How to Understand, Create, and Manage A Company Organizational Culture

A Company’s strong organizational culture backed by structure and strategy is vital to a successful company. Having a strong company culture allows these three things to happen:

• Employees know they will be rewarded for demonstrating their company’s values
• Employees know how they should respond to situations
• Employees know what the proper responses are

The HR department plays the biggest part in managing company culture. They hire staff who match the company culture and develop training and programs that will affect company culture. Another way that company culture can be affected is through the rewards, recognition, and discipline systems.

What Is Organizational Culture?

An organizational culture is a shared set of values based on these things:

Human nature

Does the company believe humans are generally, good or bad, able to change, reactive or proactive? These beliefs will support how everyone interacts and should be managed.

The business environment

How does the business see its workspace and its community.

Appropriate emotions

What emotions are appropriate for the workplace? Which ones should be expressed and which ones should be hidden.

Effectiveness

What metrics will be used to measure the performance of individuals and the company?

Culture is often hard to define, and there are many different views about what organizational culture is. It can manifest as communication styles, the behaviors of leaders, company celebration, and in many other ways.

Some companies struggle to keep messages about their culture consistent, but inconsistency leads to confused and unengaged employees.

 

Why Is Organizational Culture So Important?

A company culture helps to provide moral guidelines for how its employees should behave at work. Organizational culture provides the context for all of the business’s actions. There is no template for company culture, as it needs to fit the values of the leaders and the business’s objectives.

For organizational culture to work, the leaders need to demonstrate it in their actions. It also needs to be a strong factor in hiring decisions and training. A lack of organizational culture or hiring poor fits to the company culture can cause high employee turnover, low profits, disengaged employees, and poor customer relations.

One area where organizational culture can suffer is during mergers and acquisitions. Combining companies with different company culture can have disastrous effects if not done properly. It is vital to address business objectives as well as the company culture during a merger or acquisition.

The companies beliefs and values must be upheld if the organizational culture is to provide a strategic advantage. Culture means that employees will identify with the company and will understand what is important. Employees will also trust the company more, be able to make better decisions in line with the company’s culture, and will mean fewer disagreements.

 

HR’s Role in Company Culture

The company’s HR team should seek to encourage an organizational culture that will lead to high performance. They should ensure that culture factors into decisions on hiring, creating programs, and even firing.

HR are intrinsic to organizational culture; they can help ensure a strong culture by:

• Ensuring that the organization’s culture is clear, understood, and implemented.
• Being a role model for organizational culture
• Reinforcing the company’s values
• Ensuring there are feedback channels for employees
• Encouraging employee empowerment
• Promoting a safe and healthy work environment
• Creating and implementing reward and recognition systems
• Defining the responsibilities of each role
• Recognizing and solving issues as they arise

 

What Shapes an Organization’s Culture?

Most company cultures are not well-know, and the organization’s values are not well communicated to staff.

In truth, company cultures are very similar. Most companies are driven, want to increase their profits, want to be team-oriented, and want to do good in the community.

Values

Companies will often communicate their culture through a series of values. These can include:

• • Results-driven
  • Being focused on people, whether that is their workers or their customers.
  • Collaboration and teamwork
  • Attention to detail
  • Innovation
  • Stability
  • Competitive spirit
    
    

Hierarchy

A company’s hierarchy plays a part in its culture as it provides a structure for how employees will escalate or solve issues. A high level of hierarchy has a well-defined structure and employees know how to escalate problems. A moderate level of hierarchy has a defined structure, but employees have the flexibility to work outside of traditional channels. A low level of hierarchy means that people have loose job descriptions, and there is little authority.

A high level of hierarchy tends to be more formal and moves slower because of the checks needed.

Urgency

Another contributing factor to organizational culture is how fast things are pushed through and the response times to the market. These will support different levels of management style and the quality of work. For example, a newspaper may have a high level of urgency where it is reactive to stories without checking facts. Therefore, it sacrifices quality for a high response time.

Task Orientation vs. People Orientation

This will affect the way decisions are made in your company, as well as perhaps employee engagement. In some cases, a company may choose their orientation, but in others, the industry may dictate it.

