What Are the Key Components of Corporate Culture?
Corporate culture is often defined as a set of shared beliefs and values that influence the behaviors and actions of employees. It can also be helpful to think of culture as the personality of the organization—the combination of a company’s history, vision, people, and environment.
In a survey of 1,800 global CEOs and CFOs conducted by Duke’s Fuqua School of Business, 78 percent named culture as one of the top five factors impacting overall company value. In addition, 92 percent said that improving their company culture would improve the value of their company. Whether you’re in the process of building a high-performing culture or you’ve identified some aspect of your culture that you want to change, one thing is for sure: Your culture has an impact on the overall success of the company.
To better understand corporate culture and the elements of it that you can change or adjust, it’s necessary to understand its key components:
Vision and Values
The backbone of an organization’s culture is the organization’s vision and purpose and how these things will help it survive and compete in the market. Values describe the employee behaviors and mindset required to achieve the company vision. Together, the vision and values serve as guidelines for how employees are expected to lead, behave, and communicate.
Some of your company values may be aspirational, while others may already be a part of your culture. For example, a technology company may have core values of zero-defect product delivery (aspirational) and innovation (a value they already possess).
As you examine your culture, it will be helpful to routinely evaluate your vision and values statement, because it may need to be altered as the organization grows and times change. At all times, however, employees need to understand the vision and values, as well as the associated behaviors that are expected of them.
Practices and People
Perhaps the most important component of corporate culture is the people—the “culture carriers.” Customers, prospective hires, and other stakeholders will understand your company culture from their interactions with and observations of employees.
Because employee behaviors impact corporate culture, targeted skills training can be used to teach employees the behaviors that support the culture you want to build. Employee behaviors, both innate and learned, define corporate culture. Some examples include:
- Traits and skills of leaders: the degree to which individuals lead by example and cultivate desired behaviors in others
- Communication: how employees share information and deliver feedback
- Camaraderie: how employees have fun and build a sense of community within the organization
- Teamwork/collaboration: the degree to which individual input and perspective is respected and considered in group problem-solving and decision-making
Narrative
Every organization has a unique story that undeniably shapes its culture. When elements of the company’s narrative are shared and retold over time, they become a significant part of the culture.
Examples of narrative/storytelling activities that help shape corporate culture include:
- Celebrations that remind employees of important company milestones and successes
- Rituals and routines, such as annual meetings, that recognize newly promoted employees, or a program that brings a special guest to speak to employees at the same time each year
- Company folklore and legends
Environment/Place
The environment in which people do their work, collaborate, and make decisions is a critical component of corporate culture. For example, geographic regions tend to attract different kinds of companies and employees, as in the case of Silicon Valley for tech firms. Within companies, location can help shape culture as well. Trading floors in brokerage firms engender a culture of loud conversation and a lightning-fast pace of work. In many office environments, flexible-use gathering places and conference-type rooms support a collaborative culture among employees.
While there may be many answers to the question “what is corporate culture?”, it is ultimately shaped by the vision and values that drive the behaviors and attitudes of the people involved. All of the components of corporate culture are impacted by important decisions you make and the type of culture you want to build. You can achieve your desired culture with a mix of training and other activities that impact employee behavior. In addition, a culture transformation may necessary in order to achieve larger organizational culture goals.
