Organizational culture is the foundation of every company’s operations, shaping both the daily experiences of employees and long-term business outcomes. Research clearly shows that a well-established organizational culture can be a powerful tool for increasing effectiveness, productivity, and innovation in businesses. This article provides a comprehensive analysis of the latest scientific research on the impact of organizational culture on company performance, along with practical examples and recommendations for business leaders. Research findings indicate that companies with a strong, positive organizational culture achieve better financial results, demonstrate greater adaptability during crises, and attract talented employees more effectively.
Definition and Importance of Organizational Culture
Organizational culture is defined as “a set of values, norms, beliefs, and practices that define how the organization functions and interacts among employees.” Schein defines it as “a set of beliefs and convictions that spread within the company about how to do business, how employees should behave, and how they should be treated.” Piętkiewicz and Kałużny define organizational culture as “the proper organizational climate, management style, incentive system, qualifications, and interpersonal relations.”
Research conducted by the consulting firm Bain & Company, which topped the Best Places to Work 2024 list for large employers in the US, highlights key principles for building a cohesive organizational culture, which plays a significant role in achieving business success. Particularly in the context of multicultural work environments, researchers emphasize that organizational culture “primarily serves to eliminate organizational ambiguity of behaviors and promotes effective behaviors of the company’s employees.”
As many as 90% of managers agree that the importance of organizational culture is growing in today’s business world, and 46% of them acknowledge that improving it influences employee productivity, engagement, and retention. These results clearly confirm that a strong, positive organizational culture has a direct impact on business development and effective task execution.
In practice, companies like Netflix and Spotify invest in organizational culture based on trust and responsibility, rather than creating detailed instructions and procedures. Netflix developed the “Netflix Culture Deck,” which became a model for many organizations, emphasizing values such as honesty, transparency, and freedom combined with responsibility. As a result, the company operates with fewer formal control mechanisms while maintaining high efficiency and flexibility.
Components of Organizational Culture and Their Impact on Performance
Organizational culture consists of many elements that together determine its character and impact on company functioning. Research identifies several key components of organizational culture that directly affect business outcomes.
Leadership is one of the most important factors shaping organizational culture. “The behavior patterns and values presented by organizational leaders are of immense importance. If leaders are inspiring, motivated, and determined to achieve success, employees are more likely to follow their example and make additional efforts in their work.” Leadership models have a direct impact on culture and organizational efficiency, as confirmed by studies published in MIT Sloan Management Review.
Organizational structure also determines culture and its impact on outcomes. “If an organization is flat, with few hierarchical levels, employees often feel more engaged and responsible for their tasks. In contrast, organizations with strong hierarchies and communication barriers may experience limited basic motivation from their employees.” Studies show that a flexible culture responds almost instantly to changes in the environment, attracting individuals with high cultural intelligence who can meet the demands of this type of organizational culture.
Human resource management practices are another significant component. “If an organization focuses on development and training, creates advancement opportunities, and rewards effectiveness, employees feel valued and motivated to achieve better results.” Mental Health at Work certifies companies based on organizational culture values, identifying and measuring factors such as whether the organization cares for its employees’ mental health, maintains a work-life balance, and motivates and engages its employees.
Values and norms within the organization also play a significant role. “If an organization promotes values such as honesty, trust, openness, and collaboration, employees often experience greater motivation and job satisfaction.” Organizational culture plays a crucial role in shaping the psychological environment in the organization, being a manifestation of norms, values, and customs that affect employees’ well-being.
In practice, Patagonia, an outdoor clothing manufacturer, builds a culture based on strong environmental and social values. Employees are given time off for volunteering, the company donates part of its profits to environmental causes, and its business practices reflect sustainable development values. As a result, despite higher production costs, Patagonia experiences steady revenue growth and customer loyalty, as customers identify with the company’s values.
Impact of Organizational Culture on Company Financial Performance
Scientific research clearly confirms the direct relationship between organizational culture and company financial performance. Organizations with strong, positive organizational culture achieve better financial results compared to companies where culture is weak or dysfunctional.
Revenue and profits are areas where the impact of organizational culture is particularly noticeable. According to statistical data from 2024, “overall cultural institution revenues in 2024 were 14.9% higher than the previous year, totaling 16,536.6 million PLN.” While these data refer to cultural institutions, a similar trend can be observed in businesses across various industries.
The significance of organizational culture is especially evident in crisis situations. “The importance of culture for business is particularly strong during times of crisis and complexity. It is during these circumstances that organizational culture ensures that individual employee engagement, collaboration, and identification with the company create a mechanism that coordinates actions, directing them toward a common goal.” Companies with strong organizational culture are better prepared to respond to market changes and economic crises.
