Everything You Need to Know About Corporate Culture

Corporate culture, frequently known as company culture or organizational culture, is a truly comprehensive topic. Defining and refining company culture is no easy task – but the rewards are certainly worth the effort.

Every business has a type of company culture, and each one is different. Workplace culture is made up of the shared values, characteristics, and beliefs within a company. Every employee contributes to it, while at the same time, the culture shapes and guides the employees' behavior and actions.

While every culture is unique, there are a few main types of corporate culture, ranging from collaborative to hierarchical. Pragmatically, a culture creates the framework that allows all employees to be aligned and autonomous. It helps get everyone striving toward the same vision and instills a sense of belonging.

Corporate culture is the source of a company's differentiation. It not only defines how employees see the company, but also makes the company stand out in the eyes of customers and stakeholders. It can make or break a company, and therefore it must be dealt with sensitively across all areas and management levels.

Culture plays a vital role in allowing workers to understand each other fully, cooperate effectively, and form a sense of belonging with their team members. The desirable types of company culture can do wonders for a business.

What Are the Components and Objectives of a Company Culture?

A unique culture is not limited to the values or the raison d'être of the company. There are multiple components to corporate culture, including company history, vision, brand, code of conduct, value proposition, organizational behavior, and communication style. Some critical factors to consider are:

1. What is the vision of the company?
2. What are the company’s ambitions, strategic objectives, and metrics?
3. What are the shared values within the company?
4. What are the organizational methods, goals, and mission statement?

Once you’ve identified the components of your company culture, you need to examine how they are communicated, embodied, and practiced. If it is transparent, authentic, and deployed internally and externally, a corporate culture generates employee confidence and customer loyalty.

Any type of company culture constitutes a standard frame of reference that facilitates decisions, enables alignment, and is essential to change things for the better. Typical goals of a corporate culture include:

• Recruiting or retaining employees more efficiently
• Increasing employee engagement
• Enhancing collaboration between teams
• Increasing autonomy and accountability
• Succeeding in remote work
• Communicating more effectively and authentically
• Transforming the business successfully

Who Is Responsible for Corporate Culture?

On the surface, you may believe it is down to the HR team to create happy employees. However, while HR professionals do dictate certain elements, the company leaders, including the CEO, are responsible for providing an impeccable culture throughout every aspect of the business.

After all, the CEO and business leaders must consider the company's values and the work environment, including any issues and problems. To establish a healthy corporate culture, the bosses, business goals, stakeholders, and human resource teams must come together. This requires a certain degree of adaptability and may involve adjusting or refining some fundamental company values and visions.

For example, it’s not enough for the C-suite to just talk about a culture of innovation. They have to have the courage to put it into practice. This impacts many aspects of the organization, from regular processes like onboarding and training to core elements of the business’s identity, such as its brand and mission statement.

In short, HR should work together with upper management and team leads to establish a culture and ensure that every part of the company actually lives by this code. As with any company-wide initiative, there are many moving parts, so be sure to divide up tasks and responsibilities. For example, if the company is using photo editor software, it's important to ensure that the software is aligned with the established culture and that employees are properly trained to use it in a way that supports the company's values.

What Role Does HR Play in Corporate Culture?

HR managers play a major part in corporate culture as they are often the first port of call for new hires or when team members have a problem. Part of their job is to welcome new joiners, facilitate communication between management and employees, mediate disputes, and be advocates for the company’s values.

Indeed, many of the HR team’s regular tasks can have a big impact on company culture. These include:

• Recruitment: Recruiters should look for candidates who are a good cultural fit for the company. If you practice social recruiting, platforms such as LinkedIn are a great way to showcase your culture to potential applicants.
• Onboarding: The onboarding process should familiarize new hires with the company’s history and values. At the end of the onboarding process, new employees should be able to identify with the company’s culture.
• Training and Development: Offering training sessions to develop soft skills can help employees fit into a culture better.
• Events: On the one hand, events such as conferences and trade fairs are a good way to exhibit a company’s culture to potential customers and candidates. On the other hand, team events and regular meet-ups are essential for improving social interactions between team members – especially for remote-first companies.

The Telltale Signs of a Bad Company Culture

Unfortunately, a company culture is not always positive. Toxic work cultures are a major driving force behind employee turnover. They result in an unhappy working environment with poor employee engagement and flawed teamwork. Negative cultures are characterized by a lack of motivation within the company, no incentives for staff, zero perks, and a poor business strategy.

