What is Organizational Culture and Why Is It Important?

How attractive is your organizational culture?

The answer to that question may well determine how successful you are in your recruiting efforts. According to a recent Glassdoor Economic Research study, 77 percent of job seekers consider a company’s culture before applying for a job and 73 percent will not apply to a company unless that company’s core values align with their own.

Organizational culture is so important, almost all employees, 93 percent, mention company culture in their online reviews of employers, according to a recent MITSloan Management Review study. Because of that, it behooves you to take the time to review and reflect on just what it is your company has to offer.

Chris Ruben, co-founder and managing partner of The Pontem Group, explains that “organizational culture is what leads when leadership is not there.” It consists of all the unspoken rules.

“I used to think company values were a bunch of [hooey] in my younger professional days, but as you study leadership and when you see leaders actually coach to values, you understand their importance.” Ruben does think there are too many cliché and “no kidding” values coming out of human resources “but ones that are intentional, believable, and used in making grey decisions is what the fabric of organizational culture is.”

These intangibles and shared values of an organization's culture are important because they decide the way group members interact and go a long way to promoting healthy competition within the organization. Culture gives employees a sense of direction and brings all employees on a common platform for decision making. It also creates the brand image and gives an identity to the organization, which then unites employees from otherwise different backgrounds.

Is There a Difference Between Organizational And Corporate Culture?

Organizational culture, corporate culture, and company culture are terms that are used interchangeably. They both refer to the collective approaches, outlooks, and values within an organization. About the only difference, according to BizFluent, is corporate culture generally refers to for-profit corporations whereas “organizational culture extends to all forms of organizations, including small businesses, privately held companies, and nonprofit organizations.”

How is Organizational Culture Formed?

“Culture is something that is learned over time, and it starts at the top,” says Dr. Harold Hardaway, thought leader on corporate communications and culture and CEO of Cardigan. “The founder of an organization or current CEO has the biggest impact on culture,” Hardaway says. “What they think is important, whom they hire, and how they distribute resources all have an impact on and influence culture.” Organizational culture is also passed down, Hardaway explains, “one employee trains the next and their assumptions about the right way to do things is passed down. Managers and leaders learn what worked to get out of tough patches in the past and they are likely to repeat them because they worked.”

Ruben believes “a leader or leadership team must first understand their own beliefs when it comes to the company, mission, or project at hand.”

As the leaders’ philosophy is believed by team members, organizational culture forms and impacts the employer brand, he explains.

“Once beliefs are reflected upon and stated, then we need to think about the behaviors we want in the organization that are influenced by our beliefs but will drive the outcomes we wish to have. After the productive behaviors of your culture are defined, there needs to be intentional, implemented and often audited processes in place to make the behaviors persistent and rewarded,” Ruben says. “Finally comes the measures and outcomes that you will track and that you wish to have as a result of your culture.”

9 Types of Organizational Culture

Culture varies from organization to organization, but numerous studies show the type of culture falls into nine categories. What they are named depends upon the study, but they basically break down to these nine described in the Management Study Guide:

1. Normative

Norms and procedures are predefined in this work environment. “Employees behave in an ideal way and strictly adhere to policies.” No one dares to break rules and everyone sticks to published policies. For example, the military.

2. Pragmatic

Emphasis is on clients and external parties. Customer satisfaction is employee motivation. Clients are treated as gods and employees do not follow any set rules. “Every employee strives hard to satisfy clients to expect maximum business from their side.” E.g., Car dealerships.

3. Academy

Skilled individuals are hired into these hierarchy cultures and their roles and responsibilities are delegated according to employees’ background, educational qualifications, skills, and work experience. Emphasis is on training. “Employees in an academic culture stick to the organization for a longer duration and also grow within it.” E.g. Teaching hospitals.

4. Baseball Team

Employees are the most treasured possession of the organization. They have a major role in its successful functioning. “Individuals always have an upper edge and they do not bother much about their organization.” E.g. Advertising agencies.

