships at client

sites), and hiring talent (advertising, interviewing, inductions, staff moving between

projects and geographical locations, secondments and relocations, increased

recruitment staff). This means that as the market heated up, it was easier for PBOs to

adapt to market conditions (particularly winning work, generating revenue and profits,

and engaging with customers) and thus, the Adaptability results may be lower.

However, as the downturn became apparent it was more difficult to change (the large

project work dried up, customers were demanding price reductions, competition

became more intense, PBOs were forced to reduce overheads and talented staff), hence

the higher Adaptability results in a contracting market.

In other words, if Adaptability “has come to mean responsiveness to outside

influences” and the internal capacity to transform, reorganise and redirect (Denison,

1997, pp.144-182) then PBOs were indeed transitioning to market conditions albeit

this was challenging. Denison (1997, p182) described two coupled types of

Adaptability, one of the internal capacity to transform, reorganise and redirect; and a

second form is the capacity to respond to external forces such as market and

stakeholders. PBOs were focused internally on restructuring and reorganising their

business in response to external forces. Overall PBOs scored higher on the competing

value of Consistency (rather than Adaptability) suggesting a preference on managing

internal matters and aiming for a state of stability after such a significant impact of

their environment.

Implications of performance driving OC - The DOC model’s premise is that

investing and improving OC will increase an organisations performance within

roughly a two year lag time, thus OC comes first and serves as a driver of subsequent

performance (Denison, 2016b), as illustrated in Figure 5-15.



Figure 5-15. Culture drives performance. Adapted from: “Building and sustaining high performing organizational leaders”, by Dan Denison, 2016, Denison Certification Workshop – October 2016,

Denison Consulting, Ann Arbor, United States.

If the scenario was reversed, high performance drives OC, and in this study there

appeared to be implications. In the former huge resources boom, it seemed that

performance did to some extent drive OC, but whether this was strong, or even a

genuine culture is somewhat doubtful, because there was not enough of a PBOs

“DNA” to be shared, and employees were not fully inducted or educated to understand

the essence of a PBOs culture, because of the high volume and abundance of work.

What appeared to have happened was that performance “artificially enhanced the

OC”, or a substitute type of culture emerged because people felt better when a PBO

was generating “massive profits” and performing well; but when project work was

reduced and profits declined the real state of the inherent culture emerged. This also

supports the situation why some PBOs declined to take part in Stage 2 because

leadership teams believed that an unflattering OC would be revealed.

DOCS Instrument Questions – The DOCS instrument contained questions that

were reversed, a common research technique designed to keep participants

concentrating on their answers, and to avoid repeating the same score throughout a

series of questions. However, some participants in this research found the reverse order

questions confusing. Also some questions did not fit with the sample frame,

particularly the question on risk and innovation that were contained in the same

question (participants saw these as two distinctly different constructs). Thus, the

questionnaire could be made more effective if the questions were tailored to certain

participants or to certain industries. Perhaps if the questionnaire had been specifically

tailored to PBOs the average results may not have been as close as they were.



5.6 SECOND PART OF THE RESEARCH QUESTION ADDRESSED

The primary question driving this research is: What is the form of OC that exists

within PBOs operating in the Australian resources and energy sector, and what is

OC’s relationship with, and impact on performance? The first part of the research

question (not in bold) was addressed in the last chapter, the second is addressed next.

The quantitative data analysis was limited by low response numbers thereby

limiting its capacity to be robustly used to answer the second part of the research

question. However, in considering the low response rates there did appear to be a

relationship between OC and performance with the PBOs in this study.

The interview results outlined in Chapter 5, particularly Question 13 which

directly asked representatives in PBOs did they think OC impacted performance,

supported this. Not one interviewee argued that OC did ‘not’ impact on performance.

Interviewees provided tangible examples of where culture was visibly working,

particularly on-site, and safety was a measure used to identify a successful culture. A

PBOs culture on-site was a strong driver of performance and a direct example of OC

impacting on performance. The behaviour of staff on-site and in a corporate office also

revealed if a culture was working well. Another example of how OC directly impacted

on performance was one PBOs change program, which resulted in turning around a

dysfunctional culture with poor performance, to a successful culture with a high

performance team. In addition, one interviewee (in question 5) made a strong case of

where leadership impacted on OC, and argued the composition of a PBOs Board and

how the Chairman selects Board members will in turn impact on performance.

In this chapter, the quantitative results supported the argument that OC appears

to impact performance. On the initial analysis of OC and performance using financial

ratios from 2010 to 2015, OC did not align with performance. In other words, only

when the 2016 financial performance figure were plotted did the link between OC and

performance emerge. In addition, the Stage 3 interviewees comments support this as

they commented on their 2016 performance, in some cases it was said to have

improved and other cases it was said to have deteriorated. Consequently, when the

2016 financial results were obtained, not only were the interviewees comments

confirmed, but the OC and performance link was clearly aligned.



The link was most evident with the highest performers and lowest performers,

and the qualitative results clearly supported this, particularly in Stage 3. Stage 3 was

designed to obtain feedback from participants in order to avoid any report bias. The

highest performing PBOs tended to agree with the DOCS results, however, the lowest

performing PBOs often said the OC results were too high which suggested they may

have been inflated. This point also supports the clear link of OC to performance.

However, it seemed that the same organisational types, in the same industry and

jurisdiction was not as distinctive as if a cross section of organisations and/or industries

were captured.

The results were not conclusive or generalisable due to a number of limitations:

particularly the small sample size thus the study primarily relies upon qualitative data,

the comparative analysis was not as robust as it could have been due to unavailability

of some financial and employee figures, and when each PBO released their financial

results. PBOs in this study closed up accounts and balanced their books at the end of

different accounting periods throughout the year, and they released their figures to the

market at a later time, which fluctuated.

The performance results also appeared to depend on a number of other external

influences, particularly the tumultuous market conditions. However, having said that,

all PBO’s operating in the Australian resources and energy sector had experienced the

same downturned conditions. Notably the phase in the economic cycle during which

the research was undertaken is a point of differentiation of this research. Consequently,

a PBOs culture and how it managed the downturn appeared to be reflected in their

performance.

The overall results of the five firms’ performance and OC results are provided

in Table 5-3. Note, in Error! Not a valid bookmark self-reference., the financial

ratios results presented were collected from 2011 to 2016, and these results are aligned

to the DOC Model’s premise regarding the link of OC to performance.

However, if the financial results were used from 2010 to 2015 the analysis would

have been different, OC would ‘not’ have aligned with financial performance. Using

the 2010-2015 figures would have resulted in different positions, i.e., 1) PBO-L, 2)

PBO-F, 3) PBO-N or PBO-D, 4) PBO-D or PBO-K, and 5) PBO-K.



Table 5-3

OC results and performance results of five participating firms in Stage 2

DOCS Instrument Results Alignment with Financial Performance

Financial Performance

Performance

Higher

lower

PBO-L – returned two results in the Q4, and all other scores in Q3. Highest score 80 Æ PBO-L

PBO-K – returned one result in the Q4 and all other results in the Q3. Highest score 82. Æ PBO-K

PBO-N – returned all results in Q3. Highest score 75. Æ PBO-N

PBO-D – returned majority of results in the Q3, but also one result in Q2. Highest score 75. Æ PBO-D

PBO-F – returned all results in lower Q3. Highest score 68. Æ PBO-F

x PBO-L returned strong DOCS Instrument scores, and with the qualitative

results suggested it had a superior, healthier, effective or aligned OC. The

PBO was consistent, well organised in its processes and procedures and

appeared to be a ‘ruthless competitor’. The financial results also found PBO-

L to be the highest performer of all the five PBOs. PBO-L was fortunate to

have had a pipeline of projects which provided it with a buffer zone through

the transition of the market.

x PBO-K scored closely with PBO-L in its DOCS Instrument results.

