Why should project managers learn about organizational culture? select all that apply.

Organizational culture has an impact on various activities in organizations, including project management (PM). The aim of the study is to answer the following research questions: RQ1: what significance is attributed to organizational culture compared to the objective project characteristics when choosing the dominant PM methodology in organizations? RQ2: which type of organizational culture is preferred for successful implementation of different PM methodologies? RQ3: what kind (if any) of relationship exists between the dominant type of organizational culture in organizations and the dominant PM methodology?

The author surveyed 100 project managers working in the financial industry in Poland with the use of personal structured interviews. The competing values framework (CVF) concept authored by Cameron and Quinn was used.

Project managers find organizational culture more important than objective project characteristics when choosing the dominant PM methodology in an organization. Although statistical analysis revealed a significant relationship between the preferred type of organizational culture and PM methodology, there is no significant relationship between the existing type of organizational culture and the PM methodology which prevails in the company.

Future research should investigate other industries and other typologies of organizational culture.

The paper provides recommendations for management practice on how to shape organizational culture in the context of successful PM with the application of different PM methodologies.

This study fills a gap in the theory of PM by identifying and empirically verifying the theoretical linkage between the type of organizational culture and PM methodology.

Introduction

The interest of researchers and practitioners in intangible management factors increased in the 1980s. Other types of noneconomic reasons which can affect the success or failure of an enterprise were investigated (Webster and Jensen, 2006). Among these factors, organizational culture was of particular interest (Alvesson, 1990).

Organizational culture represents the collection of beliefs, values, norms, attitudes and assumptions which dominate in a company and which do not have to be formulated. This set of elements influences people's behavior and the accomplishment of their tasks (Schein, 1990). The culture which connects people in an organization remains very closely linked to the organization's performance (Denison and Mishra, 1995; Martins and Terblanche, 2003; Mathew, 2007; Lucas, 2006; Hartog and Verburg, 2004). This is the key factor in fulfilling the company's mission and implementing its strategy while improving organizational efficiency and managing transformations.

Radical changes in the functioning of organizations have occurred within the last few decades. The increasingly uncertain and competitive environment and the growing expectations of customers and employees have forced companies to introduce changes. Repetitive, routine operations are gradually losing importance in favor of unique and complex activities – i.e. projects (Piwowar-Sulej, 2020). In the 1990s, Drucker wrote that in 20 years, a typical large company would have half as many managerial levels and particular tasks would be performed by specialists focused on specific projects, functioning alongside traditional departments (Drucker, 1992). Today, even in those industries where traditionally repetitive activities have been the basis of their operations, projects are beginning to play an increasingly important role.

One example of such an organization is a financial company. Every day, the main processes related to sales, e.g. loans and after-sales service, are carried out. Ancillary processes include administrative activities. The purpose of subsequent projects is, e.g. to open a new branch, to launch a new product or to develop an advertising campaign. Project initiation in organizations based on traditional structures involves the need to mobilize resources which belong to multiple organizational units, for the objectives to be carried out in a specific time frame and to be managed by project managers. An employee frequently performs a dual role: as a specialist in his/her line department and as a project team member.

A project can be defined as an “endeavor in which human, material, and financial resources are organized in an innovative way to carry out an extraordinary scope of work, in line with the defined specifications, within cost and time constraints, to achieve a positive change determined by quantitative and qualitative goals” (Turner, 1993, p. 8). Project management (PM), in turn, is the “application of knowledge, skills, tools, and techniques in relation to project activities in order to meet or exceed the needs and expectations of stakeholders associated with the project” (Ward, 2000, p. 468).

Projects can be managed in accordance with guidelines presented in PM methodologies. These methodologies are referred to as guides to the types of documentation and eligibilities necessary to complete particular project stages. The literature on the subject offers two general approaches toward running projects: traditional (managerial) and modern (agile, adaptive, dynamic or light). The traditional approach has its roots in the 1950s, while the modern one is from the 1990s. Traditional methodologies describe major processes and present, in a systematized way, a set of verified management techniques. Moreover, they imply that each stage of the project can only be initiated when the previous one has been fully completed. They also stress the completeness of documentation. Such an approach has become insufficient over the years, especially for software development projects (Berger and Beynon-Davies, 2009). In the agile approach, the actions are adapted on an ongoing basis. The differences between these two approaches to PM should be also expressed in organizational culture because one of the main causes of project failure presented in the literature on the subject is that the organizational culture in which projects have to be delivered is not suitable for projects (Larson and Gray, 2011).

The aim of the study is to present the significance of organizational culture as a factor which determines the choice of PM methodologies and the relationships between the two. In the first section of the paper, previous research in the literature on the linkages between organizational culture and PM issues is presented. This was the basis of the research questions. The second section, i.e. the empirical part of the paper, presents original research with its methodology, results and discussion. The paper ends with conclusions, limitations and directions for further research. It contributes to the scientific knowledge by (1) identifying and describing the linkages between the type of organizational culture and the type of PM methodology, (2) verifying the assumption through original research findings and (3) presenting directions for future research.

