Every organization has a corporate culture. Often it is spelled out in a statement of values agreed upon by both leaders and employees; sometimes it is an unwritten code that new employees are left to figure out as they try to navigate meetings and deal with co-workers.
Your company or agency can benefit from setting out the expectations of your corporate culture. Read on to learn more about how this can make your employees more productive and increase profitability.
What is corporate culture?
Corporate culture is a set of values that underpin everything the company does. As we have indicated, these may be set out in writing or be unspoken. But even if they are not spelled out, they can be very powerful. Many studies of corporate culture focus on large organizations, but a healthy one is equally important for small businesses.
Depending on the organization, these values can vary widely. Some government agencies are highly bureaucratic and have values that focus on stability and consistency. Others are more open to change, focusing on employee flexibility and adaptability.
Some key values that could be included in a positive corporate culture are loyalty, honesty, trust and accountability. However, it needs to be more than a statement on a website; core values must be lived, be actionable and observable on a daily basis. Open and effective communication is vital to building and maintaining a strong culture.
Normally, the organization’s corporate culture should reflect its mission. For example, the Securities and Exchange Commission in the United States is responsible for regulating stock markets and protecting investors. It’s a serious job because millions of dollars of worker and retiree savings are at stake. So, the SEC culture focuses on following rules and attention to detail. Creativity and brilliant ideas are not on the top of the list of job requirements.
Corporate culture can have a powerful impact on employee morale and profitability. From 1981 to 2001, Jack Welch was CEO of General Electric and ruthlessly cut costs and fired employees who were ranked near the bottom by their supervisors. Needless to say, many employees lived in fear of being axed. Welch was driven by an obsession with meeting quarterly earnings targets. At the time, he was celebrated by some business leaders for his focus. However, history has not been so kind. In recent years, GE has struggled to find its mission and long-term profitability has been poor. Many observers blame Welch for creating a corporate culture that only had an eye on short-term profits.
Why does corporate culture matter?
A study by the Harvard Business School has suggested that corporate culture is vital to achieving an organization’s goals. “When aligned with strategy and leadership, a strong culture drives organizational outcomes,” the report says.
The report argues that a healthy and robust corporate culture can generate huge energy that can be harnessed towards a shared purpose. It can improve employee productivity and result in higher profits. If the corporate culture is aligned with strategy and leadership goals, it can drive positive outcomes for the organization. In this way, it can be a win-win for both staff and the organization.
Strategy and culture are two key levers that corporate leaders can use to achieve company goals. However, culture often does not get the attention it deserves because it is difficult to define – it can depend on unspoken behaviours, mindsets and fixed social patterns. The Harvard study found that many leaders let culture go unmanaged or relegate it to the human resources department.
However, ignoring culture can be a huge mistake for senior leaders. “Culture eats strategy for breakfast,” the report says. In other words, strategy and plans can quickly go off the rails due to a company culture that is not compatible.
Let’s look at an example. In 2018, Amazon announced that it was acquiring Whole Foods, the high-end grocery store chain that offers healthy and organic goods. Right from the start, it looked like a clash of cultures. Amazon has a corporate culture that values efficiency and technology, delivering goods as quickly as possible to consumers. Its cost cutting is relentless. On the other hand, Whole Foods has an emphasis on quality and customer service. Anyone who has looked at the prices at a Whole Foods can tell you that patrons are not concerned about price discounts. Whole Foods employees tend to be idealistic and avid supporters of healthy eating. So, what happened when Amazon bought the company? Employee morale at Whole Foods plunged as staff worried that the culture would change to address efficiency and slashing prices. Overall, the acquisition just didn’t work.
It’s not just during a merger or acquisition that culture is important. Let’s say you apply for a job with a company and HR sells the corporate culture as being friendly and cooperative. However, when you join the firm you find out that it’s cutthroat, with every employee vying with each other to make sales or get a promotion. After just a few months, you quit in disgust.
What are Canada’s most admired corporate cultures?
Here in Canada, Forbes magazine conducts an annual survey of 12,000 employees working at organizations with 500 or more employees. It asks people about working conditions, potential for growth and work-life balance. The deal breaker question: Would you recommend this company to a friend or family member?
Some of the top organizations on the Forbes list included Sheridan College in Oakville, Ontario and the Keg restaurant chain. A non-profit, the Canadian Mental Health Association, was named as a leading employer.
“The organization’s mission, vision and values are not just posted on the website – we live it out, we walk the talk,” says Michelle Lewis, a social worker with the CMHA.
How to change corporate culture
Changing corporate culture can be best compared to shifting the course of an ocean-going cargo ship. Once the vessel has built up speed towards its destination, it can be very difficult to switch directions. The forward momentum is huge but it can be done. With time and determination, the ship can adopt a new course.
Corporate culture is very similar. In order for a new culture to be implemented, senior leaders need to rally the troops and demonstrate their own commitment through their actions. It will require patience, which is sometimes not found in CEOs, who often want goals accomplished yesterday. Managers will need to work with employees, using a mix of carrots and sticks to motivate them to change.
Why corporate culture is important
Whether it is spelled out in a values statement or simply reflected in employee actions, every organization has a corporate culture. It can have a huge impact on profitability and the ability to achieve company goals. Once its established, it’s not easy to change a culture – but it can be done. It just takes a lot of planning and hard work.
