Workplace culture, organizational culture, corporate culture – however you name it, there are many who question if it even matters. My short answer to this question is YES, workplace culture does matter, but if you need a more convincing presentation of why it matters, then this will be one of the more important articles you read this year.

Organizational Culture: An Elusive Concept

Back when it first came on the scene in the 1980s, may saw workplace culture as some kind of wishy-washy HR fad, but thirty years later we’re still talking about it. The reason why so many people still question whether or not workplace culture matters is due in part to the fact that it remains a rather vague, even elusive concept. There is no universally accepted definition of organizational culture. Ask a dozen different people what it is and you’ll likely get a dozen different answers. Ask 100 people what it is and you might well end up with 100 different answers. Here are some ways other people have tried to define this frustratingly elusive idea:

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 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. Culture is the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic ‘taken for granted’ fashion an organization’s view of its self and its environment. ~ Edgar Schein in Organizational Culture and Leadership

A distinctive pattern of beliefs, values, practices, and artifacts, developed over time, which defines for organizational members who they are and how they do things. ~ Lee Bolman and Terrence Deal in Reframing Organizations: Artistry, Choice, and Leadership.

Organizational culture is the sum of values and rituals which serve as ‘glue’ to integrate the members of the organization. ~ Richard Perrin

It’s enough to give you a serious headache, right? And while the concept of organizational culture remains ambiguous, its ambiguity, or our own lack of clarity about it, doesn’t mean it isn’t real. There is near-universal agreement that workplace culture does exist and that it does matter, even if we don’t agree on how to define it. This agreement centers on the notion that leaders who ignore workplace culture put their entire organization at risk. By the same token, long-term company success depends on fostering a healthy workplace culture.

What the Research Shows

Back in 2015 Forbes reported on an organizational culture study conducted by researchers at the business schools of both Columbia and Duke. It was a difficult study to conduct given how tricky it is to hone in on a concept that everyone defines differently, but they managed to do it and came up with the following results (source) from surveying more than 1,400 CEOs and CFOs:

  • Greater than 90% said culture is important at their companies.
  • 92% believe improving company culture will improve the company’s overall value.
  • More than 50% believe company culture influences productivity, creativity, profitability, firm value and growth rates.
  • A mere 15% believe their firm’s organizational culture is where it needs to be.

If you want to take a very practical approach to diagnosing your company’s corporate culture, all you have to do is become a keen observer of behaviors. How do people consistently behave in your organization? Then think about what’s driving those behaviors. When you do that, you’ll be identifying the important pieces of your company’s cultural puzzle.

When Company Culture Turns Sour

Pay particular attention to what behaviors are incentivized at your company – it’s surprising how many companies unwittingly incentivize bad behavior. This is what happened at Wells Fargo. With incentive compensation and the push for “cross-selling,” bank employees wound up opening something like two million accounts without customer permission to try and meet the sales targets that had been set for them. Also keep an eye on the alignment between the stated mission of your company and the behaviors you observe. If they don’t match up, then you’ve got a values gap on your hands – an indication your workplace culture needs an overhaul.

With this understanding of the importance of workplace culture in general, my next article will focus on the relationship between learning and workplace culture.