Functional Orientation

Companies may focus on a particular function of their company to drive success. This could be something like marketing, R&D, or customer service. This orientation will drive the organizational culture and inform decisions.

Organizational Subcultures

Many organizations have subcultures, and they could either be harmful or strengthen the company’s culture. For example, a particular region may have its own subculture or a certain department. These differences must be noticed, and if they undermine the overall company culture, then it must be addressed.

 

Developing and Managing Company Culture

Organizational culture tends to change and grow over time. To manage culture, it must be demonstrated by all leaders in the company. It must be visible.

How Does Culture Develop?

The way an organization does things, it’s rewards, traditions, and behaviors are the visible manifestations of company culture. Founders will establish the initial company culture, but over time a company culture will change and adapt based upon what has worked in the past. Some companies hash out decisions openly so everyone can get a say, others prefer to deal with decisions in private meetings.

Once a culture has been decided upon by managers, they need to hire people who embody the company values and are competent at the job.

Sustaining the Company Culture

To manage organizational culture, management should first identify the key processes of their business day to day. These day to day activities are key to company culture as they need to be in line with the culture.

Use these three categories to identify company culture:

• Social culture: This relates to the distribution of power in a group of people.
• Material culture: This relates to the results of the work and how the group supports the exchange of services.
• Ideological culture: This relates to the beliefs, values, and ideals of a group. This will give management insight into how people are motivated.

The beliefs and values of an organization will originate with the founders because they found the values successful. After all, that is why the organization exists, and they have their position. However, a company’s culture needs to evolve over time in order to grow.

 

How HR Can Develop Culture

HR plays an important role in ensuring the company culture thrives. They can develop strategies, programs, and policies that strengthen the company culture. HR’s hiring practices, orientation, recognition programs, and performance management programs are vital to sustaining company culture.

Hiring Practices

Hiring people who fit the company’s culture is the most important part of maintaining company culture. Even a star performer can undermine the company’s culture and cause disruption if they do not share the company’s values. An employee who fits in with the company’s culture will perform well and encourage others to perform well.

A hire that does not fit with the company’s culture can cost up to 150% of their salary in disruptions, separation, and hiring a replacement.

To ensure you hire people who fit with the company culture:

Ask interview questions that identify if the applicant shares company values. Find out what behaviors and values they have, as well as what they value in a company they work for. You can do this by discovering what they valued about the best company they have worked for and what they hated about the worst company they worked for. Do not tell the candidates upfront about the company culture, save that for the orientation. This will ensure their answers are true. Ensure there are multiple people involved in the hiring process; each will notice different things.

However, a company must ensure that their company practices promote their company culture. If a new hire realizes that the company does not embody the values it says to, then they will soon leave.

On-boarding programs

The onboarding process is key in ensuring new hires are aware of the company’s values and desired behaviors. This is where new hires will join social networks and have access to resources that help them to become a part of the company culture.

Reward and Recognition Programs

The reward and recognition programs should be based around the company’s values. If the company values teamwork, then rewards should be based on teamwork rather than individual performance. People who personify the organizational values should also be recognized by HR.

Performance Management Programs

Employees perform better in companies who share their values and beliefs and are recognized for their achievements. Good performance management programs are important to ensuring employees know what is expected of them.

Communications

Communication must be handled to ensure that all messages are in accordance with the company culture. Conflicting messages may cause cynicism, distrust, or even frustration. It will make employees hesitant to give their best effort. To avoid this, everyone in the company needs to be on the same page about the company’s values and beliefs.

Metrics

To ensure the organizational culture is strong, you need to be able to measure it. This can be done by:

• • Developing an instrument to assess the culture, such as a survey.
  • Allowing employees of all levels and divisions to respond to the survey.
  • Analyze and communicate the results.
  • Conduct focus groups among employees.
  • Agree on the key issues.

Leaders and HR professionals can use these results to strengthen their organizational culture. They can identify issues or processes that don’t gel with company culture.

 

Legal Issues

Employers need to tread lightly when emphasizing organizational culture in their hiring process, or they could face discrimination claims. Employers should know any values or beliefs that may exclude certain groups.