Everything You Need to Know to Really Understand Organizational Culture & Leadership
What exactly is organizational culture? A foundational element that impacts how a company operates, how it presents itself to the world, and what its team values are is what is referred to as organizational culture.
Within your organization or group, how you define organizational culture provides key direction to employees about how they should prioritize their work, interact with customers, and what they can expect in their working environment.
Elements of organizational culture can come from the corporate leadership and managers if an overarching corporate culture hasn’t been defined. It’s critical for companies to define the culture of an organization so staff is in alignment with the organization’s mission, values, and priorities.
In this AGS organizational culture article, we cover the following topics:
- What is an organizational culture? Detailed definition
- The importance of organizational culture
- Organizational culture definition
- The characteristics of organizational culture
- Organizational culture theory
- 4 types of organizational culture (including a downloadable organizational culture PDF)
- The connection of organizational culture and leadership
- Steps for giving your organizational culture meaning
- Building & maintaining an organization’s culture
Because AGS reaches a global audience, you’ll find that we use both the American spelling “organizational culture” and the European spelling “organisational culture” throughout the article.
Organisational Culture Definition
Are employees encouraged to innovate on their own to make a company better or do they have to send suggestions through a hierarchy? Is a feeling of family encouraged at a company or is it a more competitive environment?
The answers to those questions are part of the organisational culture definition of a company.
Companies need to define organisational culture so their teams understand the company values and thus what they should value and prioritize in their daily work. Organizational culture importance can’t be emphasized enough because of the impact culture has on an organization’s bottom line and profitability.
A toxic company culture where employees don’t feel valued and the turnover rate is high can translate into poor customer service and difficulty with revenue growth. Examples of organizational culture that can negatively impact a business, include:
- One where discord and infighting are getting in the way of forward motion.
- Organizational culture types with few rules and policies, leading to costly mistakes.
- Components of organizational culture that stifle adaptability and innovation.
- An organization’s culture that lacks morality and gets a company in legal hot water.
Just as bad organisational culture can drag a company down, organizational culture change examples that are positive can lift a company and drive growth.
If you can describe the culture of an organization as positive, team-oriented, innovative, and well-defined, there’s a good chance that the company will be thriving.
Advantages that come from a positive emphasis on the meaning of organisational culture can include:
- Engaged and driven employees
- Fewer missteps and mistakes
- Improved customer experience
- Leadership, managers, and employees all pulling in the same direction
- Improved efficiency and productivity
- Positive brand image
- Ability to attract and retain top talent
“I have always believed that the way you treat your employees is the way they will treat your customers and that people flourish when they are praised.”
– Richard Branson
What Is Organizational Culture?
To define organizational culture at a company, one must first understand all the elements of organizational culture. What is organizational culture, exactly? And how does it impact employees?
Let’s start by taking a look at the definition of organizational culture, then we’ll discuss the various elements that define organisational culture.
Definition of Organizational Culture
The AGS organizational culture definition is: “Organizational 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.”
Dimensions of organizational culture will grow organically if culture isn’t well-defined and continuously communicated through words, policies, and actions. How you describe the culture of an organization can vary, depending upon your relationship with that organization.
For example, employees may focus on how corporate culture impacts their work lives. This can include how much freedom they’re given to control their work processes, whether they feel valued, and things like perks and vacation policies.
If a vendor were to provide organizational culture examples, they may describe the ease of working with the ordering department and how prompt a company is when paying their invoices.
Next, we’ll get into the different components of organizational culture.
What Are the Characteristics of Organizational Culture?
An employee cereal bar, like the one that General Mills offers at its campus, is one of the environmental components of organizational culture. It represents an element of culture that shows it values employees and wants to create a pleasant working environment.
An emphasis on outcome versus process would be an example of one of the values-based characteristics of organizational culture. In this case, a company may put “getting the sales numbers up” ahead of other priorities, such as taking necessary time away from the phones to train new sales representatives.
