Corporate culture and commercial dividend
You can’t see or touch it. But it’s there, an essential and invisible part of every company or organisation, and a potent force in marketing and commercial strategy.
Corporate culture has become increasingly important in recent years and, despite being intangible, it can affect employee performance and organisational success.
Prof James Heskett in The Culture Cycle suggests that an effective culture can
make a 20-30% difference in corporate performance, as compared with
“culturally unremarkable” competitors.
It’s something that every company should at least think about, and all those
agencies that advise on business, marketing or PR strategy.
However, corporate culture is also difficult to pin down. It has many definitions
and is heavily influenced by, for example, geographical location, sector, history,
and the personalities of leading managers. For example:
Wal-Mart - Founder Sam Walton’s concern and respect for staff from the foundation of the company created an environment of trust that still persists. Walton met staff, calling them by their first name and encouraged change to maintain a competitive edge. Even now, employees consider “how Sam would have done it.”
Southwest Airlines - Its relaxed culture can be traced back to unconventional boss Herb Kelleher who encouraged informality and wanted staff to have fun at their jobs. Employees are valued, with management acknowledging births, marriages and deaths by notes and cards. Staff are encouraged to pitch in and help out, especially at check-in, giving Southwest a higher turnaround time than the industry average.
Hewlett Packard - Problems several years ago encouraged HP to change its culture; staff are now required to formulate personal and professional goals each year, and are rewarded for meeting them, such as getting away early from work.
Apple - has a culture of innovation. As one director explained, it’s “deeply embedded…. The boldness, ambition, belief
there aren't limits, a desire to make the very best products in the world…It's in the DNA of the company.”
But corporate culture isn’t just for large corporations and essentially has several key elements, of
which two most important are:
A clear corporate vision, supported by corporate values consistent with the aims of the
company and aligned with the personal values of employees
A high value placed on staff with extensive employee communication at all levels
Simplistically, there are four types of corporate culture:
Employees are highly skilled and tend to stay in the organisation, working their way up the ranks. In return, the organisation provides a stable environment in which employees can develop and exercise their skills. Examples are universities, hospitals, large corporations.
Football Team Culture
Employees are “free agents” who have highly prized skills. They are in high demand and can rather (too!) easily get jobs elsewhere. This type of culture exists in fast-paced, high-risk organisations, such as investment banking.
The most important requirement here is to fit into the group. Usually employees start at the bottom and stay with the company, with the organisation promoting from within and valuing seniority. The best example is the military.
Employees don't know if they'll be laid off or not, in industries that often undergo regular and significant change. While there are many opportunities for those with specialised skills, the nature of the business keeps changing. Examples are high tech and IT companies.
Corporate culture can flow from a company’s Mission, Vision and Ethics (if it has those), but is largely unwritten.
It comes from the personality of leading managers, corporate vision, how the company communicates with staff, and how employees interact with the company. However, corporate culture can be influenced by:
The key things that a company is there to achieve, both for employees and to satisfy customer expectations
The “cultural” elements that are positive - for example, excellent staff, high motivation, good morale etc
The “cultural” elements that are hindering the business - for example, high employee turnover, or staff not helping one another etc.
Assessing what corporate culture exists within your company can be hard. For example, staff may be reluctant to make their views known. Sometimes an external assessment is the way forward.
However intangible, corporate culture does have an impact and, if planned, can have a commercial dividend. Best not leave it to chance.
To reinforce the positive, an article for Harvard Business School quantifies the fact that companies with well-defined corporate cultures are generally perceived as good places to work – and that’s on top of other commercial benefits. Not bad for something invisible.
Or as the Great Places to Work website puts it: “30 years of research, in over 40 countries around the world, has shown us time and again that investing in a high-trust workplace culture yields distinct, tangible business benefits.”
One way to give voice to corporate culture is through corporate vision and corporate social responsibility (CSR), subjects that we’ll return to in the following weeks. It may be intangible, but it may be worth it.