The organisational culture of any business is of critical importance - it shapes and influences everything people in the business do at all levels, from top to bottom. Yet evidence suggests that businesses’ organisational culture is not given the attention it deserves: only 14% of FTSE100 businesses discuss their culture.
A simple way to think of culture is as ‘the way we do things around here’. On a day-to-day level, organisational culture combines the behavioural norms staff tend towards, the environment they work in, the relationships between staff, and the business decisions they take. Though culture, given its abstract nature, is often reduced to ‘beliefs and values’, the real measure of the culture that is actually in place is the accumulated behaviours of people from across the organisation, from the shop floor to the board. The ‘way in which things are done’ is how performance is delivered and how embedded attitudes are demonstrated. Because organisational culture relates to the way things are done across organisations, it may differ across different parts of a company, particularly across different workplaces and locations.
On a company level, the culture of the organisation is seen in its overall approach to business, stakeholders, and employee welfare. Research indicates that organisational culture is a source of competitive advantage and the foundation of how a company approaches risk. It is a key determinant of how businesses approach any social, environmental or ethical issue, and an unhealthy organisational culture can lead to significant financial and non-financial risks. For instance, an excessively competitive culture, with unattainable targets can lead to poor business decisions being made in a sales environment.
A company has a culture whether it is monitored or not. There is no ‘right’ or ‘wrong’ organisational culture - it is specific to each business. Monitoring culture is a difficult task - a helpful though indirect approach is to consider ‘proxy’ indicators that reflect a variety of functions across the business. For example, monitoring employee turnover, levels of sickness-related absenteeism and customer satisfaction scores could illuminate whether there is a potentially unhealthy culture within a company. In addition, instances of whistleblowing or other grievances may indicate problems. An unhealthy culture can take years to reverse and ongoing monitoring allows senior management to make early changes if problems are detected.
The better an organisation defines this cultural profile, then manages activity against it, the more likely it is that the culture will in reality become the 'norm'. Often, there’s an attempt to sum up the company’s culture in a single phrase or short soundbite, such as ‘putting the customer first’. However, this rarely fully describes the intended culture.
Culture will always be a work in progress. Change can be initiated and evidenced over time, whether through to concerted efforts, or changes in company circumstances. Linking values and aims to day to day behaviours can make it clear to people across the business how the values and aims apply to them, and how their behaviour can affect the culture of the business. Directors can lead by example - demonstrating through their own behaviour how they act out the culture they want for the company. At the same time, however, leaders must realise that culture is the product of a complex combination of policies, practices and behaviours. It cannot be imposed from the top-down, rather it is the production of people at all levels of the organisation.