“Organizational culture” can be a vague term if not properly defined by the elements that make up the meaning of organisational culture in a company. Breaking down your organisational culture definition into the key characteristics of culture is crucial if you want to successfully manage and sustain a positive and strong organizational culture.
Following, are the key characteristics of organizational culture.
Examples of organizational culture elements that would be considered environment include the working environment for employees (physical and emotional) as well as staff pay and benefits packages.
Do employees work in cramped cubicles with strict rules about personalization? Or do they get more freedom to customize their working environment and have plenty of space?
When looking at organizational culture types, the working environment plays a big part in how valued a person feels, which then translates into how well they perform.
Values & Beliefs
Values and beliefs differ from rules and policies. For example, you may have a corporate value to always use sustainable products. But your written policy about using the cheapest paper products available to save money could conflict with that.
When changing organizational culture, it’s important to remember to align other elements of organizational culture with your stated values and beliefs. Values and beliefs include things that shape the personality of an organization, which could be:
- Sustainability & responsible sourcing
- A customer-first approach
- Emphasis on ongoing staff development
- Support of diversity
When understanding the importance of organizational culture, you’ll often find tradition plays a big part in how a culture has been shaped over time. For example, companies with a tradition of always celebrating employee birthdays with a cake in the breakroom can be seen to have a tradition that fosters a feeling of unity and family.
Different types of organizational culture traditions can impact companies both positively and negatively, depending upon what those traditions are. For example, a tradition of newly promoted male employees having a “boys night out,” would most likely be seen in today’s world as negative and as alienating female staff.
Rules & Policies
The rules and policies of a company also factor into organizational culture meaning. They’re often an overlooked area when managing corporate culture because they’re seen as being more cut-and-dry and process-based.
But, as mentioned earlier, policies can often be at odds with the stated culture of an organization if they don’t support the behaviors needed to adopt the desired culture.
Policies will often dictate organizational priorities. For example, if you have a policy that customers always get their orders in two days, no matter what. That emphasizes a customer-centric priority, which will be an element of how you define organisational culture.
You’ll often see companies boast on their recruiting web page about being a flat organization. This means they have very few, if any, levels of hierarchy between top management and employees.
The number of supervisors, managers, and overall chain of command that employees are asked to adhere to is one of the organizational culture examples of yet another characteristic that makes up the personality of a company.
Organizations with multiple levels of oversite can be more orderly but less flexible to adapt to change. Companies that have a flat organizational structure can lack the guardrails needed to keep everyone focused on a core mission.
The behaviors exhibited by executives, managers, and employees can be the hardest element to control when addressing, “What is an organizational culture?” in your company.
It’s easier for companies to change things like policies, pay and benefits, and physical working space than it is to change the behavior of staff and leadership. But an organizational culture definition isn’t complete without the behavior characteristic.
Behaviors would include things like:
- Whether or not employees hang out with each other at lunchtime
- The level of competition that individuals or departments exhibit
- How supervisors treat employees (Do they yell at them? Invite their contributions? etc.)
- If employees are encouraged to enjoy their work or just complete it as fast as possible
Some keys to changing behaviors to support your organizational culture definition are the consistency of message and actions, continuously communicating culture elements, and giving people time to adapt.
What is Organizational Culture?
The priorities of a company are a key indicator of organizational culture importance and where employees put their time and effort. Does a company emphasize getting things done right, even if it takes longer and costs a little more? Or does it emphasize cheap and fast when it comes to daily operations?
Priorities are reflected in many of the above organizational culture change examples of different characteristics. Priorities will be reflected in the employee environment (is comfort or space prioritized?), throughout policies and rules, and in the daily decisions made by managers and executives.
When answering, “Why is organizational culture important?” you should be sure that you’re aligning your priorities with other company culture characteristics.
Organizational Culture Theory
Answering the question, “What is organizational culture?” is the purpose of organizational culture theory. It looks at correlations between culture in general and culture inside organizations. It also dissects the various examples of organizational culture to identify key organizational culture types.
