What is corporate culture, and why is it important?

Corporate culture is a buzzword in human resources. Spreading throughout the world, corporate culture changes the way we think about work and encourages us to think about how we can do business for the better.

Let’s delve into the basics of what corporate culture is and why it’s important for small and medium-sized businesses.

What is corporate culture?

Corporate culture (also known as organizational culture) can make or break a business; big or small.

There are many definitions of corporate culture that cannot be boiled down to any one formulation. And it’s not just values scribbled on a wadepaper and taped to the walls, or office fruit vases, massage chairs, or table tennis tables.

It’s not even leadership style. Company culture is all of the above and more. It’s how a company drives business growth by giving every employee a voice while encouraging healthy daily attitudes, behaviors and work ethics.

A great corporate culture lays the foundation for real, tangible business growth. It’s based on honest and productive conversations and helps companies identify problems and collectively make decisions.

Why is corporate culture important?

In short, cultivating a great corporate culture is not only important for employee engagement, happiness and retention, but also for developing plans for a thriving business; regardless of the economic climate.

Over the past decade, corporate culture, becoming more meaningful and gaining speed, has encouraged CEOs, HR consultants and business leaders to ask the right questions that lead to honest assessment and push for change.

In the end, only when we identify and establish what can be changed can we begin to resolve problems and conflicts to evolve and outgrow our own limitations and, of course, our business competitors.

The importance of corporate culture

Reputation-dependent results

Reputation is everything. With widespread online publishing, blogging and trolling of companies, there are increasing headlines about the negligence of companies large and small.  

Thanks to the exposure of companies and employees (such as the BBC gender pay gap, Harvey Weinstein’s #Metoo campaign in the United States), HR consultants are urged to drop the “trivia” and get busy with what really matters: their people.

If we can learn anything useful from the experience (albeit negative) of large companies, it’s that a corrupt corporate culture is toxic to productivity and profits. Offices that ignore the importance of employee independence, flexibility and role fulfillment risk increasing consumer distrust because of their reputation.

On the other hand, we see the positive impact of corporate culture not only on individual employees, but also on the business as a whole (e.g., Uber and Netflix).

Employee health and economic health

Employee health and economic health are important indicators of corporate culture.

Great corporate culture theories, such as the HBR Framework and Schein Culture Model, clearly demonstrate that companies that put profit and monetary incentives ahead of human compassion and employee understanding are more likely to damage business performance.

The results of the Culture Economics Report go even further; showing a direct link between a corrupt corporate culture, employee satisfaction and tenure.

Fragmented work communities not only jeopardize the mental and physical health of employees, but can also have adverse effects on society and the nation’s economy.

Business Growth, Longevity and Results

A great corporate culture has a positive impact on business growth, longevity and results.

Contrary to what some HR professionals believe, studies show that the most profitable companies are not really profit-oriented in the first place. By shifting their focus from profit to purpose, employees and employers alike achieve greater task completion, which in turn increases productivity, efficiency and quality results. And what does quality lead to? Profit, of course. 

Thus, if all employees understand their company’s culture, goals and objectives, all team members can start on the right page.

By creating the conditions for success, starting with a solid foundation – employee engagement, employee retention, business longevity and growth goals – employees and teams are more likely to be in sync, ultimately leading to results that the entire company can be proud of.

Article by Breathe, translation by Malikspace