What is company culture and why is culture important in business?

Company culture is a popular topic at the moment with lots of different business cultures of some of the world’s leading companies making headlines, both in a positive and a negative light. But what does company culture actually mean?

What is company culture?

The sum of how individuals in a corporation interact with one another and collaborate is known as company culture.

Culture, in a societal sense, is a group’s cumulative knowledge and achievements displayed via things like customs, art, music, food, religion, and language. A society’s values and beliefs are founded on its culture, and a company’s culture is no different. It’s a collection of views, values, attitudes, standards, goals, and actions that everyone shares.

An organisation’s culture is similar to a collection of small societies within a larger civilization, and their cultures are expressions of the job they do, the values they hold, and the collective behaviours of its employees.

Using two hypothetical instances, we will explain how corporate culture develops.

First example

Firstly, we have a multinational software firm with thousands of employees all over the world. Thousands of different views and behaviours could be whirling about in its enormous personnel base. Regardless of their physical distance, they’re all working in the same field, ostensibly for the same objective, and it’s likely that a firm of that size has articulated some set of values to all of its employees, even if they don’t feel personally bound by them.

Second example

Our second hypothetical instance is a small business with only a handful of employees, all operating from the same building. They have a clear industry, a relatively clear business purpose, and a set of principles that the employees understand, even if no memo or video conference has been sent out to make them plain.

Employees at both organisations are aware of their mutual aim, and they are likely to act in any manner their employer deems appropriate in order to achieve it.

Company Culture: Weak vs. Strong

However, what makes company culture so intriguing is that it is not a single notion. Company culture is a combination of two concepts: the publicly broadcasted or declared culture of an organisation, and the actual culture of the organisation, meaning how its employees really act and treat one another. In some circumstances, these two principles converge, resulting in what may be described as a strong culture: executives and employees who understand and embrace the company’s stated values as a result of purposeful training and decision-making at every level.

However, in an organisation with a weak culture, there is a mismatch between the stated and actual cultures, either because there is no stated culture at all, or because the claimed culture isn’t understood, maintained, or perpetuated by the employees or those in charge of culture. Weak cultures are frequently an afterthought, with businesses realising the necessity for a stated culture after ignoring their employees’ experiences. Instead of putting up the work to support genuine cultural shifts, they write a mission statement, display it on a bulletin board, and hope that enough publicity will persuade their staff and the general public.

Strong company culture is where everyone understands and embraces their company’s values and goals.

Weak company culture is where there is a mismatch between how the company views itself and how it really is.

Communication is key

Type of company culture isn’t always defined by company size, either. The first example above might have a wonderful company culture, with key principles established from the start, reinforced with the opening of each new site, backed by company-wide communications and marketing efforts, and maintained by a vigilant human resources department. Meanwhile, a vindictive, abusive owner who treats his employees like cattle, fires good people out of spite, and promotes incompetent workers to management positions could in fact preach peace, coexistence, and love for all humanity around the office.

Why is culture important in business?

To understand why corporate culture is vital, consider the following questions: Which company would you like to work for: a multinational corporation that values its people or a small business that mistreats its workers? And which company do you believe has the best long-term prospects?

Most of us would probably choose to work for the larger example business, owing to its positive corporate culture. Because of those feelings, employees are likely to be happier there, less anxious about keeping their jobs, more enthusiastic about progressing for the right reasons, and more collaborative and involved in their work.

This all implies there’s a better chance the bigger company will still exist in ten years, rather than being run down. Company culture is vital because it is the bedrock of every organisation; a strong culture acknowledges that people are the most valuable asset a company has, and that safeguarding its people is the surest path to long-term success.

The Culture Misalignment Problem — Stated vs. Actual Business Culture

Finding alignment between claimed and actual culture might be one of the most difficult challenges for any business, but it doesn’t have to be. When the declared culture emerges after the actual culture has formed on its own, alignment can be particularly difficult. Without or with official guidance, company culture will always evolve, and changing the direction of an established culture that has been fortified by years of tradition and numerous generations of recruiting requires a lot of effort.

Knowing this, wise businesses would prioritise culture from the beginning rather than trying to fit it in later. It takes understanding the existing culture and reinforcing the positive aspects of it, one step at a time, until there is enough of a foothold to justify making significant changes.

Another big difficulty arises when measures to foster a positive company culture are motivated by a desire to improve the organisation’s image rather than a genuine desire to do so. When an otherwise aligned workforce population is abruptly awakened to the inconsistency between what they say and what they do, such efforts might actually backfire.

When an otherwise aligned workforce population is suddenly awakened to the inconsistency between what the firm says and what it actually does, culture efforts like this can actually have a detrimental effect. As a result, it’s always better to approach culture with realism, openly acknowledging the genuine reasons and desired goals that employees are likely already aware of, and suggesting any planned modifications internally before announcing them publicly.

Employees are the bedrock upon which organisational culture is developed over time. So, if there’s any doubt in your mind about whether or not you have the trust and support of the people in your business, you’d be wise to resolve it before embarking on any cultural effort.

Make sure your employees have opportunities to grow professionally and personally, regardless of how you define your vision of creating the ideal corporate culture for you. Ask the correct questions and listen to your employees’ unique viewpoints; they already have a decent notion of where your workplace culture is right now, and they can help shape it in a strong way for years to come.



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We help tech ventures scale by strategically advising, boosting growth, and getting startups funded from our investor network.