Understanding Corporate Culture

Posted by

Ian Hare

on 06 Jan 2023


A properly-developed corporate culture is critical to business success. So, it's important to understand how to create this type of culture in your company.

Understanding Corporate Culture

A well-defined corporate culture supports recruitment and retention, engages and encourages employees, and positively impacts productivity, revenue and growth. But what’s the best fit for your business?

An inside job - creating a corporate culture

All companies want to show they’re a more attractive proposition for employees and clients than their competition.

However, social media and sites like Glassdoor give disenchanted people a voice that can quickly erode a company’s reputation. Equally, get it right, and they can mark you out as someone people want to work for and with.

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What is corporate culture?

To some, corporate culture conjures up already-cliched images of companies bringing the fun in with games areas, slides and hammocks. And, in fairness, that’s a legitimate part of company culture. But so is a locked-down, highly-regimented workplace.

Your company culture (the terms are interchangeable) reflects and guides how your business operates – internally and externally – based on your beliefs and your behaviours.

There’s no right or wrong. Providing you make your culture clear to every stakeholder – employees, investors, prospective candidates and clients – so everyone knows where they stand, it’s your choice.

Why is corporate culture important?

In short, a clear corporate culture supports business success.
It’s the spine of the organisation that sets out the accepted working practices and procedures from the top down, so everyone understands what’s expected of them and where the boundaries are.

Corporate culture also provides a sense of identity, attracting like-minded people who want to work for you. Happy, committed people are also more productive, driving business growth.

A 2020 US survey by the Society for Human Resource Management (SHRM) found one-in-five employees had left a company because of bad company culture in the previous five years – turnover that cost US employers an estimated $223bn.

Unsurprisingly, PwC’s 2021 global culture survey revealed culture is gaining ever more traction, with 67% of senior leaders saying it’s an important topic compared to 53% a decade ago.

Culture is also a key weapon in a business’ armoury – 88% of PwC respondents said it enables internal change initiatives, while 81% said it was a source of competitive advantage.

A distinctive culture also produced better business outcomes – 48% of respondents said it led to increased revenue, and 80% said it increased employee satisfaction.

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What are the four main types of corporate culture?

The four ‘Competing Values Framework’ defined by the University of Michigan’s Kim Cameron and Robert Quinn in the 1980s are most used – adhocracy, clan, hierarchy and market. Each has defined behaviours and, as Wikijobs highlights, pros and cons.

As every business is unique, a seamless fit into one category is unlikely, and you may recognise traits from some or all. Individual departments may also have different nuances – for example, a noisy, creative Marketing team may have more leeway than Accounts, but one of these is likely to resonate more than others.

1. Adhocracy

Adhocracy is a creative, dynamic working culture with people who are prepared to think ahead, take risks, and commit to innovation and disruption.

Its senior staff are often entrepreneurial, actively encouraging their people to be the same and think outside the box. An adhocracy working culture is agile, reacting quickly to change – and often driving it.

Pros include:

  • Typically innovative, industry leaders.
  • Future-focused.
  • A belief in flexible working and individual freedom.
  • A greater focus on personality and creativity rather than experience and skills.

Cons:

  • A need to recruit wisely. A fast-paced, energetic environment can be intimidating and make people feel insecure.
  • The working environment may be chaotic or disorganised.
  • Focus on individuality may make collaboration uncomfortable and consensus difficult.
  • Risky behaviours or strategies can fail and cost a lot to fix.

2. Clan

Clan cultures are friendly, collaborative and people-focused. Senior staff may act as mentors, and its employees’ opinions are actively encouraged, heard and acted on.

Clans are caring, with an internal focus on health and wellbeing, and a drive to help people develop their skills and careers. It thrives on tradition and loyalty to the business, its clients and each other.

Pros include:

  • Good relationships mean employees enjoy being at work, helping to drive business growth.
  • Mentoring provides support and direction and encourages creativity.
  • Collaborative, inclusive environment, giving everyone a voice and ownership of decisions.
  • Clear communication that encourages feedback.

