Industry Market Trends

What's Your Corporate Culture?

Jun 23, 2009

From Enron to Google, corporate culture says a lot about an organization's character, influencing how it's perceived by customers, employees and competitors.

Corporate culture is an ambiguous term: Every company has one, but its elements change depending on the setting.

A positive corporate culture may express itself through happy and secure employees in a friendly environment, while a negative one may be characterized by overworked employees or ill-defined team roles. Regardless of the specifics, culture can usually be found in a company's overall philosophy and how it reflects on workplace dynamics.

On a day-to-day level, corporate culture dictates the dress code, hours worked, employee training, on-site perks, interactions among workers and management, the arrangement of the work space and the general impression of being in a hostile or welcoming environment.

But the final impact of organizational culture is on more than just employee satisfaction; it can also be seen in the bottom-line. According to a study by McKinsey & Co., cultural factors accounted for more than 70 percent of the obstacles that prevent a business from reaching its performance improvement goals. Thirty-three percent of barriers involved management behavior that does not support change and 39 percent were due to a culture of employee reluctance to accept innovation.

"Competitors can quickly mimic a successful strategy. What they cannot reproduce quickly is a superior performance culture," the study asserts.

There is a reason the same set of companies regularly appears among Fortune's 100 Best Companies to Work For, as well as ranking among the best providers of customer service and topping profitability standings — a positive corporate culture elevates standards across the board.

As James Heskett and Earl Sasser, authors of The Ownership Quotient, told Harvard Business School, an organization with a clearly codified corporate culture can expect the following labor benefits:

  • Become better places to work;
  • Become well known among prospective employees;
  • High level of ownership (e.g., referral rates and ideas for improving the business from existing employees);
  • Simplified screening process, as employees tend to refer similar-minded acquaintances;
  • Larger pool of prospective employees; and
  • Effective hiring process with fewer mismatches.

So how can a business figure out its corporate culture?

Evaluate Your Corporate Culture

Corporate culture depends on many factors outside a mission statement or business model.

"Too many organizations assume they know what their culture is. Often they think that it can be summed up in a slogan, like: 'We have a culture of innovation' or 'We're an action-based culture.' Others assume their values statement adequately represents their unique culture," Ethikos, a corporate ethics and compliance journal, states.

In fact, it's better to favor opinions from personnel at each level of the organization's infrastructure over mission statements or preconceived branding notions.

Ethikos explains: "Your existing corporate culture is largely conveyed from one generation of employees to the next through corporate stories and the informal systems that convey values over time. You need to explore these stories and informal systems."

A culture assessment typically involves formal and informal interviews, focus groups, surveys and observational analysis. Human Resources guide Susan Heathfield also recommends taking a "culture walk" around the building to see how space is allocated, how common areas are used and the way people interact.

In interviews, focus groups or surveys, Heathfield suggests focusing on the following questions:

  • What would you tell a friend about your organization if he or she was about to start working here?
  • What is the one thing you would most like to change about this organization?
  • Who is a hero around here? Why?
  • What is your favorite characteristic that is present in your company?
  • What kinds of people fail in your organization?
  • What is your favorite question to ask a candidate for a job in your company?

Communication between members of a group when answering these questions can reveal a lot about workplace dynamics. Similar details can also be found in the way people eat lunch (i.e. does management dine with employees?), in the protocol for meetings, the way people dress or even how office parties are thrown.

If It's Broken, Fix It

The effects of a negative corporate culture extend far beyond a bad meeting. They can result in pervasive communication problems among coworkers and management, a disheartening work environment and an overall lack of commitment to work objectives. This degrades a company's ability to address problems, ultimately hurting customer loyalty and sales.

Companies with cultures that have proven successful, such as Southwest Airlines with its upbeat approach to flying or Google with its reputation for openness and creativity, can serve as examples of the power of positive culture. But these approaches shouldn't serve as templates. Each company has a unique culture, and careful assessment can help you identify the areas that need improvement as well as the particular strategy that would work for your firm. offers the following suggestions for improving corporate culture:

  • Be committed for the long term;
  • Take an interest in your employees;
  • Have open communication between the company and employees;
  • Create a team spirit; and
  • Create a livable work environment that balances work and life.

Perseverance is the central tenet of corporate cultural improvement. Temporary measures can't produce the generational effect needed for a new workplace culture, which depends on organizational memory and the ongoing transmission of ideas.

An optimistic and productive corporate culture can allow a company to reap major benefits, and perhaps most important, it perpetuates itself by attracting the best talent. Given the option between coming to an open and engaging workplace every day or merely showing up for a job, which would you choose?


How Do I Create a Distinctive Performance Culture?

McKinsey & Company

100 Best Companies to Work For

Fortune, Feb. 2, 2009

How Corporate Culture Makes Shareholders Rich

by Selena Maranjian

The Motley Fool, May 19, 2009

10 Reasons to Design a Better Corporate Culture

James L. Heskett, W. Earl Sasser and Joe Wheeler

Harvard Business School Working Knowledge, Dec. 22, 2008

Assessing Corporate Culture

by Ed Petry

Ethikos, March/April 2005

How to Understand Your Current Culture

by Susan M. Heathfield Human Resources

We Weren't Just Airborne Yesterday

Southwest Airlines, 2009

The Google Culture

Google, 2009

Mid-2009 Check-in: How's Your Company Doing?

by Nancy Mobley, June 5, 2009