However while the interviewees revealed an organisation that understood

culture and the impact their culture had on performance, it did not seem to

have the aggressiveness or over-confidence compared to PBO-L. PBO-K’s

OC may have been “artificially enhanced” in the boom times when it was

making “massive profits”, and this may have been realised when it returned

poor financial results from 2013 through to 2015. PBO-K’s representatives

undertook the survey between November 2015 and January 2017, and that

is when it produced relatively strong OC results, which suggested it may

have been working on aspects of its culture, and this was illustrated with

stronger financial results in 2016, supporting that OC predicts performance.

x PBO-N returned all DOCS Instrument results in Q3, and appeared to sit in

the middle between clearly two high performing organisations and two poor

performers. While PBO-N’s financial performance was challenging to



support this position, the qualitative results helped the interpretation which

supported this. A recent acquisition seemed to have assisted PBO-N

significantly. PBO-N’s OC seemed to have also suffered to the point it

almost had “no culture”, but it did not have the negative nuances of the two

worst performers and appeared to be nurturing its culture with a targeted

“campaign”.

x PBO-D returned the majority of results in Q3, but also one result in Q2. The

interviewees depicted a fragmented culture or denial from leadership of

authenticity needed, and perhaps that was why one person had been recently

empowered with OC responsibilities. Of all the PBOs, PBO-D had

historically been the worst performer; however, due to PBO-F’s new

financial low, PBO-D was positioned in fourth place. PBO-D’s leaders

appeared to have been more focused on mergers and acquisitions, and its

accounting leadership team may have assisted its transition through the

cyclical market conditions but it seemed to have a disconnecting effect from

its core of engineers.

x PBO-F returned all DOCS Instrument results in the low Q3, highest score

68. It appeared that PBO-F’s culture had substantially deteriorated in the

last few years, as reported in 2015 by the Stage 1 interviewee. However, it

seemed to have realised that its culture had been diluted in the boom times,

and was now on a journey of maintenance. The survey was completed by

its participants from May 2016 to December 2016 which revealed poor OC

scores. PBO-F’s poor financial results and a substantial decrease in

employee numbers in 2016 supports that OC predicts performance.

The average (mean score) highlights the close results from the DOCS

Instrument. It illustrates there was not a lot of variance between the highest score of

67 percent, and the lowest score of 61 percent. This may be due to all the organisations

operating in the same industry, with the same occupational profile, which had all

experienced similar market conditions. In other words, the strength of a cross-sectional

approach supports that everything was equal.

The significance of the research is that it tested a model in a specific national

jurisdiction (Australia), a specific organisational type (PBOs), and in a specific

industry sector (resources and energy sector), and in a specific time phase in the



economic cycle (the mineral resources downturn). The results found certain patterns

and similarities in certain areas which seemed to be due to the unique characteristics

of PBOs, and all had experienced a similar impact from a volatile market operating in

the Australian resources and energy sector.


This chapter presented the results of Stage 2 and 3. Stage 2 comprised of the

online survey consisting of questions that identified demographics, organisational

performance and business characteristics of each PBO, and a 60 item questionnaire

adapted from the DOCS instrument (Denison, 1997).

Stage 3 comprised of a series of five interviews designed to obtain feedback and

inform the interpretation of the results from a different set of representatives of PBOs

to those who had participated in Stage 1. The chapter described the sample strategy,

presented the performance results, a profile of each PBO and its OC results while

integrating Stage 3 interview results.

Finally, a discussion examined the results and the second part of the research

question was addressed. The final chapter of the thesis will conclude by explaining

this research’s contribution to theory and practice, practical implications, research

limitations and future research opportunities.

Chapter 6 | Conclusion & Recommendations


Chapter 6: Conclusion & Recommendations

This chapter presents theoretical contributions and practical implications of the

research. The chapter unfolds in four sections. First, it outlines the ‘Contribution to

theory and practice’, which links to the ‘Practical implications of the research’, then

provides the ‘Research limitations’ and ‘Recommendations for future research’.

6.1 CONTRIBUTION TO THEORY AND PRACTICE

The research contributes to theory and practice in seven key areas, and addressed

a number of identified research gaps, as follows:

6.1.1 OC’s relationship with performance

The results showed there is evidence that associations between OC and

performance exist. The main contribution of this research, or what differentiates this

dissertation, was notably the phase in the economic cycle (the resources downturn)

during which the research was undertaken. This clear contribution provides important

new information on specific economic cycles which impact PBOs operating in the

Australia resources and energy sector. However, the quantitative data analysis was

limited by low response numbers limiting its capacity to be used in answering the

second part of the research question, and thus the study primarily relies upon

qualitative data.

The research into the nature of OC in PBOs, and OCs relationship with

performance was conducted through a mixed method approach over four phases

including interviews and surveys with participants from 20 different PBOs. The

research design used a model and instrument of OC developed by Daniel Denison

(Denison & Neale, 1999; Denison, 1990, 1997; Denison & Mishra, 1995). The results

aligned equivocally with the Denison’s model’s premise: which maintains that cultural

and behavioural characteristics of organisations have a measurable effect on a

company’s performance (Denison, 1984, 1990; Denison & Mishra, 1995; Denison,

Nieminen, et al., 2012). Interviewees provided a rich insight into a sector that has

experienced substantial distress, and how this has impacted on their OC and

performance.



6.1.2 Established model measured OC and performance

The DOC model worked well for this research. However, a critique of the model

illustrated that benchmarking may be more effective with a diverse group of

organisational types, the adaptability trait is open to interpretation, the implication of

performance driving OC, and some of the questions may not be suitable for all

organisational types. The DOCS instrument was tested and the findings contributed to

an area of research that is often debated. The main critique of the DOC model was

that Denison and his colleagues developed and continue to add to a benchmarking

resource that compares scores in a Global Normative Database representing a subset

of over 5000 organisations (Denison Consulting, 2009) from diverse industry sectors.

It was argued that the DOC model was designed to specifically analyse various

industries or it works more effectively when comparing different companies in

different sectors, rather than concentrating on one specific type of organisation, in one

specific industry and jurisdiction, and in one point in the economic cycle.

6.1.3 Mixed Method Research Design

The research design contributed to mixed method studies, supported an

integrated approach which was successful, and provided benefits that one method

alone would not have achieved. The four phased approach was valid, allowed the use

of multiple sources of data, used different collection methods with various participants,

and aggregation of the data occurred in the analysis stage which ensured triangulation

and more information was presented around the relationships under investigation.

6.1.4 Specific organisations in a specific jurisdiction, and sector

A significant contribution of this research was providing rich insight into a

specific organisation type (PBOs), and in a specific jurisdiction and industry section

(the Australian resources and energy sector). The richness of the sample, identified

through representatives with valid positions, education and tenure with PBOs,

provided insight into an environment showing how they have managed particular

elements of OC in a turbulent period. .



6.1.5 National cultures impact on OC

This research makes a solid contribution by providing rich empirical evidence

of the relationships between national cultures and OC, particularly PBOs

headquartered and parents in North America. It contributes to what cultural values

exist beyond Hofstede’s (2010) seven dimensions of national cultures (Kirkman, et al.,

2006), particularly through a lens on some of Australia’s national cultural traits and

opinions of North American core values. Interviewees from four different PBOs with

North American parent companies and headquarters often found Australians to be

passively resistant. Australian’s tended to believe that the North American business

culture was more harsh and directive, whereas Australian’s tended to “push back”,

challenged authority, did not look for individual blame when things went wrong but

were more focused on investigating the situation and identifying solutions for future

occurrences, and were more relaxed compared to North Americans. Thus, interviewees

described cultural differences between Australia and North America which were

driven by core values, and tended to influence behaviour and in turn OC.

6.1.6 Occupations as cultures

This thesis extends the theatrical proposition of Schein (2010) that occupations,

such as engineering, may be thought of as macro-cultures because of their similar

worldview, common education, licensing requirements, and shared contact with others

in the occupation. It also supports the work of Trice and Beyer (1993) who argued the

most highly organised, distinctive, and pervasive sources of subcultures in

organisations are people’s occupations. This research found engineers appreciated

delivering project work, enjoyed the pursuit of the iconic projects, they tended to be

motivated, had a genuine desire to perform, took responsibility and ownership, and

that came naturally to most people. When many employees knew each other, were

familiar with the projects they had worked on, or had worked on projects together

previously it added to the team environment, and encouraged healthy culture, strong

performance and recognition of people’s strengths and weaknesses. The specific work

an engineer performs is generally problem solving which requires participation of

many parties and that is the value they provide. Problem solving demands full

engagement to understand, analyse and investigate the task at hand.



6.1.7 Identified Research Gaps

In Chapter 2, seven research gaps were identified. These gaps are summarised

in Table 6-1, along with where they were identified, and how they were addressed.

