What is Company Culture?

A company's culture is its personality. It tells people how to do their work. It takes its signals from leaders. It underlies motivation, morale, creativity, and marketplace success. How do you manage it?

Company culture is the distinctive personality of the organization. It determines how members act, how energetically they contribute to teamwork, problem solving, innovation, customer service, productivity, and quality. It is a company's culture that makes it safe (or not safe) for a person, division or the whole company to raise issues and solve problems, to act on new opportunities, or to move in new, creative directions. A company's culture is often at the root of difficult people-related problems such as motivation, morale, absenteeism, communications, teamwork, retention, injuries, and insurance claims.

A company with a well-developed culture..... easily outperforms competitors.Because a company's culture affects everything in it—including profits—culture is the real bottom line. A company with a well-developed culture, open to all that its members want to bring, easily outperforms competitors.

Culture and personality are similar. When people describe a national, regional, or organizational culture they use words that can apply to a person. For example we might say that a culture is “friendly” or “tough”. It might be “driven and aggressive”. It might be “active”, “analytic”, or “open”.

Culture Is Not Separate from the Company

We talk is if a person has a personality, or a company has a culture. But people and companies don't really have a separate thing called a personality or a culture. A person comes as whole cloth. A person is a person. Similarly a company does not have part of itself called its’ culture. A company is a culture. Also, just as a person is not a problem—though sometimes what a person does may be a problem to others—so a culture is not a problem. A culture is what it is.

A company culture contains everything that makes up the organization and how it all the parts work together. It contains equipment and hardware, processes and software, the authority, reporting and control structures, communications and relationships, and the nature and quality of member’s experiences. See The Five Levels of Culture.

Cultures Tell Us How to Behave

As we matured from infancy to adulthood, it was our culture, in and outside of the home, that told us how to act. As human beings we are highly skilled at learning from social settings, recognizing almost immediately how we should behave. We know how to fit in, how to do what is needed.

if you want to understand a company's culture, look at what people doCompany cultures, like any other culture, tell members how to behave—what to do and what not to do. The work culture is the stage or context for what people do, for all that happens. If you want to understand why people do what they do, look to the culture. Or said another way; if you want to understand a company's culture, look at what people do.

If people are open, forthright and engaged, you know that is the nature of the company's culture. In contrast if people are defensive, irresponsible, and passive, you also understand the company's culture.

Newcomers Know the Company's Culture Immediately

Members of an organization know the company culture by being part of it. They experience trust and relationships directly. They know how open, involved and motivated they feel.

In fact before we have even formally joined a company we know from our experiences (during the interview process and in other ways) the kind of organization we are joining. Once we have joined it doesn't take more than a few days—a few weeks at most—for us to know just what to do and what not to do, what to say and what not to say. As members of the most socialized of all the species on earth, we are masters at fitting in—maestros of social adaptation.

Most Company Cultures are Poorly Developed

Gallup provided a glimpse of the national picture of company cultures in their poll of U.S. companies reported in USA Today, 5/20/2001:

• 26 percent of employees are actively engaged in their jobs.
• 55 percent of employees have no enthusiasm for their work.
• 19 percent are so uninterested or negative about their work that they poison the workplace to the point that companies might be better off if they called in sick.

Apparently 74 (55 + 19) percent of employees work in poorly developed company cultures.

The Culture Reflects the Leadership Style

People look to their leaders for signals on how to behave. For example, although most people want to be open and engaged, they will only be this way if they think their leaders, and the culture, want it. In any organization 80 percent of the members are very flexible. If the culture asks for it, these employees will be engaged, responsible, pleasant, and highly productive. Conversely, if they don't think the culture wants them to be engaged, these same people can be closed, unengaged, irresponsible, unpleasant, and unproductive. The signals, on which way to behave, come largely from the company’s culture, which is established by the leadership.

Leaders Get the Cultures They Ask for

It is simple to build an engaging culture. If leaders want people to be engaged, engage them. If leaders want people to be involved, involve them. If managers want good communications and relationships, they communicate and establish good relationships. If leaders want people to be efficient and productive, they help employees understand their financial and production environment, i.e. give employees access to the numbers in a form that relates to the employee’s immediate tasks.

Unfortunately many leaders are reacting to today’s tough economic environment with more directives and tighter controls. This behavior from the top creates a culture that pulls, not for engagement, but for passive, even hostile behavior. It's ironic that leadership’s response to a tough marketplace would produce the opposite to what they want, which is that everyone is engaged, creative, and committed.

As you create a workplace where members can better meet their desires around their tasks, high-performance will follow.

A Well-developed Culture Is Highly Profitable

Leaders can directly change their workplace culture by changing how they do what they do. Everybody will see the change, like it, and respond. As you create a workplace where members can better meet their desires around their tasks, high-performance will follow. That is why we say Culture is the Real Bottom Line.