Literature background

Research methodology

This study investigates a subject that is rooted in two academic disciplines: HRM (and/or organizational behavior) and PM. Figure 1 presents the stages of the research process used for the purposes of this study. An exploratory and descriptive research design was chosen in order to identify the determinants of the choice of PM methodology and the abovementioned relationships between different factors and PM methodologies. The interpretative approach was used in this study, which means that the perceptions of the cultural factor from the viewpoint of practicing project managers were recognized as important (Du Plessis and Hoole, 2006).

In order to eliminate biases, one should take into account the significant differences in organizational environment and types of projects. Thus, the research included 100 project managers working in different companies from the same industry. Companies from a given sector are influenced by the same external factors (the industry macroculture) – legal regulations – for example.

The respondents were employed in medium-sized and large enterprises (i.e. those which employ over 50 people) of the financial sector in Poland (banking, financial services, leasing and factoring). This industry implements many technological innovations in the form of projects. Important projects are aimed at developing security and risk management. The convenience for customers using financial services is also changing. Around 7–8 years ago, new-generation IT systems began to appear, replacing the previous ones which were based on a tabular approach. It was understood that the client not only needs accounting statements but also wants to learn how to spend and invest their money. Personalized solutions are also important. New products and services are constantly emerging. In addition, due to the changing and very restrictive legal regulations (e.g. regarding protection of personal data), companies are forced to implement changes in processes and IT systems. One can state that these regulatory projects take top priority and are often selected at the expense of other nonregulatory projects. The PM maturity level in the financial industry is high – in comparison with other industries in Poland (Wyrozębski et al., 2012).

According to data from the Central Statistical Office, in 2018, this sector consisted of main players such as 15 banks with private capital, 13 insurance companies, 47 companies specializing in credit intermediation or lending from their own funds, 11 factoring companies and 38 leasing companies (Statistics Poland, 2019). It is worth noting that many companies run more than one business activity at the same tame (e.g. credit and leasing intermediation or leasing and factoring).

In order to collect the contact information of respondents, companies were selected from a list created from information accessible in secondary sources (listings of companies, websites, industry newsletters, etc.). The research, based on a quantitative approach, was conducted in December 2019 and January 2020. In the process of gathering information in the survey, the personal structured interviews (paper-and-pencil interview [PAPI]) method was used. The direct contact with respondents helped to avoid misunderstandings about the questions. Interviews with each of the respondents lasted about three hours. The interview questionnaire was designed for the purposes of a larger research project. This paper presents only the results which are pertinent to the chosen research questions and cultural typology, based on the CVF.

Statistical analyses were conducted with the use of IBM SPSS software. For the purpose of this paper, Pearson's chi-squared test and the Kruskal–Wallis test were used. These tests examine the relationship between two variables when at least one is qualitative. The chi-squared test allows the researcher to examine the significance of differences in percentage structures. It is based on comparing observed values (i.e. those obtained in the study) with expected values (i.e. those assumed by the test if there were no relationship between the variables). If the difference between the observed and expected values is large (statistically significant), it can be stated that there is a relationship between the two variables.

For the correct interpretation of the findings of the quantitative research, the in-depth interview method was used. Such interviews can provide much more information which builds a context to previous outcome data. They offer a more complete picture of the state and causes of a research problem. In total, three direct, unstructured interviews with project managers (from a bank, a leasing company and a credit provider) were used. Each of them lasted about one hour.

Results and discussion

At first, it is worth presenting the general characteristics of the industry in question. The CVF has already been discussed in relation to organizational culture in banking by Thakor (2015), though the author did not conduct any empirical research on this topic. He only presented the assumptions of the CVF concept and implications for managers in banking. In turn, Barth (2015) showed that different types of organizational culture have different preferences for risk-taking. He found that banks with a market-oriented organizational culture have higher excess returns. Finally, Joseph and Kibera (2019) found that clan and hierarchy are the dominant cultural types in the microfinance industry in Kenya.

During the interviews conducted for this study, the dominant and secondary cultural types in the companies were identified. Table 2 shows the three cultural types which were indicated as being the dominant cultural type in the respondents' organizations as well as the dominant PM methodology used in the companies under study. Analysis revealed similar findings to above-presented resulted from research by Joseph and Kibera (2019).

