Open Journal of Leadership
2013. Vol.2, No.2, 36-44
Published Online June 2013 in SciRes (http://www.scirp.org/journal/ojl) http://dx.doi.org/10.4236/ojl.2013.22005
36
The Organizational Culture Audit: Countering Cultural
Ambiguity in the Service Context
Mark R. Testa, Lori J. Sipe
San Diego State University, San Diego, USA
Received January 11th, 2013; revise d Fe bruary 7th, 2013; acce pted May 10th, 2013
Copyright © 2013 Mark R. Testa, Lori J. Sipe. This is an open access article distributed under the Creative
Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium,
provided the origina l w o rk is properly cited.
Development of a compelling organizational culture continues to be an imperative for organizations
seeking a competitive advantage. Identifying culture deficiencies or gaps is an important step in creating
such a culture. For culture development efforts to be successful, leaders must first know the reality of the
current organizational culture, however assessing the organizations’ true culture may be more compli-
cated than it appears. Several theoretical frameworks illustrate how highly committed mangers may have
difficulty in this regard. The following study links theory with application providing an action research
based model of culture assessment. First, the rationale and conceptual model of cultural analysis is pro-
vided based on past research. Next, a five-step model analyzing ten cultural areas is proposed, and rec-
ommendations are provided for implementation.
Keywords: Organizational Culture; Leadership; Culture Assessment; Gap Analysis
Introduction
As competition increases and customers become more
demanding, organizational leaders are faced with the di-
lemma of creating a sustainable competitive advantage. One
method of developing su ch an adva ntage is to actively build a
compelling organizational culture. This may particularly true
in organizations where stakeholders deal directly with cus-
tomers. This is well known by leading organizations with
rich organizational cultures such as Southwest Airlines, Star-
bucks and Ritz Carlton, a nd is supported by some forty years
of research (Schein, 1992). Whether termed “corporate” or
“organizational” culture, the construct has become a main-
stay variable in investigations of organizational development
(Leidner & Kayworth, 2006; Sche in, 2004; T refry, 2006).
Past studies have looked extensively at the relationship
between culture and important organizational variables in-
cluding organizati onal performance (Kotter & Heske tt, 1992;
LeBlanc & Mills, 1995; Xenikou & Simosi, 2006), effec-
tiveness (Denison & Mishra, 1995; Kemp & Dwyer, 2001),
and profitability (Tidball, 1988). In organizations that pro-
vide services, customer perceptions are critical for success
and culture may be an even more important variable as it has
been linked to work-related attitudes (Bim baum & Sommers,
1986), and can influence individu al and group behavior (Tre-
fry, 2006). In the service setting, leaders do not have direct
control over customer perceptions of quality or employee
behavior (Ueno, 2010). Consequently, creating a compelling
service-oriented culture may be one of the few organization
influence tactics available for senior mana gers.
In spite of the importance of an organization’s culture on
essential outcomes, disconnects between the desired and
actual culture may be occurring often. Mainstream examples
of cultural disparity abound with problem companies such as
Enron, BP and Home Depot. In these troubled organizations,
espoused values were in direct conflict with actual organiza-
tional practices. Such dissonance may not lead to complete
organizational failure to be worth note. Indeed, disconnects
may be more subtle. For example, behavioral standards may
not be practiced thoroughly by employees when manageme nt
“talks-up” the importance of customer service, but does not
role model the behavior. Morale may be reduced as man-
agement decisions conflict with espoused organizational val-
ues. The airline segment provides a good example as major
carriers claim the importance of customer satisfaction, yet
consistently rate lowest on factors important to customers
(American Customer Satisfaction Index, 2011). Conversely,
Southwest Airlines, which credits its culture to much of its
success (Freiberg & Freiberg, 1997), recently scored satis-
faction ratings 17 points higher than the balance of the in-
dustry. In a recent survey in the hotel segment, some 78% of
employees felt that their organization was committed to ser-
vice quality (Savitt, 2012). At the same time, only 56% of
these employees felt that their organization’s administrative
policies and practices promoted the most effective service
quality.
There are several potential reasons for a disparity in or-
ganizational culture perceptions. First, organizational culture
is not a completely objective concept. In deed, components of
an organization’s culture may be evaluated by different peo-
ple in very different ways (Reichers & Schneider, 1990).
This may be particularly true for organizational leaders who
believe strongly in, and are loyal to the company. It is con-
ceivable that senior managers can see their culture as positive
and effective, despite evidence to the contrary. Leaders who

M. R. TESTA, L. J. SIPE
demonstrate high levels of commitment to the organization
and its goals may see themselves as an extension of the or-
ganization (Testa, 2001). Subseque ntly , ide ntifyi ng any nega-
tive factors related to the organization can be tantamount to
self-criticism. Both self-theory (Snyder & Williams, 1982)
and social identity theory (Ashforth & Mael, 1989) provide
theoretical support for this notion.
Given the need for a strong, focuse d organizational cultur e,
the question becomes, what specifically needs to be streng-
thened? Little has been done which helps researchers or sen-
ior managers identify organizational culture gaps. More spe-
cifically, little has been done which provides a purposeful
assessment of the culture using an action research approach,
which allows for understanding unique organizational dif-
ferences. The purpose of the current study is t o illustrate how
organizational culture assessment can be ambiguous, par-
ticularly for senior managers. Next, a theoretical foundation
for cultural analysis is provided. Finally, implementation of
the culture audit process is discussed using a five-step proc-
ess, with a ten-category model. This work adds to an early
version of this model proposed to hospitality executives. In
this expanded work, four primary differences exist. First, a
review of cultural ambiguity is provided which provides
greater support for the need to accurately assess the true cul-
ture. Next, a full section focused on disparities in leader per-
ceptions of organizati on cult ure is pr ovided to fu rther support
the importance of the audit. In this more complete paper,
examples of fieldwork using the model are provided as well.
