Proceedings of the 2007 Industrial Engineering Research Conference

G. Bayraksan, W. Lin, Y. Son, and R. Wysk, eds.

The Effects of Organizational Culture on System Reliability:

A Cross-Industry Analysis
Marc L. Resnick, Ph.D.
Industrial and Systems Engineering
Florida International University, Miami, FL 33199, USA
Abstract
The effects of organizational culture on system reliability cannot be understated. Many industries have experienced
catastrophic failures that have been attributed to organizational culture, such as the space shuttle Columbia disaster.
Other industries, such as health care, have difficulty measuring and improving reliability because of a dominant
organizational culture that impedes reliability analysis by focusing on the attribution of blame. On the other hand,
some industries, such as commercial aerospace, have reliability ingrained in the organizational culture and thus
achieve superior reliability in their systems. This paper will present an analysis of organization culture from a
variety of industries to illustrate the diverse ways in which organization cultures affect system reliability.

Keywords

Organizational culture, reliability, human error, case studies

1. Background

System reliability is critical for the success of most organizations, regardless of whether they are in manufacturing,
service, government, education, non-profit, or otherwise. The level of reliability that is achieved by any system
must meet the requirements of its users in all foreseeable contexts. In fact, high levels of reliability have become a
baseline for entry into many markets, an expected characteristic before a product or system will even be considered
by customers, rather than a value added that can be used as a differentiator. Systems that dont meet these reliability
thresholds face either rejection by the market or lawsuits from dissatisfied customers. It is therefore imperative for
system designers and managers to understand all precursors to system reliability. Historically, most efforts have
focused on reliability in the design process [1]. However, more recent analysis has established that reliability is
determined throughout the product life cycle, including many of the stages that precede and follow design [2].
There is considerable evidence that organizational culture affects system reliability at many of these stages,
including requirements specification, design, operations [3], and incident investigation [4].
In many cases, system reliability does not achieve its potential because opportunities for improving reliability are
not addressed. The concept of ultrareliability [2] [5] identifies many opportunities for reliability improvement that
may not be discovered during traditional reliability analysis. One area that has not received sufficient attention with
respect to its effect on reliability is organizational culture. One might think that engineering decisions are largely
defined by quantitative cost-benefit analyses, however the effects of corporate culture and organizational climate can
have large and unpredictable effects on the development of systems and their subsequent reliability. An
examination of the system reliability context (see Figure 1) illustrates that culture can interact with many aspects of
reliability. This paper will identify several of these interactions, discuss the effects of organizational culture, and
suggest ways to structure the relationship so that culture has a net positive effect on system reliability. But first, a
brief synopsis of organizational culture is presented.

2. Organizational Culture

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

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External Context
Culture
Interactions

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System Lifecycle
Requirements
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Incident
Investigation

Concept
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Management

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Maintenance
Operation

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Figure 1. The context of systems reliability analysis (reproduced with permission from [5])
Management often attempts to design and control the culture, but culture is difficult to manipulate from the top
down. These attempts are often viewed skeptically by the workforce at large, often because of lack of follow
through and the impression that the effort is just another flavor of the month policy. In many cases, senior
management does not exhibit the attributes of the culture they are trying to create within the organization,
confirming these suspicions.