Table 6-1

Addressed Research Gaps identified in Chapter 2, Literature Review

Gap identified in Chapter 2

Research Gaps Addressed in this Thesis

Section 2.2 Project Based Organisations

1. Inquiries into the engineering-construction sector is significantly less compared with the more mature manufacturing-based inquiries (Chinowsky, 2011).

The totality of this research enquiry.

2. Pricing was identified as an under researched topic in industrial firms (Liozu & Hinterhuber, 2013).

Chapter 4 Section 4.3.3, question 7, and question 8.

3. Potentially ‘hollowing out’ of many engineering related skills, and the impact on OC appears to be a knowledge gap.

Chapter 4 Section 4.3.3, question 12, market trends

Section 2.3 OC Tracing the History

4. Little is known of organisations which face quickly changing environmental demands, experience high employee turnover, and hinge on geographically dispersed labour (Giorgi, et al., 2015).

Chapter 4, Section 4.3.3 questions 1 and 3.

5. Inconsistent construct definition and completeness, i.e., surveying one individual or one leader in an organisation to assess OC results in self-evaluation bias and reporting of overwhelmingly positive results (Weinzimmer & Robin, 2016).

Chapter 4, Section 4.4, and 4.7.

Section 2.4 Models and Instruments for Assessing OC

6. Appears to be a lack of published research that has used DOCS Instrument in the scope of this research: specific sector (mineral resources and energy sectors), jurisdiction (Australia) and defined organisational types (PBOs).

This thesis and future publications in academic journals

Section 2.5 Productivity, Performance and Effectiveness

7. There appears to be limited research into establishing productivity metrics and benchmarks for the engineering phase of construction projects (Ebrahimy & Rokni, 2010), and lack of published research on incorporating a combined and integrated approach of project and company performance in PBOs.

Chapter 6, Future research opportunities



6.2 PRACTICAL IMPLICATIONS OF THE RESEARCH

In addition to a theoretical contribution, there were a number of practical

implications of this research. The proposed benefits to business and industry of the

research comprise of:

1) Evidence of the impact of certain elements of OC on performance in PBOs

2) Support for certain established policies and practices of managing OC

3) Improved understanding of the impact of different types of OC operating in

the changing market conditions

4) Potential future trends in the sector as noted by interviewees.

In light of the research findings, empirical contributions recommend PBOs

leadership teams consider the implications of OC on their business. The following

recommendations are made for PBOs to consider improving their culture and

capability, particularly during significant changes in their operating environment.

6.2.1 Understanding the impact of national cultures

The connection between national cultures and OC was clear. The results found

that PBOs operating in Australia, particularly with North American parents, often had

to work hard to ensure their Australian national culture was clearly understood and

respected. While cultural differences appeared to be understood on a broader level, the

depth and reason of certain behaviours appeared to be perceived as ambiguous at times.

The overall results of the DOCS trait of Agreement supports this, and suggested that

agreement can be difficult to reach at times. Also, Vision was the lowest scored trait

of all the traits, suggesting that Australians of North American parents did not fully

understand the intentions of leadership, or that the Vision was not clearly articulated

to employees in Australia, or that leadership teams in North America were not as

transparent as they could be. The recommendations for North American leadership

teams are to understand the impact of their management style on leaders and managers

in Australia “with an Australian business unit with Australian customers, Australian

environment and Australia workers” and why Australians “push back” against some

behaviours. In addition, the leadership teams in North American have to gain the

wherewithal to understand the implications of their style and its impact on their

Australian operations and OC.



6.2.2 Merger and acquisition impact on OC

PBOs have to consider the potential damage and impact of merger and

acquisition activities particularly in boom times when OC is often at its worst. The

impact of multiple mergers and acquisitions found that OC suffered, particularly in the

short term. It is recommended that leaders be ‘crystal clear’ in their communication

prior, during and after such transactions and be prepared for the seesaw effect on OC,

particularly in changing market conditions. While merger and acquisition activity

provided challenges in the integration of people, structure and systems, it is

recommended that OC play a larger part in this process and particularly appointing OC

specialists to advise on the aspects that may impact resultant integration initiatives.

6.2.3 Accountability for OC

The Literature Review reiterated the importance of founders and leaders in the

management, maintenance and evolution of a firms OC. The work of authors, such as

Denison (1990) argued OC is a reflection of the original strategies of the founders of

a firm. Schein and Schein (2016) noted that leaders of organisations have to understand

and manage cultural dynamics for organisations to function well and not turn over the

responsibility to a HR group or to consultants. Lencioni (2002) added the best

approach in developing values are driven by small teams that included the CEO, any

founders still with the company, and key employees rather than a HR driven initiative

with. Denison et al (2012) pointed out the implications on OC was that it takes a long

time to build a positive culture and takes a lot of effort to sustain it. The research

recommends that existing founders and leaders become proactive and accountable in

managing and understanding their PBOs culture rather than delegating it to HR teams.

While the results revealed that some CEOs and leadership teams took ownership of

their PBOs culture seriously, others appeared to shift the responsibility to HR or other

teams with a sense of expecting them to be competent or knowledgeable about OC, or

this strategy allowed them to remain at arm’s length when OC became a challenge. In

this research often HR people tended to be defensive rather than supportive and

collaborative about OC, and admitted to having a negative or coloured view of the

intentions of employees and the world.



6.2.4 Monitoring OC

This recommendation on monitoring OC has been drawn from the interviews.

The view that OC appeared to be weaker in stronger market conditions, and when

transitioning from an overheated market to a volatile and uncertain market, it was

argued that OC deteriorated. Hence, it is recommended that PBOs build and monitor

the state of their culture in all times, particularly in stable market conditions, because

it seemed inevitable that OC will be “artificially enhanced”, or potentially be

perceived as synthetic; or become fractured, diluted, disrupted or damaged in boom

times.

6.2.5 Develop a ‘Cultural Strategy’ as a way to manage OC

Some PBOs appeared to maintain and manage prevalent healthy and strong

cultures. This was attributed to their successful business approach, long tenures of

people, operating globally as one business with consistency, established systems and

processes, connections with founders and strong foundations, having genuine value

creation programs, and an instilled honesty which facilitated the right solutions. Others

said they had never had a merger, but while the culture was strong it was not

necessarily the right culture. It could be argued that the measure of an enduringly

healthy culture is its authenticity and consistent behaviours through all market

conditions, and that a poor culture will not drive excellence and genuineness. It is

recommended that PBOs establish a ‘cultural strategy’ to manage, audit, maintain and

measure culture, particularly when market conditions changed. It is also

recommended that a ‘cultural strategy’ would be similar to strategic planning and

approached with longitudinal research, engage the assistance of specialists in OC and

research, with clearly set objectives, driven from current founders and leadership

teams rather than a HR administrated initiative.

6.2.6 Perception of leadership teams

Another implication of the findings was that some PBOs were led by accountants

and they were described as tending to lack an understanding of the complexity of

engineering, the need to foster innovation in project teams, and appeared to be more

concentrated on financial results compared to safety. A further implication of an

accounting style leadership approach questioned how a Chairman would select his

Board members, particularly in terms of their priority on safety, and their background,



interests, integration with employees throughout the business, or a preference on

financial matters. The research recommends that leadership teams become

increasingly involved in the culture of their firms, access the culture of Boards and

leadership teams in order to gain alignment with the rest of their organisation.

6.2.7 Organisational Learning

The perception of many employees in PBOs was the expectation of how firms

should invest in their learning and development with external training. While many

PBOs, particularly their HR groups adopted the 70, 20, 10 model (based on 70 percent

of learning is undertaken on projects or on the job, 20 percent from within the

organisation, and 10 percent with external conferences or courses) employees tended

to have different expectations. The recommendation for some PBOs where this is

ambiguous to staff, is to ensure clear and integrated communication through all of the

PBOs touch points which explains how they manage investment in staff, the HR

group’s role in learning and development, and managing staff perceptions of learning.

6.3 RESEARCH LIMITATIONS

There were a number of limitations of the research design and when the research

was conducted. Firstly, while PBOs shared a number of business characteristics, they

were not equally the same for all firms which raised a need to be somewhat cautious

about treating them as a homogenous group. Limitations included:

x Time Horizon. The OC assessment was undertaken at a single point in

time. The time was set against a backdrop of challenging market conditions

such as fluctuating commodity prices, and uncertain market conditions.