This helps to illustrate the varying ways the audit process
may be implemented. Finally, a greate r focus on implications
of the model is offered to illustrate how its use may impact
organizations seeking quality guest experiences. It is hoped
that this effort can be used in taking a proactive approach to
improving organ izational effectivene ss as well a s a means for
diagnosing the source of chronic organizational problems.
Organizational Culture Ambiguity
In spite of many attempts, there has been no clear consensus
about the definition and measurement of organizational culture
among researchers and practitioners (Deshpande & Webster,
1989). Indeed, an early study found no less than 164 varying
definitions of culture (Kroeber & Kluckhohn, 1952, cited in
Leidner & Kayworth, 2006). The ambiguity of culture as a
construct is further illustrated by two schools of thought on
how to approach culture. Some view the culture as “something
the organization has” where others see it as “something the
organization is” (Reichers & Schneider, 1990: p. 22; Smirchich,
1983). In the first instance, culture is used as a variable in the
study of antecedents and outcomes. This allows comparison of
organizations/cultures based on internal and external variables.
In the second approach, the organization and the culture are
indistinguishable. This “root metaphor” (Smirchich, 1983) ap-
proach is more descriptive in nature and identifies the meaning
connected with the culture. Using an anthropological approach,
the richness of an organizational culture is identified by shared
cognition, shared symbols and unconscious processes (Driskill
& Brenton, 2005). The current study seeks to provide direction
based on this school of thought.
Definitions of culture are both numerous and varying. Some
definitions simply state the central notion of culture, and others
include multiple components. Table 1 provides a summary of
the various definitions of culture provided in the research.
Schein (1992) provides the most commonly cited definition
of culture and will provide much of the foundation for the cul-
ture audit discussed here. Schein defines culture as: “a pattern
of shared basic assumptions learned by a group as it solved its
problems of external adaptation and internal integration which
has worked well enough to be considered valid and therefore, to
be taught to new members as the correct way to perceive, think,
and feel in relation to those problems” (p. 12).
This definition identifies “assumptions” as the key compo-
nent of organizational culture. An important message regarding
culture is provided by Pettigrew (1990) in his summary of a
collection of essays on climate and culture. The author notes
that “climate and culture are complex, multidimensional, and
multilevel constructs” (p. 421). As such they must be viewed at
varying levels. Schein (2004) agrees providing three levels of
culture which flow from the more physical to the more cogni-
tive components as shown in Figure 1.
At the first level are organizational artifacts. Artifacts refer to
the things one might see, hear or feel when confronted with a
new environment and are easily identifiable. For example, a
standard guest greeting used by hotel employees or a sign high-
lighting the importance of guest service may convey standards
of conduct. Similarly, the physical environment, layout or cli-
mate may indicate what is acceptable or not acceptable in the
work environment. Schein (2004) notes that while easily ob-
ser vabl e, t hese artifacts may be difficult to decipher. Put simply ,
symbols can be ambiguous, and subsequently may send mixed
messages to the observer. For example, a new employee view-
ing a manager who follows rules and policies meticulously may
only describe him or her as such if past experience allows it. If
the employee previously worked at an organization with ex-
ceedingly strict rules and policies, he or she may interpret the
new environment as lacking. Greater exposure to the culture’s
deeper levels and use of a variety of artifacts to craft an accu-
rate depiction becomes important to counter ambiguity.
At the next level, Schein (2004) describes collective beliefs
or values. Groups learn collectively and begin to create belief
systems. For example, if a manager uses technology to counter
a difficult scheduling problem, the group may collectively be-
lieve that this is the appropriate way to confront such issues.
Over time, these beliefs become ingrained in the culture and
become both motivational and restrictive. Beliefs can be moti-
vational in the sense that they can drive behavior, and restric-
tive because they may prevent a greater range of choices or
options in solving problems. An interesting conflict may emer-
ge at the belief level when there is a disconnect between what
the organization says it believes, and what it actually does.
Stated or espoused values are not always in sync with organiza-
tional action. For example, a company that says it values cus-
tomers, but continues to find ways to provide lower product
quality or treat employees poorly, may be out of sync. Similar
to artifacts, beliefs can sometimes be so broad as to be ambiva-
lent. A look at the assumptions made by the organization helps
to clarify the cul ture.
At the deepest level, organizations make assumptions about
how the world works and how it operates within it. These as-
sumptions are created over time and provide behavioral influ-
ence. For example, if it is assumed that customer satisfaction is
predominantly determined by the technical components of ser-
vice (i.e., speed of service, efficiency, etc.), the personal side of
service quality may be discounted. Further, programs and plans

M. R. TESTA, L. J. SIPE
38
Artifacts
Observable
Culture
Comp o nents
(10 Areas)
Goals, norms
and principles
held by the
organization
Unconscious
beliefs,
perceptions and
feelings. Source
of values and
action
Values Assumptions
Interpretation Interpretation
Figure 1.
Culture audit process based on Schein 2004 levels of culture model.
Table 1.
Definitions of organizational culture.
Author Definition
Rossi & O’Higgins (1980) “Culture is a system of shared cognitions or a system of knowledge and beliefs.”
Hofstede (1 9 80) “The collective progra mming of the mind which distinguishes members of one human group from
another.”
Deal & Kennedy (1982) “The way things get done around he re.”