Clan culture – emphasizing development of shared understanding and commitment instead of a formalized communication process – is the most popular cultural type. At the same time, the cultural type most often indicated as a secondary one was market culture (54 responses). This type of culture is a results-oriented one. The “second” culture type in the survey was defined as one which simultaneously coexists with the first but is less expressed. The commonality between hierarchy culture and market culture is that both focus on stability and control. The difference lies in the fact that market culture promotes fast changes, while hierarchy lends itself more to incremental changes. In turn, adhocracy and market cultures have an external focus in common. The most interesting result is the combination of clan and market cultures because they are focused on completely different issues. The latter is focused on the outside of an organization, differentiation and fast changes, while the former focuses on flexibility, integration and long-term changes. These contrasting cultural types are combined in the form of employee participation (clan) linked with costumer focus (market). They can be also found together in hybrid PM methodology, which was the most popular one in the companies under study (Table 2).

The in-depth interviews demonstrated that hybrid methodology was implemented because of problems with other, previously used PM approaches. At the beginning, the waterfall approach was used. A few years ago, agile PM methodology was implemented as a trendy new approach. However, numerous barriers have been noticed in the successful development of projects. Despite many years of working together, the employees had significant problems carrying out their new roles or even problems transferring their current roles to the new model. Other barriers were the unavailability or insufficient availability of internal clients and communication problems. The dominant position of traditional methodologies in the organization is associated with certain employee habits. The implementation of novelty in the form of agile moved them out of their comfort zone. The hybrid approach provided compliance with employee expectations, which is a characteristic of clan culture.

In addition, the priorities in some organizations change quite often (adhocracy culture) because of changes in legal regulations and – in the case of leasing companies – changes in the operations of the banks which finance the assets. The agile approach seems to be the most suitable in such situation. In turn, “hierarchical” banks had to meet the challenges in terms of ensuring the agile model's compliance with legal requirements. Official legal regulations emphasize a strong and active role of the bank's management board in the decision-making process and in the organization of day-to-day operations (hierarchy). The agile model assumes a limited role of the managing body. The management board is supposed to set the strategic goals but without interfering or supervising – choosing the way the goals are met. The hybrid approach allowed organizations to reconcile the business and legal requirements.

Respondents were asked about which factor has a greater impact on the project methodology used in the organization. They had the three following options to choose from: organizational culture (OC), project characteristics (e.g. duration, complexity, innovativeness and scope of cooperation with external partners) (P) and equal importance of organizational culture and project characteristics (OC + P). The results are shown in Table 3.

The findings are partially in line with Špundak's (2014) statement that there are other factors than projects' characteristics which influence the choice of PM methodology. Organizational culture is seen to be a more important factor (n = 41) than objective project characteristics (n = 27) in the context of choosing the dominant PM methodology in organizations; however, a chi-squared test did not reveal any significant relationships between the factors taken into account (χ2[4, N = 100] = 5.40; p = 0.249).

The research therefore shows that other factors or a bundle of factors should be taken into account when analyzing the basics of decision-making on the choice of a particular PM methodology. Špundak (2014) believes that the company size can play a role. He hypothesizes that large organizations are more likely to use the traditional approach because it helps them to control the work. However, the respondents who participated in this study worked in medium-sized and large companies, and the most frequently reported PM methodology was a hybrid one. As indicated in the in-depth interviews, such factors as the vogue for new PM approaches and the need to reconcile employees' needs (maintaining of tradition), business requirements (implementing innovations) and legal regulations are of great importance.

Results of previous research which utilized the CVF emphasized relationships between clan culture and project effectiveness (Yazici, 2009) and clan culture and knowledge sharing in a project team (Wiewiora et al., 2012). The presented research shows clan culture in a slightly different context. Table 4 presents the types of organizational culture that are preferred for successful implementation of different PM methodologies.

Within the traditional PM methodology, hierarchy culture (70%) was considered to be the most appropriate environment; clan culture followed by adhocracy is considered being the most appropriate environment for agile approach. The results are reverse in relation to findings obtained by Llanos et al. (2017) in their research on the impact of organizational culture on the organizational agility. Contrary to expectations, this research also revealed a positive link between hierarchy culture and agile Approach. As Llanos et al. (2017) stated, such findings may suggest that certain features inherent to hierarchy culture lead to more agile management. Finally, according to the respondents, a successful implementation of hybrid PM methodology requires an adhocracy culture. The relationship between preferred cultural types in the context of different PM methodologies is statistically significant (χ2[4, N = 100] = 81.47; p < 0.001).

These findings were compared with the cultural types indicated as dominant in the respondents' organizations. Due to the low number of indications of the “Market culture” variant (Table 2) as the dominant cultural type, a reliable measurement with the chi-squared test of the relationships between all cultural types and PM methodologies in the organizations studied was not possible. However, focusing on only the three most popular types of organizational culture, it can be stated that there is no significant relationship between existing dominant cultural types and existing dominant PM methodology (χ2[4, N = 91] = 1.02; p = 0.907).

