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Company Culture

The attitudes and behaviors governing how employees and executives engage and manage outside contractual relationships in a company

What is Company Culture?

Company culture reflects the attitudes and behaviors that govern how employees and executives engage and manage outside contractual relationships in a company. Corporate culture is typically assumed rather than explicitly stated, and it evolves gradually over time as a result of the aggregate qualities of the individuals the company recruits.

The culture of a company will be represented in its dress code, operating hours, office layout, staff incentives, turnover, recruitment selections, customer treatment, customer satisfaction, and all other aspects of operations.

Company Culture

A successful company must work to adopt a culture that is founded on a set of firmly regarded and broadly accepted ideas that are backed by strategies and processes. Three things happen when a company embodies a strong culture: (1) Employees understand how top-level management expects them to react to any circumstance, (2) They feel that the anticipated response is the appropriate response, and (3) They understand that they will be rewarded for embodying the company’s values.

Summary

  • The attitudes and practices that control how workers and executives engage and manage outside contractual ties in a firm are reflected in company culture. Company culture is usually assumed rather than explicitly defined, and it evolves gradually over time as a result of the collective characteristics of the people the company hires.
  • A company’s culture will be reflected in its dress code, operating hours, office layout, employee incentives, turnover, recruiting selections, customer treatment, and customer satisfaction, as well as all other elements of operations.
  • The four main types of corporate culture are advocacy culture, clan culture, hierarchy culture, and market culture.

 

Types of Company Culture

The four common types of company cultures include:

1. Advocacy Culture

Companies with an advocacy culture prioritize innovation, risk, and ingenuity. Employees that think creatively and bring fresh ideas are valued. Such companies are constantly planning ahead of time and producing new products. To discuss ideas and propel the firm forward, strategy and brainstorming meetings are often encouraged.

2. Clan Culture

Clan cultures, sometimes known as “family cultures,” are collaborative, action-oriented, and adaptable to change. Employee happiness and work satisfaction are key goals in companies with a highly collaborative work environment. Such organizations cherish each individual and encourage employee input and openness.

3. Hierarchy Culture

Companies with a hierarchical culture adhere to conventional business procedures, with a distinct line between employer and employees. They work in a risk-averse setting with well-defined procedures. Such kinds of enterprises usually adhere to a strict structure, including set business hours and/or a dress code. The emphasis is on day-to-day activities as opposed to employee interactions or feedback.

4. Market Culture

Profit margins and market dominance are priorities for companies with a market culture. It is the most competitive and competitive business culture kind. They are results-driven companies that prioritize business performance and the bottom line over staff satisfaction. Such businesses are concerned with achieving targets, reaching objectives, and achieving results.

Practical Example: Google

An example of a company with notable company culture is Google. Google’s culture is a good example of a healthy workplace. Its personnel are given the opportunity to work with cutting-edge technology and are actively engaged in addressing the world’s major challenges through the most application of technology. The company constantly monitors employee satisfaction and contentment in addition to giving incentives such as free meals, fun activities, napping pods, and on-site physicians.

Google accommodates everything within one place – the Google Workspace – from expert stylists to gyms and swimming pools, from essential napping pods to on-site health and wellness facilities, from console games to foosball and ping pong, etc. It’s been successful in building an innovative and pleasant work environment for its employees. The tech giant promotes organizational performance and productivity and allows employees to escape uninspiring workstations or a formal corporate atmosphere.

Toxic Company Cultures

Toxic company culture includes deviant behaviors, conflict, internal strife, poor communication, power disputes, and low morale. It also does not put employee well-being first in its activities and policies. The key elements of a toxic workplace include, but may not be limited to:

  • High employee turnover
  • Notably low employee morale
  • Discord among employees
  • Lack of effective communication

Changing the Company Culture

Any organization’s culture is inextricably linked to its objectives. As a result, senior management can exert influence on the existing company culture to mold it into a more refined culture to change the directives that define it. It can be done through the following steps:

  1. The company’s top management can revisit the organization’s core values and mission. A good corporate culture is the consequence of values that have been carefully considered and are consistently upheld. Hence, to alter the culture, the values should be revisited and redefined, where necessary.
  2. After redefining and refining the values, the organization can begin looking at setting culture goals, which will allow for the upholding of the new values and envisaged workplace environment.
  3. The next step for consideration when looking to alter the culture of a company is to examine the elements that make up the current company culture and determine what changes need to be addressed to accommodate the new and refined company values and culture objectives.
  4. After considering all the key factors, the company can then begin to map out a detailed plan to allow for the alteration or improvement of the existing company culture.
  5. Finally, the next step would be ongoing progress monitoring to ensure that the implementation of the plan towards changing the company culture is producing the desired outcomes.

Examples of changing company culture can include making changes to the office space itself (redesigning) or establishing a new work-life balance for employees and/or providing incentives for employees.

Other Considerations

Companies play a significant role in sustaining a strong culture, beginning with recruitment processes and the selection of applicants who share the company’s belief systems and flourish in that culture. It continues to fostering alignment, training, and performance management initiatives that highlight and reaffirm the company’s values. Company culture also ensures that appropriate rewards and incentives are given to employees who fully embody the entity’s principles.

Related Readings

Thank you for reading CFI’s guide to Company Culture. In order to help you become a world-class financial analyst and advance your career to your fullest potential, the additional resources below will be very helpful:

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