We explain what organizational culture is and its advantages. In addition, we discuss its importance, and more.
Organizational culture is the shared set of values, beliefs, policies and standards governing an organization that gives it an identity. Knowledge about the organization is transmitted to all employees on a day-to-day basis through management behavior.
Organizational culture should not be confused with organizational climate. How employees perceive the organization and its culture is influenced by their own beliefs, values, and motivations. In other words, the way people perceive a company culture determines the organization's climate.
For example: In a company crisis situation, speculation and rumors spread among employees, causing tension. The director called a general meeting to inform all staff about the situation, clarify doubts, and transmit tranquility. After the meeting, rumors stopped, and the atmosphere improved.
The director's response was determined by the company’s culture. The meeting to transmit tranquility shows that the company's culture prioritizes taking care of its human resources and maintaining harmony. If the director had not responded to staff's concerns, it would have meant lack of transparency and apathy from the company’s side.
- Organizational culture (set of policies and principles) is not the same as organizational climate (how employees perceive the company's culture).
- Organizational culture varies from company to company and provides a unique identity.
- The way a company interacts with its employees is determined by the company's culture.
- See also: Organizational development
How does organizational culture originate?
Organizational culture originates when the company is set up, that is, with the association of the first partners and other people who join to achieve common objectives.
The role of a company's founders and board of directors is key to defining an organization’s culture. Their values, attitudes, goals, and motivations influence the identity that the business model will have.
As a company starts to develop its activity, it can improve some processes, learn, and make new decisions that will allow it to optimize its structure and, ultimately, its identity. Therefore, organizational culture may change during the first years of a company's activity, until the business consolidates or decides to formalize its structure.
Purpose of building an organizational culture
One of the main advantages of a company that plans and shapes a positive organizational culture is that it will be more likely to overcome conflict and crisis situations.
Organizational culture is transmitted to employees in multiple ways, such as how management treats employees, internal processes for performing tasks, the type of internal communication, and how customers are treated, among other daily behaviors.
The way in which business management interacts with employees and the environment in which it operates is critical to productivity and employee motivation. If employees feel represented or identified with organizational culture, their motivation to work will be higher.
Elements of organizational culture
Among the elements that make up organizational culture are:
- Values. These are all the values, beliefs, attitudes, and skills that management passes down so that every team leader feels identified and transmits them to the rest of the employees.
- Internal regulations. These are the policies and standards implemented by company management to ensure good coexistence in the workplace, preserve corporate image, and define tasks performance.
- Structure. This is the management style and the way it implements decisions. It can be hierarchical (or linear), when employees must just follow orders, or democratic (also called horizontal), when the opinion of employees is taken into account in decision-making.
- Routines and practices. These are the typical practices of an organization, which are part of its customs. They may be work processes, actions, or employee benefits. For example: Every Friday, the company organizes a breakfast for all employees, along with yoga practice for all interested in participating.
- Company history. These are the anecdotes that the company proudly cherishes, which are a hallmark or competitive advantage over other companies in the market, and which bolsters its identity. For example: The recognition of the founding partner who started the business 20 years ago, and managed to make it grow to the current structure with over 200 employees.
Importance of organizational culture
Organizational culture is the company’s set of values, principles, and attitudes, which defines the type of relationship it builds with its employees and customers.
The way people perceive a company determines its organizational climate. Some factors that influence people's perception are beyond a company, such as ideology, feelings, and mindset. Other factors can be shaped by the company, such as internal policies, working conditions, resources, and transparent and constant communication.
Organizational culture influences company performance, which is why it is important for management and is their responsibility to understand and transmit it to all employees. A company that embraces its identity and manages to transmit it to its members so that they can apply it in their work will have created the basis for putting its business model into action.
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- Katie, T. H. (2022). Internal marketing. TechTarget.