What Is Corporate Culture?
Corporate culture encompasses the values, beliefs, and behaviors that shape the interactions, performance, and overall conduct within a company. It often evolves organically over time, reflecting the collective characteristics of those in the organization.
A company’s culture impacts various aspects such as dress code, operating hours, office layout, employee benefits, staff turnover, hiring practices, treatment of employees and clients, customer satisfaction, and overall operational effectiveness.
Key Takeaways
- Corporate culture derives from the beliefs and behaviors influencing employee and management interactions and performance.
- It plays a crucial role in employee engagement, retention, performance, business outcomes, and company longevity.
- Corporate culture is shaped by national cultures, economic trends, international trade, company size, and products.
- It encompasses the core values guiding a company’s ideology and practices.
- Four primary types of corporate culture are clan culture, adhocracy culture, market culture, and hierarchy culture.
Understanding Corporate Culture
Awareness of corporate or organizational culture in businesses and institutions gained traction in the 1960s. The term “corporate culture” emerged in the early 1980s and became widespread by the 1990s, serving to describe a company’s character.
Corporate culture derives from shared beliefs, value systems, management strategies, internal communications, work environment, and company goals. Visual symbols like logos and origin stories often reinforce these cultural aspects.
Notably, founders, management, and employees, along with national cultures and economic context, shape corporate culture. With increasing globalization, businesses now experience multiple cultural influences:
- Cross-culture: Interaction of diverse backgrounds within the business environment.
- Culture shock: Anxiety experienced when conducting business in a foreign culture.
- Reverse culture shock: Adjustment challenges when returning home after working abroad.
Significant resources and efforts go into creating positive cross-cultural experiences to foster a united, productive corporate culture. Deloitte research shows that 94% of executives believe a distinctive corporate culture is vital for business success.
Importance of Corporate Culture
A thoughtful, innovative corporate culture can set a company apart and promote sustained success by:
- Fostering a positive workplace environment
- Engaging and motivating the workforce
- Attracting talented employees
- Reducing turnover
- Improving performance and productivity
- Bolstering business outcomes
- Enhancing company longevity and ROI
- Offering competitive advantage
- Clarifying roles and departmental objectives
- Promoting workforce diversity
Types of Corporate Culture
Clan Culture
Clan cultures emphasize teamwork and collaboration, with management acting as mentors. Core values include good relationships, trust, participation, and adaptability to change.
Adhocracy Culture
Adhocracy cultures foster an entrepreneurial atmosphere, encouraging employees to innovate and take risks. This flexible environment promotes agile thinking and pursuit of aspirational ideas.
Market Culture
Market culture is goal-oriented and competitive, driven by specific targets and bottom-line results. Management prioritizes business outcomes, fostering a demanding but often motivating environment.
Hierarchy Culture
Hierarchical cultures follow structured chains of command with defined roles and conventional operating methods. This culture values stability and security, making objectives clear but potentially creating a rigid work environment.
Examples of Contemporary Corporate Cultures
Modern companies like Google, Apple, and Netflix reflect less traditional management approaches that encourage creativity, problem-solving, and employee freedom.
Google is renowned for its employee-centric culture, offering perks such as telecommuting, flexible schedules, tuition reimbursement, and on-site amenities like massages, fitness classes, and hairstyling services.
Characteristics of Successful Corporate Cultures
Successful cultures feature visionary attributes, core values, actionable practices, inclusive people strategies, compelling narratives, and thoughtfully designed places. Companies should encourage teamwork, continuous training, innovation, and open leadership to thrive.
How to Develop a Corporate Culture
Building an effective corporate culture requires tailored strategies, often encompassing the following steps:
- Clarify company vision, values, and behaviors.
- Seek employee feedback to enhance the work environment and performance.
- Engage employees through discussion groups, surveys, and meetings.
- Communicate values through regular training.
- Maintain high-quality internal communications.
- Implement guidelines reinforcing company values.
- Recognize employee contributions publicly.
- Ensure management exemplifies consistent behavior.
- Be approachable to address employee concerns.
- Promote teamwork over isolation.
- Aim for diversity and inclusion, celebrating differences while fostering consistency.
Summary
Corporate culture, encapsulating the values, beliefs, and practices of an organization, is fundamental to attracting and retaining talent, achieving business success, and ensuring long-term sustainability.
Related Terms: clan culture, adhocracy culture, market culture, hierarchy culture, vision, values.
References
- Inc. “Corporate Culture”.
- ET HR World. “Organisational Culture: Which Type Best Defines Your Company?”
- Deloitte. “Core Beliefs and Culture Chairman’s Survey Findings”.
- Wavelength. “The Story Behind Zappos’s Shift to Holacracy”.
- Harvard Business Review. “Six Components of a Great Corporate Culture”.
