Understanding Corporate Culture: Its Importance and Impact

Corporate Culture

What is Corporate Culture?

Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions. It's characterized by being:

• Shared
• Pervasive
• Enduring
• Implicit

Corporate culture implies:

• Behaviors observed regularly in the relationships between individuals.
• The norms that are developed in working groups.
• The philosophy that guides a company's policy regarding its employees or customers.
• The dominant values accepted by a company.
• The "rules of the game", that is, the ways that a newcomer must learn to be accepted as a member of the group.
• The environment or climate.

6 Components of a Great Corporate Culture

1. Vision

A company's mission, often expressed in a simple phrase (vision statement), that characterizes the purpose of the firm.

2. Values

The set of guidelines on the behaviors and mindsets needed to achieve the company's vision.

3. Practices

How a company demonstrates that it follows its values.

4. People

Hiring individuals with the ability and willingness to embrace the company's values is crucial for building a coherent culture.

5. Narrative

The ability to craft the unique story of the organization into a powerful narrative, formally or informally.

6. Place

The physical environment, including geographical location, building architecture, and office design, significantly shapes culture.

Link Between Culture and Outcomes

Top leaders and founders often express cultural sentiments related to enjoyment, results, authority, safety, and order. This framework can also define individual leadership styles and values. Cultures emphasizing caring and order encourage a positive work environment. Managers can utilize this framework to understand, evaluate, identify, pinpoint, orient, measure, and design their company culture.

Strategy + Leadership = Positive Results. Focus on priorities, combine results with caring, clarify all values, and consider the impact of culture.

6 Signs Your Corporate Culture Is a Liability

Risk #1: Inadequate Investment in People

Investing in employees is an investment in a healthy culture and, ultimately, better business outcomes.

Risk #2: Lack of Accountability

When consequences are absent or unevenly applied, it can discourage reporting poor behavior and lead to carelessness.

Risk #3: Lack of Diversity, Equity, and Inclusion

The #MeToo movement highlighted the importance of addressing sexual harassment, gender discrimination, and promoting diversity and inclusion in the workplace.

Risk #4: Poor Behavior at the Top

Employees often emulate the behavior of those in authority, making leadership integrity crucial.

Risk #5: High-Pressure Environments

Unrealistic expectations and poorly structured incentives can lead to extreme measures and unethical behavior.

Risk #6: Unclear Ethical Standards

Employees need clear ethical guidelines to understand and live by the company's values.

Building a Strong Culture: Unique Rules for Your Company

To create a distinctive presence in the marketplace, you must first build a distinctive workplace culture. Consider implementing "shocking rules" that outsiders might not understand, as they can be a building block of a powerful and unique culture.