Culture Crash Course Lesson 1: What is Company Culture?
According to Deloitte’s Global Human Capital Trends 2016 report, 82% of survey respondents believe that “culture is a potential competitive advantage,” whereas only 28% believe they understand their culture well. For a topic that is deemed so important, there is still a lot of confusion about what it is and how to approach it.
Therefore, before you dive into your planning efforts, you should take a step back and ask yourself: What is company culture? It’s essential that you and any stakeholders are working with the same definition. After all, you can’t truly understand something or seek to influence it in any way if you can’t define it.
What is company culture?
Company culture is how things get done within your organization, and it drives everything from recruitment and retention to employee engagement and financial success. At its heart, company culture is the personality and temperature of the shared practices of how your employees work.
In many organizations, company culture is confused with employee engagement, but there’s an important distinction between the two. Whereas employee engagement refers to how people feel about their jobs, culture is what causes that feeling. While employee engagement can predict an individual’s performance, company culture predicts the organization’s performance in regards to customer satisfaction, revenue growth, and employee retention.
When you’re ready to proactively guide your company culture to improve organizational performance, you’ll want to start by understanding the two angles CultureIQ uses to assess and define company culture: operational culture and strategic culture. Both are important to understand when managing culture, and both can have a powerful effect on how a company performs over time.
Operational Culture: Objective and Benchmarked
A company’s operational culture refers to an objectively desirable set of behaviors (or aspects of culture) that are common to top performing organizations. CultureIQ uses a core culture survey that collects feedback on 10 measurable qualities common to high-performance cultures (collaboration, innovation, agility, communication, support, wellness, work environment, responsibility, performance focus, mission and value alignment) as well as an Employee Net Promoter Score (eNPS) to calculate a cohesive CultureIQ Score. This operational culture benchmark enables you to measure and interpret your culture over time and see how you stack up when compared to similar organizations.
Strategic Culture: Subjective and Specific
A company’s strategic culture refers to a specific set of behaviors that align and help you execute on your target organizational strategy, customer expectations, and marketplace demands.
The key to strategic culture is is that there are no universal right or wrong answers, instead, it is specific to your company and your business strategy. When alignment is present, it should encompass your leaders’ values, employees’ values, and customers’ values. It’s why competitors in the same industry can both be successful, while still having very different cultures.
A strategic culture assessment can you help you determine where your culture currently falls along the following spectrums:
- Structured vs. Flexible
- Hierarchical vs. Delegating
- Cautious vs. Risk Permitting
- Thinking vs. Doing
- Direct vs. Diplomatic
- Professional vs. Social
- Individual vs. Team-Focused
- Internal vs. External
From there, you establish where you are, and you can compare that with where you want to be, based on your business strategy (your customers’ needs, your leadership goals, etc.). Use this comparison to identify the biggest gaps between your current culture and your target culture– or in other words, your key opportunities for alignment.
The operational culture qualities listed in the previous section (collaboration, innovation, etc.) will take different shapes in each company depending on its specific goals and priorities. For example, a startup may want employees to take more risks (and thus emphasizes innovation and agility), while a bank may want a team that’s risk-averse and more focused on minimizing errors (and thus emphasizes communication and responsibility). Defining and tweaking strategic culture allows an organization to customize its culture to its organizational priorities and values. The following examples demonstrate two distinct strategic cultures for different business strategies.