“Company culture is defined as the rules and values that largely comprise a company’s work environment, both on-premise and remote.â€
Table of Contents
- What Is Company Culture?
- Importance of Company Culture Assessment
- The Various Types of Company Culture
- 4 Best Practices to Improve Your Company Culture
What Is Company Culture?
Company culture is the set of rules and values that broadly encompass a company’s working environment, both in on-premise offices and extended remote workers.
Simply put, a company’s culture is the ethos shared by its employees – including frontline workers, middle management, senior leaders, and the C-suite. It can be defined by C-level leaders but could change dynamically in response to market movements and customer feedback.
Culture is a top priority for companies across the world today. It gives employees a coherent direction about their work. It also guides senior leadership in the decision-making process, ensuring that the company’s growth is always on track. However, poor culture can impact a company negatively. Research suggestsOpens a new window that companies in the U.K. alone are losing £23.6 billion every year due to weak or bad company culture.
One could say that culture is a company’s identity as perceived by its employees and customers, apart from the product and services it provides. It is easy to confuse culture with a company’s values, but values become part of your culture only when it is enacted in the real-world. Because of this, your middle management plays a significant role in upholding company culture, communicating its various tenets to frontline workers.
The following components add to a company’s culture profile:
- Clear and honest communication of the company’s successes and future growth prospects
- Workplace policies, rules, and regulations, including benefits and perks
- Leadership/Management communication style
- Corporate social responsibility (CSR) activities
- The level of autonomy enjoyed by employees
As you can see, the definition of culture covers a breadth of tenets. Anything that a company might do that’s beyond necessary regulatory mandates and product/service necessities could be construed as part of the culture. And this has a significant impact on the company’s long-term bottom line. Let’s look at why it is so necessary to assess your company culture in greater detail.
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Importance of Company Culture Assessment
First, what exactly is company culture assessment?
Company culture assessment is a survey that seeks to identify the nature of culture present in the company and to analyze whether it correlates to intended goals.
Without a proactive culture design, a company risks becoming fragmented with different teams and business units operating as “islands†with a culture of their own. These may be totally out of sync with the broader goals of the company. To prevent this, you can undertake a company culture assessment, using either manual efforts or digital tools.
The manual method can be cumbersome, as it involves the collection and analysis of vast amounts of data. That’s why culture assessment tools such as Culture AmpOpens a new window and CultureIQOpens a new window have become so popular. They automate the data collection process, analyze it according to scientifically validated frameworks, and identify gaps/potential improvement areas.
Below are five key reasons to conduct periodic company culture assessment:
1. Increases productivity
One of the critical insights from culture assessment is whether you are currently facilitating a productive work cultureOpens a new window . This includes ensuring that employees have a clear understanding of their future growth prospects, are given period feedback on their work, and are engaged with peers and managers.
By undertaking a company culture assessment, you can formulate policies to boost employee productivity. For example, an assessment may reveal that some employees face bullying or harassment from peers or higher authorities. The HR leadership needs to then formulate a plan to address this issue effectively in coherence with the CEO and other senior management team members. This needs to include both prevention and consequences to deter such activity and encourage a harmonious and productive company culture.
2. Encourages diversity of ideas
One of the critical targets of culture assessment is to identify if employees feel free to express their opinions during brainstorming/ideation stages without any fear of reprisal or unfair dismissal. A culture that encourages free expression of ideas at set appropriate times (such as group discussions and planning sessions) gets access to a pool of diverse approaches that may lead to better products or services, more profits, and improved customer experience and satisfaction.
3. Creates better recruitment opportunities
There are two key benefits of having a good company culture that is periodically assessed with assessments:
- Improved company culture leads to more employee recommendations for recruitment. Not only is it indicative of a satisfied and engaged employee, it also cultivates a culture of friendship and family-hood in the company where employees personally know each other. This often encourages other employees to open up as well.
- HR is not only the guardian of company culture. Like any other employee, they are also influenced and abide by it. In other words, your recruitment program will be profoundly shaped by your culture. The tone and tonality of recruiters and HR personnel play a crucial role in attracting and retaining desired candidates.
4. Determines career progression
How an employee progresses across the company ranks depends on your culture. For example, an outcome-based culture may value performance over potential and influence career tracks accordingly. A more flexible culture will seek out latent potential, with an eye on learning and employee development. Core decisions, such as outlining a succession plan for the C-suite, hinges entirely on your cultural stance.
5. Strengthens employee advocacy
A company culture assessment showcases which employees are the most invested in your culture, and identifies the employer brand. You can leverage these groups for employee advocacy activities, bolstering your recruitment as well as consumer marketing footprint. Also, companies with a strong culture are more likely to be perceived as powerful brands, and employees will be eager to vocally discuss your brand’s tenets with their personal and professional communities.
These are among the major reasons for actioning a company culture assessment.
To make this easier, researchers Kim Cameron and Robert Quinn at the University of Michigan, have defined the Organizational Culture Assessment Instrument (OCAI)Opens a new window , based on the Competing Values Framework (CVF). The OCAI distributes 100 points among four competing values, mapping your company’s different cultural dimensions.
