Corporate Culture

Corporate Culture

Corporate Culture

Updated 13 November 2020

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What Is Corporate Culture?

Every business has a different way of operating, different leadership skills, core values and goals – and this can broadly be included in the factors that make up the organizational or ‘corporate culture’.

However, corporate culture can be so much more than this, encompassing the public image of the company, how it attracts new staff and the philosophy used in decision-making.

Some businesses provide free tea and coffee for their staff and consider that to be all that is needed for a beneficial corporate culture.

Other companies offer fully flexible working, with remote offices and work from home options.

Many make the employee the highest priority, adapting the work environment completely to attract the best and brightest in new talent.

For some businesses, the learning and development of staff is given high priority, with paid opportunities to pursue further qualifications such as sponsored tuition for an MBA.

Corporate culture is the unique social structure and psychological environment of a workplace, and no two organizations are completely alike.

Any organization should view their company culture as the personality of the business and the foundation for its success.

Why Is Corporate Culture Important?

For some, the idea of investing in the culture of a business might seem a bit ‘fluffy’, a nice-to-have element of the workplace that does not matter too much. But the right corporate culture can not only improve the effectiveness of the organization but also enhance the experience and purpose of the employees.

Regular team building is a feature in organizations that are considered to have an excellent corporate culture, as is open communication from the top down, including open channels for feedback, concerns and new ideas.

Corporate culture forms the structure of the business – from the values and beliefs that help achieve goals, to the standards of work, attitudes and self-image of the employees, right down to productivity and performance. It is the shared understanding of ‘what is expected’ – from leadership to staff, into public perception.

Every society needs some structure, and the workplace is no different. Organizational structure relies on shared understanding and knowledge of business goals, with values and expectations which are clear and shared widely so that all processes and procedures can be followed to ensure success.

How Is Corporate Culture Formed and Can It Change?

To some extent, the type of industry might dictate the culture that forms through necessity.

For companies that need stability and control, such as manufacturing or government departments, a more fixed and logical company culture might be necessary for success.

For others, like tech or software startups, more flexibility and individuality might be important to stay ahead of the curve.

Although it needs careful consideration, changing a company's culture is possible.

A structured plan needs to be created, taking into account all aspects of the organization, from the company values and identity to investing in employee wellbeing and ensuring that feedback is taken on board.

It also requires looking at recruitment: how the business is attempting to attract the right employees, flexible working arrangements, learning and development, recognition, the way the business communicates internally and the public image it wishes to present.

With all these considerations, buy-in from all staff needs to be achieved first and foremost, with changes made gradually.

By executing the changes in stages and evaluating the results with input from all employees, as well as using leadership teams that can communicate changes with authenticity and transparency, an organization can improve company culture.

How Does Corporate Culture Impact Employee Behavior?

There is a magnetic quality to the right culture that will bring talented people to your organization – and getting it right is about more than just ‘things’.

Having break-out areas with ping-pong tables, free fruit Fridays and company socials is one facet that might benefit your employees, but investing in your workplace culture will inform the organization that employees are the most important asset in the business.

Happy employees are more productive, have a shared understanding of the company’s goals and vision, and feel empowered and engaged. This level of job satisfaction will reduce staff turnover and reward the loyalty of those who work well in that culture.

Perks, benefits, rewards, incentives and clear communication can take a company’s culture to the next level, ensuring that all staff are enthusiastic about working towards shared goals, aligned with the vision and ethos of the company – everyone willing to work for the benefit of the organization.

Four Types of Corporate Culture

Although there are four distinct types of corporate culture as described here, for many businesses, it is harder to define differences.

Some businesses naturally need stability and control, while others value flexibility and initiative.

Some organizations have an internal focus, whereas some focus externally.

The ‘this or that’ nature of these descriptors might not relate to all businesses, so there is likely to be gradual differences or parts of one culture intermingled with others.

In some organizations, different departments may have a different type of culture – production might be more of a hierarchical structure while marketing might be considered more of an adhocracy.

Many businesses will fall somewhere inbetween these binary values:

1. Hierarchy

Hierarchical cultures rely on processes and policies to give them reliable, stable and efficient results.

They are often highly structured with a strong internal focus and definable, stratified leadership systems.

Leaders are considered to be efficient problem solvers and employees understand their roles, learning them well enough to be considered experts.

In the hierarchy culture, uniformity and traditional values are important, and the bottom line takes precedence with risk-averse decision making.

Pros for Employees

  • Defined roles and specified instructions make sure employees understand their responsibilities

  • Employees gain status through consistent dedication and hard work

Cons for Employees

  • Limited career progression with high competition for available promotions

  • Teams can become ‘siloed’, with less interaction with different areas

Pros for the Organization

  • Managers and other leaders are recognized and give firm direction

  • Production and delivery are predictable and reliable

  • Profitable decisions are made by management and directors, making them faster

Cons for the Organization

  • Communication between departments and through the management structure can be difficult

  • The multiple layers of management and employees can have high costs

  • Public perception of the company might be affected, with it being seen as faceless

  • Innovation and growth opportunities can be stifled, with the company slow to react to change

Example of Hierarchy Culture

Ford Motor Company is a great example of a successful hierarchy culture.

There are clearly defined roles for each employee, with stratified designations for leadership and upper management.