Drennan (1992) “How things are done around here.”
House, Wright & Aditya (1997) “Distinctive normative systems consisting of modal patterns o f shared psy chological properties among members of collectivities that result in compelling common affec ti ve, attitudinal, and behavioral
orientations that are transm itted a cross gene rations a nd that dif fere ntiate collec tivities fr om each othe r.”
Ogbonna & Lloyd (2002) “The collective sum of b eliefs, values, meanings and assumptions that are s hared by a so cial group and
that help to shape the ways in which they respond to each other and to their external environment.”
made to increase organizational effectiveness may be greatly
influenced. To the extent those assumptions are no longer valid,
it becomes easy to see that poor decisions will result. This may
be commonplace in an environment with a predominant “way
we do it around here” mentality.
It’s important to highlight the role of interpretation in this
process. One viewing a particular cultural artifact has freedom
to determine the corresponding values and assumptions it re-
veals. Similarly, senior managers have freedom to determine if
the current organization culture is the desired organizational
culture. Several obstacles may prevent leaders from accurately
evaluating this symmetry.
Leader Perceptions of Culture
Senior managers may have the greatest impact on an organi-
zations’ culture. Given their ability to control resources and
decide on important organizational initiatives, senior leaders
should be responsible for actions taken to craft a particular
culture. This presupposes that these leaders see the need for
change. Self-based theories share the common assumption that
humans have a basic need to protect or improve one’s self. This
essential motivation may cause highly committed managers to
avoid acknowledging negative components of the organiza-
tional culture. Both self-theory (ST) (Snyder & Williams, 1982;
Sullivan, 1989) and social identity theory (SIT) (Ashforth &
Mael, 1989) provide frameworks that might explain how senior
managers might lose touch with the true organizational culture.
Self-theory suggests that individuals have a basic need to
maintain a positive self-image to protect psychological well-
being (Snyder & Williams, 1982; Sullivan, 1989). One may
develop a view of the “ideal self.” That is, a positive image
which includes traits, competencies and values one would ide-
ally possess (Leonard, Beauvais, & Scholl, 1999). Maintenance
of this belief can become a motive for behavior. It is important
to note that “self” changes reluctantly. Indeed, the more central
a belief, the more likely one is to resist changing that belief.
From a leadership standpoint, self-theory may contribute to an
inability of some managers to see organizational negatives. For
example, a senior manager who has spent considerable time and
energy developing an organization is likely to be highly com-
mitted to that organization and its goals, and may see his goals
as a function of the organizations’. Consequently, such a man-
ager may be protective of the organization just as he would be
protective of himself. Seeking to develop the “ideal” image of
the organization, he may consciously or unconsciously, defend
any attacks on the organization. The result may be an inability
to fully accept criticism or constructive feedback in the form of
data, survey responses, etc. In an extreme case, rationalization
may emerge with the manager seeking to maintain the positive
image.

M. R. TESTA, L. J. SIPE
Difficulty in spotting cultural deficiencies is further sup-
ported by social identity theory (SIT) (Ashforth & Mael, 1989).
Social identity theory can be viewed synonymously with group
identification. The theory suggests that individuals classify
themselves based on the characteristics of the groups in which
they belong (Ashforth & Mael, 1989). Past research indicates
that individuals who identify with a particular group (i.e., the
organization) feel a strong attraction to the group as a whole
(Stets & Burke, 2000). Consequently, individuals will act in
concert with the group. In a practical sense, this suggests that
leaders would tend to avoid acting in a way counter to the or-
ganization and its needs. Although failing to see negative com-
ponents of the organization may be harmful in the long-run, a
consequence of SIT can be defense of the group and any nega-
tivity that threatens it.
Give the potential difficulty leaders may face in confronting
organizational culture realities, a process which immerses the
leader into the culture as means of assessment may be useful. In
addition, such a process may help to counter the challenges of
accurately measuring the current culture.
Organizational Culture Assessment
In addition to ambiguity in defining organizational culture,
no clear consensus exists regarding its measurement (Desh-
pande & Webster, 1989). Such measurement can be difficult as
Lund (2003) points out because shared assumptions reside be-
neath the conscious level. A variety of questionnaire measures
exist attempting to assess culture such as the Organizational
Culture Profile (Orielly et al., 1991) and the Organizational
Values Congruence Scale (Enz, 1986), but tend to focus pri-
marily on person-organization fit or compatibility. The issue
with the person-organization fit model is its focus on individual
attitudes towards the organization and does so in a quantitative
way. Compatibility with the organization is not the same as a
deficiency or failing effort in the organizations culture. The
Competing Values Framework (Quinn, 1988) and The Organi-
zational Culture Assessment Instrument (OCAI) (Cameron and
Quinn, 1999) allow organizations to go farther in culture analy-
sis than the previous measures. The current version of the as-
sessment determines which of four typologies best describe the
organization’s culture. These categories are titled Clan, Adho-
cracy, Hierarchy and Market. In addition, the model will iden-
tify the desired culture and allow comparison to the actual cul-
ture. The limitation of the assessment is that disparities between
desired and actual culture are identified in the context of the
four categories and may not be as specific as necessary. Going
further, the process does not allow for management involve-
ment in the data collection process. Consequently, identifica-
tion of deficits and actual change that needs to be addressed
outside of the model may be difficult.