PBOs had recently experienced a cyclical change compared to a number of

years prior where the industry was experiencing extremely overheated

conditions. PBOs had experienced downsizing and restructuring to manage

changed conditions which meant the OC may be differently represented in

robust or heated market conditions.

x Interviewee Interpretation. While all interviewees answered the same

questions, one limitation could be whether interviewees interpreted the

questions in the same way. According to Dick (1999) this is problematic.

The sample of mostly professional engineers was used to describe the OC

of their employer, and the questions were structured, which promoted a



mostly objective response to questions and allowed for each interviewee to

provide examples and elaborate on their answers in a professional manner.

x Representativeness of Stage 1 Sample. Stage 1 used a single respondent

to describe a firm’s culture which had limitations (Denison & Mishra, 1995)

such as perceptions were likely fraught with self-evaluative bias and that

may have taken cues as to the quality of OC by considering performance,

which can create an auto-correlation and possible internal position which

can impact perceptions of culture (Weinzimmer & Robin, 2016). This was

addressed by having at least three participants in the Stage 2 survey and

having one and two participants in the Stage 3 interviews.

x Research Bias in Data Collection and Analysis. The data collection and

analysis was conducted by a single researcher which could have introduced

researcher bias. This was minimised by the four phase research design and

the use of Nvivo software as a tool to code and categorise the qualitative

results.

x Survey Respondent Bias. The online questionnaire was a self-reporting

assessment of OC, and although self-reporting assessments are often used

in research, there is a potential for biased responses (Slaughter, 2015).

Survey responses that made up the sample all had three or more responses

from each PBO.

x Sample Size. Stage 1 appeared to have adequate participants, Stage 2 had a

limited number and different numbers of respondents complete the survey,

and Stage 3 had an appropriate sample size. The downturn in the resources

sector resulted in many restructures, retrenchments and change which meant

that a number of PBOs declined to participate in the Stage 2 survey because

of the assumption the results could be unflattering to the firm. Consequently,

the quantitative data analysis was limited by low response numbers, which

restricted the capacity to answer the second part of the research question

unequivocally. Therefore, the research primarily relied upon qualitative

data.



x Generalisability. Crotty (2003) noted that ideally the research outcome will

be objective, valid and generalisable, although this is never realised as

human knowledge is not like that, so at best the outcomes will be suggestive

rather than conclusive, and aim to be plausible and convincing. The results

were considered to be generalisable to a point, to the sample of PBOs

operating in the Australian resources and energy sectors, in a particular time

in the economic cycle. The rigour of the research design, the triangulation

in the data analysis, and the quality and representativeness (particularly

large PBOs) of the sample in all phases added to the insightful, informative,

plausible, and convincing nature of the results.

x Limitations in Performance Data. Comparative analysis was not as robust

as it could have been due to some financial and employee figures

unavailable, and time of year when results were released. However, the

information lacking from some PBOs was addressed with Stage 3

interviewees. The performance results also appeared to depend on a number

of other external influences, particularly the tumultuous market conditions.

However, all PBO’s operating in the Australian minerals resources sector

had experienced the same downturned conditions.

6.4 RECOMMENDATIONS FOR FUTURE RESEARCH

The research results found that the role of OC in PBOs operating in the

Australian resources and energy sectors comprised of certain embedded and shared

values, shared beliefs, and identified a number of management practices PBOs tended

to share.

A summary of the research findings and their link to opportunities for future

research is presented in Table 6-2, in order to showcase the potential for improvement

in the sector for PBOs and promote further research.



Table 6-2 Research Findings and Future Research Opportunities

Summary of research findings Opportunities for future research

1. Embedded and shared values: 1.1 Managing risk 1.2 Preferred or aligned to certain Contract delivery

models 1.3 Innovation focused 1.4 Safety was always a priority 1.5 Occupational values of engineers 1.6 Delivering projects and working in teams was

fundamental 1.7 They shared a commitment to deliver

1.1 How do PBOs determine the amount of risk they will accept in their contracts? 1.2 Do market conditions dictate preferred contract delivery models for PBOs? 1.3 How is innovation defined, approached, identified, and managed in PBOs? 1.4 How do PBOs manage safety and how does it impact on OC and performance? 1.5 How strong and widespread are occupational values of engineers in PBOs? 1.6 How do different PBOs set up, manage and structure project delivery methods and

allocate resources to project teams? 1.7 How do PBOs manage their A-teams compared to their B-teams and how do they

prioritise and manage delivery commitment? 2. Beliefs 2.1 Volatile market provided fear and uncertainty among

staff of retaining their jobs 2.2 In a heated market where performance was

strengthen OC tended to become fragmented and could artificially enhance OC

2.3 Australian’s had a number of distinctive natural cultural differences which tended to influence their OC

2.4 The training model of 70/20/10 was often not aligned with the expectations of employees and leaders.

2.1 What is the variance in heated, uncertain and stable markets of perceived employee

security and retaining their jobs in PBOs? 2.2 To what degree and how exactly is OC ‘artificially enhanced’ and does leadership

realise it is occurring or are they blinded by heated market conditions and strong financial performance?

2.3 What other national cultural characteristics do Australian’s display in foreign owned PBOs and how is this different to Australian owned PBOs? What is the impact on OC?

2.4 Why do many staff expect the PBO to facilitate external learning and development training and has this always been the case? Do HR groups often take a coloured or negative view of the expectations of staff and is this more prevalent in uncertain market conditions?

3. Management practices 3.1. Accounting versus engineering led PBOs was

perceived to focus on different priorities 3.2 In heated markets some PBOs staff were promoted

for their technical abilities and not their

3.1 What is the impact of OC and performance in accounting led PBOs compared to

engineering led PBOs? 3.2 What is the impact of promoting ‘fair weather sailors’? How prevalent is this practice

in heated market conditions?



Summary of research findings Opportunities for future research

management skills and were only competent leaders in good times (fair weather sailors)

3.3 The ratio of full time staff versus contractors could impact on the loyalty to the PBO

3.4 Ownership structures particularly the amount of shareholders versus non shareholders could reflect a leadership team that realised genuine prosperity for all employees or prosperity for only a select group.

3.5 Work locations such as in a PBOs office, on site or the client’s office could impact on OC. In a client’s office, a PBOs staff members may adopt the behaviour of the clients values and beliefs (Stockholm syndrome)

3.6 PBO characteristics and whether they were a public or privately owned firm, small or large number of employees in different geographical locations, foreign owned or Australian owned

3.7 Projects tended to have a short term and temporary focus compared to the long term and permanent entity of the PBO

3.8 Consequences of M&As and the amount, size and frequency of these transactions impacted on staff members.

3.3 What is the impact on a PBOs culture of having more or less full time staff compared to contracting staff?

3.4 What is the impact of ownership structures on motivation, employee engagement and OC? What are the different models and why do some PBOs have structures that only benefit a minority of employees and others want reasonable prosperity for all employees? How does gender impact on ownership structures?

3.5 What is the impact on a PBOs OC when staff members are seconded or a project team works from within a client’s office for a long duration? Is there a formal process of sharing knowledge once an employee or team returns from working in a client’s or joint venture partner’s realm? Are staff recalibrated after long term durations outside of their home office? How do PBOs manage project staff that have been working long term in remote locations or are away from their family for long periods of time?

3.6 What is the impact of OC on performance in PBOs operating in Australia that have different entity structures such as public listed firms versus private firms, small firms versus large firms, Australian owned or foreign owned organisations?

3.7 What is the impact on a PBOs OC with their permanent entity versus their temporary project focus priority?

3.8 How do leadership teams manage OC when they are conducting a merger and acquisition of another PBO? What is the impact of an acquisition’s size and the amount of acquisitions it undertakes? How does OC impact on both PBOs in a merger or acquisition from different national cultures?

4. Timing of Research 4.1 The research found that OC impacted on

performance of PBOs operating in the Australian resources and energy sectors, in a specific phase of the economic cycle.

4. How does OC impact on performance in PBOs operating in the Australian resources and energy sectors in stable or heated market conditions?

