Culture: The usually ignored success factor in an organization. Part 1

You may or may not be familiar with this quote but what you should know is that whether you acknowledge it or not, your organization has its own culture like every other organization in the world and it plays a profound role in the performance and sustainability of an organization.

In this blog, I am going to talk about organizational culture and why it’s important for you to reflect on your organization’s culture.

What is Organizational Culture?

Although it’s a complex topic and not exactly easy to define, still in simple terms we can say that it is a collection of underlying beliefs, values, expectations, and practices that guide the behavior and actions of all team members.

I won’t be surprised if this definition made you confuse the organizational culture with organizational goals or a mission statement. But they are not the same things even though these goals and mission statements do play a part in defining organizational culture.

As I said before, Organizational culture is a complex topic and not exactly easy to define. There are many schools of thought when it comes to defining it.

Like Deal and Kennedy’s Cultural Model defines it as “the way things are done around here”

Ravasi & Schultz, 2006 define it as a set of shared assumptions that guide what happens in organizations by defining appropriate behavior for various situations.

In my view, Culture is created through consistent and authentic behaviors, not press releases or policy documents.

So, however, we define it, the truth is that every company has a culture whether shaped consciously or unconsciously, and it not only impacts how an employee and overall organization performs but also has ramifications on society.

Importance of Organizational Culture

Impact on society

I believe that because we live in a closely integrated world & society, the culture of an organization not only has a profound impact on the organization but also on the stakeholders and the society. Organizations with a larger purpose consider culture as one of the goals and not only as the means to achieve their financial goals. In a future blog,  I will delve deeper into the impact of organizational culture on society.

Helps triumph over difficult times

In the past two years, we all have seen unprecedented times for which almost none of us were prepared. But in a time like this, there were a lot of things which we got to learn. One of them was that companies that prioritize culture can also weather difficult times and changes in the business environment that are adverse to them, and come out stronger. And the reason was that these companies aligned their culture with their employees, so they could feel more comfortable, supported, and valued even in a crisis situation.

Helps attract and retain talent

I believe that culture plays an important role when it comes to attracting talent and outperforming the competition. And when I looked at the figures, my belief got even stronger. According to figures, 77 percent of workers consider a company’s culture before applying, and almost half of employees would leave their current job for a lower-paying opportunity at an organization with a better culture.

In a recently published study Toxic Culture Is Driving the Great Resignation in MIT Sloan Management Review, it is demonstrated that a toxic culture is over 10 times more likely to contribute to attrition than compensation. In fact, there are companies that have more than doubled the compensation, yet their attrition has only gone up because they continued to ignore the culture.

Helps achieve financial goals

I understand when it comes to a business, the most important considerations are the financial goals of the organization. According to extensive research by two HBS professors over a period of 12 years, Organizational culture has a huge impact on financial goals too.

When you look at the huge difference, I think it leaves no doubt about the strength of Organizational Culture.

So, even if you think purely from a financial performance perspective, you still need to reflect on your organization’s culture.

How does culture help in the success of Strategy?

When we talk about a strategy we will have to understand that it can only define the direction which the organization needs to take to achieve the targets but when it comes to the execution, it’s the culture that becomes the deciding factor about whether it will be efficiently executed or not.

I think you will get a better understanding of it after looking at the below picture.

As you can see that the strategy and Culture both work conjointly in an organization to achieve the desired results.

Leadership and Organizational Culture

The author of Organizational Culture and Leadership, Edgar Schein says “The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening”

I totally agree with him because when it comes to improving or managing the Organizational Culture, it’s the leaders who need to take an initiative to bring a change. And even those leaders can’t bring that change just by prioritizing culture, they will have to authentically live through the culture and demonstrate in their behaviors.

In the above image, you can clearly see how the process of improving employees’ morale, motivation, and well-being runs simultaneously with the process of improving performance right from the leadership level. It’s because the culture always flows from top to bottom.

Conclusion

In conclusion, I want to say that the mindset of “Let’s fix the numbers first, and worry about culture later”has huge perils and is akin to putting the cart before the horse.

I have already talked about how much of a massive impact culture has on financial and business performance. Clearly, it’s a critical component of an organization. So, it’s definitely not a good idea to ignore it.

Culture is such a vast and complex subject that if I try to fit everything about it in just one blog, I wouldn’t be doing any justice to the subject. I will talk about the benefits of creating a high-performance culture in an organization and how to create it in my next blog in this series, which I will post here soon. So, keep watching the space.