Corporate Culture
The Symbiosis Between Corporate Culture, Workforce, and Business Success
Reading time: 5 min
„To build a better organization, you must create a better culture“
This quote, from a highly recommended TED Talk and Greator speaker btw, suggests that a company's performance and health depend on its culture. Often, when companies underperform, the focus is on measurable issues like high sales costs or low margins. However, the root cause is often more diffuse and complex than just adjusting obvious variables.
I'm referring to corporate culture. Most people have a general understanding of societal culture, and corporate culture works similarly. A strong corporate culture can significantly influence a company's success by fostering employee engagement, improving collaboration, and supporting corporate goals. But what exactly is corporate culture?
In this blog post, we'll explore various aspects of corporate culture, including its definition, who is responsible for shaping it, different types of culture, and the elements that contribute to a "good" corporate culture.
What is Corporate Culture?
The term "culture" originally refers to the entire way of life of a group of people, including their beliefs, customs, art, laws, morals, and norms. Corporate culture can be seen as a specific form of social culture that exists within an organizational structure.
The concept of "culture" can easily be transferred from society to companies, as businesses act as "microcosms" of society where similar cultural mechanisms are at play.
In both cases—society and companies—culture is formed through interactions between individuals and their environmental conditions. These interactions lead to shared expectations, behaviors, and meanings that become standardized over time. In a corporate context, this is reflected in how employees communicate, how they perform their work, and which values they consider important.
Corporate culture is a frequently discussed but hard-to-define term that describes the set of shared values, beliefs, norms, and practices within a company. It influences how decisions are made, how employees interact, and how they approach their work. Corporate culture is often described as "the way we do things around here."
This includes established regulations, such as those found in large companies' internal agreements, as well as common practices and leadership examples that shape the corporate culture. This can be clearly seen in visible elements such as the company's mission, vision, communication style, or even the dress code.
However, corporate culture goes far beyond these easily noticeable elements and is constantly evolving. This is why it's challenging to define and even more critical to continuously monitor and analyze the culture. It can quickly shift from being beneficial to harmful for the company. Leadership and management play a significant role in this.
Who "Creates" Corporate Culture?
A crucial question in discussions about corporate culture is whether it is solely determined from the top by leaders and company policies or whether employees themselves also have an influence. In reality, it is a reciprocal process: corporate culture influences employee behavior, and at the same time, employees shape the culture through their behavior and interactions.
Influence of Leadership:
Leaders literally set the tone for corporate culture. This starts with top management, which determines the desired interaction within the company through the decisions they make and the values they communicate and exemplify. They are responsible for developing a vision and mission that reflect the culture and consistently promoting it.
Read my article on the impact of leadership on employee behavior for more insights.
This is typically communicated down through the hierarchy to the workforce.Influence of the Workforce:
Employees contribute to corporate culture by implementing the prescribed values and norms in their daily behavior. Their actions, how they interact with each other and with customers, and their attitude toward work significantly influence the culture.
Particularly influential are the so-called "cultural carriers" within the company—these can be leaders or informal leaders among employees. These individuals embody the core values and norms of the corporate culture and, in turn, influence the behavior of their colleagues.
Types of Corporate Culture
There are various models for classifying corporate cultures. One widely used model is by Kim Cameron and Robert Quinn, which identifies four main types of corporate culture:
Clan Culture:
Focused on collaboration and teamwork, the company feels like a big family where leaders act as mentors. There is a high level of involvement and consensus.Adhocracy Culture:
This culture promotes innovation and risk-taking. Creativity and entrepreneurship are highly valued, and the company is flexible and adaptable. Leaders are visionary and innovative.Market Culture:
This culture is results-oriented and competitive, focusing on performance, productivity, and achieving goals. Leaders are demanding and results-oriented.Hierarchy Culture:
Emphasizes efficiency, stability, and clear structure, with established procedures and guidelines. Leaders are primarily administrators, ensuring order and continuity.
Of course, this classification isn't exhaustive, and these types aren't strictly separate. I've personally witnessed multiple characteristics of the above culture types blending together, resulting in hybrid forms.
What Makes a "Good" Corporate Culture?
This is a good question because, as is often the case, it depends. What does "good" mean in this context?
Just as there are different leadership styles that have their advantages depending on the situation, corporate culture can also be "better" depending on external conditions (economy, politics, etc.). Especially since corporate culture, as described above, depends on so many factors and can constantly change.
A few key factors for a "good" corporate culture should always be present:
Clear Values and Vision: A strong culture is based on clearly defined values and a vision understood and shared by all employees.
Exemplary Leadership: Leaders must model the desired values and behaviors. Their behavior directly impacts the corporate culture.
Communication: Open and transparent communication fosters trust and engagement. Employees should feel heard and informed.
Employee Involvement: A culture that encourages employee participation can increase engagement and satisfaction.
Recognition and Reward: Acknowledging good performance and behaviors that align with the company's values reinforces the desired culture.
Is it Bad if Culture Changes?
Corporate culture is not static; it evolves over time, influenced by internal and external factors. A change in corporate culture is not necessarily bad and can often be necessary and beneficial. Companies must adapt to changing market conditions, new technologies, and shifting employee expectations.
However, a complete transformation of corporate culture, especially in large companies, rarely occurs. The culture is deeply embedded in the company's structures and processes. When changes are necessary, they can take years.
Studies show that significant cultural changes typically occur every 5 to 10 years, often in conjunction with new leadership structures or strategic realignments.
Corporate Culture in the Context of Globalization
Given globalization and the international operations of companies, corporate culture becomes even more important. Multinational companies face the challenge of creating a unified culture that integrates and respects various national cultures.
The closer the cultures of the countries involved are, the easier it is to unify corporate culture. However, even minor differences can have a significant impact.
Therefore, sensitivity and adaptability are necessary to ensure that corporate values remain relevant and applicable across different cultural backgrounds.
Corporate Culture as a Critical Factor for Business Success
Through clear values, exemplary leadership, and open communication, companies can create a culture that promotes engagement, collaboration, and innovation. Developing and maintaining such a culture requires continuous effort and adaptability to meet the ever-changing challenges and opportunities.
A strong and positive corporate culture can increase employee engagement, productivity, and reduce turnover. Employees who identify with their company's values and goals are generally more motivated and loyal. A corporate culture that promotes transparency, collaboration, and innovation can lead to employees being more willing to share ideas, take risks, and actively participate in problem-solving.
In contrast, a toxic corporate culture marked by distrust, fear, or excessive competition can harm employee well-being, lead to burnout, and damage the company's long-term performance.
By recognizing the importance of corporate culture and actively working to foster a positive and inclusive culture, companies can not only improve employee satisfaction and performance but also strengthen their competitiveness in a global market.
What Do You Think?
What experiences have you had in your company? Do you have interesting insights on corporate culture? Do you have good or bad examples on the subject?
Feel free to leave a comment and share your experiences and stories.
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