Do I Have a Corporate Culture Problem?

corporate culture in abstract

What Is Our Culture, Really?

Culture is one of the most important and biggest success factors for businesses today. It influences business strategy and performance components, such as effective talent acquisition, employee retention and wellbeing, and collaborative workplace relationships. 

People may choose your company because of its culture, but it could also be the reason why employees want to leave. How do you know if it is great or abysmal?

First, let’s get a common understanding of what it actually is. 

A Social Science Research Network study defines corporate culture as a set of values, purposes, processes, beliefs, and behaviors that are shared in the workplace. Poprouser recognizes that culture reflects written and unwritten rules, and is the sum of the influences and interactions in the workplace.

What Influences Org culture?

First, we have the standard top-down influences such as:

With these key factors, people in an organization influence org culture:

  • Ethnic Trend
  • Age Trend
  • Geographic Trend
  • Personality Type Trend
  • Gender Trend
  • Financial Needs
  • Obstacles
  • Employees’ Pastimes and Personal Preferences

There are also these external influences of org culture:

  • Market Position
  • Industry
  • Competitor Behaviors
  • Customer Preferences

Developing Corporate Culture Organically and Deliberately

HR’s role in deliberately designing corporate culture is integral. However, the team at-large is the culture, so leaders must put systems in place to hold the people accountable for sustaining and enhancing company culture. From new individual contributors to seasoned leaders, all people working in the organization are responsible for building and fostering culture.

Corporate culture has a major effect on business performance and success, and drives employee motivation, engagement, well-being, and productivity, in a continuous feedback loop.

Employee Motivation and Engagement as a Driver and Outcome

When employees are motivated, they are more likely to be engaged in their work, leading to higher productivity and better results for the company. A positive company culture that supports and recognizes employee contributions can foster motivation and engagement, creating a virtuous cycle of success. In contrast, a bad company culture that neglects or demotivates employees can lead to disengagement and negative outcomes for the company.

Leadership Behaviors as a Driver and Outcome

Most companies have their behaviors, habits, and traditions driven from the top down, so distinctiveness originates from owners, founders, and leaders who create and promote the brand. If leaders do not actively work to change a negative work environment, it can be difficult to make any meaningful progress.

According to PwC research, companies with cultural distinctiveness have better business outcomes. The research revealed that companies with a distinctive culture are:

  • 80% more likely to have Employee Satisfaction
  • 89% more likely to have Customer Satisfaction
  • 48% more likely to have increases in company Revenue

PwC also reveals that the positive impact is felt more strongly by employees when leadership leads by example. 

Employee Well-Being as a Driver and Outcome

According to the American Psychological Association, employee well-being is one of the most important aspects of the future of work. The world of work is changing fast, and companies need to keep up with those changes and embrace the new employees’ needs. 

Negative work environments can lead your employees to psychological and physical harm. Mental Health specialists reveal to CBS that a bad work environment can lead employees to anxiety and stress-related illness. This toxicity at work can create difficulties in the employee’s work-life balance, as well as reduce employee performance. 

According to Built-in research:

  • 46% of job seekers reported that culture was one of the deciding factors in the application process for a company.
  • 88% consider culture as relatively important when applying for a job. 
  • 15% of job seekers turned down a job offer because of the company’s culture.`

Productivity as a Driver and an Outcome

A well-functioning workplace can increase employee morale and sense of purpose, leading to increased productivity. On the other hand, a negative work environment, such as one with high levels of stress or conflict, can have a detrimental effect on productivity. Do you have as core values some variation of the following?

  • continuous self-improvement
  • mentorship
  • scholarship and learning
  • teamwork
  • collaboration

You should. A strong sense of teamwork and collaboration leads to increased productivity, as employees are better able to communicate and work together effectively. A strong corporate culture distributes knowledge effectively, which means that you are better able to transition workloads when employees depart or are absent unexpectedly. Information flows more freely through trust, when organizations prioritize team achievement and reducing collaborative friction.

Why Your Ratings Matter

SHRM Global Culture Research Report 2022 reveals that globally, 45% of workers have thought about leaving their current organization. And that is not only because of poor culture, the report also shows that 

  • In organizations where the culture was rated as good 32% of the workers thought about quitting. 
  • In organizations where the culture was rated as average, 72% of workers thought about quitting, 
  • In organizations where the culture was rated as poor, 90% of workers thought about quitting. 

The data reveals that the better the company culture, the less employees think about leaving the organization. 