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Appendix A | Similar and relevant studies


Appendix A – Similar and Relevant Studies

Author Purpose/Research Question Method Findings Relevance to this research Moffatt J. J. (2017) What is the form of OC that

exists within PBOs operating in the Australian resources and energy sectors and what is OC’s relationship with, and impact on performance?

Using an established model for assessing OC the research used mixed method research design comprising of interviews and surveys over four phases.

Results found that there is a clear connection and relationship with OC and performance. It also found the form of OC involved a number of elements that impact on a PBOs performance.

(Hudrea & Tripon, 2016a)

To test if OC is influenced by organisational size, type of activity and immediate environment. Analysed OC from two separate theoretical models: Denison and Hofstede

Quantitative survey, conducted a sample of 15 public institutions using Denison, and 6 using Hofstede in Transylvania.

All organisations had closely grouped scores, no clear and distinct cultural profile per type and size, and no significant difference among their environment. OC was more specific to the sector than particular organisations.

Tests Denison’s model of OC, and found sectorial culture existed. This may have some relevance to this research.

(O’Reilly, et al., 2014)

Investigated the link between CEO personality to culture, and OC to objective measures of firm performance.

Used the Organizational Culture Profile (OCP), the study collected culture data in 2009 from 56 large, publicly traded, high-technology firms headquartered in the USA, and 44 private firms headquartered in Ireland, and collected a subset of the US sample to collect data on CEO personality in 2011.

Found that CEO personality affects a firm’s culture and that culture is subsequently related to a broad set of organizational outcomes including a firm’s financial performance.

This research assessed firm performance on five separate dimensions, the authors collected financial performance metrics for 2 years after the culture data were obtained to provide a measure of growth, which is not how this research is structured. Firm performance measurement seemed to mostly



Author Purpose/Research Question Method Findings Relevance to this research rely on information available by public companies.

(Nassar & AbouRizk, 2014)

Presented an evaluation framework that assessed project performance during the construction phase.

Used 8 performance indexes: cost, schedule, billing, profitability, quality, safety, project team satisfaction, and client satisfaction with feedback and discussions with 15 construction contractors in a case study of an airport project in Canada.

Results showed that the key performance index was easy to implement and achieved practical results.

The project performance index may be relevant for this research, generic framework intended for contactors undertaking major constructions projects can be modified to suit various elements including OC. Case study

(Gu, et al., 2014) Examined the impact of organisational culture and environmental pressures on IT project performance.

Questionnaire sent to 5 industries in the USA and China with 172 and 261 usable responses, respectively. Used 4 dimensions of OC (collectivism, results orientation, positive work environment, leadership risk tolerance) and 2 dimensions of environmental pressures.

Results from analysis indicated there were differences between US and Chinese firms in terms of OC. From a theoretical perspective these results supported the idea that OC affects project performance.

OC affecting project performance is relevant to this research.

(Chatman, et al., 2014)

Hypothesized that “strong cultures” (where a high consensus exists among members across a broad set of culture norms) can contribute to better financial performance even in dynamic environments if norm content intensely emphasizes adaptability.

An updated Organisational Culture Profile (OCP) which consisted of 54 norm statements (quantitative assessment) and used 880 culture assessments from informants in 56 firms in the USA. Financial data included total net income, revenue and operating cash flow

This study found that strong cultures constrain performance by reducing reliability in turbulent environments, although a strong culture is positively associated with improving financial performance even in a turbulent industry.

OC, turbulent environments and strong cultures are all relevant aspects to this research.

(Lloyd-Walker, Mills, & Walker, 2014)

What characterises the project ambience experienced by participants engaged in

Interviewed 22 participants from 6 organisations

That project alliance ambience is valued as encouraging collegiality, trust and commitment.

Australasian projects are relevant, but the use of the term ‘ambience’ to represent the mood, feeling and sense of



Author Purpose/Research Question Method Findings Relevance to this research Australasian infrastructure project alliances.

atmosphere, rather than culture implied hidden values.

(Cheng, et al., 2014)

How to implement a successful performance excellence model in construction enterprises

Case study of construction enterprise (engineering firm) where a performance excellence model has been implemented for about 7 years, in-depth interviews.

Analysis of a typical application undertaken by managers and data from interviewees of firm confirmed the value of the PEM for construction enterprises.

Confirmed that project driven engineering is extremely complicated, and while a single construction enterprise cannot represent directly the entire industry, examining firm-specific data influences the degree of generalizability of findings.

Ahmed & Shafiq (2014)

The purpose was to determine the impact of organizational culture on organizational performance in order to know that how culture of an organization assists in enhancing the organizational performance.

Balanced Scorecard was used to measure performance, and Hofstede’s OC dimensions of telecom companies in Bahawalpur, of which 15 returned questionnaires were analysed

The findings indicated that all the dimension of the culture influence the different perspective of organizational performance.

Limitations appeared with questions in survey (poorly worded, biased, and skewed toward certain answers), very small sample size. Seems that this paper is not a peer reviewed, scholarly journal.

(Jin, et al., 2013) Developed a framework for measuring the performance of international construction firms

Interviews with 22 academics in China, 2 seminars, 47 surveys were collected to select potential performance indicators. A case study and 9 benchmarking firms to measure the performance of an international construction firm using the BSC.

Applying the framework to evaluate one of the largest construction firms in China revealed that its international construction performance was much lower than that of its competitors in several aspects.

The paper provided a framework (a revised BSC with 27 detailed performance measures) designed for professionals to evaluate the performance of international construction firms which is relevant.

Trew, Coffey and Trigunarsyah (2012) (Trew, et al., 2013)

Identified a model that best describes the program organisational culture using data collected from seven airworthiness management programs.

Denison organisational culture model was tailored to specifically address the nature of the research (12 additional questions were added to address safety)

211 responses from 7 Australian airline programs on a 5-point Likert scale. Results were subjected to a factor analysis to determine the model that best describes OC of the surveyed programs. Started with the

Using a model derived from DOCS Instrument, which the authors describe as a comparative culture model is applicable to this research, but the final model did not incorporate the Denison cultural



Author Purpose/Research Question Method Findings Relevance to this research Denison model as the basis for measuring the input variables.

traits of vision, empowerment and customer focus.

(Kotrba, et al., 2012)

Sought to further understand how culture traits interacted to effectiveness on a broad sample of organizations, particularly on how other culture traits interact with cultural consistency to predict three objective performance metrics.

Data from 88,879 in 137 public companies using the Denison Organisational Culture Survey paired with 3 objective measures of performance: consistency with mission, adaptability and involvement.

Consistency showed a significant positive interaction with all three traits in predicting market-to-book ratios and sales growth. Firms that are both consistent and adaptable are high performers. In contrast, the results showed a significant negative interaction when predicting return on assets.

Primary analyses were at the organisational level, using DOCS Instrument is of relevance to this research.

(Cheung, et al., 2012)

Examined the relationship between organisational culture and the performance of construction organisations in Hong Kong.

Completed and valid questionnaires from 103 construction companies in Hong Kong. Structural Equation Modelling investigates i) the relationship between OC identifiers and their operators; ii) the relationship between performance indicators and their operators and iii) the relationship between OC and performance

The results of the study provided empirical support to the hypothesis that the performance of construction organizations is positively affected by their organizational cultures.

Small sample study in Hong Kong. The analysis using SEM seems to be an appropriate measurement instrument for this research.

(Clegg, et al., 2011)

Studied a large Australian Alliance, made up of five organisations. The program closely studied two major projects that placed human relations, rather than legal contracts, at the forefront of what they did.

Longitudinal study from 2002 to 2007 through observation, meetings, discussions, interviews and workshops with the Alliance Leadership members. Secondary research and archival material were also collected.

Presented four themes of difference (the relations between the contacting parties, the handling of variations and incidents, the negotiating of monetary apportionment, and innovation and idea work) which shows the Alliance practice as distinctive and surprising in terms of conventional project

Relevant in the Australian jurisdiction and the influence of OC. However, the Alliance was the focus of the study and how it worked together to deliver projects.



Author Purpose/Research Question Method Findings Relevance to this research management.

(Stare, 2011) Identified the level of project organisational culture in Slovenian enterprises. Focused OC from top and line management’s attitudes, and some other factors connected with managers’ attitudes (rather than OC influence of the base organisation on projects).

Questionnaire from 137 enterprises.

Showed a high level of project organisational culture which the authors found surprising because of poor project performances (90 percent of projects exceeded time and costs).