Some criticism of questionnaire-based culture measures ex-
ists, suggesting that these measures are too similar to job satis-
faction measures (Hofstede, 1998; Johannesson, 1973). Sur-
prisingly, little direction is provided in the way of conducting a
cultural audit, which would counter the limitations of ques-
tionnaire research. An early study by Wilkins (1983) provides
some suggestions, but the process cannot be viewed as a mana-
gerial tool. Fletcher and Jones (1992) discuss cultural auditing
in terms of measurement, and attempt to provide a quantitative
formula for comparison. Driskill and Brenton’s (2005) work is
comprehensive and well-done, but takes an approach which
may not be directly suitable in practical application. An as-
sessment that provides a richer analysis of various aspects of
the organizational culture may be valuable. The proposed as-
sessment is designed to be broad enough to include varying
types of industries, but specific enough to provide useful or-
ganizational information.
Given the influence of self-theory previously discussed, see-
ing the culture as it truly is becomes paramount. The culture
audit is an applied method of assessing the synchronicity of
these cultural levels and any inconsistencies that might exist.
To that end, the goals of the audit are as follows:
1) To examine cultural artifacts and determine their consis-
tency with espoused values and assumptions;
2) To identify conflicts in espoused and actual beliefs and
values;
3) To re-examine deeply held assumptions and identify their
validity;
4) To develop an action plan for addressing inconsistencies
in any of the cultu ra l l evels.
The Culture Audit
The ideal circumstance for conducting a culture audit is the
paring of an executive team and organizational development
researcher. The uniqueness of the current model is the ability to
link theory and practice in a very experiential way. While the
executive team can engage in much of the data collection, the
researcher can guide their efforts, minimize bias and ensure the
generated results are valid. A five-step model was developed
for implementation of the culture audit with this executive
team-researcher tandem in mind. These steps include:
1) Identification of the organization’s vision, mission, values,
and strategic goals;
2) A brief narrative on the desired culture;
3) Selection of the audit team;
4) Data collection;
5) Interpretation and reporting.
Step 1: Vision, Mission, Values and Strategic Goals
The first step in the audit process is to clearly state where the
organization is going and how it plans to get there. Clearly
articulating vision, mission, values and goals will identify any
inconsistencies at the strategic level. Further, statement of these
important concepts will provide some direction for the type of
culture necessary for their accomplishment. For example, an
organization desiring to provide the highest levels of customer
service, or values employees and customers, must have a cul-
ture that supports these notions. In the study of organizational
culture, the context in which the culture operates may be criti-
cal for understanding both its strengths and weaknesses. A cur-
rent overview of key organizational metrics and the “story”
behind the organization may be useful as well.
Step 2: Culture Narrative
The focus of the culture audit is to identify disparities in the
organizational culture. That is, to identify areas that are not in
sync with the desired culture. Therefore, an initial step must be
a clear description of the desired culture. The value of the ex-
ecutive team in this process becomes evident their collective
sense becomes the ultimate goal of the process. Whether or not
to include other layers or departments in this process are

M. R. TESTA, L. J. SIPE
dependent on the particular circumstance confronted by the
researcher. A variety of questions may be asked which will help
to illustrate important organizational values. For example:
1) How do you want your employees to view the organiza-
tion?
2) How do you want customers to view the organization?
3) What “feeling” do you want to permeate throughout or-
ganization?
4) What stories best represent what this organization stands
for?
5) Who are the legendary leaders in this organization and
what do they represent?
The narrative should be long enough to convey important
values and beliefs, but short enough that stakeholders can grasp
the most important components of the culture. This description
will provide the comparison necessary to identify any potential
gaps in the culture.
Step 3: Selection of the Audit Team
To identify cultural deficits, using an executive team from
varying areas of the organization would be ideal. The goal of
the audit is to search for the meaning behind the artifacts, sym-
bols, policies, practices, etc., that make up the organizational
culture. Given the limitations of self-theory as previously dis-
cussed, implementing methods to ensure objectivity becomes
critical. Using leaders from accounting, operations, HR, sales
and marketing, etc., may be useful by allowing for multiple
view points and prevent the emergence of groupthink. Similar-
ly, using a group of both new and long-tenured leaders may be
valuable depending on the specific needs of the organization
under review.
Step 4: Data Collection
A variety of methods focusing on a variety of areas should be
used to collect the data for the culture audit. Taking a patch-
work approach, researchers should not rely on one or two
pieces of information to assess the culture, but should examine
multiple aspects over multiple instances from multiples sources.
This could include employee interviews, manager interviews,
customer interviews and focus groups. To assess the physical
artifacts of the culture, focused walk-throughs and physical
plant reviews would be useful. To capture deeper components
of the culture, observation of employee-employee, employee-
customer, and employee-leader interactions would be revealing.
Finally viewing various documents such as training manuals,
orientation manuals, standard operating procedures may pro-
vide insight.
In the current model, ten areas of culture analysis are rec-
ommended. Table 2 provides a comprehensive list of the cul-
ture areas, questions to ask and specific aspects to review.
Each area of analysis listed is a common element of an or-
ganizational culture as described in past research (Driskill &
Brenton, 2005; Kotter & Heskett, 1992; Schein, 2004). Each
area of the analysis is the foundation of a gaps analysis between
the stated or desired organizational culture (i.e., the narrative)
and the actual organizational culture. Through a variety of ob-
servations, leaders are able to compare the two, and draw con-
clusions regarding the actual state of the organizational culture.
Step 5: Interpretation and Reporting
The final step in the audit process is to interpret the data col-
lected. At face value, this may seem a direct process. However,
given the potential bias that can result during such a process
(see Woodman & Wayne, 1985 for a review), care must be
taken in drawing conclusions regarding the results. Again, us-
ing a trained researcher in this process may prevent such bias
from occurring. First, results of the observation can be placed
into summary worksheets. Table 3 provides an example of
such a worksheet.
