Organizational Culture

What is Organizational Culture?

Organizational culture is a set of values, shared beliefs, practices, and attitudes that guide the actions of every employee of the company. It represents the personality of a company and includes the collection of traits that define its fundamental values. Every organization possesses a distinct culture that evolves over time, consisting of both explicit and implicit rules. The culture of an organization provides it with a sense of purpose and orientation.

It deals with various aspects of the company such as

  • Values and belief system of the organization
  • Norms and behaviors of employees
  • Communication patterns
  • Leadership style
  • Policies related to culture
  • Well-being and health of employees
  • Branding and external image

Definition of Organizational Culture

A publication, A Literature Review on Organizational Culture towards Corporate Performance, states organizational culture as a crucial aspect of a company that has been studied to understand its connection to performance and long-term success. It is said that it greatly influences processes, employees, and the overall performance of the company. It serves as a unifying force when multiple company cultures exist within a corporate group structure.

Daniel Denison, a former professor at the University of Michigan (White Paper Series: Driving Organizational & Cultural Change), developed a model linking organizational culture to performance. He defines culture as deeply held beliefs and assumptions that shape daily behavior. Denison’s research emphasizes the impact of culture on measures like ROI, customer satisfaction, and innovation.

Culture is not just about what you say, it’s about what you do. It’s about the way you treat your employees, the way you make decisions, and the way you interact with your customers. A strong culture can be a powerful asset for a company, but it’s also something that takes time and effort to build.

– Jeff Bezos (Founder of Amazon, Blue Origin)

Culture is the secret sauce that makes a company great. It’s what attracts and retains top talent, drives innovation, and helps a company weather difficult times. If you want to build a great company, you need to start with a strong culture.

– Marc Benioff (CEO of Salesforce)

Learn more: Types of Organizational Culture

Characteristics of Organizational Culture

Organizational culture, viewed from a communicative perspective, has five key characteristics. First, it is closely tied to the people within the organization. Second, it is ever-changing and not fixed. Third, it consists of competing assumptions and values. Fourth, it carries emotional significance. Finally, it serves as both the main focus and the backdrop for communication within the organization.

These 5 points have been discussed in detail below.

1. Tied to the people in the organization

The greatest asset of a company is its people.

– Jorge Paulo Lemann

The culture of an organization is linked to its people as it is created and sustained by them. People learn and internalize culture by practicing in day-to-day activities. A strong culture can provide employees with a sense of identity and belonging and can help to guide decision-making and behavior. It can also help to attract and retain talented employees.

2. Ever-changing and never fixed.

Culture is constantly evolving and changing in response to a variety of factors, including the organization’s environment, its members, and its goals. The dynamic nature of organizational culture can make it difficult to manage. However, it is important for organizations to be aware of the factors that can influence culture and to take steps to manage it effectively.

3. Contains competing assumptions and values.

Organizational culture can be viewed as a set of four competing values:

  • Internal focus versus external focus
  • Stability versus flexibility
  • Concern for people versus concern for production
  • Achievement versus affiliation

These values can have a significant impact on the organization’s behavior and its employees. Understanding them better will help managers and seniors make better decisions at an organizational level.

4. It carries emotional significance.

The culture of an organization is shaped by the emotions of the people who work in the organization. These emotions can be positive or negative, and they can be expressed in a variety of ways. The emotions of employees can have a significant impact on the organization’s culture, and they can also affect the way that employees think, feel, and behave.

5. It depicts both the main focus and backdrop of an organization’s communication.

An organization’s culture is formed through the interactions of its members. Culture is not a fixed thing, but rather a result of continuous communication. Language use and other forms of communication shape this culture.

Employees in an organization interpret present actions based on past ones, creating a social and symbolic reality. Symbols, messages, and meanings play essential roles in this communicative process which allows employees to create and interpret organizational culture on their own terms.

Organizational Culture Examples

IBM

IBM’s organizational culture has helped the company to become one of the most successful information technology companies in the world. The company leverages the advantages of its culture by using cultural influence to inspire and motivate its employees (IBMers), in order to drive business growth.

The most significant elements of IBM’s culture include the following:

  • Radical thinking
  • Dedication to every client’s success
  • Innovation that matters
  • Trust and personal responsibility in all relationships

Apple

Apple’s organizational culture is characterized by its focus on innovation, simplicity, design, and customer focus.

According to a case study, Apple’s company values include

  • Accessibility
  • Education
  • Environment
  • Inclusion And Diversity
  • Privacy
  • Supplier Responsibility

The company enforces a 60-hour workweek limit, with a mandatory day off every seven days. Through work-hour tracking and reporting, they achieve 97% compliance across all weeks.

