Each and every business organization has its own unique corporate culture which defines how that organization works. It will guide the employees how to feel, think, act and behave.
The style adopted by the management will also influence how much impact corporate culture has on the entire organization creating either positive or negative culture:
- POSITIVE CULTURE. A healthy organizational culture that prioritizes trust, transparency, and growth can indeed provide avenues for fulfilling higher-order needs like recognition, belonging, and self-actualization. Employees feel valued, empowered, and motivated to contribute their best.
- NEGATIVE CULTURE. An unhealthy organizational culture means an environment riddled with suspicion, mistrust, and limited growth opportunities can significantly demotivate employees. Individuals will not be able to satisfy their higher-level needs such as their social need and self-esteem needs in an organization where suspicion and mistrust is endemic. When senior management acts out of self-preservation instead of fostering talent, and training is seen as irrelevant, employees lose trust and engagement.
Within each workplace, the organizational culture depends on factors such as rules and policies, social interactions, business communications, collaboration or individuals, informal organizational structure and friendship groups, etc.
Let’s take a look at specific impact of corporate culture on different areas of a business organization.
A. Organizational culture and HR functions
Here are some very obvious example of how corporate culture impacts several Human Resource (HR) functions of a business:
- Culture champions. HR professionals can play a crucial role in shaping and nurturing a positive organizational culture. This involves defining core values, promoting open communication, and implementing policies and practices that reinforce desired behaviors.
- Talent acquisition and development. HR can create selection processes that identify candidates who align with the company culture and values. Effective training programs can equip employees with the skills and knowledge necessary to succeed, address any perceived lack of value in training, and build confidence.
- Motivation and feedback. HR can facilitate initiatives that boost employee morale and recognition, fostering a sense of belonging and purpose. They can also provide managers with training and tools to create a culture of constructive feedback and growth opportunities. A positive organizational culture, fostered by HR practices, directly impacts employee motivation. When employees feel valued, trusted, and have opportunities for growth, they’re more likely to be engaged, productive, and satisfied in their work.
- Selection and training. Aligning recruitment and training with the desired culture ensures employees who thrive in that environment are brought in and equipped to contribute effectively.
- Senior management. Ultimately, senior management buy-in is crucial for a successful culture transformation. HR can work with leaders to understand the importance of a positive culture and its impact on business success. Senior managers may not appoint individuals whom they perceive as long-term threats to the reputation of the entire business.
B. Organizational culture and organizational structures
There is normally a connection between the corporate culture and the nature of organizational structures adopted in the business.
Organizational culture and structure are not independent entities; they influence and shape each other. A strong culture can help to maintain a particular structure, while the structure can reinforce and embed certain cultural values.
- Innovative businesses. A company with a culture of collaboration and teamwork might adopt a flat structure to facilitate communication and knowledge sharing. This innovative culture will promote the role of individuals to take more important decisions and to work on their own initiative.
- Bureaucratic businesses. Conversely, a company with a strong focus on individual accountability might have a tall hierarchical structure with clear lines of reporting and small spans of control. This power culture, for instance requires senior managers to exercise strict control and to operate centralized decision-making.
- Task businesses. These company will have flexible structures where the focus is on using the talents of teams from different departments to achieve organizational objectives.
It is important to note that there is no one-size-fits-all approach to the relationship between culture and structure. The key is to find a balance that works for the specific organization and its goals. Here are some additional points to consider:
- Culture can be shaped by leadership. Leaders play a critical role in setting the tone and modeling the desired behaviors for the organization.
- Structure can be used to reinforce culture. The way work is organized and decisions are made can send powerful messages about the organization’s values.
- Change in one can lead to change in the other. A change in leadership or strategy might necessitate a change in organizational structure, which in turn could impact the culture.
C. Organizational culture and decision-making
Organizational culture and decision-making are intricately linked, with each influencing the other in a continuous loop.
- Theory X of Management. Collaborative decision-making, even if initially unfamiliar in a conservative culture, can gradually foster trust and open communication, leading to a more participative culture over time. These companies will have entrepreneurial attitudes towards their employees encouraging them to make their own decisions and take risks.
- Theory Y of Management. Top-down decision-making in a traditionally hierarchical culture reinforces the existing power structure and discourages employee participation. These companies will have conservative attitudes towards their employees discouraging them to make their own decisions and take risks.
The ideal scenario is a synergistic relationship between culture and decision-making. A healthy culture fosters effective decision-making processes, while well-informed decisions reinforce positive cultural values, creating a virtuous cycle of continuous improvement.
D. Organizational culture and centralization vs. decentralization
Let’s delve into this dynamic connection:
- Power culture & Centralized decision-making. The organizational structure is likely to be tall with a narrow span of control with extrinsic financial rewards. Managers keep hold of authority and control not valuing employee input. Workers are do not adjust to change quickly and are not flexible. The business adopts a more autocratic role.
- Adaptive culture & Decentralized decision-making. The organizational structure is likely to be flat with a wide span of control with intrinsic non-financial rewards. Managers delegate authority and control valuing employee input. Workers are can adjust to change quickly and are flexible the business adopts a more entrepreneurial role.
E. Organizational culture and ethics
Corporate culture also affects the firm’s approach towards ethical business behavior or lack of thereof. Ethical business values refer to what is and what is not acceptable business behavior which determine how managers and employees treat each other and other stakeholders as well.
Businesses that rely on sustainability of their long-term operations will be much more opened to following ethical guidelines. If waste reduction is a part of a firm’s culture, then employees are more likely to use less resources as this is the expected norm in their organization.
However, businesses that are strictly profit-seeking in the short-term might take a completely different stance on ethics. Building a strong corporate culture takes time and effort, but the benefits can be significant and long-lasting.
By investing in your corporate culture, you can create a thriving workplace that attracts and retains top talent, drives innovation and delivers superior results.
