Corporate culture is an important factor that determines the behavior and actions of all employees and the company itself. But what exactly is behind a (positive) corporate culture and how can we shape it?
What is culture and why is it important?
Corporate culture, often referred to as the ‘character’ of an organization, encompasses the shared values, beliefs and practices that shape the behavior and attitudes of employees. It manifests itself in the way people work together, how conflict and mistakes are handled, how feedback is given and how decisions are made. New employees are confronted with these cultural norms and have to come to terms with them, and over time these beliefs become unconsciously taken for granted and become part of the culture.
An organization’s culture is created whether it is consciously shaped or not, and is a critical success factor. A positive culture promotes the satisfaction, health and performance of employees, making them more productive and contributing to the overall success of the organization. A neglected or negative culture, on the other hand, can be costly, for example by demotivating employees through poor communication, excessive competitive pressure or an unhealthy approach to conflict. Companies are therefore well advised to promote a culture that has a positive impact on employees.
A model of corporate culture
It is already clear that corporate culture cannot be clearly defined, but is made up of a large number of visible and invisible factors.
Edgar Schein’s cultural level model divides the factors of corporate culture into three levels according to their visibility:
- The artifacts (e.g. symbols, clothing, corporate language) on the first level are in principle visible and conscious.
- The second level comprises the norms and values of the company. These are partly conscious and partly visible.
- Basic assumptions (e.g. attitudes, beliefs or social relationships) are at the third level. These are invisible and also unconscious; they influence both the thinking and the behavior of company members and form the basis of a corporate culture.
Why do companies have culture?
Culture is a powerful lever for business success and performance – especially when it is a strong or positive culture (more on this below). The famous statement by management theorist Peter Drucker – “Culture eats strategy for breakfast” – expresses the fact that corporate culture can prevent the implementation of a strategy that is not in line with the culture. Conversely, when a strong, positive culture is well aligned with strategy and management, the performance of an organization can be improved.
How do you recognise a positive culture?
Basically, a positive culture emphasizes positive relationships, open communication, collaboration and innovation.
In contrast, an ineffective culture may be characterized by, for example
- Fear and employees act in a hedging mode.
- An above-average level of absenteeism (including sick days) and staff turnover.
- Commitments are not honored – whether by management or employees – and productivity is low.
- There is a bad atmosphere, recriminations and mistrust.
Characteristics of a positive corporate culture may include the following
- Communication is open and transparent.
- Collaboration and teamwork are supported and encouraged.
- Company values are lived and practiced by both management and employees.
- Problems are seen as challenges and mistakes as learning experiences. There is a focus on solutions rather than problems.
- Innovation is encouraged.
- Employees’ own contribution to the company’s success is emphasized.
- Appreciation characterizes the way we work together; feedback is given openly and constructively.
- More attention is paid to employee health – both mental and physical.
Company culture and mental health
The way in which a company deals with conflict and mistakes also has a significant impact on the mental health of its employees. In companies where the above characteristics of a positive culture are experienced by employees, there is a climate in which satisfaction, health and performance can grow. In contrast, ineffective cultures can have a negative impact on mental health.
The relationship between positive culture and mental health is largely driven by leadership: As managers play a key role in shaping working conditions and the way people work together, they are (partly) responsible for the mental health of employees. Their behavior, their ability to cooperate and communicate, and their approaches to stress management and problem solving provide valuable support and guidance. A healthy corporate culture also requires a shared system of values and trust.
What are the benefits of a positive culture?
In addition to the benefits already mentioned, a positive culture has many other benefits for employees and the organization as a whole:
- Employees feel good, are engaged, more efficient and willing to perform (higher productivity).
- Employees are more satisfied with their jobs.
- Employees are healthier, both mentally and physically.
- Employer attractiveness increases: talent can be attracted and retained.
- Staff turnover is reduced.
- The organization is more innovative and agile.
- Businesses achieve their goals.
The fact is that a stable, positive corporate culture is directly linked to a company’s productivity and profits, as well as the well-being of its employees. It is therefore obvious that the goal of companies should be to create a positive culture.
How do you create a positive culture?
Corporate culture is generally very stable – but with a concrete plan, a lot of work and time, sustainable change can be initiated.
There are several levers that leaders can use to create a positive culture:
- Values & Mission Statement: Values provide helpful guidance in the workplace, especially when they are openly and clearly shared and communicated. In addition, shared values and mission statements should be lived by all members of a company.
- Communication: Open and transparent communication, mutual appreciation, and the establishment of a feedback culture help build trust and stronger relationships between employees and management. This can lead to more effective decision making, better collaboration, and a sense of security among employees. According to Paul Watzlawik’s axiom, “You cannot not communicate,” it is also important to pay attention to both direct and indirect communication.
- Leadership: Good leadership results in employee engagement and a positive perception of the corporate culture. A good leader communicates that each individual is needed to achieve a larger goal. He or she motivates, stimulates creativity and innovation, and creates identification and a sense of belonging, which are critical factors in an organization’s success.
