What is driving the success of your organisation? Firstly, you’d probably say the senior leadership and team leaders who present a clear vision and drive the company to achieve its goals. Perhaps you’d say sound financial management or operational efficiency. You might think about your business’s ability to innovate, its groundbreaking marketing campaigns or focus on the customer. You might even credit a loyal workforce. These drivers are all valid and they all contribute to the overall success of an organisation, but there’s one common factor that lifts each of these areas and that’s an organisation’s culture.

Organisational culture works in the background driving decision-making, employee engagement and, ultimately, how competitive your business is. It plays a crucial role in behaviour and engagement and can help align a workforce to get behind a company vision. Read on to discover the key aspects of organisational culture and how you can assess your business and set it up for success.

Defining organisational culture

At the core of any thriving business lies its organisational culture (also referred to as corporate culture, company culture and workplace culture). Culture is created from the shared beliefs, values, behaviours and norms that create an atmosphere that can invigorate – or deflate – a workforce. Culture is not static; it evolves alongside the company, shaped by the collective practices and beliefs of individuals.

It determines what’s considered acceptable or unacceptable within the business, but organisational culture isn’t just about rules – it is the foundation of an organisation’s DNA, influencing the way people interact with each other and customers, how knowledge is shared and how innovation is cultivated. Great organisational cultures foster a sense of unity and purpose that can be seen in the outputs at every level of an organisation.

Organisational culture impacts employee engagement and productivity and has an influence on reputation.

Elements of a strong organisational culture

Understanding the components of a strong corporate culture will help you to understand the strengths and challenges within your own organisation, guiding you towards a culture that aligns with your strategic vision.

Core values

Values provide the foundation of a culture and are a guiding force for employee behaviour and decision-making. However, for values to be actively practised they must be actionable. Companies like HubSpot have turned their core values into a mantra – HEART (humble, empathetic, adaptable, remarkable, transparent) – that is woven into policies and processes.

It’s about making values visible and actionable, ensuring that they are not just a set of ideals but a road map to how your organisation operates. Leadership and human resources both play a critical role in ensuring core values are embedded into processes and daily operations.

Mission and vision

Mission and vision statements play a role in shaping culture. However, these need to be statements that are alive and not just sitting in an annual report or on a wall. Spend time working out what your vision is and consider how you can ensure that your entire workforce knows the role they play in achieving it.

Leadership

Different leadership structures will influence organisations in different ways. Let’s unpack three different approaches:

• A hierarchical structure takes a traditional approach with a clear organisational structure, established procedures and defined authority levels. It champions stability and efficiency. With decisions flowing downward, the path to follow is crystal clear. This approach minimises confusion and maximises predictability, which can ensure employees know what they’re expected to do and can feel trust in the organisation. However, rigidity can be a problem and lead to an inability to effectively adapt and innovate.
• Collaborative leadership is the heart of many small enterprises where a supportive atmosphere fosters loyalty and employee involvement. Open communication channels and regular feedback are the lifeblood of clan culture, which is about building a community within the workplace – one that values each member and celebrates collective achievements.
• Decentralised leadership takes a decentralised and organic approach to leadership to foster innovation. It’s where the status quo is continuously challenged and creativity defines success. Companies like Dyson, with its pursuit of innovation, take this approach.

Within different leadership structures, there are different leadership styles. A recent Harvard Business Review article (Knight 2024) found that six leadership styles first defined in 2000 are still relevant today. They are:

• coercive leadership – demands compliance from staff
• authoritative leadership – mobilises people towards organisational goals
• pacesetting leadership – expects staff to self-direct
• affiliative leadership – focuses on the emotional bonds between team members
• democratic leadership – centres on building consensus
• coaching leadership – focuses on performance and developing people for the future.

Adapting leadership styles to specific circumstances is a key skill leaders should develop. Even coercive leadership, which is considered the most ineffective style, can be used in specific emergency situations. A combination of authoritative, affiliative and democratic leadership builds a strong team culture and using coaching leadership is critical for helping employees grow and develop.

