Corporate Culture: Methods For An Ideal Company Culture

Unternehmenskultur – Mitarbeiter beim Meeting

Corporate culture, organizational culture, workplace culture. They go by different names, but they all mean the same thing. And, more important, they all mean a great deal to your business. In this article, we offer a complete guide to understanding, strategizing, and implementing a corporate culture that works for your organization.

Want to skip ahead? You can download our guide to corporate culture, too.

What Is Corporate Culture?

Corporate culture is made up of the beliefs, behaviors, and actions that represent how a company exists, and how those behaviors make employees feel about their work. It is how leaders, managers, and employees interact with one another, and customers, based on an implied or defined set of values, traits, or ways of being.

In a more tangible sense, corporate culture is how your employees feel when they start their day. Do they walk up to their screen with a smile on their face? Do they have a sense of dread or anticipatory doom of what is to come next? Whatever feelings they encounter is likely the best barometer of your corporate culture.

What Is Organizational Culture?

Organizational culture is best understood as the shared values, norms, and routines within any given organization. Together, these are the things that define one’s working life at a company, both what happens inside and outside of working hours (and, potentially, what constitutes “working hours,” too).

Whether defined or not, every business has a culture. In this way, it’s especially important, because culture will form on its own even when it is not defined by management or by the guiding vision of a company. This can be positive, but it can also be very negative.

A strong organizational culture, and a strategy that invests in it, essentially means ensuring that every employee (from interns to executives) identifies with the company and understands what the company stands for and against.

How Does Organizational Culture Differ From Corporate Culture?

They are essentially two sides of the same coin! While often used interchangeably, organizational culture is often used as a catch-all term that can also be applied to not-for-profit businesses.

Corporate Culture: Frequently Asked Questions

What Are The Components Of Corporate Culture?

The components of company culture can often be understood as an organization’s system of shared:

  • Vision
  • Values
  • Norms
  • Symbols
  • Attitudes

Each of these influences how employees act, and interact, with one another, and how they feel about the company. It also extends to every level of the organization, but it can be determined by just about anyone, anywhere, and at any time. If it sounds difficult to define, that’s because it is!

Who Is Responsible For Corporate Culture?

It starts from the top. Company culture includes every member of senior management, but it extends all the way through to each and every employee. This includes managers, leaders, and even part-time employees, too. It can also include clients or customers, too, when it comes to their shared relationship with employees.

How Do You Start Defining Your Corporate Culture?

We may want to start with a model, something like the cultural web model, to define culture. If we want to understand corporate culture as a topic, though, it helps to start with a few key questions:

  • What does our organization stand for?
  • What is important to our organization?
  • How are those two related?

What Can A Successful Corporate Culture Achieve?

If you have a positive corporate culture, it can help ensure that:

  • Employees feel supported in times of crisis.
  • Companies achieve their set goals.
  • Employees feel good as part of the company, actively contributing to it and staying in the company.
  • Organizational development is achieved.

What are the Benefits of a Strong Organizational Culture?

So, why does it benefit a business to have a sound organizational culture? There are a variety of reasons why it helps, which we’ll dive into right now…

1. Lower Rates of Turnover

According to a study by Columbia University, there is a direct correlation between staff turnover rates and what is rated as strong organizational cultures (48.4% versus 13.9%).

The fact is that retention rates can tell you a lot about the state of your organizational culture. The main takeaway, though, is that a toxic type of culture can force people out the door in greater numbers and at greater speeds.

When you have a strong culture, though, employees feel validated, engaged, and motivated to be their best. Therefore, they become more attached to your company and want to stay longer. Not only are people more satisfied with their work, but they are also satisfied with their workplace.

2. Seamless Hiring

Building on lower rates of turnover, hiring talent becomes even easier for companies that have a strong organizational culture. That’s not only because your employer brand becomes stronger, but employees are more likely to help you build a strong employee referral program.