Staff are employed for their skills, which can develop within their roles, and job satisfaction comes from following the pre-defined structure.

Corporate Culture

2. Market

A market culture is one where the focus is on ‘getting things done’.

With an emphasis on results and success, this is a competitive environment that is goal-oriented, and the leaders have high expectations of their staff and drive their teams hard.

This type of culture incentivizes staff through competition and has a strong external focus.

Learning more about how to be more results-oriented is one way that staff in this environment can improve their own experience.

Pros for the Employee

  • Strong focus from employees

  • Employees are open to learning new skills to be more successful

Cons for the Employee

  • A competitive environment can become unpleasant

  • Staff can become quickly overworked and stressed

  • Low morale can affect staff retention

Pros for the Organization

  • Market culture organizations are likely to be leading the way in their industry

  • Reputation, success, and market leadership is assured by employees that strive to be the best

  • By adding pressure to meet goals, there is more likely to be higher revenue and therefore higher profit

Cons for the Organization

  • Consistently staying ahead of the curve can be costly

  • A toxic, overly competitive work environment can lead to burnout

Example of Market Culture

Many fast-paced sales roles can be seen as examples of market culture and one of the most obvious is Amazon.

While employees in the warehouse and delivery arm of the business might be considered to be in a hierarchy culture, the sales and marketing teams focus entirely on driving the business forward in a culture that promotes higher profits and directly encourages competition.

3. Clan

This type of culture is sometimes known as a ‘family’ culture. Recognizable by a friendly atmosphere, clan culture ensures that employees and leaders are equally involved, have the opportunity for long-term career development and demonstrate strong loyalty.

The focus is on participation and teamwork where the needs of the client and employee are high priorities.

This environment is more person-focused, allowing those with common beliefs and loyalty to become more involved and invested, creating what is sometimes described as a ‘culture of happiness’.

Pros for the Employee

  • Employees have good relationships with colleagues

  • Employees enjoy being at work

Cons for the Employee

  • Social and professional boundaries may become blurred

  • Distraction from too much collaboration

  • ‘Pack’ mentality can cause polarization

Pros for the Organization

  • Leaders are mentors, helping and giving direction while encouraging creativity

  • Communication is clear, inclusive and encourages feedback so employees can raise concerns and share new ideas

  • Collaboration gives ownership of decisions to all

  • Happy employees help businesses to grow and develop

Cons for the Organization

  • Leaders can struggle to maintain authority

  • Collaboration can mean decision-making becomes a lengthy process

  • Hard to make decisions that could be considered tough, like cutbacks or changes in working routines

Example of Clan Culture

Probably one of the most famous examples of a clan culture is Google.

The tech giant is known for flexible working, fun office environments with video games and nap pods, and actively encouraging staff to innovate through weekly skill shares and open communication throughout the workplace.

4. Adhocracy

Relating to the ‘ad hoc’ nature of these organizations, adhocracy encourages innovation, creativity and initiative throughout the structure.

It is a fast-moving, dynamic culture that allows employees the freedom to experiment, to try something new – and perhaps even fail – so that they can aggressively pursue ideas that might be considered out-of-the-box.

Leaders in an adhocratic culture are entrepreneurs and visionaries, encouraging their staff to find creative solutions.

Pros for the Employee

  • Perfect for flexible working and individual freedom

  • Dynamic, fast-paced environment

  • Experience and skills not considered as important as personality and creativity

Cons for the Employee

  • Working environments are often unstable

  • Workplace can be intimidating for new starters

  • Fast-paced environment can make employees insecure

Pros for the Organization

  • Usually industry leaders

  • Looking towards the future through innovation

  • Innovation driven by experimental thinking – products and solutions keyed for growth

  • Organizations can react quickly to change and pivot where needed

Cons for the Organization

  • Focus on individuality makes it difficult to gain any consensus

  • Collaboration can be uncomfortable

  • Risky behavior can lead to failures – expensive to fix

Example of Adhocracy Culture

Apple is known for its industry-leading products and innovations, and it is an excellent example of ‘blue-sky’ thinking and creative problem-solving.

Employees are hired because they are the best at what they do and are recognized and rewarded for excellence.

The premise of Apple continuing to be at the forefront of the tech space is aligned to the freedom to innovate that employees have at all levels in the business.

Final Thoughts

While corporate culture might be dictated by the industry, it is in the best interests of any organization to invest in improving company culture.

Whether it is creating an employee wellness program, a new way of communicating or even just something simple like allowing more flexible working patterns where possible, investing in employee wellbeing is an important step to creating a culture where all staff feel valued.

Staff who are happy, secure and rewarded for their work are more likely to be engaged and enthusiastic participants in the success of the organization – and focusing on recruiting the right type of employee is a great way to develop and improve the culture.

Understanding where you, as an employee, feel comfortable in terms of culture, will help you decide which organizations are most suitable for you.

If you thrive in defined roles with clear goals, then a hierarchy culture might be the best fit.

If you are a creative type who thinks unconventionally when approaching a problem, you might be most suited to a role that is broadly adhocratic.

Company culture is not fixed, it can be changed and improved given the right strategy – and investing in company culture improvements can change an organization for its employees, managers, public perception and its bottom line.

By Nikki Dale Nikki Dale