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Creating organisational success through a strong asset management culture

This paper was authored by Geoff Hales, chair of the Australian Water Association's Asset Management Specialist Network, and Dr Meg Hooper.

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Abstract

Organisational culture plays a significant part in asset management excellence. In fact, one may argue that asset management culture is as important as the systems themselves to achieve asset management outcomes.

In this paper, we discuss what asset management culture is and why it is important. With many asset management improvement programs, the opportunity to address culture and utilise it to maximise the program’s success is often neglected. Sometimes this is due to the belief that ‘it’s not possible’, ‘it’s too hard to influence culture’, it ‘takes too long’ or ‘it’s hard to justify’. These barriers will also be discussed.

For those who missed the AWA’s Asset Management Specialist Network committee’s workshop on this subject at Ozwater’18, a brief summary of key points is provided.

And for those who may be interested in strengthening the asset management culture in their organisation but are wondering where to start, some recommendations are provided at the end of the paper.

Culture and organisational performance

There is growing recognition of the significant contribution an organisation’s culture has on its performance. Culture is often described as ‘the way we do things around here’; the unspoken assumptions we make about what is permissible and encouraged in an organisation, and what is not. This results in strong behavioural norms established over time and reinforced by unspoken symbols and rules around things such as decision making. Researchers have shown these products of culture in an organisation can influence its success.

For instance, researcher Francesco Rizzo and colleagues, among many others, have shown that attributes of organisational culture impacted the perceived performance of energy managers in municipalities in Italy (1).

Researcher Anthony Boyce and colleagues showed customer satisfaction ratings were influenced by the organisational culture of automobile dealerships, which in turn had a significant impact on vehicle sales and demonstrated the causal impact of organisational culture on performance (2). Further, and more specifically, researcher Sylvie Laforet has shown links between the behavioural norms, leadership style, shared vision and a sense of ownership within an organisation and the success of the company’s products (3).

“I truly believe culture makes a difference in any enterprise. But when you look at Otis, where we’ve got 68,000 colleagues distributed across the world and almost half of those every day are not being supervised – they’re out at our customer locations doing over 100,000 service calls every day, let alone installations – it’s critical that we have a culture that people can relate to, support, and feel proud of, because that enables outstanding customer service. It enables us to be responsive.” Judy Marks, President of Otis Elevator Company.

The premise of this article is that organisational culture plays a significant part in asset management excellence. In fact, we might go so far as to say that asset management regimes relying purely on technical expertise are outclassed by those that pay equal attention to the cultural attributes of the organisation and the role this plays in outcomes for the customer.

In their excellent book Living Asset Management (4), João Lafraia and John Hardwick follow the journey of an organisational leader as he tells the story of renewing an old asset, unable to be depreciated but yet worth over a billion dollars in value, to one of the highest performing facilities for its shape and size in the world. Their takeaway? That transforming culture by changing the way functional teams integrated, set goals and were rewarded was fundamental to the success of the project. The impact of a change in culture surpassed the impact of technical expertise within each function.

We, the authors, are passionate about uncovering this link further, not only through this paper, but through our work practice in general.

But what does the term ‘culture’ really mean?

The problem with discussions around organisational culture and the role it plays in company success is that the term culture is so widely used and, according to the University of Queensland’s Professor Andrew Neal, few people understand what the term culture actually means. Professor Neal argues that discussions about culture need to be tied to an outcome.

We see this in the success of organisational programs to improve safety culture. “Safety has tangible outcomes that can be measured,” says Professor Neal, and safety culture programs typically structure an intervention such that it includes very tactical activities that make sense. These tactical activities alone become a symbol of ‘the way we will do safety around here’.

On the surface, culture is not that complicated. It’s simply the things that people in an
organisation do without thinking, often because of a precedent set by management, or the inexplicable ‘way we do things around here’. But the roots of culture go very deep. This makes culture change a long and difficult journey, and one that needs even the simplest of activities to reinforce the change.