According to the University of Colorado, the dependent and independent constructs that make up company culture according to its organizational culture theory are:
- Dependent Constructs: Performance, effectiveness, employee commitment, employee satisfaction
- Independent Constructs: Organizational culture type, culture strength, culture congruence
Creating a definition of organizational culture includes both the dependent and independent factors.
Both the disciplines of anthropology and sociology have been used to define organizational culture. This makes sense because organisational culture is not unlike the culture of a town or civilization. It’s made up of both the behaviors, priorities, and traditions of the group (sociology) and the individual culture (anthropology).
Edgar Schein Organizational Culture Theory
One of the more popular frameworks to define the importance of organizational culture is the one created in 1988 by Edgar Schein. It uses three levels to describe where culture exists in an organization.
These levels are:
- Artifacts: Visible processes and structures within an organization.
- Espoused Values: Philosophies, goals, strategies, etc.
- Basic Underlying Assumptions: Thoughts, feelings, perceptions, and things that are unconsciously taken for granted
The three levels have an interdependent relationship, and a change in one can impact the others and cause changing organizational culture.
For example, if employees perceive that they are no longer getting the support they once did from a company, their personal goals can change from staying with the company for the long term to focusing on finding a better job. If this is widespread it can impact the overall company culture, and leadership may be caught off guard.
Types of Organizational Culture
There are several dimensions of organizational culture that combine to make up the personality of a company (behaviors, policies, environment, etc.) and these dimensions distill down into four core types of organisational culture.
These types are designed to describe the culture of an organization based upon factors like its priorities, employee experience, and structure.
What is an organizational culture type based on?
The four types of organizational culture are based upon the work of researchers Kim S. Cameron and Robert E. Quinn. The team created the Competing Values Framework that identified four distinct organizational culture definitions.
4 Types of organisational culture:
- Compete (Market): Focus on short-term performance, competitive, priority is the bottom-line
- Collaborate (Clan): Focus on unity and collaboration, nurturing, priority is the unity of the team
- Control (Hierarchy): Focus on structure and framework, stable, priority is doing things right
- Create (Adhocracy): Focus on innovation and ideas, risk-taking, priority is being the first to do something
You can learn more about the meaning of organisational culture types by downloading our PDF below. You’ll find further details about each of these four types of culture of an organization along with organizational culture change examples from real companies.
Download an Organizational Culture PDF
Our organizational culture PDF provides definitions for the four types of organisational culture to help you better identify which of these may be pertinent to your organization.
Understanding the organizational culture examples included can provide insights into both the positive and negative aspects of each one. Reading the organizational culture PDF provides a basis to determine culture in various areas of your company so you can change and shape your company culture into a unified and positive one.
How Does Leadership Impact the Culture of an Organization?
The components of organizational culture will initially come from a company’s founder. They have a vision when they begin a company and that will begin to shape an organization’s culture.
If a company isn’t actively managing organizational culture as it grows, it can be shaped by department managers and executives. As more leaders and managers are brought into the company, organizational culture meaning can differ widely according to who employees report to.
Employees will follow the behavior, priorities, and policies of their supervisor, which gives leadership a lot of power in creating the definition of organizational culture.
You may have a transformational leader in your marketing department that’s charismatic and takes time to mentor their direct reports. They may create a culture that drives innovation and that welcomes everyone’s ideas.
While in your customer service department, you may have a leader that’s authoritarian and not known for taking much input from employees or doing much mentoring.
The difference in these two types of strong organizational culture could lead to staff confusion and contrasting efficiency and employee retention rates in different areas of your company.
Because organizational culture and leadership go hand in hand, it’s vital to have the buy-in and support of managers, supervisors, and executives when shaping culture and promoting organizational culture importance.
Why is Organizational Culture Important?
The organisational culture definition a company creates has an impact on the entire organization, internally and externally. Those companies that neglect to build a definition of organizational culture can end up with a negative culture that is holding them back.
