What Is Organizational Culture?

Organizational culture, corporate culture, workplace culture: these phrases are tossed around a lot in discussions of what makes for a positive—or negative—place to work. But what is organizational culture and why does it matter? We’ll look into both of those questions and more as we dig into the definition and meaning of organizational culture.

First, a Little History

Before diving into what organizational culture is, a disclaimer: A fixed, universal understanding of what organizational culture is does not exist. In his essay “Defining ‘Culture’ and ‘Organizational Culture’: From Anthropology to the Office,” Bruce M. Tharp points to a 1998 study as an example of how complicated it can be to define organizational culture. The study, he says, identified 54 different academic definitions of organization culture between 1960 and 1993.

While defining organization culture isn’t simple, it isn’t impossible, either. The next few paragraphs will explore what it means, why it’s important, and tips for establishing a positive workplace culture.

Breaking Down the Definition of Organizational Culture

The definition of organizational culture crafted by Edgar Schein, former professor at the MIT Sloan School of Management and author of “Organizational Culture and Leadership,” is often used as a general jumping off point.

Schein defines organizational culture as “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has 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 other words: shared beliefs within an organization that have been proven to work well in external and internal communication, are embraced by management and employees, and are used as guidelines when addressing problems or other situations.

Schein states that culture can be seen in three key ways within an organization: in observable artifacts, espoused values, and basic underlying assumptions.

Observable artifacts are an organization’s attitudes, behaviors, and beliefs—what it considers important and meaningful.

Examples include:

• A company’s physical surroundings (the building, interior design, landscape, etc.)
• Products
• Technologies
• Style (clothing, art, publications, etc.)
• Published values and mission statement
• Language, jargon, tone, and humor
• Myths and stories
• Practices, rituals, ceremonies, and taboos

Google is a great example of a company that uses observable artifacts to define its organizational culture. Some of the observable artifacts found at Google’s 70+ offices in more than 40 countries that tie into their organizational culture include:

• Murals and decorations expressing the local personality of the different offices
• Shared cubicles, yurts, and “huddles”
• Video games, pool tables, and pianos
• Cafes and “micro-kitchens” stocked with healthy food
• Whiteboards for “spur-of-the-moment brainstorming”

All this reflects Google’s statement about their culture, which says: “Although Googlers share common goals and visions for the company, we hail from all walks of life and speak dozens of languages, reflecting the global audience that we serve. […] We strive to maintain the open culture often associated with startups, in which everyone is a hands-on contributor and feels comfortable sharing ideas and opinions. […] Our offices and cafes are designed to encourage interactions between Googlers within and across teams, and to spark conversation about work as well as play.”

Espoused values are the things advocated by a company’s leadership and management.

These can be defined as:

• Beliefs upon which the company is built—the company’s code of conduct
• Demonstrated traits; managers serve as examples by modeling the values they wish to see in their company
• Promotional efforts (in-office posters, company newsletters, special events, seminars, lectures) that further communicate these core beliefs

Google works well as an example here, too. In the company’s weekly all-hands (“TGIF”) meetings, over email, and in the cafes, Googlers are encouraged to ask questions directly to Larry Page and Sergey Brin, Google’s co-founders and CEO (Larry), and other executives about any and all company issues. This open communication models the value management places on transparency and humility; by inviting all 40,000+ employees to have a conversation about the company with senior management, Google is demonstrating that this is a core belief.

Basic assumptions are underlying determinants of an organization’s attitudes, thought processes, and actions. These are defined as:

• Assumptions central to an organization’s culture
• Values that are so ingrained and taken-for-granted that individuals are usually unaware of their influence
• Aspects of a workplace that provide an unspoken sense of security
• The “it” factor of a place—it’s vibe, atmosphere, etc. that is present, but unable to be defined in a tangible way

Since basic assumptions by definition are intangible, they can be hard to pin down. Staying with the Google example, however, this aspect of organizational culture can be seen in number 10 of its “Ten Things We Know to be True” statement that was written to answer the “What We Believe” question. Here are excerpts from that statement:

10. Great just isn’t good enough. We see being great at something as a starting point, not an endpoint. We set ourselves goals we know we can’t reach yet, because we know that by stretching to meet them we can get further than we expected. Through innovation and iteration, we aim to take things that work well and improve upon them in unexpected ways. […] We try to anticipate needs not yet articulated by our global audience, and meet them with products and services that set new standards. […] We’re always looking for new places where we can make a difference. Ultimately, our constant dissatisfaction with the way things are becomes the driving force behind everything we do.