Assessing your current culture

Defining your team’s current culture involves examining:

• what it feels like to work in the team – is there shared responsibility or is there a top-down approach? Is the tone optimistic? Do team members feel like they’re supported or out on their own? Pulse surveys, exit interviews and employee feedback can provide the information you need to understand this.
• the leadership structure – which of the approaches listed above does your organisation lean towards? Perhaps it is a mix. Are relationships hierarchical or equal? Are they competitive or do you want people to work together?
• team relationships – do people work together to achieve a common vision? Do teams divide tasks or have the opportunity to learn from each other? In a performance-based business is competition healthy or are people more internally focused?

You can also use tools like the Organizational Culture Assessment Instrument (OCAI), which was developed by Dr Kim Cameron and Dr Robert Quinn at the University of Michigan to help organisations understand their current culture and their desired culture (OCAI Online 2019). It measures six dimensions of culture:

• dominant characteristics
• organisational leadership
• management of employees
• organisational glue
• strategic focus
• criteria of success.

It uses this assessment to place an organisation’s culture within a competing values framework featuring four types of culture:

• Clan or collaborative culture – this is defined by a focus on support and collaboration leading to high morale and strong loyalty.
• Adhocracy culture – this is usually seen in companies that need to quickly respond to market changes and values a risk-taking, dynamic, creative approach.
• Market culture – a focus on targets and performance defines this type of culture, which is often seen in sales organisations. It can lead to high productivity with a strong external focus.
• Hierarchy culture – this culture is characterised by structured procedures and clear lines of authority with a focus on efficiency and control.

There are other organisational cultures your business might fall into, and businesses might fit multiple cultures, such as:

• Purpose culture – often seen in socially responsible organisations, this focuses on a strong sense of purpose and alignment leading to high employee motivation and positive public perception.
• Learning culture – this is defined by a focus on professional development, continuous improvement and knowledge sharing. It values curiosity, learning and development to encourage innovation, growth and adaptability in a highly skilled workforce.
• Coaching culture – like a learning culture, a coaching culture emphasises continuous learning with a focus on using coaching from a leader to improve performance and capability.

Using YakTrak to set and monitor goals on a day-to-day basis helps embed a coaching culture. It drives performance by keeping the focus on the daily actions and behaviours people can take to make a sustainable change. YakTrak can help to improve your workplace culture by setting up a rhythm for on-the-job workplace coaching – improving people development outcomes and employee experience.

Shaping a strong organisational culture

Trust, responsibility, clarity, connection and fulfilment are key aspects of a strong organisational culture. Creating a great culture involves more than just establishing a common value system; it requires embodying those values and incorporating them into all operational facets. Let’s take a look at some of the key components you need to get right.

The role of company leaders

Leaders are the architects of organisational culture. Their actions and decisions set the tone for the company’s values, policies and even the design of the workspace. To authentically live out these values, leaders must embody them in their daily interactions, reinforcing the organisation’s ideals and connecting with employees on a deeper level. It’s through the daily interactions and the ways that leaders inspire and recognise teams that leaders foster a sense of belonging and fulfilment.

Regular engagement with employees to understand their roles, set shared goals and acknowledge their contributions is crucial. In the modern workplace, leadership is not just about steering the ship – it’s about ensuring that every crew member is aligned with the voyage’s purpose and feels valued for their unique contributions.

Leadership behaviours are key for setting the tone of the culture and leaders should regularly reflect on their leadership style and the impact it’s having.

It is also the role of a leader to observe behaviours in others and provide appropriate feedback. The poor behaviour you walk past gets repeated; the good behaviour you walk past doesn’t. Poor behaviours often get swept under the carpet and ignored, which plays a major role in culture sabotage.

Employee feedback to measure cultural health

Employee feedback is the pulse that indicates organisational health. By establishing consistent feedback mechanisms, employees are assured that their voices are not just heard but valued, fostering a culture of open communication. Analysing feedback and taking action demonstrates a commitment to employee input and can lead to increased morale and retention.

It’s about creating a dialogue, a two-way street where feedback is not just sought but discussed and acted on. In such an environment, employees are more likely to engage, share ideas and contribute to the organisation’s success, knowing that their efforts are recognised and appreciated.