Studies show that “organizational culture is an important element of business activities and has a significant impact on the competitiveness and success of organizations. It turns out that 75% of employees are eager for business success if they perceive the organizational culture as ‘good.'” Furthermore, “a strong organizational culture builds a sense of belonging and strengthens identification with the company,” which directly translates into employee engagement and their performance, and consequently, into the company’s financial results.
In practice, Southwest Airlines has consistently built a culture based on values, where employees come first. Despite operating in a competitive and low-margin airline industry, Southwest has maintained profitability for decades (it was one of the few airlines that did not have to lay off employees after the September 11 attacks). Their organizational culture, where every employee feels valued and important, leads to exceptional customer service, high passenger loyalty, and, as a result, stable financial performance.
Types of Organizational Cultures and Their Impact on Efficiency
In the scientific literature, various types of organizational cultures are distinguished, each influencing the functioning and results of companies in different ways. One of the most recognized models is the Competing Values Framework by Cameron and Quinn, which identifies four main types of organizational cultures.
Clan culture is characterized by a friendly work environment, where leaders act as mentors, and the organization is held together by loyalty and tradition. “A desirable work environment not only promotes efficiency but also promotes mental health and emotional engagement in development.” This type of culture encourages high employee engagement and loyalty to the organization.
Adhocracy culture is a dynamic and creative work environment, where innovation and risk-taking are highly valued. “Flexible cultures react almost immediately to changes in the environment. They attract individuals with high cultural intelligence who are capable of meeting the demands of this type of organizational culture.” In a rapidly changing business environment, this type of culture often leads to high innovation and competitive advantage.
Hierarchical culture is characterized by a high degree of formalization and structuring. “Similarly, individuals with low cultural intelligence prefer hierarchical organizations that value stability, predictability, and control.” This type of culture can be effective in industries requiring strict quality control and safety, such as aviation or healthcare.
Market culture is goal-oriented and focuses on achieving objectives. “In turn, a results-oriented culture is suitable in environments with a fast pace of change, where rapid response is required, and goals are clearly defined.” This type of culture can lead to high productivity and good financial results, especially in competitive industries.
Research conducted in metal construction companies in Poland showed that “the main factor determining organizational results is the shaping of a culture that promotes cooperation and a participatory management style.” This situation results from greater empowerment of employees and their growing involvement in decision-making.
In practice, Microsoft, under the leadership of Satya Nadella, underwent a cultural transformation from a market culture (focused on competition and results) to a culture more open to collaboration and innovation. Nadella replaced the previous “know-it-all” mentality with a “learn-it-all” approach, emphasizing growth and development rather than just achieving goals. This cultural change contributed to the revival of Microsoft as an innovative technology company and a significant increase in the company’s stock value.
Organizational Culture and Communication and Employee Motivation
Organizational culture has a fundamental impact on internal communication processes within the organization and employee motivation levels, which directly translates into company efficiency and performance. Scientific research clearly indicates a strong correlation between these elements.
In the communication area, “organizational culture has a significant impact on communication within the employee team. Promoting openness, trust, collaboration, and equality” contributes to better information and knowledge exchange among employees. In the context of multicultural work environments, “culture, language, and communication” are especially important. Research shows that “cultural differences in non-verbal communication” can affect the effectiveness of cross-cultural communication.
Employee motivation is closely linked to organizational culture. “If the organization promotes values such as honesty, trust, openness, and collaboration, employees often feel more motivated and satisfied with their work. However, if the organization tolerates unethical behaviors, conflicts, and dishonesty, it may lead to deteriorating employee motivation.” Studies confirm that “organizational culture plays a key role in shaping the psychological environment within the organization, being a manifestation of norms, values, and customs that affect employees’ well-being.”
Social competencies play a crucial role in shaping effective communication and motivation in multicultural teams. “Managers managing multicultural teams listed the most important competencies as: verbal and non-verbal communication, social intelligence, and building positive interpersonal relationships.” These competencies are key to building an effective organizational culture, especially in international environments.
In practice, Zappos became known for its organizational culture based on 10 values, including “Deliver WOW Through Service,” “Embrace and Drive Change,” and “Build Open and Honest Relationships With Communication.” The company introduced a practice of offering new employees $2,000 to leave after the training period if they don’t fit into the organizational culture. This bold move aims to ensure that only individuals who truly identify with the company’s values and culture stay. As a result, Zappos enjoys exceptionally low employee turnover and high customer satisfaction.
Building an Effective Organizational Culture in a Multicultural Environment
Modern businesses increasingly operate in a multicultural environment, which presents both challenges and opportunities in building an effective organizational culture. Scientific research points to specific strategies that can help shape an organizational culture supporting growth and efficiency in such an environment.
