Organizational Culture is a collection of values, beliefs, and practices that defines the actions of employees in the workspace. Why is a clearly defined organizational culture important? What are the elements of organizational culture? Find the answers to these questions and much more right here.
An organization is defined by its people and its practices. The ethics that govern how team members function are crucial for any organization’s long-term growth. But the work culture implemented by one enterprise might not necessarily have the same positive influence on another. Fostering an inclusive and positive organizational culture that factors in the elements that make an organization unique is key to sustained growth. What exactly is organizational culture and why is it something companies must prioritize? Let’s find out.
What is organizational culture
In the simplest terms, organizational culture defines the way team members are expected to behave within the organization. These include the vision, values, assumptions, and guidelines shared by leaders of the organization for the greater good. These beliefs and values don’t just shape employee behavior and perception but also sets the context for everything an organization does.
For any company to be successful in the long run, it needs to have a strong organizational culture that doesn’t just focus on the company but the individuals and cultural priorities as well. Given how drastically different companies across industries can be, there’s no pre-defined organizational culture that governs their functioning. Let’s look at some of the popular types of organizational culture that have found acceptance in the corporate world in recent years.
Types Of Organizational Culture
- Clan Culture: First amongst the four types of organizational culture is clan culture. This people-focused culture treats employees like a big happy family where there’s a lot of scope for collaboration. Value to each individual and free communication are other pillars of this organizational culture. In a clan culture, leaders and department heads aren’t behind closed doors and interact and engage with employees regularly.
- Adhocracy Culture: Perfectly suited for cutting-edge companies that rely on constant innovation, adhocracy culture highlights the value of individuals and encourages them to think out of the box. As a general rule of thumb, employees in an adhocracy culture are motivated to think out of the box and find creative solutions to issues. Risks are also a big part of this type of organizational culture but with a higher possibility of reward.
- Market Culture: An organizational culture that solely focuses on profitability, market culture is better suited for results-driven companies. Every single decision is made keeping the prospect of eventual profits in mind. In a market culture, the top management and other employees are both figuratively and separated and the focus is on reaching targets and getting results rather than employee satisfaction.
- Hierarchy Culture: The closest culture to resemble a typical corporate structure, hierarchy culture defines a clear chain of command. This type of organizational culture generally has multiple tiers of management to separate leadership and employees. A hierarchy culture is the most rigid amongst the different types and is generally more stable and risk-free.
Organizational Culture Examples
As mentioned above, each company has its unique organizational culture designed considering its goals and objectives. To give you an example of how organizational culture can differ between two companies, here’s a look at the organizational culture of Adobe and Walt Disney.
The organizational culture at Adobe is extremely employee-friendly. From perks like discounted gym membership to paid sabbaticals and bonus awards, the company goes out of its way to treat its employees right. Despite its size, communication across departments in Adobe is made easy and even encouraged.
The magical experience Disney brings to its guests extends to its employees as well. While it doesn’t offer employees surface-level perks like a juice bar or a gym membership, it scores majorly in keeping them happy and offering great growth opportunities. Employees do get discounts on parks, hotels, and merchandise, along with incentive schemes and proper healthcare.
Changing organizational culture
Over the years, there’s been a noticeable change in the organizational culture followed by most companies. The days of hierarchy culture and market culture are on the way behind us and most companies are being generous to and mindful of their employees. Long working hours, non-existent benefits, and a generally uncared-for vibe are all elements of organizational culture that are being modified. Now, companies want their employees to be proud of where they want and offer a host of fantastic benefits to make sure this happens.
On a basic level, the rapidly evolving organizational culture will eventually completely focus on employee satisfaction since that’s paramount to long-term profitability.
Factors Affecting Organizational Culture
Organizational culture varies from company to company due to a variety of factors including:
- Type of business: A company’s organizational culture can differ widely depending on the type of business. A sales-oriented business, for instance, would focus on hitting everyday targets and not as much on the employees and their satisfaction. On the other hand, a business that requires a lot of innovation would ideally have an organizational culture where employees feel welcome to express themselves without fearing a negative reaction.