Do you focus on internal development or external/market-facing outcomes?
Do you prioritize flexibility over stability?
The OCAI positions your culture at the intersection of these two questions, assigning it a unique identity. We found it a useful way to assess company culture and understand the broad culture type in which one operates. Let’s look at these types more closely.
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The Various Types of Company Culture
There are many ways to classify culture and inevitably, this leads to a wide range of culture types. Today, we are looking at two important classifications and company culture taxonomies: the one generated by the OCAI and Harvard Business Review’s eight types of culture.
4 types of culture according to the OCAI
While there can be various types of cultures across organizations with each company adding its own unique strain, academicians have come up with some key commonalities and types.
Here, we will look at the company culture types as defined by OCAI and Harvard Business Review.
According to OCAI, developed by professors at the University of Michigan, below are the four common types of company culture:
1. Adhocracy
This implies a culture of creation, innovation, and risk-taking. A company with an adhocracy culture is marked by external-facing attitudes and a focus on flexibility. Employees are encouraged to innovate, think freely, and invest in disruptive ideas to benefit the company’s product or service capability.
2. Clan
This implies a culture of interconnectivity, collaboration, and a sense of family-like camaraderie in the workplace. If a company falls into this category as per the OCAI matrix, it means that the focus is on internal development and flexibility. Several small businesses choose to follow this definition of company culture, building a tightly-knit workforce.
3. Hierarchy
This implies that structured processes and pan-organization homogenization take centerstage. Companies with this type of culture fall in the internal-facing + stability section of the OCAI matrix. Several large organizations, particularly in the services industry, are characterized by a hierarchy culture.
4. Market
This implies an outcome-focused culture where long-term stability and market success are the top goals. Market culture-led companies are at the intersection of external-facing policies and security. Several retail giants with a massive distributed workforce around the globe follow this culture definition as it aids governance while maximizing productivity.
8 types of culture according to Harvard Business Review
In a landmark 2018 articleOpens a new window , researchers from the Harvard Business School, Spencer Stewart and UVA Darden School of Business share their eight-pronged classification of culture, based on how employees interact and respond to change. This suggested eight types of culture:
1. A caring culture
An employee-centric environment, where managers/leaders nurture the workforce and build relationships.
2. An enjoyment culture
A fun, vibrant workplace where employees like coming in to work every day and appreciate its myriad perks and benefits.
3. A culture of purpose
Employees are aware of working towards a shared vision for a better future, often perceived as larger than the company’s immediate area of operations.
4. A learning-focused culture
Employees are encouraged to continuously upskill themselves, future-proofing the company, and making it more agile.
The above four types of culture are the most responsive to change, valuing flexibility in how employees work as well as the organization’s operational approach.
5. A results-centric culture
Also known as an outcome-first culture, performance is recognized and rewarded, making the attainment of goals a top priority.
6. An authoritative culture
Marked by strong leadership, boldness and strategic skills are regularly rewarded, viewing employees as individuals.
7. A culture of safety
Work environments are predictable, conscious of offering employees long-term security. This type of culture is typically risk-averse.
8. A culture of order
Highly structured, such companies reward a systematic work environment. Organizational change isn’t too frequent in this type of culture.
These last four types are less open to change.
As you can see, there are multiple ways to assess, understand, and define the culture of a company. The OCAI and HBR frameworks are excellent starting points for those yet to ascertain their exact cultural identity.
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4 Best Practices to Improve Your Company Culture
Now that you know what company culture is and ideas for assessment, it’s time to get down to executable brass tacks. Here are four best practices to help you improve your company’s culture in 2020.
1. Translate cultural values into behavioral change
Your employees will be the flag-bearers of the company culture. Their workplace behavior must be in sync with your culture code. That’s why it is advisable to clearly outline the behavioral change that you’re aiming for, with actionable tasks. For example, some companies choose to deploy a “no email after work hours†policy where no employee is required to respond to emails after work hours unless it is a critical emergency.
2. Solicit feedback from your employees and managers
A reliable and effective culture requires buy-in at every level. By collecting feedback, you can gauge which policies are working, if they are impacting employee sentimentOpens a new window /moodOpens a new window to facilitate productivity, and what is the effect on your bottom line. #ProTip: use an employee surveyOpens a new window analytics platform to streamline the feedback collection process.
3. Give your managers culture training
This step is critical for establishing a stable, uniform culture across the different teams, offices, and departments in your company. Managers must be trained on the various company policies and how they relate to your culture profile. They should also be trained on using discretionary judgment when an ambiguous situation arises – for example, an employee taking 30+ weeks off under an unlimited vacation policy.
4. Keep an eye on cultural evolution through hiring
It is a good idea to hire for culture add, and not for culture fitOpens a new window . That way, every recruit brings a fresh element of culture, ensuring that your company continuously evolves over the years. This is particularly relevant for growth-focused startups that are yet to have a culture code set in stone.
What do you think is the most essential element of company culture? Tell us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We are eager to know about your views!