This can be completed by the entire executive team or by
sub-teams based on unique knowledge, interest, etc. The goal of
the analysis is to draw down on values and assumptions that are
revealed through the process. That is, the meaning behind the
observations is the important factor rather than the observations
themselves. To ensure objective and thorough results, several
factors should be considered:
1) Combinations of observed elements to form consistent
themes should be used. Rather than focusing on a single obser-
vation or example, multiple examples from various sources
would help to identify patterns in the culture. These patterns or
themes provide the basis for identifying beliefs and assump-
tions.
2) Both positive and negative observations should be utilized
to form themes. Often, negative examples can be more reveal-
ing then positive examples. Disconnects between desired cul-
tural artifacts and observed artifacts help to create a shared
sense of reality and the organizations true state.
3) Themes should be discussed in a group setting with no
judgments. Members of the audit team must be able to honestly
reveal their interpretation with no threat of criticism or retalia-
tion. A group dialogue that allows for connections among the
observers is desirable.
4) Telling stories rather than revealing facts may be valuable.
Stories help to provide linkages in a thorough and compelling
way. In addition, stories help to reveal deep dimensions of the
culture such as values and assumptions. Stories provide a path-
way for revealing the true story behind the culture.
5) Conflicts between artifacts and beliefs, as well as conflicts
between espoused values and actual organizational action
should be identified. These conflicts can form the basis of ac-
tions that should be taken to strengthen the culture.
6) Values and assumptions should be identified by the
themes that emerge. The ability to take the analysis to the root
level as discussed by Schein (1992) will be a measure of the
success of the audit. In addition, the validity of these assump-
tions should be questioned. Are the assumptions still valid or
have they been negated by innovation or changes in the mar-
ketplace?
7) Findings should be used to take action. Once the results
have been discussed and deciphered, the critical next step is to
act based on the findings. The categories used in the culture
analysis can also be used as a model for such action planning.
Field Work
To date, the culture audit has been used exclusively in the
educational setting in both graduate and executive education. In
the graduate setting, a recent group of 12 Master’s students
were asked to follow the five-step model and assess their own
organization. These organizations ranged from three-person
small businesses to major organizations. A variety of job-situa-
tions confronted the students from new hires, to those on the
verge of leaving the organization. In each circumstance the
student was able to successfully apply the model and identify
40

M. R. TESTA, L. J. SIPE
Table 2.
Areas of cultural analysis.
Culture Category and Questions Author What to Look For
1
Physical Characteristics an d General
Environment (F-O-H vs B-O-H)
What do the p hysical components of the organiza tion say
about the culture?
Is there consistency behind the scenes?
How does it feel?
Are employee and customer needs considered in the
planning? Layout? Design?
Hatch (199 3)
Hatch & Schultz (199 7 )
Schein (1992, 2004)
 Signage (qua ntity and styl e)
 Furniture and accessories
 Tradition vs modern
 Colors
 Symbols & logos
 Lighting
 Sounds, level and type
 Uniforms
 Cleanliness and org anization
2
Customs & Norms
What regular behaviors and expectations are in place that
affect the culture?
What impact do these have on the culture?
Are guest needs a norm?
Is facilitation of employ ee needs a norm?
Farrell (2005)
Hallett (2003)
Schein (1992, 2004)
 Greetings
 Language & phrases
 Expectations set by leadership
 Common employee interactions
 Common leader-employee interactions
 Common leader/employee-guest interactions
 Unspoken rules
 Uniforms norms
3
Ceremonies & Events
What is systematically ce l ebrated and rec o gnized at this
organization?
Are service champions recognized?
What impact does this have on the culture?
Hatch (199 3)
Schein (1992, 2004)
Trice & Beyer (1984)
 Regular staff events held
 Birthdays
 Tenure celebrations
 Service quality acknowledgement
 Certifications
 Holiday part i es
 Quarterly celebrations
 Formal vs. In formal gatherings
4
Rules & Policies
How formalized is organization?
Is the culture more rule-based or empowering?
Does it strike a balance?
Are rules and po l ices absolutes or guidelines?
Are guest/employee needs balanced wi th p olicies?
Farrell (2005)
Hallett (2003)
Schein (1992, 2004)
 What is prohibi ted vs what is permitted
 Number o f r u l es or polices
 Formal vs informal rules
 Depth of manuals
 Rule signage
 Number of SOPs
 Amount of training on policies a n d proce du r es
 Employee perceptions of formalization
 Leade r p erceptions of their role and function (rules vs
empowerment vs balance)
5
Measurement & Accountability
What gets measured in t h is organization?
What measures are most important?
Is there accountability?
Are measurements consistent with vision, mission,
values?
Are guest and employee needs central to
measurement ?
Hallett (2003)
Schein (1992, 2004)
 Types of measures used
 How senior leaders, supervisors and employees are
evaluated
 Measures vs espoused Values
 Promotion criteria
 Dismissal criteria
 Discipline s ystem
6
Leader Behavior
What do leaders make a priority here?
Are leaders at varying levels role models?
Do these le aders role model guest service behaviors?
Which leaders are most respected here and why?
How does this impact the culture?
Bass & Avolio (1993)
Schein (1992, 2004)
Tusi et al. ( 2006)
 Leader focus task vs people
 Leader-employee interactions
 Leader-gue st in teractions
 Employee perceptions of leadership
 Legendary leaders
 Outlaw leaders
7
Rewards & Recognition
What gets rewarded in this organization? How are
employees recognized for their efforts?
How does this impact the culture?
