Everything You Need to Know about Corporate Culture (Meaning & How to Define Corporate Culture)
There are some key factors you need to know about corporate culture. Within your organization or within any company, corporate culture types can range from those that are well structured but full of red tape to those that are known to be innovative, free-wheeling, and less organized.
In this guide, we’ll go through corporate culture meaning, the four key types of corporate culture, and how to know which one you are. We’ll provide examples of corporate culture, both good and bad.
Organizational Culture – Corporate Culture
By the end, you’ll have a good grasp on defining corporate culture at your organization and how to shape a positive corporate culture that fosters employee satisfaction and helps your company reach its objectives.
Best Corporate Cultures
Companies have their own behaviors, priorities, and traits as a collective that impact employees, customers, and vendors, but the best corporate cultures in any organization are those that embody the ideals and ambitions of an organization and foster an engaged, happy, and productive team.
Positive corporate culture also feeds into branding and can boost marketing efforts by building a perception of a company that people want to be connected to.
A corporate culture example of the branding benefit is the company 4Ocean. It is known for a corporate culture of sustainability and a single mission-driven purpose to clean the world’s oceans, which it funds by selling sustainable products.
This is a case where corporate culture elements impact employees and are a basis for marketing and branding. People that gravitate towards improving the planet, would want to be associated with, and support the organization’s efforts.
Negative / Stressful Corporate Culture
Just as there are great corporate culture examples, there are also examples that are the opposite. This would be company cultures where employees are unhappy, feel under-appreciated, and turnover is high. In this case, corporate culture importance can also be felt in the public perception of a brand in addition to internal operational issues.
Corporate culture is more important than the policies a company may state on paper because it is what employees live and breathe all day long. A stressful culture can cause mistakes and impact how polite (or rude) an employee sounds to a customer.
Many companies may not even have a definition of corporate culture and are just running their business without culture in mind. But if you don’t stop to ask, “What is corporate culture?” and make efforts to shape yours, you could end up with a bad one that undermines your profitability.
Corporate culture definition is one of the most impactful things a company can do. Culture creates the foundation of how everything else in their organization is done, what the firm’s priorities are, and how it is going to represent itself to the public.
What Is Corporate Culture and Why Is It Important?
Before you can define the corporate culture at your organization, it’s important to ask, “What is corporate culture?”
Company culture is not one single thing. It’s made up of multiple elements that involve the following:
- Rules and policies
- How people treat each other
- How employees collaborate
- Manager/supervisor leadership styles
- How customers are interacted with
- Company priorities, mission statements, values
- Organizational structure and hierarchy
- Employee engagement activities
- The reality of the day-to-day experience
When looking at corporate culture examples, you can often find that “on paper” a company may state that it has a certain culture, such as nurturing a flexible employee environment where everyone feels valued. But in reality, employees say their experience is far from a good corporate culture, and they don’t feel valued at all.
Companies can often have blinders on because they don’t understand corporate culture types or that there can be different levels of corporate culture in their organization. (We’ll touch on both these issues shortly.)
To help you better understand the corporate culture example that employees and customers experience, let’s begin with the textbook corporate culture definition.
Corporate Culture Definition
According to Investopedia, the definition of corporate culture is, “the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions.”
The corporate culture meaning from Entrepreneur magazine states, “corporate culture describes and governs the ways a company’s owners and employees think, feel and act.”
AGS’ corporate culture definition is, “Corporate culture describes the personality of an organization and is made up of the behaviors, priorities, actions, and working environment created by employees, supervisors, and executives.”
What’s the Importance of Corporate Culture?
Whether you are mindfully building corporate culture or not, your organization has a corporate culture. Corporate culture elements come about organically, as companies, supervisors, and staff interact with each other and those outside your company.
The importance of corporate culture comes from the fact that your culture can impact just about everything in your organization. This includes:
- Employee retention
- Staff productivity
- Customer support
- Customer retention
- Mistake mitigation costs
- The ability for an organization to keep up with the competition
- Employee engagement
- Customer loyalty
- Vendor relationships
- Ability to grow
- Ability to attract top talent
- Marketing and sales efforts
- And more
Corporate culture is more important than most companies realize. Once you learn how organizational culture and corporate culture impact multiple facets of your company, you’ll want to answer the question, “What is corporate culture like at our organization?” and then begin taking steps to mindfully shape one of the best corporate cultures that you can.