Coca Cola

Coca-Cola operates in over 200 countries across the world. It has the biggest market share and its only competitor is Pepsi. As one of the biggest companies in the world, the company pays great attention to upholding a positive and healthy organizational culture.

Two main aspects of the company’s culture are

  1. Diversity, Equity, and Inclusion
  2. Integrity and Ethics.

Having a strong culture has been a huge success for the company as it has helped with the branding of the organization while also improving employee engagement. When employees feel empowered and inspired to contribute are more likely to be motivated, leading to increased productivity.

Coca-Cola was also successful in receiving America’s Best Employers for Diversity, Forbes, 2022.

Changing Organizational Culture in the Company: How to Build a Proper Organizational Culture?

An organization’s culture emerges over time. Things that have worked in the past might not work in the current world. Culture can change with changes in leadership, change in the belief system of the organization, or simply with external variables.

Building the culture of an organization is an ongoing process and is almost never complete. Hence, while building it, enough effort must be put into it to make it sustainable enough. Let us go through the process in more detail.

Developing An Organization’s Culture

Culture in an organization is shaped by its customs, traditions, rituals, and behavioral norms. Strong cultures can be intentionally created through values blueprinting and the establishment of a values committee that ensures the desired culture is maintained. Likewise, it is necessary to hire individuals who embody the values crucial for this process to succeed.

Developing such a culture has several aspects to it.

  • Recruitment and hiring process: On top of focusing on a candidate’s skills and competencies, it is also necessary to ensure that he or she is the right culture fit.
  • Onboarding program: While onboarding new hires, conducting awareness about the company’s culture thoroughly makes them understand the importance of upholding the culture.
  • Appreciation and recognition: This is one of the key factors in motivating employees to foster organizational culture and values.
  • Performance management: Performance management programs have a significant impact on corporate culture. This includes setting clear expectations for employees and offering feedback mechanisms to guide appropriate behavior.

Sustaining The Developed Culture

The management of organizational culture begins with identifying the core business activities, processes, and philosophies that define how an organization operates on a daily basis.

Three key concepts help identify these traits or artifacts are:

  1. Social culture: Focuses on group members’ roles and responsibilities and the distribution of power within the group.
  2. Material culture: Examines the things people create and how they support one another in exchanging knowledge and services
  3. Ideological culture: Encompasses the values, beliefs, and ideals that shape people’s daily lives and interactions.

Steps to manage or sustain culture:

  1. Identify artifacts and traits related to social, material, and ideological culture.
  2. Gather representatives from all levels to assess the importance and relevance of these traits.
  3. Assess underlying shared assumptions, values, and beliefs.
  4. Share findings and gather additional insights.
  5. Create a culture management action plan to enhance positive traits and address hindrances.

Key Factors to Improve Organizational Culture

Organizational culture greatly impacts overall performance. Successful companies have a self-driven culture that promotes trust, respect, collaboration, and cooperation among employees. Organizations worldwide strive to improve their culture to attract and retain talented individuals.

The improvement process depends upon the following key factors.

  1. Shared Vision: Having a clear and shared vision that unites everyone towards common goals and provides direction.
  2. Teamwork and Collaboration: Valuing and promoting teamwork through incentives, projects, and activities that foster collaboration.
  3. Reward Mechanism: Recognizing and rewarding individuals who contribute to the desired culture, encouraging commitment and innovation.
  4. Open Communication: Establishing clear communication channels, encouraging participation, and sharing information to create an inclusive culture.
  5. Model Development: Implementing cultural changes in one department and replicating successful strategies across the organization for widespread impact.

Dimensions of Organizational Culture

Organizational culture encompasses various dimensions that shape the overall environment and values within the workplace. Understanding these dimensions provides valuable insights into how an organization functions. It throws light on its approach to problem-solving, employee interactions, and the emphasis placed on achieving results.

By examining and assessing these dimensions, organizations can gain a better understanding of their own culture. They can make informed decisions to foster a positive and effective work environment.

These dimensions are as follows.

  1. Attention to detail: The extent to which employees are expected to be precise, analytical, and pay close attention to details in their work.
  2. Innovation and risk-taking: The level of encouragement given to employees to be creative, think outside the box, and take calculated risks.
  3. Stability: The emphasis placed on maintaining the existing practices and avoiding significant changes or disruptions.
  4. Aggressiveness: The extent to which employees are competitive and assertive in their approach, rather than being cooperative.
  5. Team orientation: The degree to which work is organized around collaborative teams rather than individual efforts.
  6. People orientation: How much consideration is given to the impact of management decisions on the well-being and satisfaction of employees.
  7. Outcome orientation: The focus on achieving desired results or outcomes, regardless of the specific methods used to attain them.

