Understanding the Three Levels of Organizational Culture

Most leaders can describe the culture they want.

Far fewer can describe the culture their employees experience every day.

That difference matters because organizational culture is not defined by a values statement, an employee handbook, or the words displayed on an office wall. It is revealed through the behaviours, decisions, routines, and assumptions that shape how work actually gets done.

Edgar Schein's model of organizational culture helps leaders understand this distinction. Schein described culture as operating at three levels: artifacts, espoused values, and underlying assumptions.

Each level provides insight into the organization. However, the deeper we look, the more clearly we begin to understand the real culture.

Artifacts: What We Can See

Artifacts are the visible and observable elements of organizational culture.

They include the physical workplace, office layout, meeting structures, communication practices, employee attire, recognition systems, organizational language, policies, traditions, and everyday routines.

An open office may appear to signal collaboration. Casual clothing may suggest informality. A formal boardroom and reserved executive offices may communicate hierarchy or status. Frequent town halls may suggest a commitment to transparency.

Artifacts provide useful clues, but they do not explain the culture on their own.

An open office does not necessarily mean people communicate openly. A company may hold regular town halls while employees remain reluctant to ask difficult questions. An organization may display the word "innovation" throughout its workplace while maintaining approval processes that discourage experimentation.

Visible artifacts must therefore be interpreted carefully. They show us what exists, but not necessarily why it exists or what it means to the people within the organization.

Espoused Values: What the Organization Says It Believes

Espoused values are the beliefs, principles, and priorities an organization publicly communicates.

They are often found in vision and mission statements, corporate values, leadership presentations, recruitment materials, strategic plans, websites, and internal communications.

An organization may say it values collaboration, accountability, innovation, customer service, inclusion, or integrity. These statements help communicate what leaders want the organization to represent and how they expect people to behave.

Espoused values can provide an important sense of direction. They can influence decisions, support a shared identity, and clarify expectations.

However, stated values are not the same as lived values.

The true test is whether organizational systems, leadership behaviours, and everyday decisions consistently reinforce them.

An organization may claim to value collaboration while rewarding individual performance. It may promote empowerment while requiring senior approval for relatively minor decisions. It may describe itself as innovative while treating unsuccessful experiments as failures.

When there is a gap between stated values and lived experience, employees usually recognize it quickly.

That gap can create cynicism, confusion, and mistrust. It also provides an important clue that deeper assumptions may be shaping the organization differently than leaders intend.

Underlying Assumptions: How the Organization Really Operates

Underlying assumptions are the deeply held beliefs that guide behaviour within an organization.

They are often unspoken and may not be consciously recognized by employees or leaders. Over time, they become accepted as the normal or obvious way of operating.

They answer questions such as:

• Is it safe to disagree with a senior leader?
• Are mistakes treated as opportunities to learn or reasons for blame?
• Is information openly shared or carefully protected?
• Are decisions driven by evidence, hierarchy, relationships, or urgency?
• Is initiative genuinely encouraged, or is compliance more highly rewarded?
• What must someone do to succeed, gain influence, or earn promotion?
• Which behaviours are tolerated, even when they contradict stated values?

These assumptions develop through shared experience.

When a particular way of working appears to produce success, it is repeated. Over time, it becomes embedded. New employees learn these unwritten rules by observing what happens around them.

They notice who speaks in meetings, whose opinions carry weight, how leaders respond to bad news, which behaviours are rewarded, and what happens when someone challenges the status quo.

Eventually, these patterns become taken for granted.

This is where the real culture resides.

A Visible Artifact Can Have a Deeper Meaning

Schein once observed a technology company where office doors had been removed.

At first glance, the artifact appeared to communicate openness and accessibility. The chief executive explained that the purpose was to encourage engineers to communicate, share ideas, and collaborate more freely.

However, a deeper examination revealed that the organization valued vigorous debate. Engineers were expected to challenge ideas, defend their thinking, and engage in passionate discussion.

The removal of doors was therefore not simply about communication. It reflected a deeper assumption that strong ideas emerged through open debate and intellectual challenge.

The example demonstrates why artifacts cannot be interpreted in isolation.

The visible feature was the absence of doors. The stated value was collaboration. The underlying assumption was that rigorous debate was essential to innovation and technical excellence.

Understanding the culture required exploring all three levels.

Cultural Contradictions Reveal the Real Organization

One of the most useful ways to understand culture is to examine the contradictions between what an organization says and what employees experience.