What Are the 4 Types of Corporate Culture?
Now that we’ve reviewed corporate culture meaning and corporate culture importance, our next step is to cover the four types of corporate culture. While organizations can have a mix of more than one type, if you want to begin building a strong corporate culture, it’s important to know what these are.
There are typically 4 corporate culture types that describe the personality and workplace experience of an organization. When we go through corporate culture examples in the next section, we’ll touch on which of these types are being reflected.
Where do these 4 examples of corporate culture come from?
Two researchers at the University of Michigan, Kim S. Cameron and Robert E. Quinn, reviewed 39 different attributes of organizational culture and distilled their findings into what’s known as the Competing Values Framework.
This framework has been used for decades to better understand organizations and what makes them tick. This framework also helps define corporate culture by classifying it into four key types according to what a company values and emphasizes.
The Competing Values Framework identifies two dimensions, each with opposing values characteristics. These are:
- Emphasis on stability, order, and control vs. emphasis on flexibility, discretion, and dynamism.
- Emphasis on internal orientation focusing on integration, collaboration, and unity vs. emphasis on external orientation focusing on differentiation, competition, and rivalry.
When those opposing values dimensions are combined, it forms four quadrants or types of the corporate culture. The corporate culture example in the upper left quadrant will be a polar opposite to the one in the bottom right quadrant.
The framework uses this illustration as a way of defining corporate culture comprehensively.
The Collaborate corporate culture is based upon a belief that employee development and experience are key factors when defining the importance of corporate culture. These lead to a feeling of kinship and family, which can produce an environment where everyone gives 110% because they care about the organization and each other.
On the other side of the equation can come a belief that the feeling of family and corporate culture is more important than results. A belief that the individual or team connection outweighs the bottom line, which could cause problems when it comes to terminating less effective staff.
On the opposite end of the spectrum from collaborate/clan is the compete/market corporate culture. This can be a positive corporate culture for sales departments because it emphasizes competition and a strong focus on the customer experience.
Negative aspects of this strong corporate culture can be a lack of comradery between employees and a void of support and mentorship since people are competing with each other. Instead of sharing information that can make everyone better, a person might keep it to themselves to gain a competitive advantage.
Create/adhocracy emphasizes the corporate culture importance of continued innovation and exploration. These are the ones that think outside the box as a way of life and are continually striving to be better and outpace the competition.
Negative corporate culture elements of the Create culture include the fact that this type of organization undergoes a lot of change, so staff can feel ungrounded and that as soon as they learn one process, it’s going to change. It can also lack structure and rules, leading to costly mistakes.
The control/hierarchy type is one of the best corporate cultures for institutions like hospitals, where it’s vital to have multiple checks and balances in place. Attributes of this definition of corporate culture include consistency and uniformity and thoughtfulness when it comes to putting processes in place to drive success.
While this can be a good corporate culture for companies that need controls in place, it can feel stifling to a more creatively focused company. Employees can feel that they have little flexibility to think outside the box. This is one of the corporate culture types that is the slowest to adapt and change to keep up with competitors, market conditions, or external events.
What Are Examples of Corporate Culture?
As you see, the four different types of corporate culture have both positive and negative aspects to them. An organization’s mission and industry can also be important when building corporate culture into the type that’s the best fit.
There can be a different level of corporate culture in organizations as well, with a mix of organizational culture and corporate culture per department or division.
When understanding, “What is corporate culture and why is it important?” it helps to have examples to look to. These may be companies that you do business with regularly or those you’ve heard of because they have a well-known brand.
Next, we’ll go through some corporate culture examples and note which of the four types of corporate culture each one exemplifies.
Amazon is known as an innovator and it’s also known to be quite competitive. It was one of the first companies to enter the streaming subscription market with its Amazon Prime membership being the first of its kind.
However, in addition to being creative and innovative, the company is also known to be very competitive. To many former employees, this corporate culture meaning involves working staff into the ground as they’re asked to do more than they feel is humanly possible without burning out.