3. The effects of organizational culture on system reliability

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

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

For example the CAIB report [3] concluded that NASA did too little to encourage vertical communication from
flight engineers and technical staff to mission decision makers. Management also suffered from an information
cocoon in which the culture encouraged fitting in by buying into a common perspective. Research has shown that
when the only information entering the deliberation process already coincides with existing consensus, there is no
opportunity for deliberation [7]. This reduced NASAs mission reliability and led to the Columbia disaster.
Similarly, the 2004 report from the Senate Select Committee on Intelligence reported that the CIA succumbed to
groupthink when it concluded that there was a serious threat of Iraq weapons of mass destruction [7]. In part this
was due to a deliberation process that ignored or missed relevant information held by many employees. The CIA
had formal methods to avoid groupthink, but these procedures were not followed because of the force of the
organizational culture.
There are also potential challenges to horizontal communication.
Horizontal communication refers to
communication among and between work groups at the same level of the organizational hierarchy. Indicators that
are noticed out of range must be communicated to individuals who can use that information to perform needed
repairs or adjustments. Often, it is taken for granted that these individuals already are aware, particularly when the
organization culture does not stress individual responsibility or it penalizes risk taking. In contrast, the Toyota
Production System philosophy encourages any worker who sees a potential fault to immediately, and without fear of
repercussion, halt the production process.
Another type of horizontal communication that suffers from organizational limitations are shift handoffs. Handoff
errors can occur when incidents span multiple shifts and transition processes from one shift to the next are not
designed to accommodate typical challenges. Often, organizations in this domain do not support effective handoff
processes by providing adequate resources and incentives. At the end of shifts, workers are interested in leaving the
workplace as quickly as possible and at the beginning of shifts workers are interested in jumping immediately into
those activities for which their performance is judged. The mechanisms of performance evaluation thus degrade the
quality of handoff communication and reduce the reliability of the system. This effect can be observed in many
industries, including health care, industrial process control, and others.
3.2 Accountability and blame
When personnel in an industry are motivated by fear to hide errors, this can have a significant negative impact on
reliability. This is a particular challenge in the medical field because of the fear of litigation. Not only might
individual errors fail to be corrected [8], but the learning opportunities to identify recurring trends [9] or to allow
different facilities to benchmark their performance against each other [10] is lost. For example, hospital pharmacists
described in [11] are more likely to report errors they find from other departments. Social pressures discourage
reporting errors within the department and tangible penalties discourage any reports of ones own errors. In order to
overcome these kinds of challenges, Daly [9] describes a voluntary system in which names are removed. By
maintaining anonymity, the fear of liability is eliminated. Resolving the damage of a particular error is not
supported, but identifying trends and benchmarking can still be accommodated.

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

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[12]. In the safety arena, psychological contracts emerge from the organizational culture. If workers perceive that
the organization will not take action to address reported unsafe conditions (part of its behavioral commitment), then
workers feel absolved from reporting them, even if this reporting is required by official policy. In this way, an
organizational culture can eliminate the benefits of a well designed policy.
3.3 Incident investigation
Organizations must establish a culture that cherishes mistakes as opportunities for improvement. In complex
systems, where root causes can only be identified after a large volume of incidents are mined for common trends,
industry-wide databases are necessary. The aerospace industry has been able to achieve this through federally
supported incident investigation efforts and the concomitant increase in reliability across the entire industry has been
significant. It is possible for medical care to duplicate this success, however, there are additional challenges because
of the complex management structure of the health care industry, in which doctors are often independent contractors
for hospitals, multiple organizations, (different medical specialties, insurance providers, clinics, technical staff,
medical labs) must work collectively to coordinate care, and each component has a different lexicon and process
model [13].

Examples in workplace safety and injury reporting also reflect the effects of organizational culture. A reporting
system is dependent on the organizational culture to encourage reporting of minor events and near misses (near hits)
which are critical to achieve a sufficient sample size in the incident database to identify trends and root causes [14].
According to Heinrichs injury triangle, every major incident has a large number of similar near misses and minor
incidents that have the same underlying causes. The culture must encourage the reporting of these events so that the
major incidents can be prevented. But without organizational support, workers do not see the benefit of reporting
such events. There is little chance that this reporting will lead to any direct benefit to the worker and there is a
larger probability of negative repercussions if reporting is not supported culturally.
3.4 Enforcement
An organizations normative efforts to enforce its rules and regulations also can be a major contributing factor of its
culture to system reliability. When an organization has lax enforcement, rules are interpreted more as guidelines
than rules. Employees then feel an unspoken sanction to violate them. This trend generally starts when the violation
allows them to satisfy dominant organizational values and objectives, such as violating safety rules to increase
productivity. But it can expand to include personal benefits such as avoiding fatigue or just taking shortcuts to make
an activity easier.
3.5 Collaboration
In many cases, inter-departmental collaboration is necessary to achieve overall system reliability [2]. This has
become increasingly relevant for organizations that have geographically dispersed teams and diverse cultures.
Communities of practice [15] have been shown to increase the power of collaborative activities among knowledge
workers, but only when collaboration is supported by the appropriate performance evaluation system. Without a
supportive organizational culture, valuable information that can be used to enhance system reliability will be missed.
Similarly, knowledge databases can be used to enhance system reliability [16], but only if supported by the
appropriate organizational culture. As illustrated by the CaSIDA model of knowledge management systems [17], a
systematic process to manage knowledge capture and dissemination is necessary to complement the technological
processes of knowledge integration. The capture and dissemination aspects of knowledge management are
significantly impacted by cultural norms.

4. Conclusions

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

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