It also makes the recruitment process seamless, too, as having a defined culture can make it easier to vet and hire talent for just about any role. You not only have more talent, but you’re better able to keep them around for longer, too.

3. Better Atmosphere

According to CultureIQ, employees who work in companies with a strong organizational culture feel like their atmosphere and overall mission are more clear (and, therefore, stronger).

This is an imperative element of organizational culture when it comes to impacting business performance. After all, employees need to enjoy where they work and feel a tangible connection to their day-to-day tasks. If they lost this, they lost motivation, which ultimately costs the company.

A better work atmosphere ensures that employees are happy to come to work each day, and are motivated to do their best. This leads us to our next point…

4. An Increase In Revenue

When it comes to the bottom line, a strong organizational culture is simply better for business. According to Gallup, selecting high-talent managers (a byproduct of a strong culture) can lead to 27% increased revenue per employee.

On top of that, individual contributors can add 6% to their own work. That results in a 33% increase in revenue by focusing on a culture that attracts talent and has the engagement metrics to match.

This reveals itself in multiple ways, whether you want a culture driven by feedback, performance, or a combination of multiple approaches. In general, when you make a positive organizational culture a priority, it increases revenue.

5. More Growth

Building on revenue, and according to Forbes, 50% of executives in various companies have stated that positive organizational culture has a direct influence on growth rates.

Culture is something that builds on itself. Once you spend the time to craft a vision, goals, core values, and ways to live there, it lays the foundation for growth. Whether attracting more talent, retaining, or getting the most out of them.

Therefore, companies that devise a cultural strategy are better able to grow because they have a clear idea of who they are and what they want to achieve across the organization.

6. Saving Time

Last, but not least, there are the time savings that come from a strong organizational culture. As per the Engagement Institute, employees who identify with their company are more motivated to work harder and cost their companies less.

That’s because the more you ratchet up the connection an employee feels with the company, by way of the culture, the more likely they are to do the right thing for the company every time. In fact, they will view their own interests as the company’s interests (this is a key element of what is known as the psychological contract).

When these two go hand in hand, it has a cascading effect on everything we just mentioned. Employees feel more connected, work harder, save time, drive revenue, and the business benefits no matter what it is trying to do.

Free Download: Our Employee Survey Template

If you don’t know, an employee survey can serve as an eye-opening experience for your entire organization. Download our helpful template today so you don’t miss any of the crucial steps.

Four Factors That Shape & Define Corporate Culture

If developing corporate culture is a holistic affair, we should also consider outside factors. Obviously, market conditions impact a company’s daily operations, but we should also consider some additional, existential factors at play.

Here are some additional factors that could influence corporate culture and corporate success:

  • Globalization – Market players act globally, sometimes as part of complex networks and at high speeds. Both market speed and complexity are likely to intensify rather than let up.
  • Performance-Driven Societies – More is expected within a shorter period of time. This results in performance pressure, which can cause have an adverse effect on employee mental health in the workplace.
  • Demographics – People now work until later in life. This creates new challenges for workplaces and healthcare systems. At the same time, younger generations (Gen Y, Z) expect a positive work-life balance and flexible working.
  • Equal Opportunity – Most companies need to change their structures to account for equality and diversity in the workplace. This is true both in the medium and long term.

Each of these factors can bring about a world of change. It can cause companies to rethink the way they operate, and even the way they do business. It may also necessitate (or result in) a change in culture.

What Are Some Corporate Culture Examples?

An organization can be perceived as being service-oriented and innovative, just as easily as it can be seen as backward or unapproachable. Corporate culture is real, tangible, and has a concrete effect on employees.

An interesting way to think about corporate culture is to understand it as a company’s unique ‘character.’

