Corporate Culture03/08/2022 3 By indiafreenotes
Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires. A company’s culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction, and every other aspect of operations.
Characteristics of Successful Corporate Cultures
Corporate cultures, whether shaped intentionally or grown organically, reach to the core of a company’s ideology and practice, and affect every aspect of a business, from each employee to customer to public image. The current awareness of corporate culture is more acute than ever.
The Harvard Business Review identified six important characteristics of successful corporate cultures in 2015. First and foremost is “vision”: from a simple mission statement to a corporate manifesto, a company’s vision is a powerful tool. For example, Google’s modern and infamous slogan: “Don’t Be Evil” is a compelling corporate vision. Secondly, “values,” while a broad concept, embody the mentalities and perspectives necessary to achieve a company’s vision.
Similarly, “practices” are the tangible methods, guided by ethics, through which a company implements its values. For example, Netflix emphasizes the importance of knowledge-based, high-achieving employees and, as such, Netflix pays its employees at the top of their market salary range, rather than through an earn-your-way-to-the-top philosophy. “People” come next, with companies employing and recruiting in a way that reflects and enhances their overall culture.
Lastly, “narrative” and “place” are perhaps the most modern characteristics of corporate culture. Having a powerful narrative or origin story, such as that of Steve Jobs and Apple, is important for growth and public image. The “place” of business, such as the city of choice and also office design and architecture, is one of the most cutting-edge advents in contemporary corporate culture.
Examples of Corporate Cultures
Just as national cultures can influence and shape a corporate culture, so can a company’s management strategy. In top companies of the 21st century, such as Google, Apple Inc. (AAPL) and Netflix Inc. (NFLX), less traditional management strategies such as fostering creativity, collective problem solving, and greater employee freedom have been the norm and thought to contribute to their business success.
Progressive policies such as comprehensive employee benefits and alternatives to hierarchical leadership even doing away with closed offices and cubicles are a trend that reflects a more tech-conscious, modern generation. This trend marks a change from aggressive, individualistic, and high-risk corporate cultures such as that of former energy company Enron.
High-profile examples of alternative management strategies that significantly affect corporate culture include holacracy, which has been put to use at shoe company Zappos (AMZN), and agile management techniques applied at music streaming company Spotify.
Holacracy is an open management philosophy that, among other traits, eliminates job titles and other such traditional hierarchies. Employees have flexible roles and self-organization, and collaboration is highly valued. Zappos instituted this new program in 2014 and has met the challenge of the transition with varying success and criticism.
Similarly, Spotify, a music-streaming service, uses the principles of agile management as part of its unique corporate culture. Agile management, in essence, focuses on deliverables with a flexible, trial-and-error strategy that often groups employees in a start-up environment approach to creatively tackle the company’s issues at hand.
History of Corporate Culture
Awareness of corporate or organizational culture in businesses and other organizations such as universities emerged in the 1960s. The term corporate culture developed in the early 1980s and became widely known by the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to describe the character of a company. This included generalized beliefs and behaviors, company-wide value systems, management strategies, employee communication, and relations, work environment, and attitude. Corporate culture would go on to include company origin myths via charismatic chief executive officers (CEOs), as well as visual symbols such as logos and trademarks.
By 2015, corporate culture was not only created by the founders, management, and employees of a company, but was also influenced by national cultures and traditions, economic trends, international trade, company size, and products.
There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake of globalization and the increased international interaction of today’s business environment. As such, the term cross-culture refers to “the interaction of people from different backgrounds in the business world”; culture shock refers to the confusion or anxiety people experience when conducting business in a society other than their own; and reverse culture shock is often experienced by people who spend lengthy times abroad for business and have difficulty readjusting upon their return.
To create positive cross-culture experiences and facilitate a more cohesive and productive corporate culture, companies often devote in-depth resources, including specialized training, that improves cross-culture business interactions.
- Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact.
- Corporate culture is also influenced by national cultures and traditions, economic trends, international trade, company size, and products.