Bushardt, Lambert, &
Duhon (200 7)
Milne (200 7)
Schein (1992, 2004)
 Types and quantity of rewards provided
 Formal vs informal re wards
 Employee perception of reward value
 Amount of enc ouragement provided
 Are leaders genuine in their praise?
 Programs planned

M. R. TESTA, L. J. SIPE
Continued
8
Training & Development
What efforts are made to invest in human resources?
What impact do these efforts have on the culture?
Does the discipline system promote guest and employee
needs?
Bunch (200 7)
Kissack & Callahan (2010)
 Amount a n d t ypes of training
 Certifications
 On-the-job vs formal
 Orientation processe s
 Service quality vs rule based efforts/technical
 Leadership development programs
 Succession planning
9
Communication
How are messages, both formal and informal
communicated?
What is the impact on the culture?
What do stories told in th is organization reveal?
Are guests/employees valued or criticized in the stories
told.
Farrell (2005)
Hallett (2003)
Schein (1992, 2004)
Trice & Beyer (1993)
 How do employees fin d things out?
 Email vs memos vs signage vs face-to-face
 Number and type of meetings
 Senior leader communication
 Are the methods effective?
 Are the methods appropriate?
 Is confidentiality ensured
 How much do employees find out through t he
grapevine?
 Metaphors use d
10
Structure and Culture Development Efforts
How is the organization structured?
Does the organizational structure (hierarchy) impact the
culture?
How quickly are decisions made?
Are employees empowered to solve gu est problems
rapidly?
Does the organization actively work towards develo p i ng
its culture?
Hallett (2003)
Schein (1992, 2004)
Smircich (1983)
 Layers on the organ i zational c hart
 Formal are the chains of command
 Disconnects between the top and bottom of the
structure
 Communication barriers
 Vision, mission, values, goal consistency
 Senior leader activiti es to build the culture
 Employee perception of culture development efforts
 Employee view the culture
organizational culture gaps. This required some flexibility in
the approach; however the validity of the model at face value
seemed apparent. Although the specific findings of each inves-
tigation are beyond the scope of this paper, the ability to ac-
tively engage organizational stakeholders was valuable in iden-
tifying the true organizational culture and subsequent gaps.
In similar fashion, the culture audit was used successfully
with two groups of 30 senior leaders in the attractions industry.
As part of a five-day executive education program, the execu-
tives were asked to conduct an audit of a local attraction and
report back to management on their findings. In this case, the
cultural narrative came after the audit to be used as a compari-
son to the findings. This removed any bias that might emerge
after the desired culture was identified. Working in three-per-
son teams, the executives spent a full-day at the attraction en-
gaging staff, observing interactions, assessing front and back
areas, and speaking with departmental leaders. Again, at face
value, the audit appears to provide a means for identifying
some cultural gaps. While further study is required, these pre-
liminary findings are encouraging.
Implications
The intangible, co-constructed nature of the customer experi-
ence makes measuring business performance difficult, particu-
larly where stakeholder and customer interactions take place
(Gallouj, 2002). The culture audit provides an opportunity to
assess business performance beyond guest satisfaction ratings
or financial me trics. T he model prese nte d here allows ma nagers
to examine how the product is delivered in their organization as
well as what the customer observes. Essentially, it provides an
opportunity to blend assessment of what the guest experiences
with what the employee experiences. Given the linkage and
interdependence of the two groups, this may be very valuable.
In addition, the cultural audit process provides an opport uni t y f or
managers to practice making rounds of their organizations with
the sole purpose of enhancing organizational culture. The
structure of the audit provides a focus that goes beyond just
“management by walking around” or empty face time. It is
similar to the notion of “rounding for outcomes” introduced by
the health care industry. Much like physicians make patient
rounds, the leading healthcare organizations encourage the
rounding for outcomes process as a way to encourage managers
to focus on the positive with their employees (Studer, 2003).
Having a plan when making rounds has become common prac-
tice for senior leaders in healthcare and is cited by some as
critical to improvements in both patient and employee satisfac-
tion scores (Hotko, 2004). The cultural audit offers a structured
approach to purposeful rounding for organizational leaders.
Finally, the result of the audit process should be a greater
understanding of the true organizational culture. Leaders seek-
ing to deliver the highest levels of service or maximizing guest
experiences have a critical need for such an understanding.
Simply put, leaders can make better decisions regarding their
organization, operations, and various stakeholders when more
complete information is available. An audit as described here
can help in this regard. Going farther, regardless of the out-
comes, the audit process itself may be seen positively by em-
ployees. By actively engaging employees to identify their per-
ceptions, challenges, successes and failures, the culture itself is
positively impacted. Indeed, the dialogue that emerges moves
the organization closer to i ts vision.
Conclusion
The purpose of this study was to illustrate how organiza-
tional culture can be an ambiguous construct and show why
leaders may have difficulty identifying their true culture. In
addition, this study provides a teoretical foundation for, and h
42

M. R. TESTA, L. J. SIPE
Table 3.
Audit summary sheet e xa mple.
Culture Category What to Look For Gaps
1
Physical Characteristics an d General Envir onment
(F-O-H vs B-O-H)
What do the ph ysical components o f the organization say
about the culture?
Is there consistency behind the scenes?
How does it feel?
Are employee and customer needs considered in the
planning? Layout? Design?
 Signage (qua ntity and styl e)
 Furniture and accessories
 Tradition vs Modern
 Colors
 Symbols & logos
 Lighting
 Sounds, level and type
 Uniforms
 Cleanliness and org anization
Actions to Be Taken:
2
Customs & Norms
What regular behaviors and expectations are in place that
affect the culture?