Impact of Organizational Culture: Strong vs Weak Culture

Key PointsStrong CultureWeak Culture
Values are widely shared.Values are widely shared.Values are limited to only some people: Mostly top management.
Range of the culture’s messageCulture conveys consistent messages about what is important.Culture conveys contradictory messages about what is important and what is not.
Awareness of employeesMost employees are aware of stories about company heroes and histories.Employees have little to no knowledge about company history and heroes.
Identification of employees with the cultureEmployees strongly identify with the culture.Employees have little to no identification with the culture.
The connection between values and behaviors of employeesThere is a strong connection between shared values and behaviors.There is little to no connection between shared values and behaviors.

What is the role of HR in Cultural Change?

Human Resources (HR) plays a significant role in facilitating cultural change within an organization. HR acts like a bridge between the organization and its people. HR executives and managers advocate for both the vision of the company and the needs of the employees.

Hence, while changing a company’s culture, HR takes the steering wheel for businesses to better drive through present and future states.

When the Covid-19 pandemic hit, HRs were the ones who maintained employee morale throughout. They brought about intensive cultural change to adapt to the new mainstream. McKinsey spoke to 350 HR leaders during times of uncertainty. “They told us that over the next two years, they wanted to prioritize initiatives that strengthen their organization’s ability to drive change in leadership, culture, and employee experience.”

While driving a cultural change in an organization, HR takes the following roles.

Champion

HR identifies and communicates the necessary changes that should be made in the workplace culture. They also promote awareness and encourage participation in initiatives and activities aimed at reshaping the culture to align with the company’s objectives.

Coach

HR implements solutions and strategies that inspire and encourage the desired behaviors that support the company’s goals. They provide guidance, support, and resources to help employees adopt and embrace the new cultural norms.

Consultant

HR analyzes and interprets data related to culture change initiatives. They provide insights and advice to the leadership team regarding the outcomes and impact of the cultural changes. This helps them make informed decisions to drive further improvements.

Frequently Asked Questions (FAQs)

Q1. What is the difference between organizational culture and organizational climate?

Organizational culture refers to the shared values, beliefs, and behaviors that shape the collective identity of an organization. It encompasses the unwritten rules and social norms that guide employee behavior. On the other hand, organizational climate refers to the prevailing atmosphere, attitudes, and perceptions that employees experience within the organization. It is influenced by leadership styles, communication patterns, and the physical work environment.

Q2. What is the difference between organizational culture and organizational structure?

Organizational culture is focused on the shared values and beliefs that shape behavior within an organization, while organizational structure refers to the formal framework that outlines roles, responsibilities, and reporting relationships.

Q3. What makes a good company culture?

Good company culture is characterized by strong values, clear communication, trust, employee empowerment, collaboration, recognition, and a positive work environment. It is an environment where employees feel supported, valued, and motivated to perform at their best.

Q4. What is the organizational culture theory?

The organizational culture theory suggests that shared values, beliefs, and assumptions influence employee behavior, performance, and overall organizational effectiveness. It highlights the role of culture in shaping organizational identity, creating a sense of belonging, and providing a framework for decision-making and problem-solving.

Q5. What is the impact of organizational culture?

Organizational culture has a significant impact on various aspects of an organization. Some of them are:

  • Employee Behavior
  • Employee Motivation
  • Job Satisfaction
  • Employee Engagement
  • Productivity, And Creativity
  • Organizational Agility

Q6. Does culture influence leadership?

Culture indeed influences leadership within an organization. Culture shapes leadership styles and behaviors by setting expectations for how leaders should interact with employees, make decisions, and communicate. Leaders who align with the prevailing culture are more likely to be effective and influential.

Q7. Who influences organizational culture?

Organizational culture is influenced by various factors. Some of those are:

  • Founders and leaders
  • Employee interaction
  • Collective experiences
  • Industry trends
  • Societal changes
  • Market conditions

Q8. How to improve organizational culture?

Organizational culture can be improved by clearly defining and communicating the desired values, behaviors, and expectations. Fostering employee involvement and empowerment, providing training and development opportunities, and implementing recognition and reward programs are all strategies to improve organizational culture. Regular assessments and feedback mechanisms can help monitor progress and identify areas for further improvement.

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