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What is Corporate Culture?

        posted by , April 14, 2013

Organizations have an identity.

In many cases, the identity of an organization is almost as strong as national, community and group identities.

The identity of an organization is commonly referred to as its corporate culture.

Definition: Corporation Culture

Corporate culture is a set of norms, habits, behaviors, missions, principles, values, ethics, symbols and stories that form the collective identity of an organization.

Every organization with a history has a culture. Cultures naturally evolve amongst groups of people who have shared experiences.

Many organizations shape their organizational culture to achieve goals. Culture is considered a major factor in the productivity and innovative capacity of an organization.

Organizations use programs such as change management, internal branding, team building, mission statements and internal communications to transform corporate culture.

Corporate culture impacts organizational performance in several ways:

1. Resistance to Change

There's a tendency for organizations and individuals to resist change and defend the status quo.

The intensity of resistance to change varies greatly from one organization to the next. Where one organization quickly embraces radical change, another organization fights every small change (no matter how conservative).

Resistance to change is the primary reason that organizations become out of touch, lose their competitive advantage and fall into serious decline.

2. Innovation

Innovation is an illusive organizational capability.

Some organizations pump out innovation after innovation at an incredible speed. Other organizations have never innovated despite best efforts.

Innovation requires a culture of creativity that allows good ideas to grow into business strategies.

3. Employee Engagement

Corporate culture is a primary factor in employee job satisfaction and motivation.

A culture that demonstrates strong teamwork, a sense of belonging, a sense of common purpose, respect for individuals, respect for ideas, flexible working arrangements, continuous recognition of achievement and rewards for performance tend to have engaged employees.

Engaged employees are generally more productive, creative and are less likely to leave an organization.

4. Customer Relationships

Corporate culture also describes an organization's norms, habits and behaviors with respect to customer relationships.

Some organizations enjoy a culture founded on fundamental respect for customers. Customer relationships are friendly, professional, productive and flexible. This becomes a virtuous cycle whereby customers reply positively to the organization feeding the culture of respect for customers.

Other organizations have a fundamentally negative culture of poor customer service. Such organizations may suffer from a combative relationship with customers that spirals downward.

5. Office Politics

Just as politics vary greatly from one country to the next — office politics vary from organization to organization.

Large companies in industries that pay well tend to suffer the most from highly political environments.

Office politics are primarily fueled by competition for promotions, bonuses and team budgets. Competition between ideas also plays a role.

In many cases, office politics leads to behavior that is destructive or sub-optimal. For example, departments may be unwilling to cooperate on shared initiatives.

6. Quality

Corporate culture plays a significant role in quality.

In many cases, quality is associated with the reliability of products and processes. For example, the quality of an aircraft maintenance process depends on a low rate of human error followed by checks and double checks.

In many cases, quality is a focus of culture improvement programs. A car manufacturer that wants its products to be 100% reliable may seek a culture of stopping to fix problems.

7. Risk

Organizations differ greatly in terms of risk-taking behavior and norms.

One organization will take cowboy-like risks on a regular basis while another will seek to minimize risk to an extreme degree. This is largely ingrained in the culture of an organization.

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