What you’ll learn to do: describe organizational culture, and explain how culture can be a competitive advantage

Organizational culture is a term that describes the shared values and goals of an organization. When everyone in a corporation shares the same values and goals, it’s possible to create a culture of mutual respect, collaboration, and support. Companies that have a strong, supportive culture are more likely to attract highly qualified, loyal employees who understand and work toward the company’s best interests.


Learning Outcomes


There is no distinction between a church and a university when it comes to organizational culture.When speaking about the culture of a business, you will often hear the term "corporate culture." Corporate culture is, according to INC Magazine:

It is defined by its shared values, attitudes, standards, and beliefs that define its members.Organizations' cultures are shaped by their goals, strategies, structures, and approaches to the labor pool, customers, investors, and the local community.It therefore plays an essential role in the ultimate success or failure of any business.

Like families (or nations), corporations have cultures. Sometimes those cultures “just happen.” All too often, when corporate culture is not intentionally created, the culture winds up being disjointed or even antagonistic. Employees are all working toward different goals, in different ways, with different approaches. For instance, although Bob is dedicated to the idea of crafting quality products, Suzanne is eager to sell as much product as possible (even if the quality is only so-so). Meanwhile, Brad thinks the company should start making a wider range of products and is trying to push his ideas forward during sales meetings.

The idea of corporate culture developed from our knowledge of national, regional, and family cultures, and many theories exist about what makes a good (or poor) corporate culture. To get an idea of what a corporate culture looks like, think about families you know well. Some are formal whereas others are easygoing. Some work together toward shared goals whereas others encourage individuality and independence. Some are always having fun whereas others seem to be in a permanent state of internal conflict. We can describe corporate cultures in similar ways.

Despite the fact that some businesses don't pay much attention to corporate culture, many successful companies have developed the cultures on purpose.The motivation or vision of a founder may influence corporate culture.The creation of corporate cultures generally involves not only upper management, but also managers and employees.


What Do Corporate Cultures Look Like?

It's probably best to consider some examples in order to get a better idea of what we mean when we talk about corporate culture.Check out a few of the great cultures in some well-known companies.

IBM

Thomas Watson, the founder of IBM, played a critical role in the development of corporate culture.As a result of a very different worldview than our own, it emphasized morality, temperance, and consistency.Traditionally, IBM's men wore dark suits with white shirts and behaved conservatively.The "IBM Spirit" is even represented by corporate songs like "Ever Onward" that employees were required to sing at meetings and conventions.

This songbook from 1937 showcases the lyrics to the song "Ever Onward," which reveal the original culture that made this company one of the most recognizable business icons in US history.Please read the following verse.

EVER ONWARD – EVER ONWARD!That’s the spirit that has brought us fame!We’re big, but bigger we will beWe can’t fail for all can seeThat to serve humanity has been our aim!Our products now are known, in every zone,Our reputation sparkles like a gem!We’ve fought our way through – and newFields we’re sure to conquer tooFor the EVER ONWARD I.B.M.<2>

Watch the following video to hear the song and find out more about IBM’s early corporate culture:

Google

One business that has revolutionized the way of work and its vision about it is Google. Google has become known as the company with endless perks for its valued employees. Some of these include coffee bars, free meals, lounge breaks, and even the option to bring your pet to work! Google has locations worldwide, and management embraces the idea that a happy employee leads to a productive workplace. The company’s long-term success ties back to its corporate culture and values. Here’s a list of Google’s core values, around which it builds its corporate culture:



Apple

Google likes to make sure its employees are having fun, but Apple’s corporate culture is a bit more focused on getting things done. Its founder, Steve Jobs, passed along a set of core values that make it clear that competition, focus, and hard work are part of the organizational culture:



Compare Apple’s values to those of Google. Apple focuses on competition, outcomes, and excellence, whereas Google emphasizes values such as having fun, behaving ethically, serving the customer, and engaging with the wider world. Both companies make digital products, both have seen great success, and both attract plenty of dedicated employees. But because the corporate cultures are so different, Apple and Google attract different people who have different personal goals, work styles, and expectations.

Corporate Culture as a Competitive Advantage

Why is it so important to have a strong, positive corporate culture? There are three good reasons:


E.H. Schein’s model of corporate culture includes artifacts, values, and assumptions


E.H. Schein is a theorist who studies corporate culture. In 1992, he wrote a book titled Organizational Culture and Leadership, which suggests that there are three levels of corporate culture. At the core of a culture are basic assumptions about human behavior, which are usually so ingrained into the culture that they’re difficult to pinpoint. Surrounding the assumptions are expressed values drawn from those assumptions. These usually appear in the form of standards, rules, and public expressions of the organization’s philosophy. At the surface level are artifacts that are the outcome of the assumptions and values—these appear as actions, policies, the physical environment, office jokes, and so on.

For example, when Home Depot, under the leadership of a new CEO, needed to return the company to its customer-centric roots in 2007, it quickly introduced artifacts—buttons and awards—to remind everyone who came first: customers. Sales associates began wearing buttons that invited customers to ask for help. Associates were rewarded for outstanding customer reviews and recognized in meetings with sales plaques and more buttons. With a renewed focus on its stated value of providing excellent customer service, Home Depot began hiring people who loved serving customers instead of worrying about costs and profits. Management did not completely abandon the cost discipline of its previous CEO, but it loosened the reins substantially. The underlying assumption was that profits would return if the company took care of customers. Profits did return, although the competition from Lowe’s has been stiff.

There is no right or wrong set of assumptions and values, and companies can be successful no matter which values they embrace. You are, however, most likely to do well with a company that shares your beliefs. Just looking around a workplace can help you to determine whether a company values hierarchy or shared authority, individual achievement or teamwork.


Check Your Understanding

Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.