When answering, “Why is organizational culture important?” we can look to several reasons. These include:
- Your organizational culture defines who your company is to the world.
- How you define organizational culture guides your priorities.
- Corporate culture can create either highly productive or non-productive employees.
- Good examples of organizational culture can improve employee retention.
- Your organizational culture definition feeds into your marketing and branding.
- Companies with positive organisational culture operate more efficiently.
- Organizational culture types can impact customer service and customer retention.
Changing Organizational Culture
What if you’ve just recently learned the importance of organizational culture and realize you don’t have one that reflects your company mission or values.
Changing organizational culture can take time, but it is worth it in the long run because you’ll be positively impacting multiple aspects of the organization, not the least of which is employee wellbeing and your bottom line.
Some types of organisational culture might just need better definition and reinforcement. While others might require changing several organizational culture examples that have sprung up in various departments within the business.
It’s important to realize that you’re not just changing a company’s culture, you’re changing the behaviors of people, which takes consistency and commitment to purpose.
Here are the steps involved with changing organizational culture.
Survey: Ask Employees, “What is Organizational Culture?”
Before you can begin changing the organisational culture definition throughout your company, you need to know how that culture is perceived by those that work there.
A business owner or executive might think that one type of culture is present when employees perceive their working environment quite differently. It’s important to survey staff on how they experience and would define organizational culture.
You want to pose the right types of questions in your employee survey that’s asking about the definition of organizational culture, so you’re getting insightful answers. For example, you don’t want to ask, “What is corporate culture to you?” which is somewhat vague. Instead ask more direct questions that will help you uncover the culture, such as:
- What gives you pride about working for this company?
- How is success rewarded in your department?
- How do you describe your job to friends/family?
AGS has a free downloadable PPT and PDF questionnaire that includes 34 different questions that you can leverage for your survey.
Ask Managers/Leaders to Define Organisational Culture
Next, you want to survey your managers and leaders in the organization. You’ll have some insights into how their direct reports have answered, “What is organizational culture?” and can then see how the answers of the leaders may echo the same feeling or differ.
Because leadership is a vital driver of corporate culture it’s important to get the support of managers, supervisors, and other leaders for any changes in how the company defines organisational culture. Involving leadership in shaping the culture throughout the company will help earn buy-in and reduce resistance when introducing a company culture transition.
You can leverage the free organizational culture assessment survey above for your leadership, slightly editing the questions to reflect their position in the company.
Create a Document With Your Organizational Culture Definition
Once you’ve distilled the input from employees and leaders in your organization, you’ll want to put together a document that clearly states your definition of organizational culture.
This should be concise and include your company values and how those will be reflected within the organization. It’s helpful to include a bullet point list of attributes that make it easy for people new to your company to instantly get a feel for your culture.
This document will then be used to instill your organisational culture definition throughout policies, guidelines, onboarding handbooks, and other company literature, marketing, and documentation.
Follow the Steps for Building a Strong Organizational Culture
Once you have your organizational culture meaning defined, you should follow the steps for building a strong company culture. We’ll continue with those in the next section.
Popular Article: Change Management Process Steps | Everything You Need to Know
Steps for Building a Strong Organizational Culture
After you know what you want your organizational culture to look like, how do you make that a reality?
Any type of organizational change, especially one that impacts habits, behaviors, and ways of doing things will take a concerted effort. People are naturally resistant to change, so it takes a strategic plan, including communications, training, and the assistance of key leaders throughout the organization.
Using a change management methodology and change management templates and tools can reduce the time it takes to put together and implement a strategy for building organizational culture.
Review/Update Your Definition of Organizational Culture
If you have an existing organizational culture definition in place, then you’ll first want to review and update that as needed. Ensure that it still accurately reflects the organization’s mission, values, and priorities.