Next, a series of Kruskal–Wallis tests was conducted in order to examine whether there is a relationship between the dominant culture and the indicators of project effectiveness (see Table 5). The respondents noted the percentage of successful projects, taking into account criteria such as time, budget and scope requirements and achieving client, team member and supplier satisfaction.

Project success strictly depends on team members commitment (Araujo and Pedron, 2014), and Acar (2012) found that clan and adhocracy cultures have positive effects on employees' commitment. This study did not confirm previous findings that only clan culture ensures high project effectiveness (Yazici, 2009). The analysis revealed a statistically significant difference between the types of dominant cultural type and “Project completed within the project scope requirements” (X2[3] = 10.75; p = 0.013). The follow-up pairwise comparison showed that the project managers who chose hierarchy as the dominant cultural type (mean = 93.94; median = 100) regarded project completion to be more successful than those who chose clan as the dominant culture (mean = 87.77; median = 90; p = 0.030). No other statistically significant differences were found. The reason for these discrepancies can be a national culture and composition of team members related to their individual values. Yazici (2009) conducted research in the USA, while this paper presents research conducted in Poland. For respondents – project team members – the best cultural environment for traditional PM can be hierarchy; however, people working in projects can represent individual values congruent with adhocracy-specific values. This congruency contributes to organizational performance outcomes (Titov and Umarova, 2017).

As was highlighted during the in-depth interviews, measuring the impact that culture may have on project outcomes is difficult. The level of project success is influenced by many factors, both endogenous and exogenous. Internal factors include the competencies of the project team and individual values of team members. The competences – according to the respondents – seem to be the most important factor since highly skilled project managers and project team members can deliver high-quality project outcomes, despite an unfavorable organizational culture.

Conclusions, implications and directions for further research

This research contributes to knowledge by showing a linkage between the type of organizational culture and the type of PM methodology. In answer to RQ1, it can be said that organizational culture is seen as the most important factor which determines the PM methodology used as the standard in organizations. When it comes to RQ2, the results of both theoretical studies and empirical research show that the most appropriate cultural type for traditional PM is hierarchy. Clan culture is most suitable for agile PM approach, while adhocracy is best for hybrid PM methodology. Nevertheless, in practice, there is no relationship between the dominant type of organizational culture and the dominant PM methodology (RQ3). Moreover, projects – taking into account five out of the six project success indicators – are equally likely to be successfully completed, despite differences in organizational cultures.

There are several recommendations for management practice based on this research. Firstly, organizational culture can be developed intentionally (Gagliardi, 1986; Bendak et al., 2020). There is still room for improvement in the field of project effectiveness. The missing percentage of successfully completed projects could be made up with a more suitable organizational culture. Therefore, it is worth determining both current and expected cultural types by the use of survey and/or interviews among project team members and other employees. On this basis, managers should take up actions which will stimulate a cultural transformation of the company. They have to play a role of ambassadors of changes (Kane-Urrabazo, 2006).

If, for example, organizational culture should have more clan features, managers should turn to their employees, find what people value, use open feedback in order to collect employees' ideas and allow them to act. Inspirational motivation (by, e.g. trust and pushing decisions to the lowest levels, allowance for mistakes) and individualized consideration effects clan culture (Chan, 1997; Acar, 2012). Design of the workspace is also important. In clan culture, teams have to interact effectively with one another. Therefore, smaller footprints should be allocated to the individual than the team and workstation panel heights should be lower, if not nonexistent (ISS, 2020). In turn, transformation into more hierarchical culture requires buttoning up processes, ensuring clear goals for teams and individuals and a workspace which provides a sense of stability. Management-by-exceptions also effects hierarchy culture (Acar, 2012).

Secondly, human competencies are of the utmost value. A good understanding of the cultural aspects of PM is also emphasized. Conscious project managers and highly skilled team members will be able to deliver a high-quality product despite an unfavorable organizational culture. There is a need to develop not only technical but also cultural competences. The importance of these competencies has been so far discussed but mainly in the context of multinational projects (Isern, 2015; Vlahov et al., 2016). Training in this issue is a developmental field for educational institutions.

This paper has two main shortcomings, though it nevertheless provides directions for future research. Firstly, the sample population in this study was collected from project managers working for companies in the financial industry in Poland. In order to extend the applicability of the findings, more samples from different industries – and even from different countries – should be studied. Secondly, all respondents were project managers who volunteered to participate in this research. They subjectively assessed the dominant and coexisting cultural types of their companies. Since the companies were of medium and large size, their organizational culture may be fragmented. This means that different divisions of the organizations can represent slightly different cultural types. Future studies could overcome such a limitation. Further triangulation of the methods and the involvement of more respondents from a single company can be used in order to achieve more objective measures and to identify the mechanism of choosing the PM standards. Further research can also adopt different cultural typologies than those presented by Cameron and Quinn.