What impact do these have on the culture?
Are guest needs a norm?
Is facilitation of employ ee needs a norm?
 Greetings
 Language & phrases
 Expectations se by leadership
 Common employee interactions
 Common leader-employee interactions
 Common leader/employee-guest interactions
 Unspoken rules
 Uniforms norms
Actions to Be Taken:
practical means to, conducting an organizational culture audit
to counter these issues. It seems clear that a compelling culture
would be beneficial in gaining competitive advantage. In an
effort to craft such a culture, an action research model is pro-
posed which should allow leaders and their executive commit-
tees to conduct a thorough assessment of their culture. By iden-
tifying deficiencies or gaps, action may be taken to strengthen
the culture. In addition, this process may be valuable in that it
stimulates dialogue among the executive team. Using an action
research approach, this process facilitates discussion among the
key decision makers regarding both the desired and actual cul-
ture. It is hoped the direction provided here is useful for re-
searchers seeking a deeper assessment of culture, particularly in
the field setting, however several limitations exist.
First, cultural auditing can be a very complex task and one
that requires careful application. This model may simplify the
process, but caution must be used in both the data collection
and the interpretation. Next, while many areas of organizational
culture are provided here, the model may not be useful for all
organizations as is. Every culture is different and there may be
additional areas of analysis that should be included. This study
should however provide an adequate starting point for varying
types of organizations. Next, further study of, and application
of the model is required. While some face validity is provided
from the field work described here, more rigorous testing is
needed.
Finally, the literature on organizational culture is vast. While
mainstay authors and studies have been included, an expanded
version of this model can pay greater attention to components
of culture assessment that could not be addressed here.
REFERENCES
American Customer Satisfaction Index (2011). ACSI commentary June
2011.
http://www.theacsi.org/index.php?option=com_content&view=articl
e&id=256:acsi-commentary-june-2011&catid=14&Itemid=335
Ashforth, B. E., & Mael, F. (1989). Social identity theory and the or-
ganization. Academy of Management Review, 14, 20-39.
Bass, B. M., & Avolio, B. J. (1993). Transformational leadership and
organizational culture. Public Administration Quarterly, 17, 112-
121.
Birnbaum, D., & Sommers, M. J. (1986). The influence of occupational
image subcultures on job attitudes, job performance, and the job atti-
tude-job performance relationship. Human Relations, 39, 661-672.
doi:10.1177/001872678603900705
Bunch, K. (2007). Training failure as a consequence of organizational
culture. Human Resource Developm e n t R e v i e w , 6, 142-163.
doi:10.1177/1534484307299273
Bushardt, S. C., Lambert, J., & Duhon, D. L. (2007). Selecting a better
carrot: Organizational learning formal rewards and culture—A be-
havioral perspective. Journal of Organizational Culture, Communi-
cation and Conflict, 11, 67-79.
Cameron, K. S., & Quinn, R. E. (1999). Diagnosing and changing or-
ganizational cultur e. New York, NY: Addison Wesley.
Denison, D. R., & Mishra, A. K. (1995). Toward a theory of organiza-
tional culture and effectiveness. Organizational Science, 6, 204-223.
doi:10.1287/orsc.6.2.204
Deshpande, R. & Webster, F. E. (1989). Organizational culture and
marketing: Defining the research agenda. Journal of Marketing, 53,
3-15. doi:10.2307/1251521
Drennan, D. (1992). Transforming company culture. London: McGraw-
Hill.
Driskill, G.W., & Brenton, A. L. (2005). Organizational culture in ac-
tion: A cultural analysis workbook. Thousand Oaks: Sage Publica-
tions.
Enz, C. A. (1986). Power and shared values in the corporate culture.
Ann Arbor: UMI Research Press.
Farrell, M. A. (2005). The effect of market-oriented organisational cul-
ture on sales-force behavior and attitudes. Journal of Strategic Mar-
keting, 13, 261-273. doi:10.1080/09652540500338295
Fletcher, B., & Jones, F. (1992). Measuring organizational culture: The
cultural audit. Managerial A cc o un ti ng Journal, 7, 30-36.
doi:10.1108/eb017606
Freiberg, K. & Freiberg, J. (1997). Nuts! Southwest Airlines’ crazy
recipe for business and personal success. New York, NY: Broadway
Books.
Gallouj, F. (2002). Innovation in services and the attendant old and new
myths. Journal of Socio-Economics, 31, 137-154.

M. R. TESTA, L. J. SIPE
doi:10.1016/S1053-5357(01)00126-3
Hallett, T. (2003). Symbolic power and organizational culture. Socio-
logical Theory, 21, 128-149. doi:10.1111/1467-9558.00181
Hatch, M. J. (1993). The dymanics of organizational culture. The Acad-
emy of Management Review, 18, 657-693.
Hatch, M. J., & Schultz, M. (1997). Relations between organizational
culture, identity and image. European Journal of Marketing, 31, 356-
365. doi:10.1108/eb060636
Hofstede, G. (1980). Motivation, leadership, and organization: Do Am-
erican theories apply abroad? Organizational Dynamics, 9, 42-58.
doi:10.1016/0090-2616(80)90013-3
Hofstede, G. (1988). Attitudes, values and organizational culture: Dis-
entangling the concepts. Organization Studies, 19, 477-492.
doi:10.1177/017084069801900305
Hotko, B. (2004). Rounding for outcomes. Studer Group Newsletter, 1,
1.
