Schein’s model of organizational culture was developed in 1980 by Edgar Schein, then Sloan Professor Emeritus at the Sloan School of Management at MIT. Schein’s model of organizational culture is a framework explaining the impact of company culture on an organization with a focus on learning and group dynamics.
Understanding Schein’s model of organizational culture
Schein believed organizations developed a culture over time as employees experienced various changes, adapted to the external environment, and solved organizational problems.
What’s more, company culture affected the way employees felt and acted within the organization itself.
Based on these observations, Schein developed his organizational culture model to define a series of basic assumptions.
These assumptions are used by employees to solve problems associated with external adaptation and internal integration.
In theory, successful assumptions are then passed on to new employees as the correct way to perceive, think, and feel when faced with organisational problems.
Schein believed culture was far more complex than the relatively superficial way employees acted in a workplace in response to management or reward systems.
Instead, successful culture develops over a period of time as employees use insights from past experiences to embody culturally acceptable traits.
The three levels of Schein’s model
Sometimes depicted as a pyramid, Schein’s original model was based on three different levels.
In the context of Schein’s model, a level describes the degree to which cultural phenomena are visible to the observer.
From most visible to least visible, the three levels are:
Artifacts
Or the characteristics of an organization easily viewed, heard, and felt by individuals. Artifacts may encompass office furniture, facilities, employee behavior, and dress code.
Schein suggested artifacts yielded little insight into the company culture. As a result, altering them would not achieve significant cultural change.
In essence, artifacts provide the internal or external observer with clues into the surface manifestation of an organization’s culture.
Since they are often described as the outermost of Schein’s layers at the top of the pyramid, artifacts are the most visible part of culture and are often considered to be superficial at best.
While artifacts are the most visible, it is important to note that their meaning is sometimes subjective. In other words, the individual attributes some meaning to an artifact that was unintended by the organization.
This scenario emphasizes the importance of veracity, which can be verified by asking a company directly or consuming information about the intended meaning of the most obvious aspects of a culture.
One example is Amazon headquarters in Seattle and its unique, bold, and audacious dome design which embodies similar traits in the company itself.
Espoused values
These are the things an organization says about its culture and way of operating. Espoused values are deeper, less visible indicators of company culture than artifacts.
They may include factors such as organizational values, company or employee charters, team contracts, and mission or vision statements.
Espoused values provide more insight into the organizational culture than artifacts and can be altered to affect a reasonable degree of cultural change.
These values – particularly when espoused in a mission or vision statement – shape an organization’s culture and how it is seen by society.
They also influence the organization’s core philosophy as they become embodied by staff over time.
Nevertheless, values tend to cascade from the most senior levels of management in a top-down fashion.
If senior staff exhibit values that contradict the organizational mission, vision, and purpose, these same values are likely to be adopted by subordinates.
Patagonia’s espoused values support its sustainability endeavors and position the company as one that is part of society and thus part of the climate change problem.
Patagonia updated its core values in 2022 to celebrate 50 years in business:
Quality – provide the best service and build products that provide as much back to the Earth as they take.
Integrity – this means to learn from mistakes, meet commitments, and examine business practices in a way that is both open and honest.
Environmentalism – Patagonia acknowledges that it is part of nature and must reduce its environmental impact, share solutions with others, and embrace regenerative practices.
Justice – embrace the work required to be just, equitable, and antiracist.
Not bound by convention – success is realized by Patagonia doing things its own way.
Underlying beliefs
The deepest indicators of organizational culture because they reflect the way it operates internally and perceives the world.
Underlying beliefs are held by employees, including assumptions regarding how they should work with colleagues and the sort of behavior that leads to success or failure.
These beliefs typically constitute subconscious and highly integrated behaviors that are not written down, recorded, or even spoken about.
As a result, they have a significant impact on organizational culture but are extremely difficult to change or relearn.
Facebook was praised by multiple sources in 2017 as one of the best places to work.
One source that analyzed Glassdoor data found that employees felt valued and trusted because they were afforded more autonomy in roles that matched their skillsets and were encouraged to question superiors.
These beliefs have been nurtured by Facebook’s senior management, with Zuckerberg in particular known for his transparent, open-door policy.
Amazon’s work culture is in many respects the polar opposite.
Employees work long hours and are expected to be productive, innovative, and customer-obsessed at all times.
There are also frequent mentions of dishonest management and an “every man for himself” mentality where one employee’s success comes at the expense of someone else.
Much of Amazon’s culture is dictated by its belief that it should maintain the passion, energy, and enthusiasm of a start-up.
While this mentality has resulted in business success, it has also dictated numerous underlying beliefs that have caused a somewhat adversarial and unsustainable culture.
Key takeaways
Schein’s model of organizational culture is a framework explaining the impact of company culture on an organization with a focus on learning and group dynamics. It was developed by MIT professor Edgar Schein in 1980.
Schein’s model of organizational culture is based on a belief that culture develops over time as employees use basic assumptions to solve internal and external problems. These assumptions, if proven to be effective, are then passed on to new employees.
Schein’s model of organizational culture is based on three levels: artifacts, espoused values, and underlying beliefs. Each level describes the degree to which cultural phenomena are visible to the observer.
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eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
