What Is Corporate Culture and How Does It Affect Business?

Building a strong corporate culture is a key factor in business success. Companies who prioritize their culture experience better office morale and reduced employee turnover.

The type of culture a company has depends on its goals and beliefs. Some companies have a hierarchical culture, which is typical in traditional businesses and often involves many layers of management. Other companies have a market culture, which is focused on winning the market.

Definition

Corporate culture consists of the values, traditions, and beliefs that permeate an entire company. It influences all aspects of a business, from employee recruitment and retention to client satisfaction and public image. Whether the culture is shaped organically or pre-planned, it expresses the core attitudes and practices of the organization. Research has shown that companies with strong cultures support important business objectives, such as innovation, employee productivity, and bottom-line performance.

A corporate culture can be defined in several ways, including the goals set for the business, employee priorities and beliefs, and workplace practices. A well-defined company culture can help employees feel more connected to the company and its mission, which is critical for employee retention and overall productivity. To develop a company's culture, it is helpful to have small discussion groups and surveys for employees to provide feedback and input.

In addition, companies can use their marketing efforts to promote the company's values and beliefs to potential customers and prospective employees. The way a company's leaders communicate and interact with one another also impacts the corporate culture. Having leadership that supports the company's culture and values is a positive factor in creating a successful business.

There are four main types of corporate culture, according to Groysberg, Lee, Price, and Cheng. They include market cultures, which focus on results and competition; clan cultures, which encourage freedom and creativity; adhocracy cultures, which prioritize decision-making by teams; and authority cultures, which rely on top-down direction from leadership to staff.

Many businesses strive to create a company culture that is unique and distinguishable from the rest of the industry. This is done by incorporating values that are important to the company, such as sustainability, equality, and fairness. The type of management strategy used also plays a role in the company's culture. Less traditional methods such as collaborative problem solving, greater freedom for employees, and perks such as free lunches and on-site doctors are often found in high-performing companies with distinct cultures. This is because the leadership of these companies realizes that a strong culture can help them achieve their business goals.

Types

Corporate culture is a set of beliefs, values, goals, and consistent behavior that reflects how employees are expected to work. It’s a factor in employee retention and new hiring decisions. It also affects how employees feel about their company overall.

Some companies have a more casual culture with flexible work hours or perks like video game rooms and gyms. Others have a more structured environment that focuses on teamwork and high performance. The decision-making process and communication norms within a company are also important aspects of its culture. For example, a company that asks for feedback on how management handles difficult situations will have a different corporate culture than a company that does not.

Oftentimes, a company’s culture can be organically developed by bringing together the right group of like-minded people or it may be consciously planned by leadership. Either way, it’s essential that leadership create a workplace that supports the needs and motivations of employees to maximize productivity.

There are a few common types of corporate cultures that can be categorized on two dimensions: how a company responds to change and the type of employee who thrives there. For example, independent cultures encourage competition and value individual achievement whereas interdependent cultures focus on collaboration and support the success of the team as a whole.

Some industries require a very strict, traditional corporate culture with hierarchical structures and clear rules. Law firms and banks are examples of these types of companies. They generally have a hierarchical structure where decisions are made by a small group of leaders at the top and information flows down to lower-level employees.

On the other hand, technology and innovation-driven industries have a more fluid culture where risk-taking and forward-thinking are valued. Google is a good example of this type of culture, as they hire only the best and encourage employees to think outside the box. This type of culture can be challenging to manage because it requires a strong leader who can guide and inspire employees. Using a tool like Paycor Pulse to survey and engage employees can help managers better understand their company’s current culture and make changes that support employee needs.

Examples

Corporate culture is often viewed as the fun perks such as foosball tables, bean bag chairs, yoga rooms, and bring-your-dog-to-work days that companies may offer. These are all excellent perks that promote positive workplace atmospheres and can boost productivity. However, a company’s culture is much more than that. It is a combination of company policies, employee relations, and management strategies that create a specific work environment and mindset.

A company’s type of organizational culture is typically determined by its history, industry, and location. Changing a company’s culture requires careful planning, and can take some time to fully implement. In the meantime, the company can provide its employees with opportunities to discuss their feelings about the current culture and what they would like to see in the future.

There are many types of corporate culture, and they each vary significantly. Some are described as elite, meaning that the business looks for top talent and out-of-the-box thinking; others are called horizontal with collaborative efforts; and still, other cultures are characterized as adhocracy with flexible, innovative work methods. A company’s management style, the size of its workforce, and its overall business practices will also have a significant impact on its corporate culture.

For example, a company that offers progressive policies like comprehensive employee benefits and alternatives to hierarchical leadership (such as Holacracy models adopted by shoe company Zappos) can show its employees that it prioritizes their needs and wants. It can help them feel valued and connected to the company, and it can encourage teamwork and cooperation.

Companies that focus on promoting a culture that reflects their national and/or regional cultures will be more successful than those that do not. They will be more likely to attract and retain workers who share the company’s values, and will also be better positioned to market their products and services in a way that resonates with consumers.

Impact

Corporate culture can have a profound effect on business. A company with a strong and positive culture will have happier employees, which can lead to higher morale and improved productivity. Employee turnover will also be lower, which will help cut down on the cost of recruiting and training new hires. Additionally, a healthy corporate culture can boost a business's reputation among clients and potential customers, which may lead to increased revenue.

Corporate cultures are not set in stone; they can be changed at any time. The first step in changing a culture is making sure that all employees are aware of the company's values and goals. This can be accomplished through a variety of methods, including training, meetings, and one-on-one conversations with managers and employees.

After that, it is important to make sure that all employees are consistently following the desired behaviors and demonstrating the proper mindsets. This can be done by praising and rewarding those who follow the company's rules and guidelines. In addition, it is helpful to provide opportunities for employees to bond and socialize outside of work, such as through social events or happy hours. Finally, it is essential to get feedback from employees about how well the current company culture is working for them.

Companies can use a variety of methods to gather this feedback, including pulse surveys and employee journey mapping. This information will then be used to make changes that will improve the overall company culture. Achievers' tools, including Pulse and Listen, are ideal for gathering employee feedback, so businesses can make the necessary improvements to their corporate culture.

While many people associate corporate culture with fun things like foosball tables, bean bag chairs, and free soda, it actually runs much deeper than that. In fact, the most important aspect of a corporate culture is how a business treats its employees. If an employer does not treat its employees with respect, loyalty, and support, it is unlikely that the culture will be positive or healthy.

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