Organisational culture is one of the most crucial – and most misunderstood – concepts in the world of work. It is the company’s personality: the sum of the values, norms and behaviours that shape how work is carried out and how people feel at work. Organisational culture can be likened to a set of unspoken yet ever-present social rules for a workplace. Corporate culture influences how employees behave, how decisions are made, how leaders communicate and, ultimately, how successfully the organisation achieves its goals and delivers results. A strong organisational culture is not some vague, nice-to-have extra – it delivers tangible benefits to you as a group and as a company, and is one of the most important factors for long-term success and profitability. Yet many companies never take a comprehensive approach to their corporate culture, even though it shapes everything that happens at work, every single day.
The definition of organisational culture
The concept of organisational culture is drawn from anthropology, which studies the conditions and determining factors underlying structure, order and hierarchies in different societies. The concept of culture has since been applied to organisations in order to understand, explain and, to some extent, influence individuals’ experiences and actions in the workplace.
The word ‘culture’ comes from the Latin cultura and can be interpreted as ‘cultivation’. If we relate this to corporate culture, we might ask: What is being cultivated and developed within your organisation?
- Do you have the drive to perform and adapt to the market’s needs?
- Shared values that are part of everyday life – not just on the intranet?
- Staff who take responsibility and work together?
- Or ingrained behaviours and attitudes that hinder development and growth?
A brief definition of culture is ”the mental programming that distinguishes members of one group from another” (Hofstede) To understand organisational culture, it is important to see how corporate culture affects performance and business. Only then can we assess it, strengthen what works and develop what is holding us back – and create a cultural strategy that guides the organisation towards its vision.
The terms ‘organisational culture’ and ‘corporate culture’ are often used interchangeably in everyday speech, but there is a subtle difference worth noting. Organisational culture is the broader, academic term that encompasses all types of organisations — including public authorities and charitable organisations. Corporate culture is specifically linked to the business context. At YesP, we work with both concepts, but with an emphasis on the practical aspects of corporate culture at our clients’ organisations.
What makes up an organisational culture?
Organisational culture is the sum of the shared values, norms and attitudes that characterise a company. Values form the basis for the decisions made within the organisation – and a good organisational culture is characterised by the company’s core values being shared by many of its employees. It is about how people actually behave at work and contribute to the business – not just what is set out in policy documents. A strong corporate culture fosters commitment, job satisfaction and the conditions for success. A weak or unclear corporate culture makes it harder to lead, develop and achieve the organisation’s goals.
Four areas that provide a good description of organisational culture are (Denison Organisational Culture Model):
- Mission statement - Direction, purpose and objectives. Do we know where we are going?
- Stability - Values, systems, structures and processes. Does our system deliver value?
- Involvement - Commitment, ownership and responsibility. Are our people engaged and connected?
- Adaptability – Patterns, trends and the market. Are we listening to what’s going on around us?
In addition to these four areas, we also need to delve deep into the very heart of the company’s culture — what the researcher Edgar Schein refers to the invisible layers of organisational culture – the deeper assumptions and values that govern behaviour:
- Who founded the company and its legacy
- Which behaviours confer hero status and are held up as examples to follow
- What rituals exist and how staff members experience them
- Which values are truly put into practice – not just those that are communicated
Of course, organisational culture is also influenced by national culture and by the culture within a specific sector (Manfred Kets de Vries).
Leadership and organisational culture are interlinked
A strong organisational culture always starts at the top. A editorial sets the tone for the entire corporate culture – by setting an example, clearly communicating the company’s values and creating a working environment where the right behaviour is encouraged and rewarded. The culture is reflected in the atmosphere within a workplace, and it is not enough for management simply to decide on it – it must be lived out and expressed in the day-to-day work of everyone in the organisation, with leadership as the foundation.
Language is one of the most important factors in how culture is passed on. The stories that exist within a company, the way staff choose to behave and communicate with one another in meetings – all of this is an expression of the corporate culture. Listening with an open mind to how we talk and what we talk about is often a good first step towards understanding the corporate culture that actually prevails.
”A company with a clearly defined cultural strategy also knows what kind of feeling and experience it wants to convey to customers, employees, job applicants and all other stakeholders.”
The organisation as a living system
From a systems theory perspective, an organisation is viewed as a dynamic system of interrelated components that constantly strive to maintain balance, both internally and with its environment.
Organisations are created because people want to achieve common goals or have needs that require cooperation. We are social creatures, designed for interaction. Our ability to cooperate and achieve results together has always been crucial to our survival. An organisation that fails to adapt its culture to changes in the wider world risks losing its relevance and competitiveness in the long term.
Why is organisational culture important to a company’s success?
A strong and healthy organisational culture fosters committed staff, greater job satisfaction and better results. It is crucial to how quickly leaders can make decisions, how successful recruitment is and how high staff turnover is. A good corporate culture is also the best way to ensure that employees remain creative and find their work stimulating – which can directly contribute to innovation and growth within the organisation. Employees who are happy and feel involved perform better and stay longer. Work becomes more than just a place to earn a wage.
The flip side is just as clear: a dysfunctional organisational culture can lead to high levels of sick leave, poor collaboration and, ultimately, serious losses in performance that are difficult to reverse. An unhealthy corporate culture spreads silently throughout the organisation and affects employees, the brand and the company’s profitability. Companies with a strong organisational culture are proven to be more profitable, and a clear corporate culture is therefore crucial not only for employees, but for the entire company’s financial success.
In other words, organisational culture is absolutely crucial to a company’s survival, performance and growth. The complexity of culture does not mean that it cannot be measured and analysed – quite the contrary. Actively working on and strengthening the culture is one of the most important contributions a management team can make to its organisation.
Is it possible to change a corporate culture?
Changing the prevailing organisational culture within a company can be difficult, but if you succeed, it can lead to improved results and better interpersonal relationships in your workplace. An important starting point is to focus on behaviour rather than people. You should not try to change people’s personalities, but rather influence how staff behave and contribute to the organisation’s development and operations.
Developing a healthier and more attractive corporate culture is a long-term endeavour that is led by senior management, but which requires all staff to be involved and given the opportunity to contribute and develop. A good place to start might be to organise a a workshop or a team-building activity which fosters a shared understanding of our values and paves the way for honest discussions about our culture. It is then a matter of:
- Clearly define and communicate the company’s shared values
- Ensure that management embodies the values in their day-to-day work
- Establish structures and standards that promote appropriate behaviour in the workplace
- Measure and monitor corporate culture on an ongoing basis, just as you would monitor business objectives
At YesP, we help companies understand, measure and strengthen their corporate culture. Would you like to find out more about how we can help your organisation?