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Corporate Culture: Methods For An Ideal Company Culture

Unternehmenskultur – Mitarbeiter beim Meeting

A successful corporate culture (or company culture) can be a complete game-changer for companies, both in terms of employee and overall performance. In this post, we offer a guide to understanding, strategizing, and implementing a corporate culture that works for your organization.

But, what is corporate culture and why does it matter? What are examples of a ‘good’ corporate culture? What are its characteristics and components? If any of these questions have plagued you, or your company, before, you’ve now found yourself in the right place.

Download our free guide today to get a head start on creating and fostering a successful corporate culture.

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.

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?

If we want to understand corporate culture as a topic, it helps to ask 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.

Employees are not your company’s most important resource. They are your company.

Adam Grant – organisational psychologist, Wharton professor, and bestselling author

How Does Corporate Culture Contribute To Overall Success?

Here’s an adage you should keep in mind: Values shape behaviors, and behaviors shape outcomes.

According to a study by the German Federal Ministry of Labor, a third of a company’s profit (before tax) can be attributed to an employee-focused corporate culture.

A positive corporate culture has a distinct effect on employees. Ideally, it makes them more satisfied, which leads to better performance and higher levels of motivation.

When employees feel good about their workplaces, they are more likely to stick around. This results in lower recruitment costs and supports the company’s long-term operational planning processes.

In fact, employee culture can form the basis of other employee retention strategies you should explore.

So, a healthy corporate culture for employees has manifold benefits. You can attract better talent, your culture nurtures that talent, and raises your retention rate in the process. Developing corporate culture is, there, a holistic process. That’s because it works as a function of employee experience (and, indirectly, employee emotion).

How Are Your Employees Currently Feeling?

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 mental stress and affects employee health, motivation, and performance.
  • 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 hours.
  • 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 Can Companies Do To Improve Corporate 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 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 company vision.

What Are Examples of Company Culture?

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.

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 (click here to read more about the cultural web model and how it can help shape corporate culture).

The following corporate culture examples can serve as best practices for when culture is successfully implemented…

Granini: Employees Sharing Management Responsibilities

Granini neither regulates nor imposes corporate culture. Rather, it focuses on employees’ lived, day-to-day reality. For them, this is the only way for an organization to reap the full benefits of what we might call corporate culture.

“Employees are a lot smarter than many executives and board members believe,” said Heribert Gathof as he took over as managing director of Granini, a fruit juice producer. What did he do differently? He involved employees closely in strategic questions, including in investment decisions worth millions.

To do so, Gathof created an interdisciplinary team with members from all levels of the company’s hierarchy. They were then tasked with developing a five-year strategy. This team generated ideas that management had never thought of, and it ensured that all employees fully supported the new strategy.

The results spoke for themselves: Eckes-Granini increased its sales by 70%. The company’s self-organization model means that employees take on responsibility not by title, but through daily practice.

Schmalz: A Small Company With a Google-Sized, Feel-Good Atmosphere

Schmalz, a vacuum technology specialist, promotes itself as an employer that truly takes care of all aspects of its employees’ wellbeing.

To start, there is a crèche and daycare center for employees’ children close by; life coaches provide support in the event of private or professional issues, and the company’s internal academy offers a program of 200 professional development and leisure-oriented courses.

The company’s management team is also currently exploring options for providing better support to employees with relatives who require care.

In sum, Schmalz is emulating large corporations like Google. But, there is one big difference: Keeping work clearly separated from employees’ private lives is priority number one for this company.

“We do that so we can keep up with competitors, who are mostly located in cities,” says Daniel Just, Schmalz’s head of HR. “In contrast, we are located in the Black Forest town of Glatten, and we are very different from what other companies do, including Google, in that we want the leisure time of our 850 employees to be precisely that, without work encroaching. When they clock off, their time is entirely theirs to spend as they wish.”

That in mind, Just believes that this holistic support is only one piece in the bigger puzzle that makes up an ideal corporate culture. “Corporate culture is decisively shaped by the executive,” he states. “Only when a company’s managers are exemplary in their conduct and dealings with employees can a sustainable, thriving corporate culture develop.”

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 Models For Understanding Culture?

Digging deeper into the topic of corporate culture reveals some very interesting models. 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 corporate 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.

