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Corporate Culture


Corporate culture refers to the shared values and beliefs that characterize members of an organization and define its nature. Corporate culture is rooted in an organization’s goals, strategies, structure, and approaches to labor. As such, it is an essential component in any business’s ultimate success or failure. 

It is an unwritten value-set that management communicates directly or indirectly that all employees know and work under. It is the underlying soul and guiding force within an organization that creates attitude alliances, or employee loyalty. A winning corporate culture is the environmental keystone for maintaining the highest levels of employee satisfaction, customer loyalty, and profitability.

Every company has a culture, though not every culture is beneficial in helping a company to reach its goals. A healthy corporate culture is one in which employees are encouraged to work together to ensure the success of the overall business. Developing and maintaining a healthy corporate culture can be particularly problematic for entrepreneurs, as the authoritarian practices that helped establish a business often must be exchanged for participatory management strategies that allow it grow.

Corporate culture affects many areas of a firm’s operations. One broad area of corporate culture involves corporate citizenship – the company’s relationship to the larger environment. In this area, a company’s culture helps in determining its overall ethics and attitude toward public service.

A second broad area of corporate culture involves human resource management. A company’s culture affects a variety of human resource policies and practices, including the nature of interaction between managers and employees, the responsiveness of diversity issues in the workplace, and that availability of flextime and telecommuting options, safety and training programs, and health and recreation facilities. In a smoothly functioning organization, all such policies and practices foster an internally consistent corporate culture.


Implementing Culture in Businesses

Culture can be a particularly important consideration for businesses. A healthy company culture may increase employees’ commitment and productivity, while an unhealthy culture may inhibit a company’s growth or even contribute to business failure.

Many entrepreneurs, when they first start a new business, quite naturally tend to take on a great deal of responsibility themselves. As the company grows and adds employees, however, the authoritarian management style that the business owner used successfully in a very small company can become detrimental. Instead of attempting to retain control over all aspects of the business, the small business owner should strive to “get everybody else in the organization to do your job, while you create an environment so that they can do it.”  

In a healthy culture, employees view themselves as part of a team and gain satisfaction from helping the overall company succeed. When employees sense they are contributing to a successful group effort, their level of commitment and productivity, and thus the quality of the company’s products or services, are likely to improve.

In contrast, employees in an unhealthy culture tend to view themselves as individuals, distinct from the company, and focus upon their own needs. They only perform the most basic requirements of their jobs, and their main – and perhaps only- motivation is their paycheck.

Since every company is different, there are many ways to develop a culture that works. Following are several main principles that business owners should consider in order to create a healthy corporate culture. 


Prevailing Corporate Culture Begins at the Top

Entrepreneurs need to explain and share their vision of the company’s future with their workers. “Let your vision for the company becomes their vision for the company,” stated a business consultant. “A company without a vision is reactive in nature, and its management is seldom confident addressing competitive treats and stepping into the future.” In addition, business owners should be aware that their own behaviors and attitudes set the standard for the entire workforce.

Business owners who set poor examples in areas such as lifestyle, dedication to quality, business or personal ethics, and dealings with others (customers, vendors, and employees) will almost certainly find their companies defined by such characteristics.


Treat all Employees Equally

Entrepreneurs should treat all employees equally. This does not mean that business owners cannot bestow extra rewards on workers who excel, but it does not mean that interactions with all employees should be based on a foundation of respect for them. One particular pitfall in this area for many business owners is nepotism. Many small business owners are family-owned and operated. But bloodlines should be irrelevant in daily operations. Successful businesses constantly place “you are no different” expectations on family members they employ. Doing otherwise quickly undermines employees’ morale. Showing favoritism in the workplace is like swimming with sharks – you are destined to get bitten.


Hiring Decisions Should Reflect Desired Corporate Culture

The wise business owner will hire workers who will treat clients and fellow employees well and dedicate themselves to mastering the tasks for which they are responsible. After all, “good attitude” is an essential component of any healthy corporate culture. But entrepreneurs and their managers also need to make sure that hiring decisions are not based upon ethnic, racial, or gender issues. Besides, business typically benefit from having a diverse workforce rather than one that is overly homogenous.


Two-way Communication is Essential

Business owners who discuss problems realistically with their workforce and enlist employees’ help in solving them will likely be rewarded with a healthy internal environment. This can be an important asset, for once a participatory and engaging culture has been established, it can help propel a business ahead of its competitors.

On the other hand, problems with corporate culture can play a major role in business failures. When employees only perform the tasks necessary to their own jobs, rather than putting out extra effort on behalf of the overall business, productivity declines and growth comes to a halt.  Unfortunately, many entrepreneurs tend to ignore the developing cultures within their businesses until it is too late to make needed changes.

Some warning signs of trouble with the company culture include the following:

  • Increased labor turnover
  • Difficulty in hiring talented people
  • Employees arriving at work and leaving  for home right on time
  • Low attendance at company events
  • A lack of honest communication and understanding of the company mission
  • An “us-versus-them” mentality between employees and management
  • Declining quality of customer satisfaction.

A business exhibiting one or more of these warning signs should consider whether the problem stem from the company culture. If so, the business owner should take steps to improve the culture, including reaffirming the company’s mission and goals and establishing a more open relationship with employees.

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Bernard Taiwo
I am Management strategist, Editor and Publisher.