“Greatness” isn’t something a corporation can buy, but it’s something Google strove to include within their organizational culture at the beginning and strive to maintain today. It’s also a great example of a basic assumption that determines an organization’s attitude, thought process, and actions.

Why Organizational Culture is Important

Organizational culture, as defined by the Business Dictionary, is “the values and behaviors that contribute to the unique social and psychological environment of an organization.”

It includes a company’s expectations, experiences, philosophy, and values that hold it together.

It is expressed in its self-image, inner workings, interactions with the outside world, and future expectations.

It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid.

Basically, it affects every aspect of a company and determines not only the corporation’s present, but also its future. By building the right culture and environment, a company can:

• Increase productivity and performance
• Provide better customer service
• Ensure better product quality and safety
• Increase employee attendance and punctuality
• Make better products
• Have more impactful marketing and advertising practices
• Be more innovative with product creation

That’s according to an article written by Ann Rhoades, one of the founding executives of JetBlue Airways, winner of the JD Powers award for customer service. She explicitly outlines a few of the benefits she’s seen from building a strong, positive culture, from different points of view, including:

For the company:

• Lower levels of absenteeism and turnover
• Increased employee engagement
• Increased alignment of employee performance and corporate objectives
• Increased customer satisfaction scores

For the employee:

• An increased feeling of well-being and job satisfaction
• Increased trust in management
• Higher engagement scores
• Higher productivity overall

For the customer:

• Increased responsiveness to customer needs
• Higher service quality levels
• Increased levels of trust due to higher transparency and open communication
• Increased customer satisfaction

Tips for Establishing a Good Organizational Culture

Now that we’ve discussed what organizational culture is and why it’s important, here are a few ways to establish your company’s culture.

1. Articulate a core cultural statement.

A company’s core cultural statement should be embedded in its mission statement and seek to further explain the concept. For example, Patagonia’s mission statement is “Build the best products, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

That in and of itself is explanatory. But then they go on to explain the “why” behind the statement, a further definition of their values (simplicity, utility, donating time, services, and money to grassroots environmental groups, etc.) to establish a deeper core cultural statement and understanding.

2. Develop a cultural vocabulary.

Once a core cultural statement is established and paired with the mission statement, a company should consider the words it wants to use to define the sentiment in question. What reinforcing words, adjectives, and nouns best reflect your core cultural statement? Identify a list of words that define your culture and use them regularly in internal and external communications.

A great example of this is demonstrated at Blinds.com, where CEO Jay Steinfeld says words are used to inspire (projects are named things like “Everest,” to emphasize “taking customer product customization to new heights”), establish accountability (trainees are called “future stars,” call centers are called “academy bay,” sales reps are called “design consultants”), and support core values (the word “failure” is forbidden within the office, called “learning experiences” instead).

3. Model your behavior.

Leaders need to practice what they preach, especially with culture, where modeling behavior is particularly important. Act in such a manner that shows employees that you live the culture. Organizational culture should be reflected in leaders’ behavior in a natural, consistent, and unobtrusive way so the modeling is authentic. If it is, employees will follow suit.

Examples of this are often seen with servant leaders, who demonstrate expectations to employees by showing them how to act.

HR professionals can also help foster an atmosphere that reflects a company’s organizational culture by acting as stewards of cultural practices. HR is often responsible for helping to shape or reshape an organization’s culture by developing programs that align to and support it, as well as by measuring how employees engage with it. Serving as the person that helps others manage change or adapt to these workplace cultural norms is critical to driving systemic change.

4. Avoid cultural drift.

After organizational culture is defined and established in the above ways, take strides to continue to support it through actions, words, and attitude. No matter what, leadership should reinforce, recognize, and reward behavior that's consistent with the company’s core cultural statement.

Conclusion

Organizational culture involves the values and behaviors that contribute to a company’s social and psychological environment. It involves the expectations, experiences, philosophy, and values that hold a business together. A positive organizational culture can motivate and inspire and propel your business forward, while cultivating a positive work environment that everyone can appreciate.