Understanding corporate culture

Last week we looked at the term culture, with specific emphasis on national culture. We identified it as a system of shared meanings or in a much simple manner as collective mental programming. Let’s keep it in mind in looking at the term climate, it is important to distinguish between the two terms to avoid confusion.

Organisational or corporate culture is the pattern of values, norms, beliefs, attitudes and assumptions that may not have been articulated but shape the ways in which people behave and things get done.

In a more detailed manner, Edgar Schein defines culture as, “A pattern of basic assumptions – invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration - that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

In fact, the term culture refers to the deep structure of organisations, which is rooted in the values, beliefs and assumptions held by organisational members. This can be further explained by linking to several metaphors.

Organisational culture as an iceberg: What is seen on the surface is based on a much deeper reality. The visible elements of culture are sustained by hidden values, beliefs, ideologies and assumptions.

Organisational culture as an onion: Like an onion, organisational culture has many layers which constitute it. Such culture is unravelled by observing the various constituting elements such as rituals, ceremonies and symbolic routines.

Vision

Organisational culture as an umbrella: This refers to the overarching vision and values that unite the people and groups working under the umbrella.

Organisational culture as sticky glue: Organisational culture can be viewed as intangible ‘social glue’ that holds everything together. They include norms, values, rituals, myths, stories and daily routines which form part of a coherent reality.

As these metaphors indicate, an organisational culture takes a long time to form, and as such it also takes a long time to change. Changing the direction of a sailing ship is not just turning the rudder. The rudder will rotate soon but the ship takes a long time to turn to the needed direction.

Corporate culture includes the beliefs and behaviour that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined and develops organically over time from the cumulative traits of the people the company hires. A company’s culture will be reflected in its dress code, business hours, office set up, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction and every other aspect of operations.

Perks

Let’s take Google as a case in point. Google is a company that is well-known for its employee-friendly corporate culture. It explicitly defines itself as unconventional and offers perks such as telecommuting, flex time, tuition reimbursement, free employee lunches, on-site doctors and at its corporate headquarters in Moutain View, California, on-site services such as oil changes, massages, fitness classes, car washes and a hair stylist.

Google’s corporate culture has helped it to consistently earn a high ranking on Fortune magazine’s list of ‘100 Best Companies to Work For’. As Laszlo Bock of Google puts it, “We want to understand what works here rather than what worked at any other organisation.”

There is a critical role HR professionals have to lay in managing a culture change. John Storey says, “Managing culture change and moving towards HRM can often appear to coincide and become one and the same project. Corporate culture management has generated much excitement because it is perceived to offer a key to unlocking of consensus, flexibility and commitment.”

We talk about performance-oriented corporate cultures. Here the main emphasis is on a goal-driven approach. Everyone is supposed to know their performance objectives and are encouraged to achieve it at the end of the year. The Leader has to set an example by driving from the front. In fact, leaders create corporate cultures. The way Jack Welsh turned around the culture of General Electric is one global example. How Sir Richard Branson is creating a friendly supportive yet performance-driven culture at Virgin Group is another.

Corporate cultures take a long time to form and once established, resistance to change may occur. Also, it takes too much time to unlearn a given set of values and replace them with a new set. However, the counter argument is that as cultures can be learnt they should be unlearnt as well.

“We have a retention crisis,” says the Forbes magazine. New Deloitte research shows that culture, engagement and employee retention are now the top talent challenges facing business leaders. More than half of the business leaders rate this issue ‘urgent’ – up from only around 20% last year. In fact, corporate culture has become a key board room topic around the world.

Why is corporate culture discussion relevant to Sri Lanka? Economic and social prosperity cannot be achieved without the formation of a proper bedrock in organisational settings. For me, it is the corporate culture. Performance driven culture with a relevant set of values being practised by an engaged set of employees will do the needful. Much action is needed in the local front in this regard.

The writer is the Director of the Postgraduate Institute of Management. He also serves as an Adjunct Professor in the Division of Management and Entrepreneurship, Price College of Business, University of Oklahoma, USA.