Where incongruities exist between espoused values and basic assumptions, scandal and myth explosion become primary mechanisms of culture change. Nothing will change until the consequences of the actual operating assumptions create a public and visible scandal that cannot be hidden, avoided, or denied. One of the most powerful triggers to change of this sort occurs when an organization experiences a disastrous accident, such as the near-meltdown at Three Mile Island, the losses of the Challenger and Columbia space shuttles, the Bhopal chemical explosion, the Texas City refinery explosion in BP, or the Alpha Power Company explosion that led to the accusation that the company had denied the existence of asbestos, which was blown into the neighborhood. Alpha Power was brought up on criminal charges and was ordered by the court to improve environmental management leading to a major culture change program.
In all of these cases, it is usually discovered that the assumptions by which the organization was operating had drifted toward what was practical to get the job done, and those practices came to be in varying degrees different from what the official ideology claimed (Snook, 2000; Gerstein, 2008). Often there have been employee complaints identifying such practices but because they are out of line with what the organization wants to believe about itself, they are ignored or denied, sometimes leading to the punishment of the employees who brought up the information. When an employee feels strongly enough to “blow the whistle,” a scandal may result, and practices then may finally be reexamined.
Whistle blowing may be to go to the newspapers to expose a practice that is labeled as scandalous or the scandal may result from a tragic event.
For example, a company that prided itself on a career system that gave managers real choices in overseas assignments had to face the reality that one of their key overseas executives committed suicide and stated in his suicide note that he had been pressured into this assignment in spite of his personal and family objections. At the espoused values level, they had idealized their system. The scandal exposed the shared tacit assumption by which they operated: that people were expected to go where senior executives wanted them to go. The recognition of this discrepancy then led to a whole program of revamping the career assignment system to bring espoused values and assumptions more into line with each other.
In a different kind of example, a product development group operated by the espoused theory that its decisions were based on research and careful market analysis, but in fact one manager dominated all decisions and operated from pure intuition. Eventually, one of the products he had insisted on failed in such a dramatic way that a reconstruction of why it had been introduced had to be made public. The manager’s role in the process was revealed by unhappy subordinates and was labeled as scandalous. He was moved out of his job, and a more formal process of product introduction was immediately mandated.
Public scandals force senior executives to examine norms and practices and assumptions that were taken for granted and operated out of awareness. Disasters and scandals do not automatically cause culture change, but they are a powerful disconfirming force that cannot be denied and that start, therefore, some kind of public self-assessment and change program. In the United States, this kind of public reexamination started with respect to the occupational culture of finance through the public scandals involving Enron and various other organizations that have evolved questionable financial practices. Government oversight practices are now being reviewed in the wake of the Bernie Madoff scandal, and even some of the more fundamental assumptions of the capitalist system of free enterprise are being reexamined because of the deep recession of 2009. These reexaminations lead to new practices, but they do not automatically create new cultures because the new practices may not result in greater external success or internal comfort. Scandals create the conditions for new practices and values to come into play but they become new cultural elements only if they produce better results.
Source: Schein Edgar H. (2010), Organizational Culture and Leadership, Jossey-Bass; 4th edition.