As the world struggles against a virus, the way business is done across the world and what accounts for why one company would have competitive advantage against another will be determined by a number of factors. One of such factors is your company culture.
Culture; it’s probably a word you hear often if you follow blogs on entrepreneurship or read articles on business and management. But what is it exactly?
According to Frances Frei and Anne Morriss at Harvard Business Review:
“Culture guides discretionary behavior and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which is of course most of the time.”
Entrepreneur Magazine defines company culture as, “a blend of values, beliefs, taboos, symbols, rituals, and myths all companies develop over time.” Every company develops these elements of culture simply by operating each week, day after day, whether they intend to or not.
This means that company culture is organic, at least in part, as there is no way to force people to be happy and productive or to truly believe in any set of values.
Managers and executives do have a direct influence on their company’s culture, however. They generally set the tone for the work environment and expectations for each employee.
The key to a successful organization is to have a culture based on a strongly held and widely shared set of beliefs that are supported by strategy and structure. When an organization has a strong culture, three things happen:
- Employees know how top management wants them to respond to any situation,
- employees believe that the expected response is the proper one, and
- employees know that they will be rewarded for demonstrating the organization’s values.
HR has a vital role in perpetuating a strong culture, starting with recruiting and selecting applicants who will share the organization’s beliefs and thrive in that culture. HR also develops orientation, training and performance management programs that outline and reinforce the organization’s core values and ensures that appropriate rewards and recognition go to employees who truly embody the values.
Justification for Company Culture
An organization’s culture defines the proper way to behave within the organization. This culture consists of shared beliefs and values established by leaders and then communicated and reinforced through various methods, ultimately shaping employee perceptions, behaviors and understanding. Organizational culture sets the context for everything an enterprise does. Because industries and situations vary significantly, there is not a one-size-fits-all culture template that meets the needs of all organizations.
A strong culture is a common denominator among the most successful companies. All have consensus at the top regarding cultural priorities, and those values focus not on individuals but on the organization and its goals. Leaders in successful companies live their cultures every day and go out of their way to communicate their cultural identities to employees as well as prospective new hires. They are clear about their values and how those values define their organizations and determine how the organizations run.
Conversely, an ineffective culture can bring down the organization and its leadership. Disengaged employees, high turnover, poor customer relations and lower profits are examples of how the wrong culture can negatively impact the bottom line.
Mergers and acquisitions are fraught with culture issues. Even organizational cultures that have worked well may develop into a dysfunctional culture after a merger. Research has shown that two out of three mergers fail because of cultural problems. Blending and redefining the cultures, and reconciling the differences between them, build a common platform for the future. In recent years, the fast pace of mergers and acquisitions has changed the way businesses now meld. The focus in mergers has shifted away from blending cultures and has moved toward meeting specific business objectives. Some experts believe that if the right business plan and agenda are in place during a merger, a strong corporate culture will develop naturally.
If an organization’s culture is going to improve the organization’s overall performance, the culture must provide a strategic competitive advantage, and beliefs and values must be widely shared and firmly upheld.
A strong culture can bring benefits such as
enhanced trust and cooperation,
fewer disagreements and
Culture also provides an informal control mechanism, a strong sense of identification with the organization and shared understanding among employees about what is important. Employees whose organizations have strongly defined cultures can also justify their behaviors at work because those behaviors fit the culture.
Company leaders play an instrumental role in shaping and sustaining organizational culture. If the executives themselves do not fit into an organization’s culture, they often fail in their jobs or quit due to poor fit. Consequently, when organizations hire C-suite executives, these individuals should have both the requisite skills and the ability to fit into the company culture.
Please join us again in reading as this is going to be in series.
Isaiah B. Tovishede
Business Development @gconsultingisl.