One for all: why do we need a corporate culture?

Hello, dear friends! What’s your opinion on corporate culture? Not so long ago, maybe about twenty years ago, it was widely accepted that the success of a business lies in hard work.

In the past Shrewd companies, of course, cared about their employees. Although they expected loyalty, hard work and dedication from their staff. Back in those days, few employers thought about creating team spirit or sharing a vision of their goal. In today's world, everything has changed thankfully. Now, a business success lies in a well-coordinated team that understands what it's doing and why it is doing it.

Nowadays, when thinking about business, we primarily think about people. Not only about consumers or users, but also about the team that creates the product. This is the way it is now. However, the transition to such a business mentality is not easy for everyone. I constantly hear about various problems - from the wrong or ambivalent leadership style to the tense psychological climate within the organization and each of its departments. More than once I had to look for some solutions and help, consulting entrepreneurs and HR department employees. Today I have collected my tips on this topic and am sharing them with you. They can be useful not only for heads of departments or entire companies but also for ordinary employees who are dissatisfied with their work environment but do not always understand why.

I am convinced that a strong corporate culture is needed to solve internal problems, establish communication, and motivate employees to work effectively. Let's look at the basic principles of corporate culture, its technologies, and functions. And some examples of how organisational rules and regulations can be implemented in any company.

Where did the concept of corporate culture come from?

Although widespread use did not happen until a century later, corporate culture was first introduced in the 19th century. This was the name given by German Field Marshal Moltke to the relationship between officers who had specific rules, laws and conflict resolution styles based on the principles of the court of honour and duels. A sort of corporate culture was also present in medieval guilds. Here it mostly demonstrated itself in a community of colours, symbols and accessories where members of the guild could distinguish themselves and others.

In the familiar, modern sense, corporate culture began to develop after the 1970s. The main points of the theory of corporate culture occurred in 1973, and they were first formulated by anthropologist Clifford Geertz.

The word "corporate" itself is derived from Latin "corporatio" which translates as "association, community", and the term "corporate culture" in this case refers to a collection of written and unwritten standards and rules of conduct operating within an organisation.

The crucial elements of corporate culture are:

• The goals and objectives of the company
• The values and traditions
• The established leadership style
• The conflict resolution styles
• The code and standards of conduct within the team or partners and customers
• The corporate style which includes symbols, appearance, and interior design
• The employees themselves

The ability to understand the structure of corporate culture helps you to develop the most detailed list of rules, regulations and laws that employees are going to live by and use when communicating within the organisation.

Levels of corporate culture by E. Shane

In 1981, the Swiss-born American psychologist Edgar Shane conducted an analysis of an organisation. Based on his findings, he identified three main components of corporate culture: artefacts, values and basic concepts.

The first level of corporate culture is artefacts, which include all material objects that can be seen, heard, or touched. For example, an anthem, dress code, imagery in documents, individual building layout, and interior design, etc.

The second is values, everything that employees believe in and what employees and management regularly talk about. Identifying and diagnosing the main priorities is not a complicated process, but it is particularly essential for any company.

The third is the basic concepts. This includes various assumptions that employees do not recognise, more complex components of corporate culture that nobody talks about and that cannot be analysed. For example, cultural background, social status, and behavioural patterns that unite employees with everyday life and their world outlook. Accordingly, if someone is from a different background, tension can occur between employees, and sometimes this can involve open conflicts.

The functions of a corporate culture

To define more clearly why it is necessary to implement a corporate culture in your organisation, you need to identify and understand the main functions that it performs. Based on these functions, it is possible to understand precisely what kind of niche and needs of your company the corporate culture should cover.

• Motivational function - any corporate culture is based on company values and goals that employees should share (in theory). A clearly defined line of action regularly motivates those employees who are interested in being successful.
• Image function - a developed corporate culture influences not only the employees of the organisation itself but also those who communicate directly with it: partners, customers, or competitors. Such a company attracts more significant attention to itself and understands how to correctly position itself in the eyes of others.
• The identification function - when employees are united by a shared culture, they feel they are an essential part of the company.
• The organisational function - corporate culture can be used to organise the work of departments and their internal communication.
• The involvement function - this means that every employee is involved in the life and development of the company.
• Adaptive function - when a new specialist comes to the company, corporate culture helps them to quickly join the team and become familiar with the values and priorities of the company.
• The management function - as we have previously learned, the components of corporate culture also include leadership style. Which enables us to form internal norms and rules for team management.
• The functions of corporate culture also include marketing and promotion. The established image of the brand, customer associations, and the attitude of our partners - all of this can be used to increase awareness and attract new customers.

Typology of corporate culture by J. Sonnenfeld

There are several approaches to defining corporate culture, so we will look at each of them individually. According to J. Sonnenfeld, Professor of Management Practice at the Yale School of Management, there are four types of corporate culture:

1. The baseball team. It is characterised by a predominance of creative, proactive, and ambitious employees, and this type of corporate culture is usually found in fast-growing projects.
2. The Club. Variety prevails in stable organisations where teamwork and the systematic achievement of set goals are a priority.
3. The Academy. A more conservative culture that is frequently found in large and long-established corporations on the market. These companies attract specialists who are happy with the option of slowly moving up the company ladder. Employees here either leave for other places or become accustomed to their position and wait for an exception to the rule, and hopefully, to be promoted.
4. The Defence culture. This is a typical characteristic of unstable companies that occupy an uncertain position in the market, and their employees are continually undergoing layoffs and restructuring. Career growth is almost impossible, and only if you stand out from the crowd by demonstrating the very best possible performance.