Poor company cultures can result in:

High Employee Turnover

Companies with a bad corporate culture will struggle to attract and retain the best talent. To prevent excessive employee turnover rates, companies must ensure that team members receive high-quality training, tools, and development opportunities.

Improper Communication

Good communication is necessary for collaboration and business success. A clear warning sign of bad corporate culture is a lack of communication. While employee engagement can suffer in the short term, team members could choose to quit in the long term.

Incompatible Values

A company's core values must be reflected in its corporate culture. It can even have a detrimental effect if a company claims one thing but doesn’t follow through with action. An example of this could be a company claiming that it focuses on fairness but then not giving its workers a living wage.

Employees appreciate honesty, so it’s much better to start with claims that are realistic and achievable for your company. But even if you think you’re delivering on your promises, employees might have a different view. To test whether your employees think you are actually living up to your company values, you can conduct employee surveys, questionnaires, and interviews.

Poor Work-Life Balance

Examples of unhealthy work-life balance include team members who regularly work without pay or are given increasingly unrealistic deadlines. While executives may think that pushing employees to their limits is the best way to achieve a return on investment, it often isn't. These consequences can result in staff leaving and unhappiness.

However, beyond a negative human experience of your company, these direct violations can lead to severe legal repercussions if dissatisfied former employees take your business to court.

Negative Working Environment

The physical work environment dramatically influences the company's overall culture. A cramped, dirty, or unwelcoming office space can quickly deter employees from wanting to work there. And while you cannot entirely control the working environment of remote employees, you can at least give them the equipment they need to create a productive workspace.

Other elements that can negatively affect the working environment are bullying between employees, discrimination, outdated equipment, poorly maintained office furniture, and technical issues such as poor internet connectivity.

What Are the 4 Types of Corporate Culture?

Two business professors, Robert E. Quinn and Kim Cameron, analyzed data from a large number of organizations. Using this extensive research, they defined four distinct types of company culture. While there are major differences between each culture type, they each have their pros and cons.

1. The Clan Culture

This type of culture promotes close collaboration above all else. Everyone is encouraged to express themselves freely to achieve their goals. Managers are not there to give orders, but rather provide their team with the mentoring they need to grow.

2. The Adhocracy Culture

Adhocracy is the theory that moving fast and taking risks is the best way to encourage innovation and creativity. This culture is popular among startups as it allows them to try things out and test their hypotheses. If something doesn’t work, the adhocracy culture advocates quickly moving on to the next idea.

3. The Market Culture

A market culture is motivated by results. The aim is to make the business as competitive as possible. In the pursuit of this goal, the organization also promotes competition between its own employees. Managers set demanding goals and reward employees for achieving them.

4. The Hierarchy Culture

A hierarchy-type culture is all about structure and processes. It is geared toward optimizing existing processes for greater efficiency, rather than taking risks by making larger changes. Everyone understands their role in the team, and managers focus primarily on consistency and reliability.

5 Advantages of a Solid Corporate Culture

One thing that successful companies have in common is impeccable company culture. Authentic and meaningful values will endear you to potential employees as well as new and returning customers.

Some of the top benefits of a strong corporate culture are:

1. Increased team productivity: A healthy work culture will motivate your employees, improving engagement and productivity.
2. Improved recruitment: You should not underestimate the draw of a strong corporate culture. It can make your company more attractive to potential candidates.
3. More customer loyalty: If effectively communicated, your company culture will catch the eye of customers too. Customers that identify with your brand and its values are more likely to remain loyal.
4. Better retention: Aligning your employees behind shared values and a common goal strengthens their connection to your organization, making them more likely to stay.
5. Higher employee satisfaction and well-being: A healthy company culture is exactly that: healthy. With the right culture, your employees will be happier, healthier, and less likely to take time off.

What Are The Challenges of Corporate Culture?

The first challenge is for company managers to become aware of the importance of company culture and adopt the right leadership style. When a business grows, there is a high risk of losing what made it successful in the first place. This can result in tensions between old and new hires.

The best way to improve your corporate culture is to ensure that it is not limited to a restricted circle around the manager but that it is adopted and practiced daily by all teams. The challenge is only won once the culture is ingrained in every process. Even then, corporate culture is constantly in flux – and that is a good thing.

