What is organisational culture – and why should you care?
Organisational culture can be an easy thing to ignore. Often because it is difficult to notice in the first place. We are so immersed in it. In Culture Map, Erin Meyer explains it through a much-told story of two young fish who meet an older fish.
“He nods at them and says, ‘Morning boys, how’s the water?” – which prompts one of the young fish to ask the other, ‘What the hell is water?’”
As leaders, we can similarly lack perception when it comes to our corporate culture. Because we can’t see it, we don’t think about it much, we don’t prioritise it and we don’t measure its impact.
But just as certain species of fish can only live in saltwater, or freshwater, certain kinds of success can only grow in businesses that have taken the time to analyse the quality of what surrounds them.
Defining corporate culture
“Cultural patterns of behaviour and belief frequently impact our perceptions (what we see), cognitions (what we think), and actions (what we do).” – Erin Meyer, Culture Map
Before we can begin to address the impact of culture, we need to differentiate between what it is and what we sometimes believe it is.
We often imagine that our company’s list of values is our company’s culture. But there can be a vast divide between our conscious values and our reality.
Professor Geert Hofstede conducted one of the first and most comprehensive studies of how culture affects the workplace. He defined culture as “the collective programming of the mind,” which distinguishes “the members of one group or category of people from others.” It is a subconscious set of values, a collective way of thinking, that directly affects how we act. It affects how our organisations teams respond in times of crisis, how we instigate executive strategies and how we interact with one another.
Or as Marc Randolph, the co-founder and former CEO of Netflix, says, “Culture isn’t what you say, it’s what you do.”
Mazars’ Board Leadership in Corporate Culture survey revealed that only 5% of company board members are able to say they are “very confident” that there is “clear alignment”’ between their desired and actual culture. It is a gap that we need to address, if we want to succeed as leaders.
Organisational culture enables business success
“The bottom line was that while everyone was rowing the boat… there was no forward movement.” ― Ed Catmull, Creativity, Inc.
The impact of culture on the success of a business is pervasive. Often we imagine that strategy – our business idea and our business plan – is what ensures success. But it is our company’s culture that affects our team’s capacity to rally around that idea and to fulfil that plan.
In Creativity Inc. Ed Catmull, a co-founder of Pixar, writes “There is nothing like a crisis, though, to bring what ails a company to the surface.” And it is then that our true culture, not just the one we hoped we had, is revealed.
Inevitably, unexpected obstacles will hinder our progress, unforeseen problems will limit our initial vision, and sometimes, a business initiative will simply fail. Our culture affects our ability to recover, to adapt to the unexpected, to learn from our experiences. It is our culture that determines whether we will be sunk by hard times, or rise above forecasted results.
Culture attracts talent
“…it’s often something intangible – like a diverse, inclusive, values-driven culture – that determines where the best and brightest talent decide to work.”- Marc Benioff and Monica Langley, Trailblazer: The Power of Business as the Greatest Platform for Change
When it comes to attracting the most talented individuals, the cultural fit is the most important factor. Eric Schmidt and Jonathan Rosenberg emphasise this in How Google Works, “Many people, when considering a job, are primarily concerned with their role and responsibilities, the company’s track record, the industry, and compensation. Smart creatives, though, place culture at the top of the list. To be effective, they need to care about the place they work..”
Culture determines who stays and who leaves. Those that feel at home in a company’s culture will gladly remain while those that strain against it will either tire and leave, or compromise to tow the company line, for a while. But the best leaders, the smartest creatives, will never be content to stay in an organisation that is at odds with their ideas, their work ethic, their ideals. They’re not interested in career progression as much as career purpose.
Implications for the next decade
“Leading with culture may be among the few sources of sustainable competitive advantage left to companies today. – Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng, HBR, The Leader’s Guide to Corporate Culture
Corporate culture no longer only has implications for the long term. The landscape is changing. Some large money funds are now restricted – they can only invest in companies that meet certain criteria in regard to gender balance, or approaches to their workforce. How much a business can be socially responsible is partly defined by the type of industry, but company culture plays an even more significant role.
As the next decade unfolds, the impact on businesses will only be greater. Company culture will affect PR and subsequent popularity among customers. It will affect investment. It will affect the quality of new hires and the retention of high performing employees. It will affect our ability to navigate an increasingly unpredictable world. Margaret Heffernan explained at the 2019 TED Summit, “the unexpected is becoming the norm. It’s why experts and forecasters are reluctant to predict anything more than 400 days out.”
We need to diagnose our corporate culture, and begin shaping it with intention, so that we can fulfil our company vision. But to understand our own culture, we often need outside perspective. The steps we take will determine the level of success we experience in an uncertain decade.
For more information, or to discuss your own development, please get in touch.