Types of corporate culture according to Terrence Deel and Allan Kennedy

1. The culture of tough guys. Typical for companies living in a constantly changing environment. The ability to take risks and make quick decisions is valued.
2. Bet on your company. The corporate culture of this kind of company implies that the actions of employees are results-oriented over the long term and can be associated with certain risks.
3. Working for pleasure. This type is found in large and stable organisations. Here the effectiveness of a company and employee is associated with a personal interest and the absence of any risks.
4. Process culture. It is typical of public organisations: employees' actions within these companies are regulated, each employee takes exact steps and achieves precise results.

Types of corporate culture according to G. Hofstede

Sociologist G. Hofstede has identified five parameters through which different models of corporate culture can be identified:

1. individualism and collectivism. This is the most extreme model. Employees are either in full compliance with a public interest or vice versa, i.e. either teamwork and strong communication between employees are predominate, or the emphasis is focused on an individual and the specific achievements of a particular person. In real companies, extreme positions are not particularly common.
2. Distance of power. Determines the degree to which there is inequality between ordinary employees and the management in a company.
3. Attitude towards uncertainty. Identifies how employees view all sorts of risks and unexpected turns in the future.
4. Masculinity and femininity. Shows how clearly the company has developed social roles for different genders, whether there is inequality, how it affects the efficiency of employees, etc.
5. Focusing on the future. Stable companies are looking at the long term, and unstable companies are focusing on profit in the here and now.

The pros and cons of a well-developed corporate culture

Pros:

• Effective teamwork. When a company is involved in the development of corporate culture, the value of all departments and employee's is considered. Employees do not have problems identifying themselves, they are more likely to get involved and demonstrate themselves to be professionals.
• Caring about traditions and values. For many employees, it is essential for them to feel secure to work effectively. If they find a job with a company, the last thing they want is for everything they believe in to fall apart. Corporate culture provides some foundation, even in a world of rapidly developing technologies.
• Creating an attractive image. A company with a robust corporate culture looks confident and stable and arouses trust and interest.
• Simplifies management of the organisation. Corporate culture structures and streamlines internal relationships and defines the nature of negotiations, conflict resolution, etc. When everything is clear, it is easier to move towards goals and achieve results.

Cons:

• The complexity of creation. It is not that difficult to articulate the rules and write them into an appropriate code. Still, the process of implementing them takes time and does not always go smoothly or to plan. The structure of corporate culture must continuously be adjusted according to the circumstances.
• Rules do not mean anything without action. You cannot say one thing but then demonstrate the complete opposite. For the most part, this applies to management. The specified rules must be supported by actions, so one manager or even several managers are needed. They will be responsible for the smooth implementation of the corporate culture.

• It may cost the company a great deal. There is always the option of hiring employees who will accept the rules without too much difficulty. Still, sometimes it is necessary to compromise as soon as the corporate culture needs special effort, cost, and time from employees. This can be either monetary compensation or non-material compensation (time off, holiday, etc.).

How corporate culture is shaped

To create an influential company corporate culture, it is essential to bear in mind the three principles of corporate culture:

Freedom. In the long term, it is impossible to force an employee to work under strict conditions and by rules with which they disagree. Therefore, any position in corporate culture must consider the employee's desire to be free in their actions and decisions. Within the limits of reasonableness, of course!

Fairness. A company's corporate culture is necessary for unification, and any inequality will only increase the differences between employees. So, when drafting an internal code, you need to remember that everyone has the same privileges and restrictions. If not, it must be reasonably justified.

Human values. You must not force an employee to choose, for example, between family and work. Family is a priority, and the cost of infringing corporate culture will do more harm than good.

Only when you understand that your potential model meets these principles can you begin to develop a more comprehensive business corporate culture.

How to develop an organisational culture

There is a general plan of action that will help to qualitatively stimulate the development of corporate culture:

1. Formulate the objectives, goals, and direction of your organisation.
2. Identify the values and priorities.
3. Streamline the recruitment process to ensure that the right people are correctly employed in your company.
4. Communicate with employees about the pros and cons of working in your organisation and then use the diagnostic results to implement improvements.
5. Guarantee that the company's corporate culture is transparent and accessible.
6. Create a mentoring system so that all employees, especially new ones, are aware of the company's corporate culture.
7. Identify an exact position in employee management.

Here are a few examples of activities and actions to implement a corporate culture that you can use:

1. Regularly communicate the values of the company through brochures, presentations, media notes, the organisation's blog, etc.
2. Organise team building events.
3. Establish an incentive system.
4. Introduce and consolidate internal traditions: for example, for birthday celebrations, corporate events, or parties to celebrate the completion of a project.
5. Organise shared leisure activities outside the company, which could include both leisure and educational activities.

Remember that every company is developing its unique model of corporate culture. It would be a mistake to hire third-party HR managers and distance yourself from the development process. External specialists do not know your company as well as your employees who are working in it every day.