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What Is Corporate Culture?

A good company culture promotes a positive working experience.
Corporate cultures can change with the times.
A corporate culture that is too firmly based on control and stability may eventually stagnate.
Corporate culture is established by company leaders and involves employee attitudes, corporate standards, rites and rituals.
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  • Originally Written By: Malcolm Tatum
  • Revised By: Wanda Marie Thibodeaux
  • Edited By: Bronwyn Harris
  • Last Modified Date: 21 December 2014
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Corporate culture is a set of characteristics that define a business. It involves employee attitudes, standards (policies and procedures), and rites and rituals. The culture of a company is connected to the characteristics found in the surrounding society, but it also has some traits, such as a hierarchy system, that are unique. It can be negative, neutral, or positive, and although some businesses like to portray corporate culture as static, in most cases, it changes over time.

Major Components and Development

The attitude of those within a company is perhaps the most fundamental element of corporate culture. When executives, managers, and rank and file employees are all on the same page as far as basic corporate values, it becomes possible to have general agreement on the relationships that must be in place to accurately reflect the desired set of characteristics for the business. For example, when employees are provided with ways to make suggestions that could improve the productivity or the general working environment of the company, it can be said that the environment is inclusive, as it allows for free communication between everyone employed by the business.

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People in a business use their collective attitude to set standards that govern the operation of the business. Companies typically express these standards in terms of the policies and procedures that define how the business will operate. This includes how different departments or functions relate to one another in the production process, the line of communication established between management and departmental employees, and rules governing acceptable employee conduct. Other elements develop based on the policies and procedures adopted.

Corporate culture usually includes some rites or rituals. Examples are an annual holiday bonus, a week in the summer when the entire company shuts down, or even the naming of an employee of the month. These rites help to bond people together and provide some sense of collective identity. They are not always a part of formal policy, but they become routine and expected due to the overall acceptance by those in the workforce.

Relationship to General Culture

In some ways, corporate and outside general cultures are always connected. The society in which the business is located shapes the individual attitudes employees have to a large extent, for instance, and it is those attitudes that are the foundation for the corporate environment. This is one reason why corporate characteristics vary so drastically from one region to another; the business is socialized and structured based on what people think and do outside of work, which varies by geographical region.

At the same time, the cultures found in businesses have traits that are not common to groups outside companies. Most businesses value a hierarchy system, for instance, such as low-level employee, manager, and CEO. The duties and purviews of each level of the hierarchy are often strictly enforced, and people tend to acknowledge that they must follow particular paths to move upward in the company. Outside of businesses, however, promoting equality and eliminating a class or hierarchical structure is usually a goal. People often prize independence and the ability to approach different situations, problems, or goals from different perspectives.

Fit

When a company’s personnel management team needs to hire an employee, they consider the culture of the business in addition to a candidate’s skills and experience. The goal is to find employees who will be a good fit — that is, whose beliefs and behaviors coincide with those already present in the company. Members of management tend to believe that doing this reduces the chances of conflicts and makes it more likely that the new employee will assimilate and contribute efficiently. This is often what sets two very similar candidates apart.

Types

There are many ways of classifying corporate environments, but overall, the simplest way is to rank them is negative, neutral or positive. A label of negative usually means that workers do not feel comfortable, acknowledged, or supported. It also is associated with activities or policies that go against the outside general culture, because transitioning between the two conflicting characteristic sets can be stressful. Another common issue is that the rites or policies routinely change, resulting in confusion or inefficiency. This type of environment may lead to both indirect or direct conflicts between employees.

Neutral means that the business neither supports nor hinders its employees. Productivity and subsequent market share are not impressive but are high enough to allow the company to continue operating. This type of environment often occurs because there is no clear leadership in the business.

Companies with a positive corporate culture set tend to see employees as their most valuable asset. They have clear objectives and push employees to meet them, but they are sensitive to personal and group needs. Collaboration is a hallmark, with employees often demonstrating high productivity and company loyalty.

Change

Business environments are rarely static — they evolve over time as the attitudes of employees and the circumstances surrounding the company change. The changes sometimes happen very slowly and are not intentional, although, in other cases, business leaders make a conscious decision to make modifications in the company, such as giving employees more ways to provide their input in order to foster a sense of collaboration and respect. Some employees have trouble with cultural shifts if they happen abruptly, so most businesses are careful to provide a period of adjustment.

Despite the fact that nearly all companies adapt over time, some make a consistent environment or value set a selling point. A company that sells “homemade” jams, for example, can point out it still uses the same recipe and methods as it did 75 years ago. Companies that do this are often trying to make a profit from the fact many people look for some constancy when everything else is shifting.

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Discuss this Article

anon342402
Post 8

As an employee, what are some of the ways in which you can affect your company's culture?

anon313296
Post 7

My father was fired from a bank many years ago for standing up to something he believed in. He didn't know his beliefs were going against what is considered corporate culture. Fortunately for him, he went into business with a partner who didn't need to depend upon references and work history to give him a job. He is still in business now.

I think one thing just as important as understanding corporate culture is learning about networking so that if something happens in one work place and it is going to impact on other employments, you can rely on support by networking.

anon173019
Post 6

I used to work for a bank years ago. I didn't understand what corporate culture meant, until by accident something was done which went against the company's values. I would have gladly apologised for it, but instead I had to resign.

Years later, when I was struggling to get another job since my references were not supportive, I discovered something disturbing. A flashing indicator was placed on my file without my knowledge and with the words "do not re-hire." I was to learn it was put there for cultural purposes, but I didn't understand what that actually meant.

It's been almost ten years now and my life was turned upside down, to say the least. I lost everything to my name which included a paid off house. I look back and still can't believe what happened to me and all because of mistakes that could have been discussed and fixed instead of used against me.

I agree that the culture needs to be changed and mainly because it borders on medieval times without the physical harm attached to it.

anon153905
Post 5

what is a successful corporate culture, and does it contains its own seed of destruction?

anon150867
Post 4

is there any different between corporate culture and corporate performance?

mutsy
Post 3

Comfyshoes- A great book that analyze the effects of corporate culture on the actual company’s profitability and success is, “Corporate Culture and Performance” by John P. Knotter and James L. Heskell.

These authors provide various case studies to determine why some corporate cultures are successful while others struggle.

He takes a particular look at Wal-Mart and Kmart.

He explained that the corporate culture was more customer service oriented in Wal-Mart which is why Kmart was having financial difficulties. This prompted Kmart to consider managing corporate culture in a more customer-oriented way.

comfyshoes
Post 2

I agree that the corporate culture is a group of beliefs of what is accepted in the workplace. For example, a strong corporate culture can be defined as people working long hours because that is what everyone is expected to do.

In this type of company it would be frowned upon to leave at 5PM when the majority of the staff leaves at 7 or 8 PM. Also, the corporate culture might be formal and the attire might always call for business suits.

Another aspect of corporate culture might include a company that frequently relocates its staff members all over the country. In such a firm, it is expected that if you will be asked to relocate at some time in the future.

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