Company Culture: What is It and Why is so Important

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Company Culture: What is It and Why is so Important

All companies have their own company culture. It is something that is built during the day-to-day actions. It is the way of being of the company, what defines it and what differentiates it from the others. 

Some companies have a well-defined culture and ensure that everyone in the organization know it, creating a harmonious environment where personal and corporate goals go hand in hand, there is a feeling of belonging, and the business grows and evolves. 

Others know their culture and its importance, but fail to integrate it into their workforce, creating teams disconnected from the needs of the business, without commitment, and poor identified with the mission and vision, remaining stagnant in the market. 

Finally, there are other companies, the least, that the corporate culture is something that sounds foreign to them, and they don’t bother to develop it in the company, creating disengaged behavior patterns. These companys surely have their days numbered. 

One thing is clear: corporate culture is a key element in business development. In fact, PWC’s “2021 Global Culture Survey ” states that: 67% of managers report that culture is the most relevant element for business success, above strategy or operations. 

This is so true, that more and more companies are investing a large part of their resources in tools and programs that promote the development of corporate culture among the workforce. 

But of course, if we want to improve this aspect, we first must know what are we talking about. What is company culture? What elements make it? How many types are there? And why is it so important for employees to be part of the corporate culture? 

Let’s see the answers to all these questions one by one. 

What is company culture? 

The company culture is the set of beliefs, values and practices shared by the group of members that make up the organization and that serves to guide the course of all actions, decisions and activities aimed at achieving the objectives. 

It defines from the tone of internal communications to the dress code of the employees, and it’s the company itself that has the duty and the obligation to make all people know their corporate culture and integrate them into it. 

Corporate culture influences three main aspects: 

  • The brand image: how it is perceived from the outside. 
  • The employees: how are the interactions with and between them, the work model and the leadership style. 
  • The customers: what strategies guide customer service. 

A solid and powerful culture projects stability, homogeneity in the quality of services and a strong competitive advantage, since it is very easy to recognize and identify a company with its own personal culture. 

In short, corporate culture is the DNA and the ideology of an organization. 

The 7 Elements of Organizational Culture 

According to Stephen Robbins, one of the most respected and influential authors in the world of organizations and people management, every corporate culture is made up of seven elements: 

  • Autonomy. It refers to the degree of responsibility and independence that employees possess within the organization. It ranges from taking responsibility for one’s own tasks, to participating in corporate decision-making. Companies that promote individual autonomy foster self-managed teams, trust and proactivity. 
  • Structure. It refers to all the norms, rules and codes, implicit or explicit, that mark the operation of the business, as well as the degree of supervision that exists so that these rules are complied with. 
  • Support. This factor defines the type of leadership and relationships. Support is very important, and an overly directive style can hinder relationships of trust and create a toxic environment that harms cooperation and teamwork. 
  • Identity. This component appeals to employees’ sense of belonging and is one of the biggest drivers of motivation. The more identified a worker feels with the company’s values, the more likely they are to commit to their goals and work hard to achieve them. 
  • Recognition. Are employees valued? Are they encouraged and rewarded every time they exceed expectations? When employees feel valued and are fairly rewarded for their efforts, satisfaction increases and, consequently, the work environment improves. 
  • Compromise with Conflicts. It defines the way a company manages the typical problems that arise because of daily coexistence between people, whether with employees, with customers, or with any person related to the organization. 
  • Risk taking tolerance. It indicates the degree a company is willing to accept mistakes and learn from them. Creating a safe space where employees feel free to make mistakes without fear of being rejected is essential for innovation and the generation of new ideas that lead change. 

Knowing all these elements and how they relate to each other is the first step to start creating a robust and healthy organizational culture. 

In the same way, when a company culture starts to fall, it doesn’t mean that all factors are in problems in the same time. With a proper tool, like Team Insights, you will find out which of these specific factors need urgent addressing and you will be able to start fixing the problem before it affects everyone else. 

Dimensions of organizational culture 

Author Roger Harrison explains that companies do not usually have a 100% fixed, unique and immovable culture. However, all of them end up leaning towards one or another of the four dimensions that he describes in his book “ Diagnosing Organizational Culture”. 

  1. Power culture dimension

Power-oriented organizations focus their efforts on domination, both of the market and of their own employees. 

These are highly competitive companies, and their desire to be the kings of the market promotes actions such as buying smaller and “weak” companies. The leadership style is usually autocratic: except for managers, no one has decision-making power. 

They know how to negotiate always getting the maximum benefit and they do not hesitate to cancel agreements when they’re not useful for their results. 

  1. Role culture dimension

It’s a culture oriented to bureaucracy, to “paperwork”, where legality, legitimacy and responsibility are defended above all else. 

In these companies, respect for the hierarchies and the status of each one takes on special relevance. Conflict management is resolved through the application of pre-established procedures, following a rigorous code of conduct. 

They are companies with a strong attachment to processes and protocols. 

  1. Achievement culture dimension

Here, the achievement of the established objectives prevails, prioritizing those of short and medium term. Teamwork is essential: collaboration between areas, division of projects, creation of groups… 

For maximum efficiency, companies optimize both processes and resources – both human and material – which would increase profitability while saving costs. In addition, everything is measured and monitored, since the monitoring of the results allows forecasting and that will help to better manage decisions. 

  1. People culture dimension

The main objective of this culture is to satisfy the needs of the employees, promoting the spirit of a leader at the service of others. 

For these companies, the personal and professional development of their teams is the most important thing, and promote values such as psychological security, transparency or trust. 

All this creates the right space for the flow of motivation and creativity while retaining talent. 

Benefits of working on corporate culture 

A well-defined culture: 

  • Generates a feeling of belonging. 
  • It unites all the members of the organization under the same philosophy. 
  • It serves to differentiate a company from the competitors and create its own name within the market. 
  • It is a motivating element and provides satisfaction. 
  • Provides stability in all processes. 
  • It facilitates the design of strategies that respond to the needs of the business. 
  • With it, all the members of the company “row in the same direction”. 

Do you want to know what kind of culture you have in your company? Find out with Team Insights 

Use our Demo account and discover everything our software can do for you.