A well-managed corporate culture can help a company achieve its goals and stay ahead of the competition. First and foremost, what is corporate culture, what examples of corporate culture can we encounter, and how can we build a strong culture within a company?
In today’s business world, any company that wants to stay ahead of the competition must clearly define its goals and have a clear plan for achieving them. The foundation for achieving these goals is a consistent corporate culture.
However, corporate culture does not create itself by offering employees massage chairs, ping-pong tables, unlimited coffee, or other employee benefits. Over time, the concept of corporate culture has evolved from superficial ideas to practical management strategies and innovative practices. Modern companies are well aware that a positive corporate culture is a fundamental pillar of a prosperous society.
What is corporate culture?
Corporate culture (sometimes also referred to as organizational or business culture) is a set of values, norms, beliefs, ethics, and attitudes that characterize an organization and govern its practices. It identifies and emphasizes the vision and behavior of the organization and sets the overall tone within the company.
A company’s organizational culture is rooted in its goals, visions, strategies, structure, and approach to employees, customers, investors, and the wider community. Other key elements of corporate culture include people, story, and place.
According to American psychologist and organizational culture expert Edgar H. Schein, corporate culture can be understood on three levels. The first consists of artifacts, meaning visible expressions of culture, such as communication styles, the work environment, or shared rituals. The second level includes espoused values, such as an emphasis on collaboration, innovation, or customer orientation. At the deepest level are basic underlying assumptions and beliefs, which are so deeply rooted in an organization that they influence employees’ everyday decisions and behavior.
Every company has its own vision of success, on the basis of which the company’s management then develops a set of goals to achieve this vision. A clear understanding of corporate culture can help managers define the right values and culture for their company. In addition to the company itself, employees also contribute to the process of shaping the culture with their diverse skills and abilities.
Ideally, corporate culture unites employees and helps drive everyone in the organization forward so that the company achieves its goals. These elements of corporate culture shape the “personality” of the company and determine how the company will do business and interact with its customers.
Why is it important to cultivate corporate culture?
Culture can shape and influence almost all aspects of a company, such as efficiency, overall success, and financial results.
Companies with a well-designed culture supported by good principles boast more motivated and engaged employees, who are ultimately more productive. Such an environment also creates a positive relationship with former “boomerang” employees who decide to return after a certain period of time because they perceive the company as a trustworthy and fair employer. Business partners and customers also often respond positively to companies that are considered to have a positive corporate culture, which in turn helps companies succeed.
Conversely, companies that do not have a well-defined culture or are characterized by a toxic environment are at greater risk of poor financial performance, higher employee turnover, or even bankruptcy.
A strong corporate culture means:
- Higher employee motivation: Motivated employees are more productive in their work, which has a direct impact on the company’s financial results.
- Lower turnover: When employees do not feel that they are a valuable part of the team, they start looking for work elsewhere. A strong corporate culture is inclusive and recognizes the contribution of each employee
- Better quality candidates: Job seekers will evaluate the organizational culture when deciding whether they want to work for a particular company. A positive corporate culture attracts the best candidates and inspires them to work for that company
Typology of corporate cultures
There are generally four basic types of corporate culture, based on shared values such as the degree of freedom employees have in decision-making or the degree of openness to the market environment.
- Clan culture: Characterized by a friendly, family-like atmosphere with a focus on cooperation, mentoring, and belonging. It resembles a large family, with company managers regarded as mentors and the team united by tradition and loyalty.
- Hierarchical culture: Based on structures, processes, procedures, and control mechanisms that ensure efficiency and stability. Companies with this culture operate in a formalized and structured work environment. Success is defined by low costs and smooth planning and implementation.
- Informal culture: Characterized by a dynamic and entrepreneurial approach that emphasizes risk-taking and innovation. The company is characterized by a creative and rapidly changing work environment dominated by individual freedom and initiative.
- Competitive culture: Results-oriented. Companies with this type of culture value competitiveness and success. The work environment is competitive, people are focused on goals, and the organization is results-oriented.
How to build a corporate culture?
Building and maintaining a corporate culture can happen organically. However, company managers should consciously participate in creating a positive corporate culture that embodies specific values, visions, attitudes, etc.
- Define the company’s core values: Company values are two or three words that everyone associates with the company name. Whether it is a company that focuses on gaining customer trust through a traditional approach or aggressively seeks to enter new markets, it is important to express its values in a few well-chosen words.
- Setting realistic goals: Goals related to company culture should address diversity, inclusion, and shared values. The company owner must consider why they originally founded the company and what they want to achieve. The culture should reflect these ideas. It should be a positive message that inspires not only employees but also customers.
- Employee involvement: It is difficult to measure and monitor the effectiveness of company culture. To improve it, it is necessary to involve employees. Company leaders should ensure that there are ways to obtain feedback from employees and provide them with constructive feedback themselves. This can be achieved, for example, through anonymous employee engagement surveys or regular meetings.
Would you like to learn more about corporate culture? Then you may find the course Cross-cultural Leadership, taught as part of our most popular MBA program, the Executive MBA Online, very beneficial.
