What’s a common denominator among the most successful companies?
A strong organizational culture.
What if your organization can generate an additional 30% revenue?
And I am not talking about some digital marketing strategy or a growth hack.
Had to mention that given my long, strong romance with strategic marketing and growth hacking.
As per Gallup, an organization with a culture that attracts high talent can lead to 33% higher revenue.
Let’s be extremely conservative here and expect just a 1% revenue growth.
Wouldn’t that still be worth a shot?
What is Organizational Culture?
I have observed so many (and sometimes conflicting) definitions.
In my opinion, an organizational culture entails the core beliefs, values, and interaction styles that contribute to the unique social and psychological environment of an organization.
Why should I care?
Well, without sounding too pessimistic, the truth remains that an ineffective organizational culture can take down, both the organization and its leadership.
A business with a poor culture generally has disengaged employees, high turnover, and lower revenue.
And for all you there who think of business in terms of P/L, yes, it can negatively impact the bottom line.
Before I embark on a journey about organizational culture, maybe it would make sense to take a step back and dive into the origins and history of organizational culture.
Organizational Culture: When in Rome (and maybe elsewhere), do as the Romans did!
Yup, I might have butchered the proverb there.
The Roman empire underwent multiple changes over the years- religion, military strategy, you name it.
The Empire, however, did not change one thing- its socially inclusive culture.
As part of this culture, the Roman empire did not push a set of laws on the territories they invaded.
Instead, they made those territories a part of the empire through an inclusive culture,
This meant that regardless of the location, a man could rise through the political or military ranks while representing Rome.
The culture also allowed its subjects to believe in the gods they liked as long as they also believed in the classical Roman gods. We don’t care what you do in your spare
time as long as you do your job.
Managers who still micromanage should perhaps take some advice here.
Organizational Culture: The Twentieth Century
Dr. Elliott Jaques coined (kind of) the term organizational culture in his book The Changing Culture of a Factory, published in 1951.
The book, aka, case study, addressed a British business dealing with metal bearings.
Dr. Jacques came out with a book titled Requisite organizational: a total system of effective managerial organization and managerial leadership for the 21st century in 1998.
Organizational Culture Types
Let’s address the different types of company culture.
The Competing Values Framework classified organizational culture into four types-Clan culture, adhocracy culture, market culture, and hierarchy culture.
Clan Culture
Clan culture is like working in a friendly environment- more like a large family.
Loyalty and tradition hold the organization in this culture.
The focus is on teamwork, participation, and consensus.
This kind of culture is seen more commonly across education and not-for-profit organizations.
High employee engagement and a highly adaptable environment represent the Clan culture.
However, it is difficult to scale.
Adhocracy Culture
This kind of organizational culture reflects a dynamic and creative working environment, driven by experiment and innovation.
Naturally, risk-taking is a big part of this culture.
Disruptive startups and tech-driven industries are the best examples of this type of organizational culture.
Examples: Uber, Airbnb.
Adhocracy culture encourages creativity, thus also leading to high-profit margins.
On the downside, it attracts high risks and high competition between employees.
Market Culture
When you observe a focus on deadlines and getting things done, you can safely conclude it’s a market culture.
The focus under this kind of organizational culture is on competition and market leadership.
You will come across market culture across manufacturing, accounting, sales, and marketing sectors.
While this kind of culture promotes profitability, it can also result in low employee engagement.
Hierarchy Culture
This type of organizational culture puts emphasis on formal rules and policies.
Everything is formalized and structured.
Most government and banking/insurance institutions stick to this kind of organizational culture.
Structured processes and clear direction define this type of culture.
On the flip side, it has little room for creativity and employee feedback. It is also slow to adapt to the changing marketplace.
Which company has the best organizational structure?
I wanted to evade this question…
But, in all fairness, it would make this article incomplete, to some extent.
While I agree that the term “best” is rather subjective, we still can agree that some businesses have taken organizational culture seriously.
And, as a result, they have created a unique name for themselves.
Zappos, in particular, has an awesome corporate culture.
Here is something that might surprise you about Zappos’ organizational culture.
New employees at Zappos are offered $2,000 to quit after Week 1 of training if they decide it isn’t the right job for them.
Now, since I have not worked for Zappos, or have any direct connection with them, I would leave this to the discussion.
How to create a healthy and productive organizational culture?
Given the importance of this subject, It might not be correct to address it in its entirety here.
I might have to work on another in-depth article to tackle this topic.
However, here are a few things you can do to get started.
Start with making your organizational culture as important as results.
I would not be wrong to point out that almost every business has clearly defined performance expectations for its employees.
But do they also have clear expectations about values that promote teamwork?
Next, just as you quantify your performance metrics (ROI and ROAS), ensure that you make your culture observable, tangible, and measurable.
Yes, you can measure your company culture (more on that in a separate article).
A poor organizational culture encourages disengagement among employees.
Research suggests that employees who don’t like their organization’s culture are 24% more likely to quit.
Organizational Culture and Team Dynamics
People, aka, teams, make or break a business.
This is such a simple yet powerful thing to understand.
Focusing on P/L and growth metrics is important.
But if it comes at the expense of “people”, then you are doing something wrong.
It is, therefore, important to make teamwork part of the organizational culture.
Jack Welch rightfully said- No company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.
Let’s reflect upon this as we strive to make the workplace a more “human” place to work.