- Corporate cultures, whether shaped intentionally or grown organically, reach to the core of a company’s ideology and practice, and affect every aspect of a business.
Negative impact of corporate culture in business
Negative culture include gossiping, low employee engagement, higher rates of absenteeism and presenteeism, a lack of empathy, a lack of flexibility and high employee turnover.
Toxic cultures infect others. When a toxic culture causes a business to close, this has ramifications for other businesses in the supply chain.
The economic cost
Poor economic performance has huge implications for everyone. In an increasingly competitive global market, businesses not fulfilling their potential are in danger of going to the wall. This has an effect on jobs and consumer spending. A downward spiral of poor economic performance can end in recession. It’s a problem that goes further than the businesses it closes.
Poor company culture promotes unethical behaviour both inside and out of the workplace. Unethical behaviour destroys trust. Disengaged employees also develop a lack of trust. When this behaviour spills into life outside of work it has implications for the kind of community we live in.
Wellbeing and health costs
Employee health is probably one of the most concerning aspects of a negative company culture. A negative vibe in the workplace can lead to poor mental health outcomes. In fact, harassment and conflict at work can have a detrimental effect on our physical and emotional wellbeing, as well as our mental health. This has implications for business productivity, employee relations, family dynamics and society as a whole.
Promoting the values you want in your organization doesn’t guarantee they’ll be adopted. In any organization, there are multiple influences on people’s behavior. In some organizations, those influences push culture to the dark side.
- A toxic employee who backstabs or bullies colleagues can erode organizational culture. If management doesn’t rein the employee in, other employees may assume the company will tolerate them behaving the same way.
- Poor communication. If managers don’t talk openly to their staff, or if employees can’t share their thoughts with management, that leads to a breakdown in trust.
- Prioritizing profit above everything else encourages employees to cut ethical corners to suit the bottom line.
- If employees feel they’re under constant scrutiny, they stress out.
- Setting employees competing against each other works against building a cooperative culture.
- Resistance to change makes it harder to fight the negative impact of organizational culture.
- If managers or other workers don’t perform to the company’s standards, employees will realize how much they can get away with.
- Lack of engagement. If the company shows no interest in employees, that makes it harder for them to care.
Organizational culture affects all aspects of your business, from punctuality and tone to contract terms and employee benefits. When workplace culture aligns with your employees, they’re more likely to feel more comfortable, supported, and valued. Companies that prioritize culture can also weather difficult times and changes in the business environment and come out stronger.
Culture is not just about ping pong tables and hip work spaces. It is so much more. A positive culture is one that fosters trust, respect, and dignity. It empowers employees to grow within the organization and take ownership of ideas and projects. It promotes learning and professional development, while discouraging toxic behaviors and poor work ethic. Culture can be the defining difference between you and your competitors. Focus on shaping your corporate culture and watch your employees and business thrive.
Qualities of a great organizational culture
Every organization’s culture is different, and it’s important to retain what makes your company unique. However, the cultures of high-performing organizations consistently reflect certain qualities that you should seek to cultivate:
- Appreciation can take many forms: a public kudos, a note of thanks, or a promotion. A culture of appreciation is one in which all team members frequently provide recognition and thanks for the contributions of others.
- Alignment comes when the company’s objectives and its employees’ motivations are all pulling in the same direction. Exceptional organizations work to build continuous alignment to their vision, purpose, and goals.
- Trust is vital to an organization. With a culture of trust, team members can express themselves and rely on others to have their back when they try something new.
- Resilience is a key quality in highly dynamic environments where change is continuous. A resilient culture will teach leaders to watch for and respond to change with ease.
- Performance is key, as great companies create a culture that means business. In these companies, talented employees motivate each other to excel, and, as shown above, greater profitability and productivity are the results.
- Teamwork encompasses collaboration, communication, and respect between team members. When everyone on the team supports each other, employees will get more done and feel happier while doing it.