Walk into two different hospitals and you’ll notice it almost immediately. Same job titles, same equipment, same regulations to follow, but the feel of the place is completely different. One feels calm and collaborative. The other feels tense, with staff who seem to be watching their backs. That feeling is culture, and it’s a lot harder to pin down than it sounds.
Edgar Schein, a longtime professor at the MIT Sloan School of Management, spent much of his career trying to explain exactly why culture is so hard to read from the outside. His answer became one of the most widely taught models in organizational behavior. So let’s get into what he actually argued.
What Is Schein’s Model of Organizational Culture?
Schein defined organizational culture as the set of shared assumptions a group learns as it solves its problems, assumptions that have worked well enough to be taught to new members as the correct way to perceive, think, and feel about those problems. That’s a fairly dense definition, so here’s the simpler version: culture is what a group has learned works, repeated so often that people stop questioning it.
The model was first developed in the 1980s and set out in detail in his book Organizational Culture and Leadership. What made it so useful for teaching is that Schein didn’t just describe culture as one thing. He split it into three levels, stacked on top of each other, each one harder to see than the last.
The Three Levels of Culture
Think of the three levels as layers of an iceberg. The top layer sits above the waterline, visible to anyone who walks past. The lower two sit beneath the surface, and you generally only find them once you start asking why things are done a certain way.
1. Artifacts
Artifacts are the observable parts of an organization’s culture, including physical features and behavior. This is everything you could notice on a first visit: the office layout, the dress code, how people greet each other, the way meetings are run, the slogans on the wall, even the org chart.
The tricky part about artifacts is that they’re easy to see but hard to interpret correctly. A company might have a bright, open-plan office with bean bags and a ping pong table, and you might assume that means the culture is relaxed and informal. It might be. Or it might be a workplace where people are expected to answer emails at 11pm and the ping pong table barely gets touched. Artifacts tell you something is going on, but not necessarily what it means.
2. Espoused Values
The second level is what an organization says it values. This includes the mission statement, the stated goals, the official policies, and the things leaders say out loud about how the company operates. “We put customers first.” “We value work-life balance.” “Safety is our top priority.”
Espoused values matter, but stating them does not establish that everyday practices support them. But there’s an obvious question worth asking here. What happens when what’s said doesn’t match what actually happens day to day? A company can have “innovation” printed on every second slide of its induction deck while, in practice, punishing anyone who takes a risk that doesn’t pay off. When that gap shows up, employees notice fairly quickly, and it tends to breed cynicism rather than buy-in.
3. Basic Underlying Assumptions
This is the deepest and, according to Schein, the most powerful level. Basic underlying assumptions are the beliefs that have become so automatic that people no longer think of them as beliefs at all. They’re just “the way things are.” They are often left unstated, and employees may struggle to explain them because they are taken for granted.
These assumptions might cover things like whether mistakes are treated as learning opportunities or as failures to be hidden, whether hierarchy is respected strictly or challenged openly, or whether time is treated as something to be managed tightly or something more flexible. Once a group has settled on assumptions like these and they’ve worked reliably enough, questioning them starts to feel almost uncomfortable, even threatening.
Schein’s point was that if you really want to understand a culture, and especially if you want to change it, you have to get down to this level. Rearranging the furniture or rewriting the values statement won’t shift assumptions that people aren’t even aware they hold.
A Practical Example: Two Bank Branches
Let’s put this in a workplace setting to make it concrete. Imagine a retail bank with two branches on opposite sides of the same city, both operating under identical policies from head office.
At the surface level, the artifacts look almost the same. Both branches have the same uniform, the same signage, the same teller stations, and the same customer service training manual sitting in the staff room.
At the espoused values level, both branches also say the same things. Head office has rolled out a company-wide value statement: “We build long-term relationships with our customers, not just transactions.” Every staff member has heard this line in onboarding.
So far, the two branches look identical. But spend a week working in each one and you’d notice something quite different happening underneath.
At Branch A, when a teller makes an error on a customer’s account, they flag it immediately, and the branch manager treats it as something to fix and learn from. Staff feel comfortable asking questions, and new employees are encouraged to speak up if a process seems slow or unclear. The underlying assumption here, even though nobody would phrase it this way out loud, is something like “raising a problem early is safe and useful.”
At Branch B, the same kind of error gets quietly corrected without being reported, because the branch manager has a reputation for being sharp with anyone who admits a mistake. Staff have learned, through experience rather than instruction, that it’s safer to stay quiet and hope nobody notices. The underlying assumption there is closer to “mistakes are dangerous, so don’t be the one who reveals them.”
Same policies. Same posters on the wall. Same official values. Different local cultures, with visible behavior reflecting different underlying assumptions. If head office ever wanted to fix the problems at Branch B, changing the artifacts or restating the values wouldn’t do much. They’d need to understand and shift the assumptions that staff have quietly built up through repeated experience.
Why This Matters to Managers and Employees
For managers, Schein’s model is a useful reminder that culture change announcements often fail because they only target the top layer. A new mission statement, a rebrand, or a fresh set of office plants might change what visitors see, but if the underlying assumptions haven’t shifted, staff behavior generally won’t shift either. Real culture change usually means looking honestly at how people actually respond when things go wrong, get questioned, or don’t go to plan, and working from there.
For employees, the model offers a way to make sense of a gap that a lot of people feel but struggle to name: the difference between what a workplace claims about itself and what it’s actually like to work there. If you’ve ever joined a company that talked a great game in the interview and then felt noticeably different once you started, you were probably experiencing the gap between its espoused values and its basic assumptions.
The model is also genuinely useful outside formal management roles. Understanding that visible symbols don’t always match deeper beliefs makes people better at reading a new team, a new department, or even a new country’s workplace norms when starting a job somewhere unfamiliar.
Strengths and Limitations of the Model
Schein’s framework has stayed popular for decades, and it’s easy to see why. It gives people a simple, memorable structure for a concept that otherwise feels vague, and it explains a pattern almost everyone has noticed: organizations that look great on paper but feel off once you’re inside them.
That said, the model does have some limitations worth knowing about.
- It can be difficult to identify basic underlying assumptions from the outside. They usually only become visible over time, through observation, or when something goes wrong and reveals how people really think.
- Large organizations rarely have just one culture. Different departments, teams, or locations, like the two bank branches above, can develop quite different assumptions even under the same official values.
- The three-level framework is a diagnostic guide rather than a complete change plan. Schein’s broader work also explains how leadership priorities, rewards, resource allocation, and recruitment can shape culture; changing entrenched assumptions may take sustained effort.
None of this makes the model less useful. It just means it’s better treated as a lens for understanding culture than as a fixed formula for changing it overnight.
Conclusion
Schein’s model gives us a straightforward way to think about something that’s genuinely hard to describe. Culture isn’t just the posters on the wall or the values statement in the handbook. It’s built from layers, and the layer that actually drives behavior, the basic underlying assumptions, is usually the one nobody talks about directly. If you want to understand why an organization behaves the way it does, or why change efforts keep stalling, this is the level worth paying attention to.
Sources
- 5 enduring management ideas from MIT Sloan’s Edgar Schein – MIT Sloan School of Management
- Learn About the Management Theory of Edgar Schein – Business.com
Remembering professor emeritus Edgar Schein – MIT News