Corporate culture: the building blocks of a business
It’s not always easy to put a finger on what makes a workplace feel the way it does. Is it rooted in the work that takes place there? The other employees? The work environment itself?
In fact, it’s all of this – and more. The unique culture of a business is the golden thread that runs through every aspect of its operations.
Increasingly, people are seeking to address their work-life balance – acutely evidenced by what has been dubbed “The Great Resignation” witnessed throughout the pandemic. An organisation’s culture is often at the heart of decisions to leave or join an employer. With many now viewing work as more than a paycheck – in a world where going solo is seen as less of a risk – businesses can’t afford to ignore substandard cultures. To retain talented individuals, they need to create environments in which people can thrive.
What is corporate culture?
Corporate culture describes and governs the ways in which a business operates. It refers to its personality and character: shared values, beliefs and assumptions about how people should act; how decisions should be made; and how work activities should be carried out. Culture denotes the particular ideas and customs that make each organisation unique. For example, its leadership, job roles, company values, workspace, pay, initiatives and perks, rewards and recognition. Cumulatively, it should be the foundation upon which people can work to the best of their ability.
The core elements that make up a company’s culture include:
- Vision and values
- Learning and development
- Pay and benefits
From small start-ups to established, global brands, all businesses have a workplace culture – and they vary dramatically. The various types include conventional, clan, progressive, market, adhocracy, authority organisation, and more.
Take the retail brand Zappos, a company where creating an inclusive culture is the top priority. Their core value lies in celebrating every employee’s diversity and individuality – and they’re famous for it. However, this approach is starkly different to that taken by countless other businesses.
Why is corporate culture important?
Experts in the company culture space, Liberty Mind, make a compelling case for why improving corporate culture should be prioritised:
- 88% of employees believe a distinct workplace culture is important to company success
- Companies with strong cultures saw 4x increase in revenue growth
- 58% of people say that they trust strangers more than their own boss
- 78% of executives included culture among the top 5 things that add value to their company
- Job turnover in organisations with positive cultures is 13.9%, whereas in organisations with poor cultures it’s 48.4%
- Only 54% of employees recommend their company as a good place to work
- More than 87% of the global workforce is not engaged, yet engaged workplaces are 21% more profitable
However, it seems many organisations are struggling to get it right; 87% of organisations cite culture and employee engagement as one of their top challenges.
Strengths and weaknesses of culture
Clearly, culture matters to employees – and therefore has a direct impact on a business. Workplaces with poor or non-existent cultures are more likely to encounter low morale, brand reputation issues and decreased productivity. As people leave their roles, poor employee retention necessitates costs associated with recruitment, training and – at least in the short-term – an increased workload for already-beleaguered employees. Worse still, workplaces with toxic cultures breed resentment, fear, frustration and poor mental health among their employees. If staff do not simply leave, as many will, they are likely to take more sick days and be less productive.
In contrast, companies with nurturing, strong cultures can expect to reap the rewards. They are likely to feature good teamwork: teams working towards shared goals are more driven and productive, with the ability to resolve issues more quickly. Brand reputation will soar as employees – who have belief in company leaders and their shared values – spread the word, acting as brand ambassadors. These businesses are in a better position to weather change, attract and retain high quality applicants, and to take risks and make decisions. Together, these positive, culture-building aspects are likely to improve a company’s bottom line.
Improving company culture: more than a mission statement
By first assessing the current cultural status, a company is in a stronger position to identify – and design a roadmap to achieve – its desired culture. With input from stakeholders, leaders should examine the current culture, including core values, strengths, and organisational impact. Harvard Business Review designed a tool to understand an organisation’s cultural profile, supporting this investigative work. It guides leaders to examine cultural styles and types of cultures, the prominence of company culture, and demographic aspects of how culture operates.
Next, leaders must understand how strategy and business environment impact the culture. Are there any current or future external conditions or strategic decisions that will influence cultural styles? If so, how can the styles respond? Any robust culture target will need to support, or respond to, future changes.
It’s critical to ground the target in business realities. Leaders should frame any culture targets in response to real-world problems and value-adding solutions – far more practical and effective than selling them as shiny, culture change initiatives.
Leaders must be prepared to drive cultural change through every area of the business. Indeed suggest further actions to support a company-wide cultural improvement:
- Hire the right people
- Appoint a cultural ambassador
- Set specific, achievable goals with clear metrics
- Encourage open communication
- Reward success and offer incentives
- Organise meaningful team-building and social events
Boosting employee engagement through company culture is not about making people happy. Instead, leaders should focus on making them feel connected to the business and motivated to help achieve its goals, even during times of adversity.
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