In that sense, corporate culture is the way in which a company acts. How it thinks, how it feels, and even how it expresses opinions. Thinking about it further, it can be expressed in various ways, including:

  • Handling conflict and mistakes
  • Optimizing employee identification within the company
  • Communicative behaviors
  • Appreciation of commitment and performance
  • Engagement with stakeholders
  • Willingness to take risks
  • Feedback processes
  • Commitment to family-friendliness

It especially comes across in the ways in which employees interact with customers. A key example would be if a customer makes a purchase, but doesn’t hear back from the company afterward. This lack of communication is systematic and is a standard that is (for better or worse) set by the corporate culture.

Let’s consider another example: ‘Employee Y’ is working on a difficult task and discusses it with colleagues over lunch. These colleagues immediately volunteer to help, even though it will require them to work overtime. This, too, is an example of organizational culture in practice.

Given the above, it doesn’t really make a lot of sense to ask applications about specific values (e.g. “are you proactive?”) during an interview. It is far more productive to ask them about behaviors, where they can demonstrate that they act in line with particular values rather than agreeing to them.

This is the difference between a culture ‘in principle’ and a culture ‘in practice.’ It is easy enough for a company to list what they believe and to hope for the best, but far more productive and results-driven to live those values and seek out examples of employees (or candidates) doing the same.

Is Your Corporate Culture Working For You?

Corporate Culture Guide by PersonioA healthy corporate culture ensures greater productivity, efficient hiring, and more revenue. This guide can help provide you with the necessary tools to develop, promote, and ultimately build corporate culture from scratch.

What Are Popular Corporate Culture Models?

Digging deeper into the topic of corporate culture reveals some very interesting models (the cultural web model being one with special significance). When properly implemented, these can help optimize your culture and grow your business.

The following three are not the only models, simply some of the best known…

The McKinsey 7S Framework

Tom Peters and Robert Waterman developed the 7S framework, which is sometimes also referred to as the McKinsey 7S Framework, in the 1970s, when they were working with McKinsey as consultants.

They focused on the company as a whole system whose ultimate success depended on seven hard and soft elements.

While hard elements can be clearly mapped, for example to charts, plans, etc., soft elements are more difficult to grasp. This is because they describe values, skills, and working styles, which are in constant flux.

McKinsey 7S Framework - corporate culture

Source: Tom Peters and Robert Waterman

All elements – hard and soft – are interdependent. While soft elements are less concrete, they have a stronger effect on corporate culture. After all, they form the basis for employees’ day-to-day work, which in turn has an impact on the organization’s performance.

According to Peters and Waterman, a company will be successful if it manages to balance all of these elements. If, however, a company only focuses on hard elements and, for example, creates a new department without considering the decision in the context of the other elements – how will departments cooperate? what support measures will be necessary? – it will most likely destabilize rather than improve the organization.

The Cultural Iceberg Model

Edward T. Hall visualized corporate culture in the shape of an iceberg. He understood corporate culture as a pattern of fundamental assumptions used to solve internal and external problems.

The pattern included both visible and invisible aspects, which resulted in outsiders not always being able to understand it to its fullest extent.

The tip of the iceberg, i.e. its visible portion, stands for the observable aspects of an organization’s culture. Beneath it, there are hidden structures of workplace culture. These make up the larger and therefore more important part.

These underlying structures determine which elements ultimately reach the surface.

The Cultural Iceberg Model - corporate culture

Source: Edward T. Hall

An organization can only shape its culture by addressing its invisible aspects.

If it wants a behavioral or cultural change, it needs to recognize the hidden aspects at work:

  • What are the employees’ needs?
  • How does the company manage?
  • How do people cooperate?

It is at this deeper level where change can be initiated that ultimately rises to the top.

Hofstede’s Model

Hofstede conceived of culture as a kind of ‘software of the mind.’ This entailed shared mental programming that provides differentiation. Different people with different identities, experiences, and values come together and ‘develop culture’.

Hofstede chose the image of an onion to distinguish between four layers of cultural manifestation:

Hofstede

Source: Hofstede

Cultures share an environment and therefore undergo a similar socialization process. This not only provides guidance and stabilizes the system, but also differentiates one group from the next.