Good managers convey the idea that everyone is necessary to reach a greater goal. They motivate, promote identification, and generate a sense of belonging. All of these are critical factors for an organization’s success.

Culture eats strategy for breakfast.

Peter Drucker

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

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

Let’s think about greetings for a moment. At Swedish retail chain, IKEA, for example, everybody is on a first-name basis internally, and people are addressed casually in all communications. This showcases IKEA as a friendly place to work.

Good management culture is therefore expressed in many small, potentially invisible gestures and initiatives. It is something that can be experienced. Customers feel that they have received good advice; employees feel appreciated.

It 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 Create ‘Company Culture Strategies’?

The following framework of eight different cultural styles can give us some guidance.

Originally developed by the HR consultancy SpencerStuart and the Harvard Business School, the below is based on a global study of 230 companies and 1300 managers…

  • Caring: Managers consider honesty, teamwork, and good relationships to be important. Employees are connected through loyalty.
  • Purpose: At this level, employees work towards doing good in the long term. They are tolerant and have empathy. Managers emphasize shared ideals.
  • Learning: Employees enjoy trying out new things if they work in an environment with little restriction. Supervisors promote a desire to innovate and increase knowledge.
  • Enjoyment: There is joy and a positive attitude throughout the work environment. Managers create an environment that allows for spontaneity and fun at work.
  • Results: Oriented toward outcomes and profit. Employees want the business to succeed, and managers are focused on achieving targets, above all.
  • Authority: The working environment is characterized by competition, with employees predominantly pursuing their personal advantage. Managers lead with courage and confidence, but also through dominance.
  • Safety: Employees are aware of risks and only make decisions after long, detailed analyses. Supervisors lead with a sense of reality.
  • Order: Respect, structure and shared norms. People generally want to fit in at their workplace. Supervisors emphasize proven traditions and processes.

Three Employees are looking on a Computer

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.

How? By having an HR strategy that promotes professional development, ensures managers are trained regularly (whether internally or externally) and is built on the timely communication of management decisions.

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.

Adapting Environments

Corporate culture needs to adapt continually to keep up with our rapidly evolving world. A world in which technologies, work methods, and goals change all the time.

For HR, this means that it needs to recognize and respond to change early on. What sort of environment will employees need to embark on new challenges with confidence and motivation? That becomes the core question.

Gain an overview of your company, its goals, and its market to establish a basis for creating an appropriate environment. Ideally, you will also gather information on how much overlap there is between individual employees and your corporate culture, i.e. to what extent employees’ actions are in line with the company’s values.

This can be done by performance analyses or through discussions with managers. Understand who is not aligned with your corporate culture, and why. Learn how to enable managers to have a positive influence.

How Do You Change Corporate Culture For The Better?

Hardly any company can afford to resist change, meaning it is all the more important to not only control change processes but also to evaluate them. After all, studies have shown that over half of all change projects fail completely or fail to deliver the results aimed for. HR can control and support change processes.

5 Steps To Creating A Change In Corporate Culture

1. The Fundamental Question

Before you establish anything else, you need to ask yourself: What goal are we trying to achieve by changing our culture? To do this, your company will ideally have internalized the insight that the best corporate cultures are firmly rooted in both a broad alignment with the company’s strategies and a deep engagement with the challenges of its business environment.

2. Analyzing The Status Quo

What is your current corporate culture like? To understand where your corporate culture is currently at, you will need to have a solid grasp of the company’s history, environment, and tradition. These are the elements that have shaped its management styles, team dynamics, subcultures, and values to date.

3. Discussions Featuring Decision Makers

Work together to identify the strengths and weaknesses of the old corporate culture, how the latter can be or could have been addressed, or to what extent they were influenced by external circumstances.

4. Charting A Course

Next, evaluate your company’s and its competitors’ current and future business environment and challenges. In this step, it is essential that you also consider your strategic corporate orientation so that you can define which cultural styles should be emphasized or played down respectively.

5. Formulating A Bigger Goal

An example could be: “We will work together to create a feedback-oriented corporate culture that promotes innovation”. Once this is done, set aside the status quo and focus exclusively on the future.

The only relevant decision that comes next is, which cultural style will optimally support the intended change? From there, it’s best to focus on management principles, the style of communication within your company, and the overall organizational structure. This makes it easier to guide cultural change in the right direction.

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