If it’s been a while since you’ve taken an employee corporate culture survey, then you should also do that at this stage. This serves many important purposes:
- Identifies departments that have competing types of organizational culture
- Brings awareness to strengths and weaknesses in the current culture
- Identifies issues that need to be addressed by changing organizational culture
- Provides valuable ideas for shaping a better corporate culture
Create an Organizational Culture Communication Plan
When you want to emphasize organizational culture importance to your team and build a strong culture, your communications plan is going to be key.
There will be a variety of different communications that you’ll need to send out to different stakeholders. For example, you will want to introduce the topic, “What is organizational culture” to staff in an awareness communication, send out surveys, schedule training for managers, provide ongoing education on company culture, and more.
Some of the communication types will include:
- Meeting Scheduling
- Training Scheduling
- Reminders (e.g., Did you fill out your survey?)
- New policy Go-Live notices
You’ll want to use a tool or template to keep track of your communications planning and management. One that will allow you to identify the priority of each communication, details on who is responsible for drafting, approving, and sending the communication, and more.
One such tool is AGS’ Communications Management Toolkit. It includes customizable templates and real-time analytics to keep track of what communications are going out and who they’re being sent to.
AGS Communications Management Toolkit Template & Analytics
Review & Update Hiring Practices
The hiring and interview process will be the first opportunity you have to personally introduce your definition of organizational culture to potential employees. Does your current interview process reflect your culture properly?
Are you recruiting the right types of employees that will fit into your organisational culture? For example, if you have a very team-oriented and collaborative corporate culture, you want to make sure that any potential recruits understand that. A “lone wolf” might find they’re not a great fit and aren’t comfortable in that type of environment.
Update your job descriptions on hiring boards and the questions you ask potential candidates to align perfectly with your definition of organizational culture.
Develop Onboarding With Organizational Culture Examples
It’s important to train new employees during the onboarding process on company culture, so they’ll know what to expect. Culture onboarding allows them to begin adopting the values, processes, and behaviors that are elements of organizational culture at your company.
Be sure to include organizational culture examples during your onboarding to help illustrate what you mean by company culture.
Update Policies & Guidelines
Company policies and guidelines can sometimes conflict with the examples of organizational culture that you’re trying to reinforce. These should be reviewed and updated as needed to align with your company culture.
For instance, you may have recently added sustainability as one of the key characteristics of organizational culture, but your purchasing policies may not have been updated to reflect that.
You could have policies that allow purchasing of non-sustainable materials and even favor those if they’re cheaper. In this case, you would need to update your purchasing policy to reflect the move towards being a more sustainable company.
Train Leadership on How to Implement the Organizational Culture Change
As we’ve discussed earlier, organizational culture and leadership are intrinsically connected, thus onboarding your leadership is vital to building corporate culture.
You should put a coaching plan into action that educates leadership (executives, managers, supervisors, etc.) on the tenets of your organisational culture and explains their role in mirroring that culture to their direct reports.
Leaders don’t always have experience in promoting company culture or initiatives, so they will need to be coached as to how they should reflect the organizational culture in their actions, policies, communications, and treatment of employees.
Make Any Necessary Physical Workplace Changes
What if you have adopted one of the organizational culture types that include collaboration and invites brainstorming of employees throughout the day. You might tell staff that they are encouraged to take a 20-minute “brainstorm break” once per day with at least two other colleagues.
But, when employees try to implement that culture initiative, they find that there’s no space to sit more than two people around someone’s workspace comfortably. In this case, the physical workspace doesn’t reflect the change in organizational policy and requires an update, such as the addition of small meeting areas throughout the building.
Look for any physical workspace changes that should be made to strengthen your defined organizational culture.
Update Website & Documentation
How you define organizational culture should be reflected throughout your company documentation and online presence.
Marketing teams often use company culture as a method of attracting new customers because people feel good about doing business with a company that treats its employees and customers well and promotes that in its organizational culture definition.
Update your website and internal documentation to reinforce your company culture, so you don’t have any information people may run across that conflicts with your stated culture initiatives.
Sustaining & Managing Organizational Culture
Once you’ve built your organizational culture, it needs to be tended to like a garden. Otherwise, you can begin to lose unity and end up with rogue cultures developing on their own within different departments.
