A study in difference: Structures and cultures in Australian registered training organisations

This report presents the findings of a study examining organisational culture and structure in ten Australian registered training organisations (RTOs) and is part of a program of research examining the factors which affect and help build the capability of vocational education and training (VET) providers.

This study found that public providers had initiated extensive and often rapid change in response to external pressures to be more competitive and client-focused. For some, the amount and rapid pace of change had placed considerable strain on their organisations. For smaller private registered training organisations, on the other hand, change tended to be simpler and more incremental.

Key messages

• Building organisational capability relies on the effective alignment of key elements within each registered training organisation. These elements include a clear vision and strategy, effective leadership and management, empowered staff and a workplace culture that encourages collaboration and networking.

• There is general acceptance within registered training organisations that both structural and cultural changes are positive and will be ongoing. However, there is evidence of change fatigue and a desire for a period of structural stability.

• Policy-makers need to carefully assess the potential impact of policies and regulatory arrangements on the sector's providers to ensure that these do not stifle the ability of providers to respond to their clients' needs.

• A lack of autonomy, administrative rather than strategic approaches. and a silo mentality constrain organisational agility, which is not evident in public registered training organisations. Readers interested in other components of the research program on building VET provider capability, of which this report is part, should visit http://www.ncver.edu.au.

Tom Karmel
Managing Director, NCVER

This report presents the findings of a study examining organisational culture and structure in a range of Australian registered training organisations (RTOs). The research was designed to identify and describe the ways in which cultures and structures shape activities in registered training organisations, while identifying strategies for managing structural and cultural change in order to build organisational capability.

The following questions formed the basis for the research:

• In what ways and for what purposes are registered training organisations adapting organisational structures to enhance team and organisational capability?

• To what extent and in what ways do cultures within registered training organisations influence team and organisational capability?

The research included a review of the relevant literature and a scan of organisational documents; 43 interviews and 16 focus groups were also conducted with staff at different levels within seven technical and further education (TAFE) institutes, two private training providers and one enterprise provider.

In all cases, both individual interviewees and work teams revealed a thorough understanding of the imperatives driving change in their registered training organisations. While there were subtle differences in emphases between public and private, large and small, old and new, metropolitan and regional, registered training organisations, the key drivers for all of the organisations were similar. They included Australian Government policies, state-based training imperatives to address skill shortages, working within financial constraints, meeting client, community and regional needs and developing the business of the organisations. Senior management within the seven large TAFE institutes and the enterprise registered training organisation agreed that some degree of structural and cultural change was essential if their organisations were to meet these demands.

On the other hand, participants in the large organisations had a different perspective and were far less enthusiastic about the prospect of ongoing structural changes. All described their experience with what could be called chronic structural reshaping over the last five to ten years. All had been involved in partial restructures, or shifts from centralised decision-making to decentralisation and back again. The majority had undergone or were in the process of significant upheavals involving the amalgamation of a number of registered training organisations or complete system-wide 'repositioning'. Often driven in the name of fiscal efficiency, changes had also been used by governments and senior executives in registered training organisations to generate the structural and cultural change needed to meet the emerging demands for greater flexibility and responsiveness. Given the constancy of structural adaptation in TAFE institutes, interviewees at lower levels not surprisingly referred often to what they saw as the negative outcomes of previous organisational change and their sense of 'change fatigue'. In terms of organisational structure, only the two small private registered training organisations in the study remained relatively free from structural change and saw little need for anything but minimal changes in the future.

In describing new structural arrangements, TAFE participants outlined key changes to the bureaucratic structures traditionally exhibited by large public service organisations. For some, organisational charts no longer reflected a hierarchical box-and-line format, but instead used novel shapes to describe and suggest new ways of working - encouraging the building of external relationships with industry, enterprises and individual clients. Commonly, interviewees noted flattening of hierarchical structures, devolution of decision-making, establishment of teams in various guises, and breaking down faculty and functional unit silos through the encouragement of increased cross-organisational collaboration and networking. Greater communication, both horizontally and vertically, within organisations was described, as was a loosening of the bureaucratic processes governing the day-to-day work of teams and units, leading to increased flexibility in work practices. In addition, registered training organisations were aligning support and teaching staff more closely to enhance services to clients.

Even in the most radical cases of structural change, however, the enhanced structural flexibility needed to be supported by a relatively stable, traditional, bureaucratic, structural core that maintained the best of previous practices. Danger lies in driving structural change too far.

In terms of organisational culture, people in senior positions articulated broad views of culture within their organisations that were largely shared by those at lower levels. However, scratching the surface frequently revealed cultural disjunctions between senior management and work team levels. The existence of multiple cultures was most readily evident in TAFE institutes, where people spoke of cultures based on vocations, industry, geographic location, history and the concept of 'them and us', the latter being an almost inevitable outcome of the diversity of backgrounds and experiences. In the enterprise registered training organisation, multiple cultures were related to different brands with different ways of doing business. While this multiplicity enabled diverse and useful approaches for different functional groups, the presence of multiple cultures was also seen to be a weakness if they became closed cultures, impervious to change and opportunity.

