What is Corporate Culture?

What is corporate culture?

Corporate culture results from common values, fundamental assumptions, beliefs, behaviours, and past business decisions. Within an organization, the participants integrate those factors so that they may become internalized core values. In short, this culture may explain how or why an organization reacts a certain way to a current business situation. Within the banking context, the former position of a bank as a public institution to the current position as a profit-oriented entity has dramatically altered the culture.

Corporate culture refers to the values, beliefs, and behaviors that are common or understood at a company. These determine how a company’s employees and management interact, perform, and handle business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people that the company hires.

A company’s culture will be reflected in elements such as its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of employees and clients, client satisfaction, and every other aspect of operations.

Why is It important?

This is crucial because it can help achieve critical corporate goals. Employees, for example, may be drawn to organisations whose cultures they identify with. This can lead to increased employee retention and the recruitment of new talent.

Awareness of corporate or organizational culture in businesses and other organizations such as universities emerged in the 1960s. The term “corporate culture” developed in the early 1980s and became widely known by the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to describe the character of a company.

Corporate culture develops from generalized beliefs and behaviors, company-wide value systems, management strategies, employee communications and relations, work environment, and attitude. As it became a more widely understood and embraced concept, it also came to include company origin stories put forth by charismatic chief executive officers (CEOs), as well as visual symbols such as logos and trademarks.

Creation and Influence of Corporate Culture

Corporate culture is created by the founders, management, and employees of a company, influencing how they act and who they hire. It then trickles down to the employees, both as characteristics of people the management team hires and as a set of unspoken expectations that employees learn to hire. Corporate culture can also be influenced by national cultures and traditions, economic trends, international trade, company size, and products.

There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake of globalization and the increased international interaction of today’s business environment.

• Cross-culture refers to people from different backgrounds interacting in the business environment.
• Culture shock refers to the confusion or anxiety people experience when conducting business in a society other than their own.
• Reverse culture shock is often experienced by people who spend lengthy time abroad for business and have difficulty readjusting upon their return.

Benefits of a Positive Corporate Culture

A carefully considered, even innovative, corporate culture can elevate companies above their competitors, support long-term growth, and underpin a company’s longevity. Benefits of a positive corporate culture that contribute to business success include:

• Building a positive workplace environment
• Creating an engaged, enthusiastic, and motivated workforce
• Attracting high-value employees
• Improving employee morale
• Improving performance quality and productivity
• Building favorable business results

When employees feel encouraged and motivated by a positive company culture, this can reduce burnout and provide a strategic competitive advantage by reducing turnover and increasing productivity. A positive corporate culture can clarify a company’s goals at all levels and provide a strategic competitive advantage. A company with a corporate culture that is attractive to a variety of employees can also benefit from workforce diversification.

Corporate culture is not an inherently positive phenomenon, however. If managers or executives never take time off, for example, employees will follow their example, creating a culture of overwork. This can lead to demoralized employees who experience high levels of burnout, increasing turnover and decreasing overall company productivity.

How to Develop a Corporate Culture

There is no single strategy for building a corporate culture because of the inherent differences between companies, industries, and people. However, the basic steps below may help you envision a corporate culture that spells success for your employees, clients, and company.

• Define a company’s vision, values, and behaviors.
• Gather feedback from employees about your company’s values, ideas, and work methods to improve the workplace environment and performance.
• Use small discussion groups, surveys, brown bag lunch meetings, or town hall-type meetings to engage your employees and give them a voice.
• Establish methods, such as training at regular intervals, to communicate company values/behaviors and determine how well they are understood.
• Employ high-quality internal communications about company goals, the working environment, and employees’ roles in the company’s success.
• Establish guidelines that reinforce company values, e.g., a rule that employees should not be disturbed by work phone calls, emails, or texts during vacations or other types of time off.
• Recognize employees in a positive and public manner as a reward for their contributions to corporate success.
• Ensure that management maintains a consistent behavioral approach to operations rather than cutting corners when convenient.
• Prioritize approachable leadership so that all employees may address their concerns and feel connected and valued.
• Foster teamwork rather than silos and isolation.
• Set goals for diversity and inclusion; celebrate the differences among people as you encourage consistent behavior from all.

What Are Some Examples of Corporate Culture?

There are many examples of companies with well-defined corporate cultures. Alphabet Inc., for example, is known for its employee-centric culture and its emphasis on working in a creative and flexible environment, whereas Amazon is known for its relentless pursuit of customer service and operational efficiencies. Often, national cultures will play a role in determining the kind of corporate culture that is prevalent in society. For example, Japanese corporations are known for having corporate cultures that emphasize structured hierarchies and long hours, which are markedly different from those of American or European companies.

The Bottom Line

Corporate culture has become a vital, even essential, ingredient in the ongoing success of a business. It represents the values, beliefs, and goals of a company, as well as the consistent behavior expected from all employees, from top to bottom.

Corporate culture is an important key to attracting and retaining employees. It can also support high-quality employee performance, ongoing achievement, and the longevity of a company.