What Role Does Management Play In Corporate Culture?

Management = culture. That’s it. Short and sweet.

If employees are managed well, they have a positive perception of their company’s culture and are therefore more likely to commit to it.

Management and corporate culture are expressed in the form of general environmental conditions such as:

  • Working hours
  • Introductions
  • Dress codes
  • Salaries
  • Health care
  • Child care

Workplace culture also impacts the company’s image. Customers recommend the company; employees recommend their employer. While culture is a soft element, it ultimately determines whether somebody will buy a product or service, or if somebody is happy to work for a company and performs well. Nothing more, nothing less.

How Do You Change Your Organizational Culture?

When it comes down to it, you need to put together an action plan that can help build a strong organizational culture for your organization. How do you do it?

Setting Your Goals

The first thing is to do a ‘hard reset’ of your culture. Think about where it is now (even employing the cultural web model to help), and where you want to take it. Envision the ideal culture, what it stands for, and how it will help increase performance.

Think about answering questions like these:

  • Where are we currently and where do we want to go in 2, 4, or 5 years?
  • What routines are we currently unconsciously encouraging or discouraging?
  • How do we currently evidence collaboration with other team members?

Defining Clear & Unique Values

Values are an intrinsic part of a positive corporate culture. When you have them and address them regularly, employees have a clear connection between their work and what the company values or how the company addresses problems.

One piece of advice, though: try to avoid values that are overly generic, and go for something that is unique to your company and your mission. Make it specific, because it will help develop real, actionable ways to ‘live your values.’

Living Those Values

It’s not enough to simply talk about your values, you need to live them and communicate them! You can read our full guide to communicating corporate values by following this link, but the main thing you need to know is that values need to be shown (and not just talked about).

Measuring Values

In the same vein as living your values, you also need to find a way to measure them. While it can be done with data, it helps to think about ways that you can get feedback or get employees to identify values in their own work. Rather than having to spell it out for them, this can lead to proactive identification while developing stronger connections.

What Can Companies Do Right Now To Improve Workplace Culture?

Let’s start with a quick brainstorm! Here are some ideas to kick things off:

  • Developing your own purpose or identity that employees can understand and express.
  • Helping employees learn their company’s strategic goals.
  • Allowing employees to flourish by using their full potential to support strategic goals.
  • Offering professional development plans to help employees meet new challenges.
  • Valuing the ability to innovate and to have a positive approach to mistakes.
  • Ensuring that communication within the company is transparent.
  • Relying on cooperation within management, rather than competition.
  • Engaging all stakeholders, from investors through to customers, the media, and the public.
  • By ensuring that the overall conduct is in line with your company’s vision.

What Role Does HR Play In Corporate Culture?

Firstly, HR, just like managers, can be role models for a positive corporate culture.

This means that they have internalized the organization’s values to such an extent that they translate them into behaviors. Additionally, HR can help employees understand the organization’s culture.

HR can support corporate culture by:

  • Formulating and communicating a mission statement (in cooperation with management)
  • Taking initiatives to develop teams
  • Offering professional development opportunities
  • Organizing events
  • Promoting the exchange of knowledge
  • Sharing information and keeping messages consistent

Moreover, HR can support the organization’s culture as early as the recruitment process by ensuring that there is a good cultural fit between applicants and the company. To do so, HR should have a standardized process and ask candidates about their values and norms in a behaviouristic manner.

Another task is to convey the company’s culture in external relationships to strengthen its employer branding.

Improving Your Organizational Culture Today

Today, we discussed organizational culture, why it matters, and some of the actionable steps you can take to put it in place or refine it for your goals. Not only is it essential for your employees, but for business, too.

Ready to launch into your company’s culture? Don’t forget to download our Corporate Culture guide, first, as it can help you roadmap the next steps to make a real difference, both for your culture and your bottom line.

Need Time To
Develop Culture?

Discover Personio Today