Cultural differences significantly impact the functioning of organizations. “Cultural differences are a factor that increasingly affects the functioning of modern organizations. Therefore, it is essential that they are taken into account in the management process.” Studies show that “in organizations, there are often many different and competing value systems, which create rather a mosaic of organizational realities than a unified culture.” A challenge for leaders, therefore, is the integration of these diverse values and the creation of a cohesive organizational culture.
In a multicultural context, social competencies gain particular importance. “Employees’ social competencies are very important because they affect relationships within teams. These relationships determine the effectiveness and success of team functioning, which is very important in a culturally diverse work environment.” Developing these competencies should be an integral part of the strategy for building an effective organizational culture.
Psychological research on multiculturalism provides valuable insights for managing organizational culture. “Intensive psychological research on multiculturalism has been conducted since the 1990s, although related topics appeared in psychology as subjects for scientific reflection much earlier.” The results of this research can be used to develop strategies for managing organizational culture in a multicultural environment.
In practice, IBM is an example of successfully building a global organizational culture while respecting local cultural differences. IBM developed the “Diversity & Inclusion” program, which not only promotes diversity but actively uses it as a competitive advantage. The company created a global network of employee groups representing different cultures, religions, sexual orientations, and other aspects of diversity. These groups not only support their members but also provide valuable insights into various markets and customers. As a result, IBM is able to better understand and serve diverse clients worldwide, leading to better business performance.
Organizational Culture in Times of Crisis and Change
The significance of organizational culture is particularly visible during periods of crises and intense change, when it becomes a key element determining the organization’s ability to adapt and survive. Scientific research points to specific aspects of organizational culture that can support organizations during tough times.
In crisis situations, a strong organizational culture can serve as the foundation of stability. “There is no doubt that organizational culture has a significant impact on company performance. This is confirmed by numerous studies. As a result, many companies have undertaken the conscious process of cultural transformation.” Particularly in the face of unforeseen challenges such as a pandemic or an economic crisis, “organizational culture ensures that individual employee engagement, their collaboration, and identification with the company create a mechanism that coordinates actions, directing them toward a common goal. It works much better than direct orders.”
Studies show that organizations with certain types of cultures adapt better to changes. “The main factor determining organizational results is the shaping of an organizational culture promoting cooperation and a participatory management style.” In the context of rapid changes, “a results-oriented culture is suitable in environments with a fast pace of change, where quick response is required, and goals are clearly defined.” At the same time, cultural flexibility is important – “a flexible type of culture responds almost immediately to changes in the environment.”
During periods of intense organizational change, culture can serve as both a barrier and a catalyst for change. “Those who built a culture with an inherent ability to respond to changes, with an internal system capable of adaptation, were able to switch to self-regulation.” This is particularly important in the context of global crises, where traditional management models may prove insufficient.
In practice, Toyota is famous for its organizational culture based on continuous improvement (kaizen) and respect for people, which forms the foundation of the Toyota Production System. During the global financial crisis in 2008, instead of mass layoffs, Toyota used this time for employee training, process redesign, and implementing improvements. Thanks to a culture of continuous improvement and long-term thinking, Toyota not only survived the crisis but emerged stronger, maintaining employee loyalty and improving its processes. This example shows how a strong organizational culture can be a crucial asset during a crisis.
Conclusions and Recommendations for Business Leaders
Scientific research and practical experiences from organizations clearly indicate that organizational culture has a fundamental impact on company performance. Based on the analyzed data and studies, specific recommendations can be formulated for business leaders aiming to build an effective organizational culture that supports the achievement of business goals.
First and foremost, organizational culture should be treated as a strategic asset of the company. “Conscious management of organizational culture is a goal in itself.” Leaders should devote as much attention to organizational culture as to other strategic aspects such as financial planning or product development.
A key element is consistency between the declared values and actual practices in the organization. “Insecure managers often stifle their teams’ creativity because they fear new ideas. Proper support and a sense of belonging to the organization can unlock their potential and change this approach.” Leaders should not only articulate desired values but also demonstrate them in their daily actions.
In a multicultural context, it is important to treat cultural diversity as a value. “The significance of organizational culture is particularly important in a multicultural work environment, where managers manage employees from various national cultures and function in multicultural teams working toward the company’s goals.” Cultural diversity can be a source of innovation and competitive advantage if it is properly managed.
The process of building organizational culture should be systematic and long-term. “The right organizational culture begins with the employer’s activities.” This requires the involvement of leaders at all levels of the organization and consistent actions supporting the desired values and behaviors.
In practice, IKEA is an excellent example of an organization that consciously shapes its organizational culture based on values such as simplicity, thrift, responsibility, and democratic approach. These values are reflected in every aspect of the company’s operations – from the democratic organizational structure, through product design, to customer interactions. Ingvar Kamprad, the founder of IKEA, personally demonstrated these values, living modestly despite his vast wealth. This consistency between declared values and actual practices builds the authenticity of IKEA’s culture and contributes to its global success.
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