Consider culture as one of the most important competitive advantages a company can have. According to Built-in research, 88% of employees believe that a strong company culture is vital to business success, and 94% of executives share that same thought. Globally, employees are more aware of what they want from their employer.

How Can Organizations Self-Diagnose Their Corporate Culture?

Let’s take a look at how to diagnose your own culture and how it is reflected in your workplace. Company culture can be at risk when your values and beliefs are absent from the work environment, or the values that are included are “accidental.” When this happens, it negatively impacts the company’s relationship with its customers, employees, suppliers, investors, and business partners. Use these questions to diagnose the presence of accidental values, which create a toxic environment.

  1. Are our values and beliefs present in our work environment?
  2. Are our values and beliefs actively reflected in the way we conduct our business?
  3. Are the behaviors we exhibit to our customers, employees, suppliers, investors, and business partners consistent with our actual values and beliefs?
  4. Do we know how to identify any accidental values that may be present in our work environment?
  5. Do we know how our employees perceive our company culture? (And, do they feel that our values and beliefs are reflected in the workplace?)
  6. Do we have a plan to take action on any feedback from our customers, suppliers, investors, or business partners that suggests our culture may be at risk?
  7. Are we able to understand and control the levers that cause our employee turnover?
  8. Are we actively working to maintain and strengthen our company culture?
  9. Do we have a process in place to identify and address any potential threats to our company culture?
  10. Do we have harassment, misconduct, and retaliation policy and reporting procedures?
  11. Have we conducted thorough investigations and taken action on reported incidents between stakeholders at our company?
  12. Do we have only high ratings and positive comments on employer brand sites like Glassdoor?
  13. Do we encourage employees to share their ideas and contribute to our company culture?
  14. Are we transparent with our employees about any changes or updates to our company culture?
  15. Do we encourage employees to share their ideas and then communicate what we did with them?
  16. Are we actively seeking to create a diverse and inclusive organization?
  17. Do we handle conflicts or disagreements that arise around our company culture (and how)?
  18. Do we celebrate successes that align with our values, and recognize and address areas where we fall short?
  19. Do we measure the impact of our company culture on our overall business performance?
  20. Does the company prevent any favoritism, nepotism, or special treatment at all levels of the organization?

If you answered No to any of these questions, it’s very likely that your organization has become toxic or at risk of becoming toxic. More than three No answers to the questions above indicates that your organization is at high risk with an immediate level of urgency. Gallup states that a toxic culture is characterized by confusion and misalignment throughout the organization. This misalignment can manifest in various ways, such as:

  • Marketing messages that don’t align with the company’s mission and values
  • Onboarding that conflicts with a degraded and disjointed employee experience
  • Inconsistent behavior among leaders and team members
  • Mass voluntary exits from the company, or increased involuntary turnover from non-performance and misconduct

A coherent and consistent culture is crucial for business operations to thrive. One last question will help us work through the issues we uncovered while asking the others:

“Do we measure the impact of our company culture on our overall business performance?”

Measuring Corporate Culture

When trying to get insight to deliberately change culture, data is your best friend. According to Deloitte, the following measurements are great to measure company culture:

  • Performance statistics
  • HR related metrics (such as employee turnover, absence rate, and engagement)
  • Feedback from other internal and external parties
  • Customer surveys

Treat measurement as an ongoing process, by measuring it more frequently. Some examples of how companies are negatively impacted by poor company culture:

  • High turnover
  • Disengaged employees
  • Poor customer relations
  • Lower profits

Good corporate culture should drive high performance, as well as improve employee retention and engagement. When gathering data points, collect data from these often-overlooked sources:

  • The organizational network (who talks to who, and how often?)
  • Knowledge distribution
  • Trends in performance evaluations
  • Investments into upskilling and team building
  • Results from internal marketing efforts
  • Sentiment from work environment, mission, and vision
  • Conflict resolution
  • Recurring problems
  • What’s actively promoted by employees and what is considered too taboo

Feed the results back into the organizational strategy, and bring very alarming insights and observations back to the leadership team to build the case for an organizational transformation (which we understand is a course-correction). These transformations are more likely to succeed when the proposed change is in line with the company’s overarching strategy and financial goals. 

Built-in says that 76% of employees believe that a well-defined business strategy helps cultivate a positive work environment. Even when you have completed a transformation and positive change is measurable and observable, review your organization again and continue holding the team accountable.

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