House, R. J., Wright, N., & Aditya, R. N. (1997). Cross-cultural re-
search on organizational leadership: A critical analysis and a pro-
posed theory. In P. C. Earle y, & M. E rez (Eds .), New perspectives on
international/organizational psychology (pp. 535-625). San Fran-
cisco: New Lexington.
Kemp, S., & Dwyer, L. (2001). An examination of organizational cul-
ture—The Regent Hotel, Sydney. International Journal of Hospital-
ity Management, 20, 77-93. doi:10.1016/S0278-4319(00)00045-1
Kissack, H. C., & Callahan, J. L. (2010). The reciprocal influence of
organizational culture and training and development programs. Jour-
nal of European Industrial Training, 34, 365-380.
doi:10.1108/03090591011039090
Kotter, J. P., & Heskett, J. L., (1992). Corporate culture and perform-
ance. New York: Free Press.
Leonard, N. H., Beauvais, L. L., & Scholl, R. W. (1999). Work motive-
tion: The incorporation of self-concept-based processes. Human Re-
lations, 52, 969-998. doi:10.1177/001872679905200801
LeBlanc, C. L., & Mills, K. E. (1995). Competitive advantage begins
with positive culture . Nation’s Restaurant News, 29, 22-24.
Leidner, D. E., & Kayworth, T. (2006). Review: A review of culture in
information systems research: Toward a theory of information tech-
nology culture conflic t . MIS Quarterly, 30, 357-399.
Lund, D. (2003). Organizational culture and job satisfaction. Journal of
Business & Industrial M a r k et i n g , 18, 219-236.
doi:10.1108/0885862031047313
Milne, P. (2007). Motivation, incentives and organisational culture.
Journal of Knowledge Management, 1 1, 28-38.
doi:10.1108/13673270710832145
Ogbonna, E., & Lloyd, C. H. (2002). Managing organizational culture:
Insights from the hospitality industry. Human Resource Management
Journal, 12, 33-53. doi:10.1111/j.1748-8583.2002.tb00056.x
O’Reilly, C. A., Chatman, J. A., & Caldwell, D. F. (1991). People and
organizational culture: A profile comparison approach to assessing
person–organization fit. Academy of Management Journal, 34, 487-
516. doi:10.2307/256404
Quinn, R. E. (1988). Beyond rational management. San Francisco, CA:
Jossey-Bass.
Reichers, A. E., & Schneider, B. (1990). Climate and culture: An evo-
lution of constructs. In B. Schneider (Ed.), Organizational climate
and culture (pp. 5-39). San Francisco: Jossey-Bass.
Reichfield, F., & Sasser, W. (1990). Zero defections: Quality comes to
customer service. Harvard Business Review, 68, 105-111.
Savit, M. (2012). Above and beyond. Lodging Magazine, 37, 42-44.
Schein, E. (1992). Organizational culture and leadership (2nd ed.). San
Francisco, CA: Jossey-Bass.
Schein, E. (2004). Organizational culture and leadership (3rd ed.). San
Francisco, CA: Jossey-Bass.
Smircich, L. (1983). Concepts of culture and organizational analysis.
Administrative Science Quarterly, 28 , 339-358. doi:10.2307/2392246
Snyder, R. A., & Williams, R. R. (1982). Self-theory: An integrative
theory of work motivation. Journal of Occupational Psychology, 55,
257-267. doi:10.1111/j.2044-8325.1982.tb00099.x
Stets, J. E., & Burke, P. J. (2000). Identity theory and social identity
theory. Social Psychology Quarterly, 63, 224-237.
doi:10.2307/2695870
Studer, Q. (2003). Hardwiring excellence: Purpose, worthwhile work,
making a difference. Gulf Breeze, FL: Fire Starter Publishi ng .
Sullivan, J. J. (1989). Self theories and employee motivation. Journal of
Management, 15, 345-363.
Testa, M. R. (2001). Hospitality leaders: Do they know how their em-
ployees feel about them? Cornell Hotel and Restaurant Administra-
tion Quarterly, 42, 80-89.
Tidball, K. H. (1988). Creating a culture that builds your bottom line.
Cornell Hotel and Restaurant Quarterly, 29, 63- 69.
doi:10.1177/001088048802900118
Trefry, M. G. (2006). A double-edged sword: Organizational culture in
multicultural organizations. International Journal of Management,
23, 563-575.
Trice, H. M., & Beyer, J. M. (1984). Studying organizational culture
through rites and ceremonials. Academy of Management Review, 9,
653-669.
Trice, H. M., & Beyer, J. M. (1993). The cultures of work organizations.
Englewood Cliffs, NJ: Prentice Hall.
Tsui, A. S., Zhang, Z. X., Wang, H., Xin, K. R., & Wu, J. B. (2006).
Unpacking the relationship between CEO leadership behavior and
organizational culture. The Leadership Quarterly, 17, 113-137.
doi:10.1016/j.leaqua.2005.12.001
Ueno, A. (2010). What are the fundamental features supporting service
quality? Journal of Services Marketing, 24, 74-86.
Woodman, R. W., & Wayne, S. J. (1985). An investigation of posi-
tive-findings bias in evaluation of organization development inter-
ventions. Academy of M an a g em e nt J ou r n al , 28, 889-913.
doi:10.2307/256243
Wilkins, A. L. (1983). The culture audit: A tool for understanding or-
ganizations. Organizational D yn a m i cs, 12, 24- 39.
doi:10.1016/0090-2616(83)90031-1
Xenikou, A., & Simosi, M. (2006). Organizational culture and trans-
formational leadership as predictors of business unit performance.
Journal of Managerial Psychology, 21, 566-579.
doi:10.1016/0090-2616(83)90031-1
44