What is Organizational Culture? Importance, Types, Meaning

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Table of Contents

1. What is Organizational Culture:

Organizational Culture is the way in which people or employees in an organization relate to each other, their work and the outside world, in comparison with other organizations. Your Organizational Culture definition or Corporate Culture shows how your organization works: how things get done, the interactions between people, and employee relationships to their work and the outside world.

2. Why is it crucial for your organization:

Organizational Culture determines how and if you are reaching your goals or key performance indicators (KPIs), so, it’s crucial to ensure that your way of working supports what you want to achieve, rather than hinders it. By shaping an Organizational Culture or Company Culture that fits your needs, you will be positioning the organization to be able to reach these goals.

3. There is no one best Organizational Culture to aim for:

what is definition of culture

There’s no one template for organizational culture. The best Organizational Culture is always contextual. The best Organizational Culture or Corporate Culture your organization should aim for should be a culture that best supports your strategy. If you’re an up-and-coming start-up you will need a very different strategy than an already established international organization. Also, expect that your optimal culture will probably change over time. Bigger organizations tend to operate in different contexts and face different requirements and restrictions and, therefore, one day there may be a need for more structure and processes..

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4. What are the different types of Organizational Culture?

We divide Organizational Culture in four different themes:

Optimal culture: one size doesn’t fit all. It’s never a good idea to try to apply the culture of another organization as the optimal culture for yours. Optimal culture is the organizational culture that best supports your organization’s strategy in order to be successful. It is crucial to keep in mind that optimal culture should always be tailored for each organization, or function of an organization.

Actual culture: is the culture your organization or department currently has and should be the basis for all Organizational Culture change projects. In order to guarantee accuracy and objectivity, actual culture should be measured using a valid and objective method, such as our Multi-Focus ModelTM on Organizational Culture that thousands of global organizations have relied on for shaping their culture, since 1985.

Perceived culture: the culture people or employees in the organization think it has. It is also the culture you think your organization has. You can get more insight on the perceived culture by asking others and this might change your perception or belief of your organization’s culture. Implementing changes based on perceived culture alone, without measuring the actual culture, is one of the reasons why many Organizational Culture change projects fail.

Ideal work environment: is measured exactly the same way as actual culture, except that instead of asking questions about the current work environment, the respondents or employees describe the Organizational Culture they would love to have. Measuring Ideal work environment gives valuable information about the preferences of the people working in the organization.

5. Your organizational culture can enable or hinder your strategy.

types of culture

Our Research-backed Multi-Focus Model on Organizational Culture is a strategic tool aimed at helping organizations to have a functional culture. It consists of six dimensions:

D1 Means-oriented vs. goal-oriented
D2 Internally driven vs. externally driven
D3 Easy-going work discipline vs. strict work discipline
D4 Local vs. professional
D5 Open system vs. closed system
D6 Employee-oriented vs. work-oriented

Learn more about the organizational culture model

Set a meeting with one of our consultants to discuss the challenges faced by your organization and practical steps to align your Culture and Strategy.

Based on the results of your Organizational culture or Corporate Culture scans we can help you go through:

Mergers and Acquisitions: are commonplace in modern global business. However, a successful organizational culture is often overlooked in M&A processes despite it being a crucial element to success.

Change management (CM): focuses on how people, leadership and teams are affected by the organizational transition. Organizational culture plays a significant role in culture change, change management and changes to organizational behaviour. Organizations with highly engaged employees with continuing education and open and effective internal communication are more likely to succeed in their change management and cultural change initiatives. We help you to:

Measure your organizational culture and define your optimal culture
Shape your organizational culture and organizational development
Understand how your organization culture or company culture helps or hinders you to implement your new strategy/new performance management/IT/HR system
Understand the importance of the role of your leadership team in organizational change or organizational behaviour.
Plan and implement change by working closely with you throughout the process (Change Levers) so that the process of change is as effective and streamlined as possible.

National culture vs Organizational culture:

National Culture:

Refers to a group of people who have been brought up within a given country. In comparison to others, these individuals tend to share certain expectations of how things should be done and values around these expectations. National culture takes shape at a formative age, these impressions are completely formed by the age of 12 to 14 and are a product of the environment we grow up in. It’s easier to sense National Culture in larger groups because individual qualities supersede national qualities in smaller groups or if you interact with one individual.

If you deal with a large number of French people at the same time, the individual qualities or behaviour of each will be less noticeable and you’ll begin to see what they have in common. However, this only becomes truly clear if you are able to see them in comparison to another group. For example, how a large number of French business people compare in a meeting with a large group of British business people. When all other elements are relatively equal, this is when the differences of National Culture will become most apparent.

Organizational Culture:

A large group of German people or employees from a specific organization in comparison to a another similar-sized group from a US corporation can demonstrate differences in National Culture. However, the behaviour of this group of people would not represent German or American culture as a whole. In this case, it would be wrong to assume that the culture of their organization is identical to the dominant culture of their country. This is because it involves two different levels of society. The company would have a culture of some sort; this is what we call Organizational Culture.

How National Culture and Organizational Culture are different

National Culture is based on the values that groups of individuals prefer or expect to be carried out. Organizational Culture or Corporate Culture is based on the practices that are carried out within the organization. The difference in the root of National Culture and Organizational Culture also impacts how fast they can change. National Culture changes very slowly as the values of a collective group of people are often based on their past experiences, as well as family and historical experiences. The changes in National Culture are relatively inconsequential over time.