While the smaller registered training organisations in the study remained culturally stable, widespread culture change was a feature of all of the large organisations. There was general acceptance that an overarching culture was needed not only to balance multiple cultures but to provide a strong focus and direction for organisations. A view frequently expressed was that vision, supported by clear strategies and positive attitudes, provided the basis for culture change and that leadership of change needed to come from the top. Newly empowered leaders at various levels in organisations were also perceived to be critical in successful cultural transformation.

Other key facets of cultural change were identified as open and transparent communication, inclusiveness and empowerment, rewards and incentives, and an investment in people. There was also a common view of culture change as not merely moving from one point to another, but as a process of exploring - of creating sustainable change and continuous improvement.

Reflecting the thinking of commentators writing about organisations of the future, senior management acknowledged that future success was dependent upon their registered training organisations being agile, flexible, client-driven and responsive, despite the uncertain times they were facing. They needed to be competitive and businesslike in the business of vocational education and training (VET). In accepting this view, there was recognition among all interviewees that culture and structure were integral to organisational effectiveness - and capability.

Each chief executive interviewed considered that the changes their registered training organisation had undergone had improved their organisation's capability - some to a greater degree than others. Evidence of this enhanced capability was a focus on more businesslike behaviour, income-generation and meeting key performance measures. Also mentioned was a shift from an overwhelming focus on the operational to the more strategic, and the development of better relationships and enhanced credibility with employers. Furthermore, senior managers spoke of greater flexibility, the breaking-down of rigid bureaucratic processes, improved responsiveness and the building of a culture where risk-taking was supported and in which innovation could flourish. Others noted that, by bringing people with disparate ideas and experiences from across their organisations together, they had not only built better working relationships, they were also able to make more informed educational and business decisions.

Perceptions at lower levels in organisations, however, tended not to be so uniformly positive. Concerns were often expressed about the speed and extent of change and the paucity of good-quality communication about strategies and visions for the future. Despite these negative views, many work teams outlined a range of gains they saw being made with the implementation of change. Benefits included a stronger sense of working as the 'one organisation', closer linkages and more transparent communication between different levels of the registered training organisation, greater interaction between senior managers and the workers, more sharing of ideas across the whole organisation and a lessening of the sense of isolation some work groups had previously experienced. In addition, cross-functional teams had become an established way of working, and the increased empowerment of people at lower levels had generated a more collaborative approach to work. Most work groups clearly articulated a sense of team and a sense of self-worth.

For middle managers, shifts to entrepreneurial activity and more self-managing teams had brought greater autonomy, but also greater responsibility and greater challenges. Charged with the tasks of educational leadership, building the business, managing the budget and allocating resources, many middle managers were struggling with the weight and complexity of their workloads and the changes they were required to implement.

Looking to the future, chief executives generally agreed that the building of organisational capability through cultural and structural change would continue to pose challenges for their organisations. Reconciling cultural goals with reality was cited as a prime example. The test for leaders at all levels was to communicate, discuss and become comfortable with ambiguity and to help people accommodate the inevitable inconsistencies between espoused and lived cultures. Without this, staff are likely to become cynical about the organisation because of what was often seen by those at lower levels as hypocrisy. This is because staff feel that they are asked to work in particular ways, but they are not given the resources, administrative systems and power to do what is being asked of them.

A major challenge posed by structural change was that it would not necessarily enhance performance or build organisational capability in the short term. Opportunities would still need to be provided in the future to enable various parts of organisations to adjust, to ensure further improvements in client focus, flexibility, innovation, entrepreneurship and responsiveness. Senior management of registered training organisation agreed, however, that there was a need for a period of structural stability in which to bed down the broad-ranging changes that had been made in organisations and systems in recent times. By way of balance, there was also general agreement within organisations that a focus on continuous improvement and a commitment to ongoing incremental adaptation were the keys to building their organisational capability.

All registered training organisations in this study are operating in dynamic environments, environments that demand different responses from different organisations in different contexts. With unified cultures, simple structures and clear strategies and visions, the smaller organisations considered they are well placed to face the new demands being placed upon them, without the need for significant change. The diverse and highly complex large registered training organisations acknowledge that multiple cultures will remain a reality, and that history, politics, geography and power relationships are likely to continue to have both positive and negative effects on their culture and structure and, ultimately, their organisational capability. The challenge for leaders within these organisations is to continue to manage and transform cultures, adapt structures, focus on people and create clear linkages between these components and their organisational visions and strategies.