Cloud storage provider Dropbox is a great corporate culture example of the collaborative/clan culture. On the company’s website, the value of empowering a strong team by nurturing the individual is highlighted.
The company has Employee Resource Groups that are voluntary employee-led groups that help connect team members and foster a sense of community and diversity.
Wells Fargo Bank (Compete)
One of the famous examples of corporate culture gone wrong is the cutthroat values that have been a big reason for Wells Fargo Bank to be in the news several times over the last decade.
Settlements with the SEC over misleading and fraudulent practices have been blamed on certain departments defining corporate culture as “do anything to win” no matter the moral or legal implications. The bank has been working to fix this and to build a good corporate culture, but it takes time to build back that lost consumer and employee trust.
An organization that’s been known to define corporate culture from a hierarchal/control perspective, and do it well, is Starbucks. One can’t expand as much as it has done over the past two decades without putting an orderly process in place that can be repeated in each of its stores.
There’s a consistency of customer experience and product quality when you step into a Starbucks location, no matter where in the country you may be. That type of consistency comes from understanding the importance of corporate culture and embracing the best aspects of the control culture type.
Are There Different Levels of Corporate Culture?
An organization can have several levels of corporate culture that compete against each other or its stated mission and values. This can often happen when a company has not built a strong corporate culture, so the culture ends up being defined by the leaders in each department.
Company supervisors and managers have a lot of power over corporate culture importance and how it’s defined to the employees under their command. For example, your accounting department could have a family-based atmosphere where collaboration is rewarded, and the team is nurtured. While your customer support department could be a toxic environment with a competitive culture and a “no mistakes allowed” mentality.
When you have different levels of corporate culture, these can compete against each other and make it hard for your company to meet its objectives.
An example would be if your shipping department had an “accuracy first” mentality that emphasized an orderly process to order fulfillment to reduce mistakes. But your sales department just wanted to get the sale, leading to customers being promised delivery times that conflicted with the shipping department’s process.
This difference in the definition of corporate culture by each department could end up costing you customers that had to wait longer than promised for their shipment and could result in order packing mistakes.
Toxic organizational culture & corporate culture can hurt a company’s bottom line.
Corporate culture elements grow organically, like the plants in a garden. If you leave a garden alone and don’t do any pruning or provide any barriers to contain it, it can become wild and overgrown.
While a well-manicured garden, one that’s nurtured, cared for, and that has a structure in place, will flourish.
The same is true for a positive corporate culture. If you don’t put any effort into defining and building corporate culture, then it’s going to exist anyway within your different company areas, and it could hurt your success and company effectiveness.
When you create and maintain a clear corporate culture definition, you can ensure your team and business grows in the right direction.
How Do You Start Defining Corporate Culture?
The best corporate cultures that you find in business, don’t just get that way on their own. The leaders in an organization put effort into defining corporate culture and then reinforcing that definition in multiple ways throughout the operation.
Before you can begin building corporate culture meaning in your company, you need to define your corporate culture.
Do you want your company to emphasize sustainability and empower employees at all levels to bring ideas to the table? Do you need one of the corporate culture types that has a logical hierarchy and controlled framework?
Define your corporate culture as a first step to building or rebuilding one. Here are some ways to do that:
- Survey your staff to learn what they see as your corporate culture elements.
- Review your company mission statement, values, and priorities.
- Look at corporate culture examples from others in your industry for ideas.
- Question managers about the biggest challenges in their departments.
- Ask staff what they’d change about their working environment.
- Ask customers what they like about doing business with you.
- Review statistics, such as employee and customer retention to look for opportunities for improvement.
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What Goes Into Building Corporate Culture?
Once you understand, “What is corporate culture and why is it important?” and have created your definition of corporate culture, you can begin building a positive corporate culture.
This is undertaken in several steps and should be done in a manner that takes into consideration the importance of corporate culture being sustained and nurtured (just like a garden) over time.
Define “What is Corporate Culture?” for Employees & Others
You and your leadership may know what you want your corporate culture example to be, but you have to put this down “on paper” as a starting point for your employees and others (customers, vendors).
Emphasize corporate culture importance and define it in your internal organizational documents, outward-facing media, such as your website, and in all employee materials.