Organizational Culture is based on practices and is something that can vary greatly from organization to organization, regardless of the country or industry. In addition a successful Organizational Culture is impacted by a CEO or a charismatic leader or management team, and can shift over short periods.

The Culture Factor can help you build the best Organizational Culture

Each business depends on a unique strategy for success. Your strategy is the ideal starting point to build a sustainable Organizational Culture. Identify the crux of your strategy. It could be:

Promoting innovation
Market leadership or Growing within your current market
Following strict safety guidelines
Being customer focused
Employee engagement
Aiming for a successful M&A
Looking to reduce production costs
Protecting confidential information
Be a leader in Sustainability
Employee focus
Culture change
Competitive advantage
A nimble organizational structure to stay competitive and respond swiftly

Once you have decided on your point of focus or interest, you have to direct your Organizational Culture according to your strategy to reach that goal. What that looks like in practice may differ drastically depending on many factors such as your industry, your size, and National Cultures differences. At The Culture Factor we’re specialised in supporting companies throughout this process.

(Read about how Organizational Culture and National Culture impact your organization)

Six steps to build the ideal Organizational Culture

company culture

Define your strategy: the vital first step. Even before you are able to align your Organizational Culture with your strategy, you have to clearly define what that strategy is.

Understand your current Organizational Culture: it’s important for you to get an impartial understanding of how your Organizational Culture is today. You can do this by seeking inputs for different areas of your organization before you establish an overall view of the situation.

Identify areas of improvement: Once you have clearly defined your strategy and have an overview of your current Organizational Culture or Company Culture, you are ready to identify the gaps where improvements could be made.

Create an action plan: once you put together the big picture, you are now ready to create an action plan and task culture. In most cases you will have too many gaps to address at one time and that is why we suggest starting with the most beneficial ones to your organization.

Monitor the progress: In order to ensure consistent monitoring, we recommend creating what we call Culture Squads. This means tasking a group of people or employees with driving and monitoring change with the leadership. The Culture Factor provides training and mentoring for this as well.

Re-evaluate regularly: Consider evaluating and re-evaluating your Organizational Culture on a regular basis in order to make sure you are continuously moving in the right direction. This also helps you to understand if the actions you are taking are having the desired impact on your Organizational Culture or if different actions could have more impact.

Reach out us to build an effective and sustainable Organizational Culture

The Culture Factor can help you reach your Organizational Culture goals

Our objective is to make sure you reach your own goals and culture change based on your own strategy. We support your team through the entire process of clarifying and aligning strategy with the Organizational Culture. Our Organizational Culture Scan helps us develop an impartial understanding of your current culture. This scan is based on six independent dimensions and each of these dimensions help identify the gaps between where your organization is and where it wants to be. We can help with culture transformation and help you reach your desired culture.

Once the gaps have been determined, we can begin to evaluate which ones are most relevant to success. We also support organizations to create an action plan based on the most critical issues they are facing. By training and supporting “Culture Squads”, The Culture Factor help you maintain and track progress. Finally, because our Scan is standardised, Organizational Culture can be measured when necessary and progress can be evaluated.

Eight Benefits of a well-defined Organizational Culture

Recruitment: companies with a well-defined culture often attract the best talent. Your Human Resource team will agree that a strong organizational culture is one of the best ways to attract potential employees. Most potential employees will be keen to work for a company with what they perceive as a strong culture, effective leadership and a strong culture fit.

Retention: employee retention has become particularly significant in a booming post-pandemic market where employees have multiple job offers. High turnover is a typical symptom of an ineffective organizational culture or a poor employee experience. Cultivating a workplace that encourages employee participation and employee engagement is extremely vital.

Perfect fit: the first port of call for most job seekers is organizations that align with their shared values. For some it might be a company that allows flexibility, for others it could be a company that encourages a spirit of entrepreneurship. A clearly defined culture and effective leadership allows the right talent to find you and make a significant contribution to your organizational goals.

Customer satisfaction: when your employees are satisfied, it encourages them to put their best foot forward and create the right buzz and energy. The result – exceptional products and higher standards of customer service that reflect their motivation in a healthy culture. This has a direct impact on customer satisfaction.

Innovation: is derived from the Latin verb ‘innovare’, that translates to ‘renew’. Innovation in the modern context is the creation of new ideas, processes, or products. An organization where employees are highly motivated is likely to provide the perfect environment and platform for innovation or an innovation subculture.

Collaboration: a positive and effective organizational culture fosters a spirit of partnership and builds teamwork. It also enables much better communication and social interaction.

High employee morale: employee surveys of companies with a well-defined organizational culture or corporate culture almost always reveal a happy and motivated workforce.

Work-life balance: stress is one of the major factors that upsets work-life balance. A strong and positive work culture significantly reduces workplace stress and impacts employee productivity, behaviour and well-being.

Organizational Culture Consulting:

We Offer you a structured approach to measure, understand and shape your Organizational Culture. Our approach is based on data.

Our effective 5-step consulting process:

Consulting process

Reach out to us to discuss the challenges faced by your organization and practical steps to align your Culture and Strategy.