And what has this got to do with asset management?

Reliabilityweb.com prepared a research report on Asset Management Practices, Investments and Challenges for 2014-2019 (5). The research included approximately 1000 participants from a wide variety of industries around the world. When questioned on the most common obstacles that organisations have encountered when improving their asset performance, organisational culture ranked the highest, as seen in Figure 1.

Figure 1 - Biggest obstacle for improving asset performance.

Conversely, Lafraia and Hardwick discuss the enabling features of culture when working toward operational excellence through asset management maturity. In particular, they discuss the power of organisational culture when seeking to realise the maximum value of assets through organisational elements such as integrated systems and effective leadership styles. This is illustrated in Figure 2.

Figure 2: The premise of the article is that asset management culture is as important
as the systems themselves to achieve asset management outcomes.

With the development of the ISO55000 series (6), we can more clearly align the elements of culture with an internationally recognised standard for asset management excellence. While culture is not mentioned explicitly in the standard, there are hints throughout the publication to the role that culture plays. References to stakeholder engagement, governance, cooperation and integrated management give us hints to the type of workplace needed to achieve this standard and sustain it successfully.

The ISO55000 series states: “Asset management enables an organisation to realise value from assets in the achievement of its organisational objectives”.

As stated by the standards, the benefits can include:

  • improved financial performance;
  • managed risk;
  • improved services and outputs;
  • corporate/social responsibility;
  • demonstrated compliance;
  • enhanced reputation; and
  • improved organisational sustainability.

The ISO55000 series also describes the requirements of a system, referred to as an Asset Management System (AMS), used by an organisation to direct, coordinate and control asset management activities so as to achieve such value and benefits. Key elements of an AMS are depicted in Figure 3.

Figure 3 - Key elements of an Asset Management System. Source: ISO55000:2014. Note: The grey highlighted area designates the boundary of an asset management system.

A strong asset management culture in an organisation provides the basis for a good AMS in that it can:

  • help the various elements work together;
  • cover for areas where there are gaps or weaknesses;
  • provide a more positive work environment; and
  • establish a focus on continuous improvement and taking an innovative approach to problem solving.  

To revisit our premise, we would argue that the system depicted in Figure 3 is as dependent on elements of the organisation’s culture as it is the level of technical expertise. In addition, organisations that seek to use asset management systems, practices and principles to realise greater value from their assets commonly focus on the development of individual elements rather than the entire system.

A strong asset management culture is not confined to the department with ‘asset management’ in its title, it permeates an entire organisation. Without it, the potential benefits of asset management improvement are greatly limited, and the sheer effort required greatly increased.

More bluntly, why invest in implementing an AMS without also being prepared to tackle the cultural hurdles that may stymie its success?

What is a strong asset management culture?

Generally speaking, a strong asset management culture is the organisational culture required to produce positive asset management outcomes. However, like many organisational questions, the actual answer depends on the context.

Successful implementations of asset management improvement programs acknowledge that there is no exact recipe to follow from a culture point of view. However, there are some behavioural and attitudinal norms that consistently emerge as patterns in organisations with a strong asset management culture:

  • customers are valued and included as a part of every asset management conversation;
  • there is a high level of accountability at appropriate levels of the organisation
  • continuous improvement is a common goal;
  • staff have strong role clarity and a good understanding of how their roles and activities realise objectives;
  • engagement is seen as a goal and an investment in and of itself, not as a cost incurred through implementation;
  • transparency and openness are practiced consistently and communication practices are inclusive; and
  • collaborative practices are seen as normal and help integrate functions across a business.

Can we influence an asset management culture?

In short, yes! The collective behaviours we observe that either facilitate or inhibit asset management success are changed through the levers available for all organisations to pull. Just like driving a backhoe, the levers must operate in an aligned way or the outcomes (a hole dug in the right place) can’t be achieved.