A certain amount of relevance, OC in terms of project culture, however this was conducted on IT companies in Slovenia which seemed to display a difference operating environment that PBOs in this research.

(Coffey, 2010) Investigated the existence of a demonstrable link between organisational culture and performance of Hong Kong construction companies engaged in public housing projects.

Four mini-case studies, and using the Denison Organisational Culture Survey to measured OC, and performance measurement used the Hong Kong Housing Department’s Performance Scoring System

Found that various cultural traits appeared to be closely linked to objectively measured organisational effectiveness

Relevance to this research includes the use of Denison’s OC model and survey in a similar sector but different jurisdiction.

(Wang, El-Gafy, & Zha, 2010)

Exploratory research built a bi-level performance measurement network to improve construction enterprises’ productivity using two subsystems: company and project.

Company subsystems were organised around the BSC, the project subsystem used the Project Management Body of Knowledge (PMBOK), study of a real estate construction company in China.

Found the bi-level framework was an applicable measurement system that could be used to provide deep and integrated insight, and to analyse the performance of a construction enterprise.

This study is very relevant, even though it lacks the link to OC.

(Andersen, et al., 2009)

Investigated the relationship between one aspect of OC of the base organisation and its effect on the way its projects are approached

Empirical study based on a survey of 165 managers

The paper showed the degree of formal organisational rationality affects choice of project perspective: the more rational the base organisation, the more dominant the task perspective. The study size was significant, larger projects are less task-

Relevant to this research, even though it used one element of OC (rationality).



Author Purpose/Research Question Method Findings Relevance to this research oriented than small-mid sized, everything else being equal.

Bassioni, Hassan & Price (2008)

Evaluated and analysed the criteria and sub-criteria of a Construction Excellence Model that would aid measuring and improving contractors business performance

Questionnaire survey on UK construction contractors, sample size 50.

The criteria and sub-criteria of the model were confirmed using empirical data, and the criterion weights were suggested on an empirical / scientific basis.

The authors claimed the main benefit of the model is that it provides criteria and sub-criteria for an excellence model developed for and evaluated by construction companies, and has a more comprehensive and wider coverage of performance criteria relevant to the construction industry rather than other excellence models when used.

(Ozorhon, et al., 2008)

Explored the impact of cultural differences between international JV partners, and the cultural differences originating from the host country on international joint venture performance.

68 completed surveys from Turkish construction companies in joint ventures with foreign partners, using Hofstede’s national and OC dimensions to measure partner’s cultural differences.

The results suggested that OC is highly associated with international JV performance, whereas national culture and host country culture have little influence on international joint venture performance.

Limited relevance, small sample size, and used Hofstede’s theoretical framework which is not very relevant to this research.

(Thiry & Deguire, 2007)

Investigated the double loop effect of strategy, governance and structure on project management and vice versa in PBOs.

Provided an overview of the literature

Concluded that an important aspect of PBOs is yet unexplored and lies in the development of a collaborative relationship between the fields of project and general management and developing a common language that fosters dialogue.

Relevant organisational forms, particularly PBOs, overview and discussion valuable to this research.

(Cheng, et al., 2006)

Reported on the implementation of a new performance management system in a large PBO to assist guide or change initiatives.

Case study of a large construction company provided an experimental arena for exploring the process of implementing performance

Barriers to implementing new performance solutions stemmed from a lack of senior management commitment and support, ingrained working

Some relevance, although the research design and focus on change is different to this research.



Author Purpose/Research Question Method Findings Relevance to this research management systems. practices and an absence of

appropriate training (Siew & Yu, 2004) Examined the possible

relationships between corporate culture and organisational performace among Singaporean companies in three industires (manufacturing, hospitals and insurance companies)

Using the Organisational Culture Profile (OCP) as primary research instrument, survey included Q-sort method. Sample size: 70 (7 participants from 10 organisations)

Culture was found to impact a variety of organizational processes and performance, and demonstrated the power of culture in influencing organisational performance.

Units of comparison were organisations, the performance indicators reflected the aggregate level of performance, the study assessed financial indicators covering a 5 year period which provides some relevant to this research although the sample frame is different and a different OC model was applied.

Lee & Yu (2004) Investigated the possible relationships between organiszational cultre and performance among Singaporean companies

Used Organisational Culture Profile (OCP), using Q-sort, survey 70 companies in the manufacturing, hospitals and insurance sectors. Performance indicators as the aggregate level included sales turnover, return on assets, net profile, rate of growth, net returns on investments.

The evidence supported the existence of some form of relationship between culture strength and organizational performance, but not strong enough to provide a discerned pattern applicable to a wider sample of companies.

Not particularly relevant, studied different industries, different OC model was used, a different jurisdiction, and many older references were used from the 1980s and 1990s.

Beatham (2003) – Thesis

To develop an integrated (design and construction) business improvement system within the primary case study unit – being AMEC the sponsoring organisation.

EFQM Excellence Model, and developed and implemented the Integrated Business Improvement System (IBIS). Case study, action research, observation, survey, interviews, focus groups, archival analysis, process modelling.

Change was required by those who wanted to use the EFQM excellence model as a tool to identify and deliver business improvement.

Similar organisation (involved in D&C solutions), used a case study of one firm, identified that most organisations use traditional, easily quantifiable measures, such as time and cost, whilst neglecting the softer cultural issues, as a way of assessing overall business performance.

Appendix B | Survey questions used in Stage 1 and Stage 2


Appendix B – Survey Questions used in Stage 1 and Stage 2

Questions Answer options

Demographic questions 1. Your employer’s Name

2. How long have you been working for your current employer?

Less than 6 months 6 months to 12 months 1 to 5 years

5 to 10 years More than 10 years

3. What is your educational background? Secondary and/or tertiary Undergraduate Post graduate Civil engineering Mechanical engineering Electrical engineering Process engineering Chemical engineering Metallurgical

Mining Project management Construction management Non engineering (business, IT, HR, management, accounting law) Other engineering related, please specify

4. What country is the location of your company’s headquarters Australia Canada Europe Malaysia New Zealand

Singapore South Africa United Kingdom United States Other

Performance questions 6. Compared to companies like yours, how would you assess your organisation’s performance in the following areas. (rank on a Likert type scale from very low performer, to very high performer and don’t know)

Sales revenue/growth Market share Profitability/ROA Quality of products or services

New product development Employee satisfaction Overall organisational performance




7.What is the total operating revenue (turnover) your company has earned per annum over the past 5 years? (asked to select from drop down menu from 2010-15)

< $1 million $1 - $10 million $10 - $50 million Over $1 billion Over $2 billion

$50 - $500 million $500 - $1,000 million

8.What was the profitability, per annum, of the firm over the past 5 years (in percentage terms)? If 2015 figures are unavailable please write unavailable.

9. What was the company’s Earnings Before Interest and Tax (EBIT), per annum, over the past 5 years? (in percentage terms). If 2015 figures are unavailable, please write unavailable.

10. What was the company’s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), per annum, over the past 5 years? (in percentage terms). If 2015 figures are unavailable, please write unavailable.

Characteristics of PBOs 11.What are the principle activities of the firm in Australia? (allocate a total of 100 percent among the offers to reflect the relative emphasis of the primary activities of the company)

Engineering including chemical, civil, electrical, marine/port, mechanical and hydraulic Mining infrastructure and process engineering Hydrocarbon related engineering Pipeline engineering

Project management consulting Construction management General construction Procurement assistance Environmental consulting Other/please specify

12.Traditionally what stages of a project reflects your company’s current and possible future work, in Australia? (locate a total of 100 percent among the stages to reflect the stage of a project the company typically undertakes)

Detailed engineering Front end loading (FEL)/front end engineering design (FEED) studies Procurement Construction and/or construction management

Project management Asset management Operations and/or site support related services Other/please specify




13.What delivery model, or contract type, does your firm most typically undertake (locate 100 percent against the attributes that best reflects the type of contracts the firm traditional undertakes).

Engineering Engineering, Procurement (EP) Engineering, Procurement, Construction (EPC) Engineering, Procurement, Construction Management (EPCM) Design and Construct (D&C) Owner’s engineer

Design Construction and Operation (turnkey) Alliance contracting Lump sum/fixed price Build, Own, Operate (BOO) Build, Own, Operate and Transfer (BOOT) Other/please specify

14. With the downturn in the mineral resources sector over recent years, to what degree has your firm changed its service offering or behaviour in terms of its strategic approach, such as its Principle Activities, Stages of a Projects Lifecycle, and Contract types or delivery models. (flag which applies).

