Corporate culture, or business culture, or organizational culture, determines what employees do and how they behave in a particular business organization.
All these terms are essentially the same thing used to describe the shared values, beliefs and behaviors that characterize a business.
What is corporate culture?
Corporate culture represents the character, or personality of a business organization. It depicts what is considered ‘normal’ in a business – ’the way how we do things around here’.
The corporate culture of a specific business organization is based in values, attitudes, beliefs, traditions and norms that are common to both the management and workers within an organization.
Corporate culture not only gives all employees a sense of identity, but it also determines how all the people within the business organization see the world and respond to it striving to achieve various business objectives.
Corporate culture has an influence on employees’ behaviors, and it helps to influence decision making within the firm.
How is corporate culture expressed?
Corporate culture is mainly based on people’s beliefs in the workplace, the way how employees behave on daily basis and how the they interact with each other and with external stakeholders.
It is expressed in the company’s mission statement and vision statement as well as throughout other business communications both externally and internally.
Corporate culture may be represented by a number of things such as the architectural style of office buildings, interior decorations of shops, offices and factories, dress code and work uniforms, how people address each other, titles given to various employees, attitudes towards punctuality, whether smoking is acceptable in the workplace, etc.
NOTE: It is possible for the same employee to act in different ways in different business organizations.
Determinants of corporate culture
The specific culture of an organization will be influenced by a number of factors, including its size, industry, location, and leadership. Let’s take a look at several interrelated determinants of corporate culture:
- Nature of the business. Corporate culture is shaped by the purpose of existence of a business organization as specified in its vision statement, mission statement, the aim and business objectives. It means that for-profit businesses will have a very different corporate culture from non-profit businesses. Some firms will rely on aggressive approach maximizing profits while others will focus on people and doing something good for the society.
- Organizational structure. Businesses will tall organizational structures will have smaller teams working independently from each worker being responsible for specific tasks. On another hand, businesses with flat organizational structures will have larger teams working collaboratively with each other. Also, businesses made up of highly skilled and innovative workers will have different corporate culture than firms made up of unskilled workforce.
- Rewards. Businesses than reward their employees appropriately are more likely to develop a strong and united culture. They will intrinsically strive to achieve organizational objectives. However, businesses than do not reward their employees appropriately are more likely to develop a weak and fragmented culture.
- Management styles. Corporate culture in business organization with centralized decision making will require workers to seek permission from the head office in case of problems. Threats and sanctions will most likely be used by management to control workers. But, corporate culture in businesses with decentralized decision making will allow workers to deal with most problems by themselves. Encouragements and rewards will most likely be used by management to motivate workers.
- Sanctions. A business organization with few sanctions for misbehavior may encourage employees to slack, miss deadlines, be late for work, provide poor customer service, etc. However, if a business is too strict and rigid, it may result in workers feeling resentful and unwilling to cooperate.
While some business organizations have a very strong corporate culture that is clearly defined and well-articulated, while other firms have a more informal and undefined culture.
Different types of corporate culture
In general, different types of business organizations have distinctive corporate cultures. Let’s take a look at a few examples.
The corporate culture of a bank will be very different from that of a kindergarten or nursery. Each company will have its own culture depending on the industry it operates in.
There might also be differences in corporate culture between businesses that provide the same or very similar products. While some schools will focus on educating holistically the complete person, other schools will be driven by the need for better examination results.
Various corporate cultures will be largely influenced by the members of the organization and the attitude of the group leader. Individual workers will work better in some companies than in others because of the group dynamics and different expectations set by the managers.
Case Study 1: Corporate culture at Starbucks Corporate culture is successful at Starbucks because there is not culture gap among the employees. The culture provides the employees with a sense of identity and power to make decisions and own shares in the company. The workers are able to identify with each other and the managers of the company. They are more committed because they have better benefits and are treated with laid back, supportive attitudes. The values are of the organization are reinforced upon them and in turn, they value the organization itself.
Criticisms of corporate culture
Here are a few different perspectives on corporate culture that undermine its importance:
- Economic performance. Businesses with strong cultures sometimes perform as poorly as their competitors with weak cultures.
- Subcultures. Some people claim that a business organization is made up of many subcultures which coexist and conflict rather than one specific culture.
- Ambiguity. There is lack of clear centers where corporate culture thrives due to decentralization, delegation and the employment of part-time workers and temporary workers.
- Diversity. The unique mix of different socioeconomic groups within a business means that different individuals shape the culture of the organization.
In essence, corporate culture, or business culture, or organizational culture, showcases a personality of the business organization, or what is normal to the business. It is mainly expressed through the way workers behave, in mission statement and vision statement as well as through beliefs or values that have been established over long period of time.
You can learn about a company’s culture by talking to current or former employees, reading online reviews and attending company events.