Cons:

  • Over-collaboration may result in a lengthy decision-making process and distract from core work.
  • Difficult to make tough decisions around cutbacks, job losses or changes to working routine.
  • Potential for polarised opinions or ‘pack’ mentality.
  • Possible blurring of social and professional boundaries.

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3. Hierarchy

A hierarchy revolves around policies and procedures within a formal and structured working environment.

Its defined managerial framework ensures leaders monitor and encourage people to follow traditional, tried and trusted ways of doing business, avoiding risks and high costs wherever possible to produce efficient and reliable results.

Pros include:

  • Clearly defined roles and responsibilities
  • Predictable and reliable methods, services and delivery.
  • Managers provide firm, understandable direction.
  • Key decisions are quickly made at leadership level.
  • Hard work is recognised and rewarded.

Cons:

  • Limited career progress and high competition for promotion.
  • Siloed teams may mean less interaction across the business.
  • Communication often needs to filter through several management layers.
  • Layers of management and employees may be expensive.
  • Slow to react to change, while innovation may be discouraged or stifled, reducing growth.
  • Public perception may see the company as ‘faceless’.

4. Market

Market culture is all about getting things done to achieve results. Often, it’s an aggressive, competitive, goal and results-focused environment that concentrates on external stakeholders rather than its employees.

Success is measured by winning – more clients, more money, more recognition – or all of them. Leaders expect their people to work hard – potentially at the expense of leisure time – but for greater rewards.

Pros include:

  • Employees are focused and open to learning new skills if it helps them succeed.
  • Employees striving to be the best helps ensure companies are successful, and often market leaders.
  • Goal-oriented culture drives higher revenue.

Cons:

  • Can be expensive for the company to stay ahead of the curve.
  • A competitive culture can lead to a ‘me first’ attitude and toxic working relationships.
  • Pressured employees may suffer from mental ill-health, stress, anxiety or depression
  • Low morale may affect staff retention, and in these days of social media, recruitment through reputational damage.

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How do you implement a corporate culture?

The various facets of your business and your approach to your employees, your clients and even the way you communicate will help define which culture you are.

For example, start-ups or small businesses are more likely to be able to embrace change, rip up the rule book and have a family feel. Older, larger companies may thrive on a management structure and set ways of doing things.

Typically, your culture is built on the foundations of your company’s values, vision and mission statement.

How do you treat, reward and recognise your people? What company benefits do you offer? Is there flexibility in the workplace? Is there a clear commitment to diversity, equality and inclusion internally and corporate social responsibility externally? How does the company do business? All feed into the company you are.

Find, create and nurture the culture that will provide the most creative and productive working environment. One that people want to be a part of, and clients want to work with.

Whether you’re creating a corporate culture or making changes to one that already exists, you need buy-in from the senior team down to ensure a successful transition. Explain clearly and transparently why you’re doing it (without glossing over any difficulties you want to overcome), your goals, and the overall benefits to the business.

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Which corporate culture is right for your business?

If you’re still in doubt about what your culture is or aims to be, tech and HR solutions company Oracle suggests leaders understand how their employees work day-to-day.

How do they behave with clients and colleagues? How do they collaborate? What are the cultural norms or expectations? Carry out a ‘culture audit’. Use surveys and talk to employees about their working and business environment to reveal strengths, weaknesses, and areas for improvement or growth.

And what you may be now isn’t set in stone. The slightest change can help alter a workplace culture, such as switching a strict dress code for a ‘dress for your day’ approach or introducing flexible working hours to help people with elder or childcare responsibilities.

Remember too, that creating a successful and fitting corporate culture may take time and tweaking. And be prepared to evolve. New technology, sector innovations, and even local and world events may affect how you and your clients do business.

Embrace change, but stay true to your values. Where there’s a corporate culture that fosters a sense of belonging, there are real business rewards.

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