LESS: market forces have meant we have had to consolidate, and now provide and/or concentrate on less offerings UNCHANGED: Activities and offerings we provide remain the same

MORE: Market forces now demand more flexibility and we now provide, and offer, a broader range of activities and offerings

15. Please indicate the level of your firms multi-project handling ability by location and mineral diversity on a continuum (use indicator along a continuum to best reflect geographical locations, and mineral experience range)

Location Minerals

NOTE THIS QUESTION WAS USED IN STAGE 2 ONLY (NOT STAGE 1) 16. A key challenge for engineering services companies is managing labour utilisation (or indirect costs), particularly in the current market (the utilisation rate is the percentage of hours spent on billable projects vs the total number of hours worked). What is your company’s target utilisation rate it expects each fee earning person to achieve per week? What is your current utilisation rate, at this moment?

Company’s target utilisation rate Your current utilisation rate Not applicable

Appendix C | Survey questions used in Stage 1 and Stage 2


Appendix C – Stage 3 Analysis Summary

PBO-L (Stage 3 interview scheduled: 29/11/16) Highest trait: Involvement (70). Highest score: Mission - Goals and objectives in Q4, 80. Lowest trait: Adaptability (61) Lowest score: Mission - Vision 57, low Q3

1. Mission, overall average was 67. Goals and objectives index reached the Q4 at 80 which suggests that PBO-L is able to define organisational goals clearly, is very good at execution, and is operating in a similar manner to higher performing organisations. Being the highest in the Mission trait, working towards goals and objectives directly impacts on its mission, and the leadership has ‘gone on the record’ to create alignment and understanding about realistic goals. Strategic direction at 64 suggests that PBO-L’s strategy is relatively clear and gives meaning, purpose and direction. Vision at a lower score of 57 may indicate that long range planning is not a particular strength?

2. Consistency, overall average was 68. Core values at 79 sits within the Q4. This directly impacted consistency and was it because of strong historical foundation and roots, and ties to the past? As agreement is lower at 59, and lower than Core values and Coordination and integration, which scored at 65, suggests that that reaching agreement may be difficult when conflict or different opinions arise? The two strong traits of Mission and Consistency, with some scores in the Q4, are generally the better predicators of profitability and, impact on performance and this fits with the DOC model.

3. Involvement, at average of 70, was PBO-L’s strongest overall trait. Empowerment and team orientation resulted equally in Q3, both 71, and capability development was close at 68. How do you think you are think you are different to other organisations, in your practices, for empowering and engaging people/or building teams/what reflects this strong sense of engagement? The results suggest that PBO-L’s staff are empowered, have the opportunity to contribute their knowledge and skills, and are committed to their work and the teams they work within, and the company invests in the development of their peoples skills?

With the Involvement (70) and Consistency (68) traits the highest suggests that PBO-L is stronger at internal integration than external focus? PBO-L seems well integrated and controlled, people are aligned and engaged and their systems may create leverage? These traits are traditionally strongest when the market is in depression. When the rankings fall within Q3 and Q4 quartiles this typically indicates higher levels of quality, fewer defects and less rework, good utilization, and higher levels of employee satisfaction?

4. Adaptability, average of 61. Customer focus at 64 is the strongest dimension, followed by organisational learning at 61, and Creating change at 59 which all sit in the Q3. However, Creating change is the lowest of all the PBOs indicated that PBO-L may be reluctant to, or resistant, to change? Organisations with a strong sense of purpose and direction such as PBO-L, are often the least adaptive and most difficult to change? The Adaptability trait at an average of 61 is the weakest of all four traits, and this may be due to the recent downturn? The results suggest that PBO-L is customer orientated and has the ability to receive, translate and interpret signals from the environment into opportunities. However, the ability to create adaptive change in response to external conditions was weaker than all other PBOs?

In sum, the overall picture for PBO-L indicates an emphasised capacity for stability and direction due to indices in each Mission and Consistency ranked in the Q4. Mission and Consistency tend to impact financial performance measures when their rankings fall within the third and fourth quartiles. The organisation knows where it is going and has the systems to create leverage as the performance data illustrated earlier, PBO-L was the best performer in



terms of net profit, efficiency in managing to keep its costs low, profitability, and managing cash flow?

PBO-K (Stage 3 interview scheduled 2/12/16) Highest trait: Consistency (68) Highest score: Consistency – core values (80) in Q4. Lowest trait: Mission (62). Lowest score: Mission – vision (56) equally with Adaptability- organisational learning (56)

PBO-K had the highest financial ratios of any of the 5 PBOs and the whole 20 PBOs in 2012, with all ratios in the double digits, the huge spike in 2012 was due to a lot projects that finished up around then? The OC results does not seem to fit with the financial results? The financial results say that you are not as strong as some of the others, but the OC results are quite strong, you have one in the Q4 and everything else is sitting in the Q3 which is good.

1. Mission (62). All in the Q3, Goals and objectives (69) the highest, followed by strategic direction and intent (61), and then vision (56). All PBOs followed a similar pattern, with Goals and objectives, Strategic direction & intent and then vision (Vision for all PBOs was in the 50s). The research suggests this is often is an indication that the organisation is good at execution but may not have any long range planning or vision, the focus is usually short term and often focusing primarily on the bottom line and not the horizon? This may be because of the downturn and difficulties forecasting the longer term vision?

2. Consistency (68) – highest trait with highest index score was Core Values (80) in Q4. Coordination and integration (64) followed by agreement (60) both in the Q3. Behaviour may be rooted in a set of core values, may be because of strong historical foundation and roots, strong core values usually have ties to the past - how is this reflected? Consistency can be tricky as it needs to be balanced with other traits, consistency by itself may not necessarily be a strength. The research suggests when agreement is lower than core values, and lower than coordination and integration it may be due to difficulty in reaching agreement when conflict or differing opinions arise, even though there are good intentions?

3. Involvement-(67) is PBO-Ks second highest trait with all indices in the Q3. Empowerment is highest at 73, followed by team orientation at 72, and a fair drop in capability development at 57. The results suggest that individuals are relatively empowered and have a sense of authority and responsibilities and almost equally the organisation relies on team effort. With the low capability development indicates that the organisation probably does not invest in its employees skills as much as it could?

With the involvement (67) and consistency (68) traits the highest of scores, this suggests that PBO-K is stronger at internal integration than external focus? In other words, PBO-L seems well integrated and controlled, people are aligned and engaged and their systems may create leverage. These traits are traditionally strongest when the market is in depression. When the rankings fall within the Q3 and Q4 quartiles this typically indicates higher levels of quality, fewer defects and less rework, good utilization, and higher levels of employee satisfaction.

4. Adaptability (65) – customer focus (71) was the highest index impacting on adaptability, followed by creating change (67) and organisational learning (56). This trait is about identifying signals in the external market, particularly through customers, competitors, and other changes in the environment, and adapt work systems to the changing conditions? PBO-K is strongest in its customer focus, it may be good at meeting customer needs today, but is it preparing for what the customer may need tomorrow?

Adaptability, this is all about reading the market and customer focus is your strongest, taking feedback from the customers and bringing that learning into the organisation, so you guys are customer focused first, then creating change are you looking at the market, seeing what your competitors are doing and making changes and bringing them into the organisation to change?



While it may be making an excellent effort at satisfying the customers, and creating change, how will does it receive, translate and interpret signals from the environment into opportunities for the company in the future (innovation, gaining knowledge and developing capabilities) and respond to patterns and trends emerging in the market? Also note: strongest is consistency 68 and lowest is adaptability at 65? Is it not great at adapting to the market, but rather being stable and consistent?

In summary, the overall picture for PBO-K indicates an emphasised capacity for stability and consistency due to indices in each Mission and Consistency, and particularly its core values ranked in the Q4. Mission and Consistency tend to impact financial performance measures when their rankings fall within the third and fourth quartiles. However, the financial performance shows over the past 5 years three ratio indictors all peaked in 2012, all in the double digits, and then since then have taken a downward trend? Why was this? M&A with X was 2009?

