What Is Organizational Culture, and How Do You Develop It?

Organizational culture holds a lot of weight and for good reason. It shows up in employees’ behavior, from how they work with others to how they respond to leadership, and oftentimes determines a company’s success.

Organizational culture is the shared values, beliefs, and behaviors that shape how an organization operates. It cannot be built simply with mission statements and memos, but with direction and leadership. Learn more about why organizational culture is so important and how to develop it effectively.

Why Organizational Culture Matters More Than Ever

Organizational culture is more important than ever as people want to work for a company that they can align with. It attracts talent that shares the same values, improving employee retention and engagement. Employees with a clear outline of company goals and behaviors can be more motivated and confident in their work.

What Exactly Is Organizational Culture?

Organizational culture is referred to as the shared values, behaviors, and norms of a workplace, but what does that actually look like? It appears in the way employees work, interact, and make decisions. It connects them to the company’s purpose, motivating them and increasing productivity.

Organizational Culture as Shared Values, Norms, and Practices

An organization’s personality goes beyond a simple mission statement. It includes shared values, or the core principles that guide the organization’s actions. When an organization has a shared goal, employees work together more effectively and achieve better results.

Company personality also includes norms, or the expected behaviors that shape how employees interact. These norms can be seen in dress codes, communication styles, and conflict resolution. Practices are the observed behaviors and actions. A strong foundation will be reflected in practices that align directly with the company’s goals.

Why Organizational Culture Plays a Critical Role in Hiring Success

Organizational culture attracts suitable personnel. A strong set of values and behaviors draws in candidates who align with those factors, boosting retention and engagement. It reduces turnover by ensuring new hires mesh with the environment and instilling them with confidence in the company’s mission.

5 Key Traits of a Strong Organizational Culture

Organizational culture comprises several characteristics, and some companies prioritize certain traits over others. However, some key factors are essential to a strong and sustainable organization.

Shared Values  

A strong organizational culture will embody values shared across the company's personnel. These values guide how people behave within the organization and support decision-making that aligns with the company’s core mission, fostering cohesive collaboration and motivation.

Transparent Communication

Organizational culture thrives on open communication. Being able to share information and deliver feedback openly not only develops trust but also identifies concerns, promotes collaboration, and ensures everyone is aligned with the organization’s goals. Transparency encourages team members to communicate. They can share their concerns without fear of retribution, but also share their ideas without fear of being shut down.

Strong Leadership

Organization leaders are the driving force behind a successful culture. They develop and implement practices that support the company’s values and foster behaviors that support the culture. Strong leadership provides direction, building confidence and commitment to the company's mission.

Flexibility

Organizations are always changing, and so is their personality. An ability to adapt shows high levels of trust and belief in the organization’s values. Flexibility allows companies to stay competitive and meet expectations.

Clear Purpose

Clearly outlining an organization’s purpose helps build values, behaviors, and norms that support that purpose. An organization that doesn’t clearly articulate its purpose breeds confusion, conflict, and a lack of confidence. Clarity unites people and allows them to focus on achieving a common goal.

Prevailing Misconceptions About Organizational Culture

Organizational culture has attracted considerable attention over the years. While attention is warranted given its importance to a company’s success, there have also been misconceptions about what it actually looks like. For example:

• It happens organically: It’s easy to believe an organization’s personality just builds itself through natural interaction, but it can be learned and developed. While authentic relationships are essential, company leaders can encourage behaviors that promote shared goals.
• It’s about coworkers liking each other: While team members getting along is often a good indicator of a strong organization, culture goes beyond how people interact. It takes into account values, norms, practices, and commitment to mission and purpose, among other things. Not to mention, people liking each other is no good if they are too worried about damaging relationships by raising concerns.
• It’s about the perks: Many people equate company culture with flexible hours, free lunch, employee discounts, and other perks. These amenities, however, can simply be covering for a weak foundation. Perks should reflect the organization’s values and purpose.
• Once it’s established, it’s nearly impossible to change: Organizational culture is often the foundation for a successful company, but, like a company, its culture changes too. In fact, a strong one can adapt to shifts in personnel, mergers, customer needs, and technological advancements.
• HR handles organizational culture: HR helps define and build a culture by suggesting practices that support common goals, but the onus is on the company leaders to communicate and reinforce the right values and behaviors.

How Organizational Culture Is Built and Reinforced

Clearly defined values and visions are essential to aligning personnel with the company’s goals. When everyone shares the same values, the organization becomes more efficient and focused. Transparent communication is also imperative, as a company does not want everyone blindly keeping the peace, but rather to raise concerns that can strengthen it.

Company leaders are the backbone of a successful organization. They influence others through their actions and decisions, modeling what behaviors are desired. By creating a blueprint for employees to follow, leaders reinforce the ideal values and encourage others to follow suit. They also promote an aligned team through hiring decisions. Onboarding individuals who share the organization’s values makes training and socialization more efficient.

Building an organizational culture takes plenty of time. When it’s established, it must be flexible. Trying too hard to stick to something successful when changes occur can lead to a breakdown in relations and trust.

Frequently Asked Questions

What Is an Example of Organizational Culture?

Organizational culture can be seen in what’s referred to as “clan culture.” This setup prioritizes teamwork and loyalty, creating a family-like environment where members feel valued. This type is common in small businesses and family-owned companies.

Why Is Organizational Culture So Important?

Organizational culture acts as the foundation for employee productivity and retention. It influences behaviors and decisions, aligning everyone with a shared goal. A lack of foundation will have team members confused and uncertain about the company, while a strong one instills confidence and trust.