- Working environment and conditions: A positive corporate culture does not necessarily require fruit baskets and foosball tables; rather, some basic environmental factors should be provided, such as up-to-date and functional equipment in terms of IT landscape and software, as well as basic needs such as regular working hours.
- Collaboration and Teamwork: A positive corporate culture also emphasizes collaboration and teamwork by encouraging employees to work together, share ideas, and support each other in achieving common goals. This fosters a sense of community and teamwork, which can contribute to higher job satisfaction and productivity. In addition, psychological safety is a fundamental component of creating a creative, innovative and sustainable productive organization; everyday working life must be free from fear of judgment or negative consequences. Mistakes should not be seen as failures but as learning experiences. Providing psychological safety is primarily the responsibility of managers and leaders.
- Diversity: Diversity has been shown to increase productivity, innovation, creativity and decision-making. When people of different backgrounds, ages or genders work together on a task, the different perspectives contribute to a better outcome.
- The role of HR: On the one hand, HR can positively influence corporate culture through its employees as role models who internalize values and translate them into behavior. On the other hand, an HR strategy that promotes training, develops managers and communicates management decisions at an early stage contributes to a positive corporate culture.
A 4-Step Guide for HR to Create a Positive Culture
The actions HR teams can take depend heavily on the culture of their organization. We have a step-by-step guide to help you find the right actions for you and your organization.
Step 1 – The status quo
Before you start improving your culture, you need to know where you are. To find out, you can conduct anonymous employee surveys or use workshops to identify the status quo. Pulse checks, short but frequent surveys on key issues such as motivation or well-being at work, can also provide valuable insights. Find out what is on employees’ minds, what is going well, and where there are gaps.
Step 2 – The goals
Once you know where your company stands in terms of culture, you can begin to formulate goals. Think about what needs to change and by when, and make sure the results are measurable. For example, if your survey shows that many employees feel they are not always getting the information they need through official channels, your goal might be as follows: Within 6 months, at least 80 percent of respondents should say they get the company information they need to do their jobs directly from an official source.
Step 3 – The Actions
Now it gets concrete. Before you start thinking about practical measures to achieve the goals you have set, it is a good idea to establish a good foundation with company values and a mission statement.
- Define company values and mission statement: If your company does not have values or a mission statement, now is the time to do so. Your company’s values not only help your department shape and promote the desired culture, but also help all employees. For them, clearly communicated values and mission statements provide guidance in their daily work. As with all fundamental things, the same applies here: It is best to get feedback from all sides and to be guided by those who ultimately matter: the employees. After all, shared values are easier to maintain.
- Establish hiring and onboarding policies: Your company’s culture will only be sustainable if you hire the right people. Therefore, it can be helpful to clearly define what traits and behaviors are desired and not desired for the recruiting and onboarding process. It is also a good idea to communicate the values and mission statement to the outside world and to discuss the culture with prospective employees. Values, mission, vision, mission and strategy should be clear after onboarding at the latest.
- Improve communication culture: The way your company communicates is an essential part of your culture. So lead by example and communicate in an open, transparent and appreciative way. A culture of feedback is also very important. This is the only way to make employees feel seen, heard and taken seriously, which in turn leads to trust and well-being. What internal communication channels do you have? Use them and motivate others, especially your managers, to use them regularly. Clearly defined feedback processes and communication training can also raise awareness of a positive communication culture in the company.
- Strengthen leadership skills: In an Inc. survey, 91 percent of employees said their managers lacked communication skills. And according to a Compensation Partner survey, 45 percent of respondents left their last job because of a lack of recognition from the top. So leadership training is a good idea for most organizations – and a great way to build a positive culture. Such training is also the perfect opportunity to remind your managers of their role as role models for your values and mission statement.
- Focus on mental health: The last two measures already play a role here: the mental health of your colleagues is an important factor, also and above all for the culture that is lived in your company. Programs to improve mental health not only increase well-being and productivity. Possible focuses and measures in this area could be: stress management, personal coaching, peer exchange groups, burnout prevention, and the like.
Step 4 – Measure and optimize
Last but not least, don’t forget to measure. It’s best to think ahead about how often you want to survey your employees and what other ways you can collect your metrics. Perhaps your team is already using a platform like nilo that provides data, reports and insights.
Conclusion
In conclusion, a positive company culture is essential for any business that wants to succeed in today’s fast-paced and competitive business world. By prioritizing openness, collaboration, innovation and communication, organizations can create an environment where employees feel valued, engaged and motivated to contribute to the success of the business.
What does this mean for you?
You too can play a part in creating a positive culture in your workplace by first considering what kind of cultural environment you would like to work in and what makes it special. The next step is to carefully analyze your company for the key factors and levers mentioned above for a positive corporate culture, to set an example yourself and to discuss the first steps for cultural change with your team.
