Are you here to learn the importance of organisational culture? Clueing up on this and fixing your current culture should be a top priority if you haven’t already. In this article, we’ll explore the definitions, the importance of organisational culture in strategic management, and what constitutes good and bad culture, so you can work to develop it.
What Is Organisational Culture?
A definition we like about organisational culture (by Cameron & Quinn, 2011[1] )is that it is:
“The social glue holding an organisation together.”
According to Cameron and Quinn (2011), an organisation’s culture is typically comprised of:
● Implicit assumptions – people are, by definition, unaware of these. These are the elements of culture that people take for granted
● Rules – the rules and procedures of an organisation that give guidance on how people behave and interact
● Artefacts– these are the more visible and tangible parts of a culture and include things such as uniforms, buildings, logos, mission statements, and goals
● Behaviours– often seen as “just the way things are around here”.
The most common types of organisational culture include:
- Adhocracy culture: staff are encouraged to take their own initiative, share their creative ideas, and take calculated risks
- Clan culture: staff are encouraged to participate in teamwork across different departments
- Hierarchy culture: authority and clearly outlined managerial processes are in place
- Market culture: concentrates on the results of the organisation’s financial success and the employees responsible for contributing to this
Importance of Organisational Culture in Strategic Management
No manager should under estimate the relevance of organisational culture. Here are the top reasons why:
With a strong organisational culture, you can…
1. Meet your business goals
A commonly used quote from Peter Drucker, the influential academic, proclaims that:
“Culture eats strategy for breakfast!”
That is to say that organisations cannot deliver against their strategy and meet their business objectives without an effective and healthy corporate culture. This is pretty tough to argue against.
2. Boast a competitive advantage
According to the PwC Global Culture Survey 2021, having the ‘right’ culture can provide a genuine competitive advantage.
3. Embrace higher employee satisfaction
When considering the importance of a strong organisational culture, it’s good to consider the demonstrable business outcomes it can lead to, including employee satisfaction. If you keep your employee well-being policies in tip-top condition, your teams may be more motivated and engaged.
4. Enjoy higher customer satisfaction
If your employees are the face of your business, the chances are that your customers will be affected by them. Therefore, a happy or unhappy employee can make all the difference when it comes to creating happy or unhappy customers. If your employee is able to deliver exceptional service due to a strong organisational culture, your customer is likelier to enjoy an outstanding consumer experience and remain loyal to your business.
5. Improve your revenue
A mix of happy employees and happy customers potentially delivers improved revenue. Taking a step towards improved financial results is that simple!
6. Experiment with more effective ways of working
Sparked by the pandemic, many companies have since been experimenting with different – and potentially more effective – ways of working. If you build a strong organisational culture, you should feel able to trust your employees to do a job well done wherever they are located – whether this be in the office, at home, or even abroad.
7. Bring greater success with change initiatives
The importance of maintaining a healthy organisational culture can also be recognised in its ability to foster alignment, trust, and collaboration, which are all essential ingredients for the success of change initiatives. When your team shares a common vision and fosters open communication, it is more likely to adopt a growth mindset and feel more able to adapt to new challenges.
Moreover, strong leaders who set good examples and reward successes can build a supportive environment, thereby sustaining long-term success during times of change and making transitions smoother.
8. Improve your employee morale
Additionally, a strong organisational culture can hugely impact employees’ morale, commitment, productivity, physical health, and emotional well-being – so it is a win-win for organisations and their people.
Attract and retain top talent by being the company people want to work for!
Why is culture so important?
A commonly used quote from Peter Drucker, the influential academic, proclaims that:
“Culture eats strategy for breakfast!”
That is to say that, without an effective and healthy corporate culture, organisations will be unable to deliver against their strategy and meet their business objectives. This is pretty tough to argue against.
Moreover, it is borne out by research on culture, performance, and the long-term effectiveness of organisations. According to the PWC Global Culture survey 2021, having the ‘right’ culture can provide a genuine competitive advantage and lead to demonstrable business outcomes including:
- Improved revenue
- Higher employee satisfaction
- Higher customer satisfaction
- More effective ways of working (during the pandemic)
- Greater success with change initiatives.
Additionally, it can have a hugely positive impact on things like employees’ morale, commitment, productivity, physical health and emotional well-being – so it is a win-win for organisations and their people.
Organisational Culture Issues
Now that you know more about the importance of a strong organisational culture, it’s vital to identify and overcome the potential roadblocks in your journey to building a better culture.
The big problem with tackling organisational culture is the scale and scope of what is involved. Plus, it can be intangible, meaning knowing where to start is tricky. That is almost certainly why most business leaders choose not to do anything about it.
“Over 90% of leaders said that they could probably improve their culture. Fewer than 20% said that they had actually done anything about it. People get it; they just don’t do anything about it.”
- Jack Heskett (Duke Universitystudy/McKinsey.com)
The precise nature of culture challenges tends to be unique to a particular organisational context. That said, most of the recurring issues we have heard back from clients can broadly be linked back to one (or more) of four areas:
● Aligning culture to strategy
● Negative impact of the existing culture
● Bringing consistency across multiple organisational cultures
● Becoming more inclusive.
What Does a Good Organisational Culture Look Like?
A strong organisational culture:
● Aligns with your objectives
Your team’s motivations should be going in the same direction as your organisation’s goals, ensuring everything is driving towards the same target. To do this, ensure the company’s goals, visions, and values are clearly communicated to each employee to guide behaviour and decision making.
● Showcases trust
Managers and teams should trust each other to communicate transparently and work on innovative ideas. To do this, encourage your employees to take their own initiative and be prepared to take risks in strategic decisions.
● Embraces recognition and reward
A company that places focus on the significance of organisational culture will recognise and reward outstanding employee contributions. This can help reinforce positive behaviours and demonstrate to team members that they are appreciated. You can do this in many ways, from offering employee of the month bonuses to simply bringing some cupcakes to the office on a Friday afternoon.
● Leads with collaboration and communication
Companies with a strong organisational culture will have excellent communication and teamwork skills, always ensuring that every team member is supported and guided towards the same goal. You can try this by ensuring you hire employees who are likely to be a good fit, incorporating more group tasks into everyday practices, or even trying more group socials outside of work.
● Places an emphasison performance
At the end of the day, we know results matter to your business, which is why focusing on performance is vital. To do this, employees should try to encourage each other to continuously learn, train, progress, and hit specific milestone goals. Learn why a feedback culture is worth its weight in gold if you need any more convincing.
Working towards constant improvement can enhance productivity and profitability in the long run. For example, just look at how building a strong organisational culture has been integral in driving the success of big businesses like Facebook, Pixar and KPMG.
What Does a Weak Organisational Culture Look Like?
Culture can have a wide-reaching impact on an organisation and every one of its people, and this can be a positive or negative one. The diagnostic process is just the beginning, albeit it is a fundamental step in bringing your people along with you on the journey and ensuring they have a voice in the future culture you, together, aspire to create.
If you want to address the importance of organisational culture in strategic management at your company, don’t hesitate to get in touch with us and see how our services can assist. Our team would love to help you build a stronger organisational culture to ensure you can reap its rewards in the long run.
If you want to learn more about improving employee experience at your organisation, please refer to our extensive collection of resources.
