Tools & Templates

What is corporate culture?

Imagine that you never have to micromanage your employees. That they independently make the right decisions for the good of the company. That they instinctively know the right thing to do concerning customers, partners and competitors. Where your resources as a leader are spent on thinking big, strategic, forward-looking thoughts and not on micromanaging employees and putting out fires.

In companies which have a strong culture this is actually possible. Because there is a general agreement on what the company represents and what values are important, employees are, with relatively certainty, able to make decisions that are in sync with the decisions that any other individual in the company, including you, would have made.

What is culture?

Culture includes the organization’s vision, values, standards, symbols, language, assumptions, convictions/beliefs and habits. A way of perceiving and even thinking and feeling, which new members of the company easily pick up on.

The company’s culture affects how you talk, think and act. Your culture affects how you act among each other internally within the organization but also how you act towards your customers, partners and competititors.

Big advantages when focusing on culture:

A strong culture not only leads to more self-reliant employees. Research, conducted by John P. Kotter and James Heskett in 1992, indicate that companies with a strong culture produce a higher profit than other companies. See the index below, which we found in this article.

 

  Average Increase for Twelve Firms with Performance-Enhancing Cultures Average Increase for Twenty Firms without Performance-Enhancing Cultures
Revenue Growth 682% 166%
Employment Growth 282% 36%
Stock Price Growth 901% 74%
Net Income Growth 756% 1%

 

A 901 % growth in share prices for companies that have a performance enhancing culture against a 71 % growth in companies that does not. That is a difference that matters, right? Also notice the difference in the growth of net income. 756 % against 1 %!

A weak culture vs. a strong culture

What separates the strong culture from the weak? Kotter and Heskett describe it like this:

“… a strong corporate cultures that facilitate adaption to a changing world are associated with strong financial results” (Kotter and Heskett “The Value of Corporate Culture”)

And later on in the same book:

“We found that those cultures highly value employees, customers, and owners and that those cultures encourage leadership from everyone in the firm. So if customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered to do just that.”

So, there are many positive outcomes to working constructively on your culture. To make the culture work WITH you and not against you.