The levers of culture work to set expectations about behaviour and reinforce these at a collective level. These include (among many others):

  • the financial decision-making processes in an organisation (e.g. does the CEO sign off on $20 parking vouchers or is this delegated to a lower level?) and the associated values and beliefs about those decisions;
  • the way priorities are funded (and which projects get funding);
  • the way leaders engage with their staff; and
  • the systems, tools and resources available to do your job.

These examples all inadvertently send messages to staff about what is expected of them. Just as when working to shift safety culture, the smallest symbols are important.

“In terms of maintaining a safety culture, the first topic at every staff meeting is safety. No matter who is in the room, and even if we just broke records on sales last month, we’ll start with safety. So that sends a message.” Brett Wood, President and CEO, Toyota Forklifts.

 

The good news for us is that once we find the key levers in an organisation, we can work to align them and influence culture change.

Why isn’t everyone doing it?

If so many thinkers in this area agree that strong asset management culture is important for asset intensive organisations, why don't we hear as much about this being addressed directly? The short answer is, ‘it is hard work’. Addressing culture commonly requires more finesse than the usual ‘engineering’ and ‘management’ skills involved in asset management. In fact, the majority of organisations who have travelled this road recommend seeking external assistance with this.

It takes time. Yes, strengthening culture takes time in contrast to a typical asset management project. However, the longer term and more sustainable view sees this time as an investment rather than a cost. A short-term focus can limit the effectiveness of asset management, and work on a strong asset management culture is no different. All the more reason to work on organisational culture sooner rather than later.

The return on investment seems hard to imagine.  It can be difficult to quantify the benefits of culture development initiatives, especially on their own. When combined with other asset management programs, they can be easier to express. For instance, increasing the cost of such programs by a relatively small percentage to include asset management cultural development typically increases the benefit by a much higher percentage.

Everything becomes visible. It can be terrifying to think that your role as a leader and the style you employ can influence the success of asset management in your organisation. An increased focus on this also increases its visibility and subsequently the associated discomfort. Leaders set the tone at many levels and are the single most important levers available to an organisation. When seeking to understand your asset management culture and how to strengthen it, it is important to work with your leaders and support them to create the right environment for all staff to play their part. Alienating leaders can be a damaging experience for organisations seeking to improve asset management as a whole.

Ozwater’18 workshop

At Ozwater’18 the AWA’s Asset Management Specialist Network committee ran a 2-hour workshop on this subject. There was a broad representation of the industry in attendance, including utility staff, consultants, developers, contractors, etc.

Special input was provided through an industry panel as well as findings from an online survey the committee conducted in the lead-up to the workshop.

The workshop included breaking into smaller groups, in which there was active discussion at each table. This included discussing a scenario to do with a fictitious (hopefully) organisation called ‘Rock Bottom Water Utility’.

The importance of having a strong asset management culture was endorsed, with the following key points being made:

  • leadership and staff engagement were two of the most important factors;
  • all staff should provide positive leadership no matter their level or role;
  • culture can be changed...by influencing behaviours;
  • ‘Don't do asset management to your staff, do it with them’; and
  • A clear strong alignment of activities with organisational objectives and strategies, is needed.

Back to the beginning

Back to the image at the beginning of this article and the question about what culture has to do with the work in the image.

In a strong asset management culture, these workers understand that installing this pipe contributes to the value the asset delivers its community. They also know what it will take to maintain the pipe and they know that the pipe connects to a bigger system. The workers do not leave this job until they are proud of the finished quality; however, they will stop work if the situation becomes unsafe. They know they have their supervisors’ and managers’ support to do this. These workers know exactly who to call when something goes wrong, although they are encouraged to first solve the problem themselves as they are closest to the source of any problem.  