PBO-N (Stage 3 interview scheduled– 21/3/17) Highest trait: Involvement Highest score: Consistency – core values (75) and Involvement – empowerment (75) at the high end of Q3. Lowest trait: Mission and Adaptability both at 61. Lowest score: Mission – vision (51).

1. Mission - Goals and objectives (66), followed by strategic direction and intent (65) and vision (51). All PBOs followed a similar pattern, with Goals and objectives, Strategic direction & intent and then vision (Vision for all PBOs was in the 50s). The research interpretation is this is often an indication that the organisation is good at execution but does not have a long range planning or vision, the focus is usually short term and often focusing primarily on the bottom line and not the horizon?. This may be because of the downturn and difficulties forecasting the longer term vision?

2. Consistency. (is between principles and behaviour) core values at (75) just misses sitting in the Q4 by 1 point. It is relatively high indicating strong historical foundation and roots, strong core values usually have ties to the past? The research indicates that when agreement (56) is lower than core values (75), and lower than coordination and integration (66) it may be because it may be difficult to reach agreement when conflict or differing opinions arise, even though there are good intentions?

3. Involvement. Empowerment (75) sits on the high end of Q3 followed by capability development (68) and team orientation (66) all in the Q3. PBO_N is relatively unique in this pattern, other PBOs had different patterns and priorities. Involvement asserts that employees will have the opportunity to contribute their knowledge and skills, and people are committed to their work. The results suggest that PBO-N trusts capable employees of making important decisions that impact their work, or even that people are making decisions that they are not capable of making because they are empowered? Overall involvement is the strongest trait (average 70). How do you think you are think you are different to other organisations, in your practices, for empowering and engaging people/or building teams/what reflects this strong sense of engagement?

With the involvement (70) and consistency (66) traits the highest of scores, this suggests that PBO-N is stronger at internal integration than external focus? In other words, PBO-N seems well integrated and controlled, people are aligned and engaged and their systems may create leverage. These traits are traditionally strongest when the market is in depression? When the rankings fall within the Q3 and Q4 quartiles this typically indicates higher levels of quality, fewer defects and less rework, good utilization, and higher levels of employee satisfaction?

4. Adaptability – creating change (65) is followed by customer focus (62) and then organisational learning (55). The ability to create change is the most important index in adaptability for PBO-N. Adaptable organisations quickly translate the demands of the



organisation’s environment into action. What aspects of adaptability, or practices has PBO-N used to address the response to external forces (from markets and stakeholders), or another way, how many new ideas had your organisation recently considered that came from sources of which you were unaware of a few years ago? The challenge is to adapt successfully today, and transfer what the organisation had identified into learning (or implementation) or attend to the organisational learning that occurs during adaption and incorporate this learning into the organisations culture? In summary, PBO-N is assumed to be more internally focused than externally driven, with its beliefs and assumptions, and slightly skewed towards a flexible approach but stability is important?

PBO-D (Stage 3 interview 18/1/17) Highest trait: Involvement (69). Highest index: Core values: 75

Lowest trait: Adaptability (59). Lowest index: Vision (50)

1.Involvement: highest trait, all in the Q3. Team orientation (74), followed by empowerment (68) and capability development (64). This may be indicative of an organisation that has been built around teams, and team work is encouraged, or could also indicate that it is so team driven that people easily comply without a great deal of commitment and empowerment? Because empowerment is not as strong, are people able to make decisions and have input, and capability development such as investing in people in various ways including training, coaching. Note: all PBOs had scores in the 50s in vision.

2.Mission: Goals and orientation (71), Strategic direction (69) and vision (50). Note vision is on the cusp, and could be viewed as vulnerable but could move either way. The research interpretation is when Goals & Objectives are higher than the other indices, it is often an indication that the organisation is good at execution, as Strategic direction is about multi-year intent and operationalising the vision and is about long range planning? - Vision, is vulnerable index. So it seems the focus is usually on short term and often focusing primarily on the bottom line and not the horizon? This may be because of the downturn and difficulties forecasting the longer term vision? With high involvement and low mission it may be that there is a bottom up is stronger than the top down, is it that people are not involved in the planning and strategic intention of the company?

3. Consistency: The second strongest trait, with core values (75), coordination & integration (63) and agreement (60). Core values directly impacted consistency and is usually because of strong historical foundation and roots, and ties to the past? Is this the case, that behaviour may be rooted in a set of core values, how is this reflected? Consistency is particularly delicate, as it needs to be balanced with other traits, consistency by itself may not necessarily be a strength. The research indicates that when agreement is lower than core values, and lower than coordination and integration it may be because it may be difficult to reach agreement when conflict or differing opinions arise, even though there are good intentions?

4.Adaptability: Customer focus (64), creating change (60) and organisation learning (54). This is all about reading the market and customer focus is your strongest, taking feedback from the customers and bringing that learning into the organisation, so you guys are customer focused first, then creating change are you looking at the market, seeing what your competitors are doing and making changes and bringing them into the organisation to change, so this is saying. While it may be making an excellent effort at satisfying the customers, and creating change, how will does it receive, translate and interpret signals from the environment into opportunities for the company in the future (and respond to patterns and trends emerging in the market?

In summary, the overall picture for PBO-D indicates an emphasised capacity for internal focus, due to strongest traits of involvement and consistency, is this because of the market downturn? It is bottom heavy and lots of internal competition?



PBO-F (Stage 3 interview scheduled – 13/1/17) All results scored in the Q3. The highest trait: Involvement; highest index: Team Orientation – (68). Lowest trait: Consistency, and lowest score: Vision (54)

1. Mission: All scores in the Mission trait were ranked in the Q3. Strategic Direction (66), Goals and objectives (62), followed by Vision (54). PBO-F was unique in the priorities in Mission trait with Strategic Direction & Intent the highest index compared to the other PBOs? It seems that PBO-F has a relatively clear strategic intention that conveys the organisations purpose and it has been clearly communicated how everyone can contribute, and priorities have been established to operationalise the goals and objectives, however Vision was the most vulnerable index of all at 54? When Strategic Direct & Intent are the highest index in this trait this indicates that the organisation may have a difficult time executing or operationalizing its mission, even though it may have brilliant visionaries (Denison & Neal (2000) which may suggest that PBO-F has realised this and has had made communication of its strategic intent a priority?

2. Involvement: Team orientation is the highest index of all the indices (68), followed by empowerment (62) and capability development (61). This may be indicative of an organisation that has been built around teams, and team work is encouraged, or could also indicate that it is so team driven that people easily comply without a great deal of commitment and empowerment. While the literature argued that when Team Orientation is higher than the other indices this is often an indication that there may not be much substance to the team, and people tend to comply without much commitment and ownership (Denison & Neale, 2000) this may not necessarily be the case for organisations that are project oriented?

3. Consistency: Core values (66), coordination and integration (57) agreement (55). Core values suggest that PBO-F has a relatively strong historical foundation and roots, strong core values and ties to the past. With Agreement the lowest index, it may mean that at times PBO-F has good intentions but may find it difficult to reach agreement when conflict or differing opinions arise?

4. Adaptability. Creating change (63), Customer focus (60), Organisational learning (57). The ability to create change is the most important index in adaptability for the PBO. If creating change is the highest index this may to indicate a ‘change for change sake’ mentality?

PBO-F highest traits were Mission and Involvement. It was the only PBO to have this pattern (all other PBOs had the strongest traits of involvement and consistency). If the scores were reversed (mission higher than involvement) you might say that the meaning and direction of mission may limit involvement, but this is not the case? It may be that people are empowered to be involved in the company’s direction and goal orientation. It’s a top down versus a bottom up which represents the competing demands that it may face? (if it was high involvement and low mission may mean a great bunch of people going nowhere together? In summary, Involvement appears to be a drive of PBO-Fs OC. In Stage 1 the interviewee gave an the ‘custodians of culture’ who had been strongly embodied in the way that they behave, and the team orientation which implied a sense of ownership and responsibility for the OC? The strong involvement also implied a bottom-up approach, in conjunction with a top-down approach from the mission trait? Mission was relatively strong, implying a sense of purpose and meaning, and goals defining an appropriate course of direction for its employees?

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Organisational Culture and Performance in Project Based ... · Organisational Culture and Performance in Project Based Organisations operating in the Australian Resources and Energy