- Recruitment process: Arguably, the recruitment process is amongst the most important factors when determining an organizational culture. The type of employees in a company majorly defines how much the vision and ethics laid down by the management will be followed. When a company is doing well and hiring a lot, it needs to ensure that every employee is aligned on the same page in terms of the culture. This also ensures that there’s no bad hire or people who don’t fit in culturally and aren’t able to be as productive.
- Leadership principles: Since company leadership is more acutely involved in the process of defining the organizational culture, their thought process can make a whole lot of difference. If the leadership is clear on what it expects from its employees and lays down values that must be followed, the organizational culture will be better defined, leading to better growth. Although company leadership is responsible for setting up the organizational culture, they need to be mindful of the employees and also take their aspirations and comfort into consideration.
Elements Of Organizational Culture
What defines an organizational culture? Is it past events, the company’s goals? Here are the 5 elements of organizational culture.
- History: A company isn’t born with organizational culture. It’s something that’s cultivated over years of experience. Past events and people have a clear influence on the values and ethics that shape a company’s culture.
- Routine: Over a period of time, the daily actions and behavior that are deemed appropriate become part of a company’s organizational structure. These actions become the norm for different situations when acknowledged by the senior management.
- Organizational Structure: Another crucial element of organizational culture is the structure of and the predetermined lines of power that run through the company. A top-down corporate structure cannot have a laid-back organizational culture since there are clear demarcations of levels and departments.
- Control Systems: A company’s organizational culture is also impacted by how it’s controlled in terms of financial systems and quality systems. The way rewards and performances are measured and distributed also influences the culture.
- Power Structures: How power is structured in a company has a part to play in determining the organizational culture. People with the greatest amount of influence in terms of decisions and operations can define the organizational culture.
Impact Of Organizational Culture On Employee Performance
Does the organization’s culture impact employees’ performance? You bet. When a company’s culture is strong, compassionate, and widely reinforced, employees feel valued and taken care of. Their contribution to the company not just in terms of actual work but by following the culture feels like it matters. By having a great organizational culture, employees also enjoy some amount of control over their job and feel like their opinion is important.
Strong company culture also provides employees many opportunities for growth through career development programs, annual promotions, rewards and incentives, and more. In a company where the culture is to reward good performance, employees work harder and ensure their performance is up to the mark. The presence of a good organizational culture also fosters a feeling of togetherness in the company where everyone works together to achieve the company goals.
Benefits Of Organizational Culture
- Increased Revenue: Organizational culture directly impacts revenue for many reasons. First, when a company has a clearly defined culture, employees are better motivated and can band together to achieve the company’s goals. With a well-defined culture, companies have an easier time navigating stressful situations leading to better profits.
- Steady Growth: A healthy organizational culture majorly drives growth, especially in the long run. Companies with a strong culture can adapt to the changing business environment much faster than companies without one. Having an organizational structure is also crucial for driving sustained growth in a planned manner as opposed to reacting to whatever comes your way.
- Increased Motivation: Employees aren’t expected to derive satisfaction just from the work they do. They also need to believe that they have found their purpose and are well taken care of. This is possible only when there’s a good organizational culture in place. Having well-defined values and an employee-friendly culture is essential to keeping employees motivated and driving them to work to the best of their capabilities.
- Better Hires: For a company to keep growing in a sustained manner, it needs to keep hiring fresh talent that brings something to the table. To attract top talent, a company needs a strong organizational culture where employees are valued. More importantly, potential recruits need to be made aware of this culture during the interview so that they are drawn to joining. With online reviews of companies readily available, it’s best to put it all on the table and let recruits make a decision accordingly.
- Employee Retention: Retaining top talent is amongst the most challenging parts of running a company. Nowadays, employees expect more than just salary and health benefits from their employers. They need an environment where new ideas and initiatives are encouraged and knowledge sharing and collaboration are welcome. An organizational culture where an employee feels all of this and more will ensure that they stay in the company.
Organizational culture is a key driving factor in shaping how companies function and their overall path to growth. What’s important for companies to remember is that what works for one might not work for another. Each company should look at its structure, goals, and aspirations, and define an organizational culture that suits its structure. As long as the culture is employee-friendly and factors in their requirements, a company is golden!