Managing organizational culture should be a natural part of your operational processes. This includes managing organizational culture and leadership styles since the two are so connected.
Regularly Monitor for Adherence to Organizational Culture
Whenever a new policy is put into place, you should ensure that it aligns with your organizational culture definition.
You also want to ensure that departments, especially those that may have new managers leading them, aren’t “going off the rails” and developing a culture that’s counter to the organization.
Monitor across the company for adherence to your company culture and address any conflicts as soon as they arise to keep organizational culture strong. To do this effectively, you’ll want to develop a set of metrics you use to measure the strength of your organizational culture.
Create Reward & Recognition Programs
A positive way to sustain your organisational culture definition throughout the company is through reward and recognition programs. Reward managers, teams, and employees that are going above and beyond to promote and embody the company culture.
If you have a collaborative culture that emphasizes a feeling of family, it can be particularly beneficial to use group or department recognition and reward, which further reinforces that feeling of unity.
Continue communicating your message of organizational culture regularly. You don’t want to stop communications after the initial “kick-off” campaign is over.
Ongoing communications can come in the form of “company culture corners” in a company newsletter, posters that you post throughout the building, in the way you name projects and departments, and more.
Assessing Organizational Culture
If you’re not looking, your defined organizational culture can morph into something else, so you want to regularly take the temperature of culture through employee and leadership surveys and in other ways.
For example, you may have an annual Organizational Culture Definition staff meeting or event to review culture, address any deviations, and come up with ways to strengthen your desired organizational culture.
Conclusion | Best Guide on the Dimensions of Organizational Culture
We’ve learned in this article that no matter how you answer, “What is organizational culture?” it’s a vital part of any business. Culture can cause an organization to stagnate and have continuous internal problems. It can also be a driver for success and growth.
The importance of organizational culture makes it vital to define your culture and take steps to build and nurture it. Without regular management and monitoring, different types of organizational culture can begin to crop up in different areas of an organization, and some may be toxic and detrimental.
Culture is unique, and one type of organisational culture may be a better fit for certain industries than others. So, keep in mind your core mission and values when deciding on the best way to define organizational culture.
It’s important to include leadership and employees to get their ideas, buy-in, and ongoing support if you want to successfully sustain a great organizational culture.
What is Organizational Culture FAQ
What is organisational culture?
Organisational 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.
Dimensions of organisational culture will grow organically if culture isn’t well-defined and continuously communicated through words, policies, and actions. How you describe the culture of an organization can vary, depending upon your relationship with that organization.
What is included in organizational culture?
“Organizational culture” can be a vague term if not properly defined. Breaking down your organizational culture definition into the key characteristics of culture is crucial if you want to successfully manage and sustain a strong organizational culture.
Following, are the key characteristics of the corporate culture.
• Values & Beliefs
• Rules & Policies
• Organization Hierarchy
Why is organizational culture important?
There are several reasons to pay attention to organizational culture and ensure you’re in control of it, rather than the other way around.
Organizational culture is important because:
• Your organizational culture defines who your company is to the world.
• How you define organizational culture guides your priorities.
• Corporate culture can create either highly productive or non-productive employees.
• Good examples of organizational culture can improve employee retention.
• Your organizational culture feeds into your marketing and branding.
• Companies with positive organizational culture operate more efficiently.
• Organizational culture can impact customer service and customer retention.
What is the best organizational culture?
There is no one type of organizational culture that is the “best.” Different companies and industries will find they operate better with one or the other key company culture types.
For example, a hospital would not operate well in a culture where there is little structure or hierarchy. Patient care requires multiple checks and balances that benefit from a structured and controlled corporate culture.
But a new software startup might find a controlled culture too stifling, and an organizational culture that stresses creativity and innovation with fewer rules could be a better fit.
Companies need to look at their values, mission, requirements, and priorities when creating the best organizational culture for their needs.
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