Empowering employees

Creating avenues for employees to feel valued and empowered to innovate, suggest changes to processes and provide feedback is key to fostering a positive work environment. Encouraging innovation and autonomy helps people own their roles and leads to higher job satisfaction.

Engaging employees in the co-creation of their organisation’s future culture is a powerful means of empowerment, helping to ensure that changes are not just accepted but embraced. This involves:

• constructing a narrative that connects with employees
• aligning new practices and incentives with the evolving culture
• charting a course towards a future that everyone can support.

Recognition and reward

Implementing reward programs and recognising the efforts of your people helps your people feel valued and validated. Promotions, financial remuneration and bonuses are one side of this, but actively thanking people and showcasing their efforts is also key.

Development and learning

Giving people the opportunity to develop new skills and improve their skills is essential in modern workplaces. Employees are more mobile and are seeking new opportunities – why not keep great talent in-house by ensuring that you are able to grow and build capability?

Engagement and wellbeing

When people bring their best selves to work, they’ll actively contribute to a positive workplace culture. So, what can organisations do to foster this? Work-life balance has a critical impact on mental health so make sure your organisation recognises this and has structures to support a healthy balance. Investing in programs and initiatives to boost wellbeing at work will also provide added benefits.

Cultivating diversity and inclusivity

Diverse perspectives and experiences create truly inclusive organisational cultures. Diversity, equity and inclusion (DEI) programs are not just a societal imperative but a strategic business advantage. Creating inclusive workplaces fosters innovation and leads to better problem-solving. It also helps to reach wider markets.

Consider how you can incorporate DEI programs and build a more inclusive workplace to increase employee satisfaction and attract new team members.

Leveraging organisational culture for employee retention and attraction

A great culture doesn’t just keep great staff, it attracts new talent too. Companies that uphold strong cultural values and prioritise diversity are particularly compelling in today’s job market, drawing in high-quality candidates who share these principles. Healthy cultures with modern leadership are more likely to align with employee values, fostering an environment where:

• engagement and productivity thrive
• employees feel valued and respected
• diversity and inclusion are celebrated
• ethical behaviour is encouraged and rewarded.

Frequently asked questions

What is organizational culture?

Organizational culture is a system of shared beliefs, values and norms that shape employee behaviours and interactions within a company, influencing engagement and workplace atmosphere. An organization’s culture is partly a result of a national culture but is led by an organization’s leaders. There are distinct workplace culture types and the right culture for your organization will depend on your organization’s structure and organizational goals.

How does organizational culture impact business performance?

Organizational culture impacts business performance by influencing employee satisfaction, retention rates and overall performance. It also shapes business ethics and ethical behaviour. A strong organizational culture encourages engagement and innovation. It can also improve customer orientation and reputation.

Can organizational culture be measured and assessed?

Yes, organizational culture can be measured and assessed using tools like the Organizational Culture Assessment Instrument (OCAI), which uses the competing values framework and helps businesses understand their cultural strengths and areas for improvement. This tool places an organisation’s culture within a matrix of hierarchy culture, adhocracy culture, clan culture and market culture types.

How do leaders influence organizational culture?

Leaders influence organizational culture by setting examples, living out company values, and engaging with employees to create a sense of belonging and fulfilment, ultimately impacting the tone and direction of the culture.

Why is diversity important in organizational culture?

Diversity is important in organizational culture because it brings a range of perspectives and experiences that enhance creativity and problem-solving, while also helping to attract and retain top talent, providing a competitive edge. Diversity and inclusion should factor in modern organizational goals.

What is the connection between a company culture and organizational change?

An organization’s culture has a direct bearing on its ability to effectively manage change. A strong organizational culture can lead to improved employee experience and engagement, with people being more adaptable, resilient and open to organizational change programs.

Knight R (2024) 6 common leadership styles – and how to decide which to use when, Harvard Business Review,https://hbr.org/2024/04/6-common-leadership-styles-and-how-to-decide-which-to-use-when

OCAI Online (2019) About the Organizational Culture Assessment Instrument (OCAI), Ocai-online.com, https://www.ocai-online.com/about-the-Organizational-Culture-Assessment-Instrument-OCAI