These contradictions may include:

• "We are a family," while employees are afraid to speak candidly
• "We are entrepreneurial," while decisions remain highly centralized
• "We value collaboration," while incentives reward individual achievement
• "We encourage innovation," while mistakes are punished
• "We empower our people," while leaders remain involved in every decision
• "We value accountability," while poor behaviour is tolerated from high performers

These tensions are not simply communication problems. They are evidence of competing assumptions, systems, and leadership behaviours.

For example, leaders may genuinely believe they value empowerment. However, if they regularly overturn decisions, demand to be copied on every communication, or step in whenever a problem arises, employees learn that independent decision-making carries risk.

The lived assumption becomes clear: wait for approval.

"Culture is not defined by what leaders say. It is revealed by what leaders consistently reinforce."

Leadership Behaviour Shapes Culture

Leaders influence culture through their actions, decisions, and responses.

Employees watch what leaders pay attention to, what they reward, what they tolerate, and how they behave under pressure.

Culture is shaped by questions such as:

• What happens when someone delivers bad news?
• How do leaders respond when results fall short?
• Which behaviours are excused because someone is considered important?
• How are disagreements handled?
• Who is included in important decisions?
• Do leaders behave consistently with the values they promote?

A leader may speak frequently about trust while closely controlling decisions. Another may promote accountability while avoiding difficult conversations with senior employees.

These inconsistencies send stronger cultural signals than any formal values statement.

Employees tend to believe what leaders repeatedly do, not simply what leaders say.

Why Culture Matters to Strategy

Organizational culture has a direct effect on whether strategy can be implemented.

Strategy requires people to make decisions, allocate resources, work across functions, change priorities, and behave differently. Culture influences whether those actions are supported, resisted, or quietly undermined.

A strategy based on innovation will struggle in a culture where failure is punished.

A strategy based on customer intimacy will be difficult to execute if decisions are driven primarily by internal efficiency.

A strategy requiring collaboration across departments will stall if information is protected and success is measured within functional silos.

A strategy built around agility will be constrained by excessive hierarchy and slow approvals.

This is why culture and strategy cannot be treated as separate subjects.

Leaders may make clear strategic choices, but execution depends on whether the organization's assumptions, behaviours, and systems support those choices.

When culture and strategy are aligned, employees receive consistent signals about what matters and how decisions should be made.

When they are misaligned, strategy often loses momentum.

Understanding the Culture Employees Experience

Organizational culture cannot be fully understood through an employee survey or leadership discussion alone.

Surveys can identify patterns and perceptions, but they may not reveal why those patterns exist. Employees may also hesitate to provide candid feedback, even when anonymity is promised.

At Cohesive Strategy Group, our Organizational Culture Assessment combines confidential interviews, workplace observation, document review, and leadership discussions to uncover the assumptions shaping everyday behaviour.

A deeper cultural assessment requires multiple forms of evidence, including:

• confidential employee interviews
• leadership interviews
• workplace observation
• meeting observation
• document and policy review
• analysis of organizational stories and language
• examination of decision-making and communication practices
• comparison of stated values with lived behaviours

This approach allows leaders to look beyond individual comments and identify recurring themes, contradictions, and assumptions.

The objective is not simply to determine whether employees are satisfied. It is to understand how the organization actually operates and whether its culture supports its leadership aspirations and strategic direction.

What This Means for Leaders

Leaders seeking to understand their culture should ask five important questions:

• What culture do we say we have?
• What behaviours do our systems and leadership practices reward?
• What do employees believe is truly required to succeed here?
• Where do our actions contradict our stated values?
• Does our culture support or obstruct our strategy?

These questions require honest reflection.

They may reveal gaps between intention and experience, between leadership aspiration and organizational reality, or between strategic ambition and cultural capability.

Those gaps are not reasons for blame. They are opportunities for greater clarity and alignment.

Looking Beneath the Surface

Artifacts and espoused values provide important insights into organizational culture, but they tell only part of the story.

The deepest understanding comes from exploring the assumptions that shape how people make decisions, respond to challenges, resolve conflict, and define success.

Organizational culture is not simply what leaders say or what employees can see. It is revealed through the behaviours, systems, and underlying beliefs that determine how work is actually done.

Understanding culture is not about judging the organization. It is about making the invisible visible so leaders can deliberately shape the conditions for long-term success.

Leaders who understand all three levels are better equipped to identify cultural contradictions, align behaviour with values, and create the organizational conditions needed to support strategy.

That is where meaningful cultural change begins.