In short, a strong asset management culture helps to ensure:

  • great value from the work undertaken. The workers take pride in the job so the pipeline provides a reliable service to customers, and does so efficiently. As a result, the limited funding is well utilised and the required asset life can be achieved;
  • the installation equipment these workers used was in good working order, because those that used it previously treated the equipment as their own; and
  • the work is completed safely, for the workers’ own benefit but also knowing safety is a key value of their organisation.

The levers of cultural change are powerful when operated in alignment. The influence is far reaching, even to two workers installing a pipe.

Next steps

Interested in strengthening the asset management culture in your organisation but wondering where to start?

In our experience, the top three starting places are:

Create a compelling reason to get on board. Work with your staff rather than doing things to them; seek their input and value their experience in working with your assets. We would typically hold a workshop to identify what a strong asset management culture looks like in the organisation and uncover the current ‘pain points’ in managing assets.

Following this, measure your asset management culture. You can’t leverage strengths if you don’t know where they are. Similarly, you can’t address gaps if you can’t see them. A specially designed asset management culture survey completed by all impacted staff can help to do just this (Note: We are currently developing a web-based survey tool that can be utilised for this purpose.)

Your findings should be discussed with a broad group of stakeholders who can assist you to develop a 12 to 18 month roadmap with specific activities that will help to achieve your asset management culture goals.

So, what’s next for us, the authors, in this journey? Much of the relationship between asset management culture and asset management performance is anecdotal. How do you know what you really have (in terms of asset management culture) and how do you know what you really need? We are currently developing a measure of asset management culture to better target our interventions and tell a stronger story of the specific relationship between asset management culture and asset management performance. In particular, what factors of culture play the biggest part? Where would you target your interventions? What role can leaders play most effectively?

Achieving a strong asset management culture is attainable and beneficial; however, it is hard work and requires commitment from leaders at all levels of the organisation. It is worth the effort, and benefits our customers, when we get asset management right.

About the authors

Geoff Hales | Barnewall Resources Pty Ltd | E: ghales@barnewall.com.au

Geoff is a principal civil engineer with over 30 years’ professional experience, of which a significant portion has been in relation to infrastructure asset management in the water industry.

He advises on strategic, tactical and operational matters, developing and helping implement key improvements to clients’ asset management systems. Capacity development is a key passion of his, and over recent years he has found it increasingly important to address the ‘culture’ side of asset management.

Geoff is a member of AWA’s Asset Management Specialist Network Committee and has chairman for the past 3+ years.

Dr Meg Hooper | Carousel Consulting | E: mhooper@carouselconsulting.com.au

Meg loves strategy and culture, and figuring out how these can help teams to continue to thrive and perform in the face of change and challenge. Meg is a registered psychologist with a PhD in Organisational Psychology and has over 17 years’ experience working with human behaviour at an individual, team and organisational level.

Over the past 5 years Meg’s focus, though her consulting practice, has been on helping organisations transform by aligning their strategy and culture, building change management capability and leadership, and creating strong resilient teams that optimise their performance through change and challenge.

References

  1. Rizzi, Francesco & Annunziata, Eleonora & Frey, Marco. (2017). The Relationship between Organizational Culture and Energy Performance: A Municipal Energy Manager Level Study. Business Strategy and the Environment.
  2. Boyce, Anthony, Nieminen, Levi R.G., Gillespie, Michael A., Ryan, Ann Marie, & Denison, Daniel. (2014). Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships. Journal of Organizational Behavior.
  3. Laforet, Sylvie (2017). Effects of organisational culture on brand portfolio performance, Journal of Marketing Communications, Vol. 23, No. 1, 92–110
  4. Lafraia, JR., & Hardwick, John (2013). Living Asset Management. Engineers Media: Crows Nest, NSW Australia.
  5. Research Report on Asset Management Practices and Challenges 2014-2019
    Copyright: Reliabilityweb.com   http://www.reliability.web.com
  6. ISO55000 series:2014, International Organization for Standardization.

For more information about the Australian Water Association's Asset Management Specialist Network, click here.