Put Together a Communications Campaign
To give corporate culture meaning and earn adoption for your newly minted culture objectives, you need to have a communication strategy. Just sending out a company-wide email about the new “corporate culture” isn’t going to be enough to get people to adopt it permanently.
Your communications strategy should incorporate different types of information at different stages to introduce the new corporate culture to employees in a comprehensive way.
For example, you might start with a communication titled, “What is corporate culture and why is it important?” Next, you might give some examples of corporate culture that employees may recognize.
Include the following types of communications in your strategy:
- Team meeting notices
- Ongoing culture reinforcement
Coach Your Leaders on Your Corporate Culture Definition
Your company leadership is a key part of building and maintaining your corporate culture elements. You don’t want them bucking this new initiative and going back to the culture they may have created in their own department, rather you want their buy-in and support, so they’ll all encourage the same definition of corporate culture as you have.
Set up leadership coaching for your managers, supervisors, and department heads to ensure they fully understand their responsibility in promoting and building corporate culture at your organization.
Update Policies & Documentation
Do you have any policies that aren’t in line with your defined corporate culture? Revisit and update as needed your HR policies, customer support policies, and other company documentation to reflect your new corporate culture example.
The more reinforcement you have throughout your organization’s information, the more chance you have of creating a strong corporate culture that is adopted and sustained.
Check Your Corporate Culture Regularly
Some companies have the best of intentions when they define corporate culture and work to put company culture standards in place. But they don’t check in regularly with employees and managers to ensure that corporate culture examples in the organization’s departments are continuing to reflect that culture.
It’s important to survey your team annually to ask, “What is corporate culture in your daily working environment?” so you can identify any culture shifts that need to be corrected. This is also a great way to get ideas that can help you continually improve and evolve your company’s culture.
Benefits of Building Good Corporate Culture
Corporate culture is more important than many business owners realize. The time and effort you put into your corporate culture definition and reinforcement can pay you back in several ways.
When your team is pulling together in one direction, with one corporate culture meaning, your organization is stronger and can thrive. Instead of dealing with problems that result from different levels of corporate culture, your managers can focus fully on your core mission.
The benefits of creating a good corporate culture example include:
- Happy employees, which relates to higher retention
- Ability to attract top talent
- Fewer internal conflicts and problems
- Higher efficiency and productivity
- Improved customer satisfaction
- Clarity of corporate focus and mission
- Improved corporate image
- Bottom-line benefits related to revenue and profitability
Conclusion | Best Guide on Understanding & Building Strong Corporate Culture
While the definition of corporate culture may differ from one organization to the next, a common thread is the importance of corporate culture. No matter what your company size or industry.
Corporate culture is more important than many organizations realize. It’s critical to understand that you have one, whether it’s intentional or not. So, it’s best to define corporate culture and not let it be defined for you by the managerial styles present in different departments.
Taking the time to define your company’s culture and reinforcing that culture throughout your organization can have very real benefits that go beyond those related to employees. A positive corporate culture goes a long way towards branding a company, improving customer perception, and keeping operations running efficiently.
Definition of Corporate Culture FAQ
What is corporate culture and why is it important?
Corporate culture describes the personality of an organization and is made up of the behaviors, priorities, actions, and working environment created by employees, supervisors, and executives.
Corporate culture is important because it’s a foundational element of a company and impacts areas such as operations, efficiency, employee relations, customer service, vendor relationships, and profitability.
What are the 4 types of corporate culture?
Four standard types of corporate culture are derived from the Competing Values Framework, a standard that describes the different quadrants of company culture.
• Collaborate (Clan)
• Compete (Market)
• Create (Adhocracy)
• Control (Hierarchy)
What is a good corporate culture?
The type of corporate culture that is considered “good” can vary according to the organization's mission and industry. While a hospital may benefit from a more controlled and structured corporate culture, a digital marketing agency may have better results from a creative and flexible culture.
The best corporate cultures are those that foster employee loyalty and engagement while aligning a team with that company’s overarching mission and growth goals.
How do you understand corporate culture?
The best way to understand your corporate culture is to survey your employees and managers. You may find that you have different and competing types of corporate cultures within your organization that need to be addressed and transitioned to a singular top-down corporate culture definition.
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