However, because of its changeable nature, culture is fragile and can be lost. The biggest cause for this is multiple hires in a short period of time, particularly if they are not a good cultural fit. New management and mergers and acquisitions can also disturb an existing company culture. These events should be triggers for a fundamental rethink of the organization's culture.

Mistakes to Avoid Regarding Corporate Culture

1. Believing that culture is only an HR or communication subject and not something that concerns the whole company
2. Assuming that the job is done after simply writing down the definition of the company’s culture and sharing it with employees
3. Making claims or promises that the company and its management fail to follow through on
4. Recruiting without taking cultural compatibility into account
5. Assuming that company culture is only applicable internally, ignoring external factors like communication, customers, suppliers, relationships with shareholders, and partners
6. Performing a major structural change, such as a merger or acquisition, without considering the company’s cultural aspects.

7 Aspects of a Good Corporate Culture

One of the most commonly used models for corporate culture is Richard Barret’s Seven Levels Model. Barrett is an author and consultant who specializes in leadership. When creating his model, he was inspired by Maslow’s hierarchy of human needs. Starting with the most basic need, stability, Barrett’s model helps companies assess their culture.

1. Viability

Corporate culture cannot thrive unless a company has a stable financial system in place. Managers must pay employees fairly, and the client base must continue to grow. In order to make it through each quarter with a positive climate, a company must remain as competitive as possible.

2. Relationships

No manager wants their employees to be unhappy with one another. Corporate culture should inspire open communication and support, along with satisfied customers. Establishing clear communication lines should be a priority for every company – particularly as the company grows and becomes more complex.

3. Performance

Employees will rarely feel a sense of comradery if they cannot take pride in their work and their company’s output. Professional pride is the root of any soon-to-be thriving corporate culture. Proper onboarding, regular training, and integrated quality assurance can help set a quality standard that employees are proud to be associated with.

4. Evolution

An organization's values and culture are not static. True, they should be consistent and not completely change every year. But at the same time, company culture has to be adaptable enough to keep up with technological advances and new generations of employees. Regularly reviewing your company culture and asking for feedback from employees can help you make little adjustments to stop your culture from stagnating.

5. Alignment

Many aspects of a company’s culture are likely to be subjective. That means it’s vital to keep everyone aligned. To do this, you should be as transparent as possible about your culture. Don’t just tell employees what it is and what it’s not: show them real-life examples. Listening to your employees’ feedback will give you a better insight into how your culture is perceived.

6. Collaboration

Collaboration is one of the most valuable parts of company culture. If your team is dispersed between different locations or if you have a hybrid work model, organizing team events and in-person socials is essential. Even casual, non-work events can help strengthen social bonds within your workforce, facilitating collaboration once everyone is back at their desk.

7. Contribution

Corporate social responsibility (CSR) can play a significant role in fostering corporate culture. People are more likely to forge collective bonds when working toward something greater than company objectives. Sustainable contributions can also make your company more appealing to customers and other stakeholders. However, you must make sure you’re following through on your promises.

Steps to Start Changing Your Corporate Culture

Is corporate culture created or chosen? When starting a business, you can create your own brand of corporate culture, preferably one that is close to your heart as a leader. Very quickly, every organization inherently grows its own culture. It’s shaped by every employee and their experiences in daily business. It is, therefore, less a question of creating a corporate culture than of clarifying it and putting it into practice.

Here are five steps we recommend for developing and implementing a corporate culture:

1. Define each corporate culture component clearly. Involve managers from different areas of the business to reduce the risk of forming a one-sided view.
2. Explain your culture, for example in a culture code or culture book. This can be an external document as well as an internal one – just make sure it is clear and comprehensive.
3. Communicate your corporate culture. Ensure that employees, customers, and stakeholders understand what it means.
4. Implement the corporate culture throughout the organization. The culture should be visible and lived in every part of the business.
5. Review and refine your culture as soon as it becomes necessary. Potential triggers could be dissatisfaction among employees, a company merger or acquisition, or a strategic pivot or rebranding.

There is no one-size-fits-all solution to company culture, and it is not a topic that can be dealt with in a week. The best thing you can do is make sure your HR team, managers, and employees have the right tools to encourage a healthy work culture.

flair is an all-in-one HR solution that can help you implement your culture in numerous key processes: from recruiting and onboarding to performance reviews and employee recognition.

If you want more detailed tips on how we can help you improve your company culture, check out our employee experience guide.

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