5. Club

In this culture, organizations are very particular about the employees they recruit. Specialization, educational qualification, and interests are key in employee selection. Every employee does what he is best at, and high potential employees are promoted accordingly. Appraisals are a regular feature. E.g., High-tech companies.

6. Fortress

In this culture, employees are not certain about their career and longevity. They are terminated if the organization does not perform well. “Individuals suffer the most when the organization is at a loss.” E.g., Investment firms.

7. Tough Guy

Employees are constantly watched in this organizational structure. Feedback is essential. Performance is reviewed from time to time and employee work is thoroughly monitored. “Team managers are appointed to discuss queries with the team members and guide them whenever required.” E.g., Exxon Mobile. E.g., Oil and gas companies.

8. Bet Your Company

In this workplace culture, organizations make risk-taking decisions and the consequences are unforeseen. “The principles and policies of such an organization are formulated to address sensitive issues and it takes time to get the results.” E.g., Space exploration companies.

9. Process

Employees in this type of culture adhere to the processes and procedures of the organization. “Feedback and performance reviews do not matter much in such organizations. The employees abide by the rules and regulations and work according to the ideologies of the workplace.” E.g., All government agencies.

An example of a great organizational culture, says communication strategist and chief creative officer for Cardigan, Shannon Hernandez, C.H. C., is H-E-B, a grocery company in Texas. “It has a great people-first culture that has earned them both a loyal employee and customer base. You also read about companies like Southwest Airlines and Zappos. What they all have in common is they put people first and they focus on hiring people who believe in their mission and will work to advance the mission.”

What Are The Characteristics Of Organizational Culture?

• Innovation

High-value innovation culture is characterized by encouraging employees to take risks. Companies with low value on innovation expect employees to perform as trained without looking for ways to improve performance.

• Attention to Detail

Companies that value attention to detail expect employees to perform with precision, those with a low value do not.

• Outcome Emphasis

These companies care about outcomes, not how outcomes are achieved.

• People Emphasis

How decisions will affect employees is of high import in these organizations.

• Teamwork

Companies with a high value on teamwork rather than the individual tend to have positive relationships between coworkers and managers.

• Aggressiveness

This characteristic dictates how aggressively employees are expected to compete in the marketplace.

• Stability

Rule-oriented, predictable, and bureaucratic, these companies provide consistent and predictable levels of output and operate best in non-changing market conditions.

Two additional characteristics that are not represented in the typical organization culture profile but are important characteristics to consider are, according to Bauer and Erdogan:

• Service

Employee involvement is highly valued in these companies. Employees are trained to serve the customer well, and cross-training is the norm. Employees are empowered to resolve customer problems in ways they see fit.

• Safety

How Can You Make Organizational Culture Change?

Organizational change does not come right away, nor naturally.

“Since culture is developed over time,” Hardaway explains, “it takes time to change culture.”

Once you have determined the desired values and behaviors, “you have to work to change the minds of the senior leadership team.” Then you need to come up with behavioral descriptors for each value and articulate how those translate into actionable behaviors at all levels. You have to then align strategy and processes to make a culture change. The timing of the change depends on the organizational culture and leadership deciding how and when to alter the current culture.

Conclusion: How Does Organizational Culture Impact Recruiting?

“Company culture has the potential to be your best calling card for the employees you want and the best stop sign for the employees you do not want,” says Hernandez. In companies with a strong culture, culture affects recruiting and employee engagement.

Employees become the advocates, and do the recruiting work by spreading the word amongst their friends, and that is the best endorsement you can get for your organization's values. “Also, your customers get a taste of your company culture, and their experiences with your employees informs their decision about whether or not they want to work for your organization.” For example,” Hernandez explains, “most people have been to Chick-fil-a have experienced their customer service—there are even memes about how above and beyond they go. If you are someone who does not want to say ‘my pleasure,’ you will probably not choose to work there, which is great for both the candidate and Chick-fil-a. If that is the type of culture you want, you would immediately apply. The culture attracts you.”