Organizational culture is much more than a set of formal rules. It is primarily the values, norms, beliefs, and behaviors that shape the identity of an organization and influence the daily functioning of its employees. Research shows that companies with a strong organizational culture achieve better financial results and attract the best talent. According to Harvard Business Review, these organizations can be 20-30% more effective than competitors with less developed cultures. In this article, we present the key components of organizational culture, based on scientific research and practical examples.
The Three Levels of Organizational Culture According to Edgar Schein’s Model
Edgar Schein, one of the most prominent researchers on organizational culture, distinguished three fundamental levels that create the culture of every organization. This model remains the most recognized and comprehensive approach to the elements of organizational culture in academic literature.
Level One: Artifacts
Artifacts are the most visible and tangible manifestations of organizational culture. These are conscious, visible elements easily identified by both the organization’s employees and the external environment. Schein distinguishes three main categories of artifacts:
Physical artifacts are the material components of the organization, such as:
- Dress code (e.g., formal suits in financial institutions or casual attire in tech companies)
- Building architecture and office space arrangement
- Logo and visual identity
- Workplace equipment
- Company merchandise
Language artifacts are related to communication within the organization:
- Company-specific vocabulary and jargon
- Myths and legends about the company’s history
- Internal and external communication style
- Stories about the founders and organizational heroes
Behavioral artifacts include actions and practices:
- Rituals and customs within the team
- How meetings are conducted
- Celebrating successes
- Onboarding practices for new employees
- Organizational etiquette
Real-life example: Google is known for its distinctive artifacts that build its culture of innovation and creativity. Colorful, open office spaces with relaxation zones, free meals, and the option to spend 20% of work time on personal projects are physical and behavioral artifacts that communicate the company’s values—innovation, collaboration, and employee well-being.
Level Two: Norms and Values
Norms and values are partially visible and conscious elements of organizational culture. They are expressed in the mission, vision, and philosophy of the organization. They answer the question, “Why do we do what we do in our organization?”
Organizational values are a key element that guides the company’s actions and decisions, influencing its strategy and long-term goals. A critical distinction is made between:
- Declared values – officially communicated by the organization
- Actual values – those that actually guide the employees’ behaviors
Norms and values may concern:
- Company goals and strategy
- Interpersonal relations within the team and with business partners
- Creating a workplace atmosphere
- Customer service standards
- Complaint handling procedures
- Approach to innovation
Gartner’s 2024 research shows that fewer than one in four employees say they understand the values driving organizational culture. At the same time, according to Talent Trends 2024, one in four HR leaders plans to invest more in communicating company values, recognizing their key role in talent retention.
Real-life example: Patagonia, an outdoor apparel company, has a clearly defined environmental protection value that permeates every aspect of its operations. The company donates 1% of its annual revenue to environmental causes, uses recycled materials, and encourages customers to repair their clothing instead of buying new. These actions show the consistency between the declared and actual values of the organization.
Level Three: Basic Assumptions
Basic assumptions are the deepest level of organizational culture. The elements that make up this level are invisible and often unconscious. They are fundamental beliefs that guide the organization and its members, concerning:
- Human relationships
- The nature of humanity (e.g., whether people are naturally hardworking or lazy)
- Perception of time (orientation to the past, present, or future)
- Relationship with the environment (dominance, harmony, submission)
- Approach to truth and reality
This level forms the foundation of organizational culture and is the most resistant to change. It determines how the world and phenomena around the organization are perceived. Researchers note that basic assumptions often stem from the values and beliefs of the organization’s founders, which over time become unconscious axioms.
Real-life example: In Toyota, the basic assumption is kaizen—continuous improvement. The belief that there is always room for improvement is so deeply ingrained in the company’s culture that employees at all levels constantly look for opportunities to optimize processes, even those that are already working well. This is not just a declared value but a fundamental, often unconscious belief that guides daily decisions and behaviors.
Functions of Organizational Culture
Research shows that organizational culture performs a range of key functions that directly impact the effectiveness of the organization. Understanding these functions helps in consciously shaping the desired culture.
Team integration – building a sense of community and belonging, which strengthens bonds between employees. Research published in the “Journal of Organizational Behavior” confirms that a strong sense of community translates into lower employee turnover and higher engagement.
Support in achieving mission and strategy – helping employees understand the company’s goals and adapt to the changing environment. The Gartner report highlights that organizations with a strong organizational culture are 26% more likely to change their strategy in response to market conditions.
Strengthening internal communication – improving information flow, which is crucial for effective collaboration. According to research by MIT Sloan Management Review, companies with an advanced open communication culture achieve 47% higher shareholder value in the long run.
Maintaining consistency and order – setting boundaries within the group, helping maintain harmony in the organizational structure. Studies published in the “Academy of Management Journal” show that clearly defined cultural boundaries reduce team conflicts by 32%.
Real-life example: Zappos, known for its obsession with customer service, has created a culture that supports this mission at every level. New employees undergo intensive training in the company’s values, and then are offered $2,000 to leave the company – a test to see if they truly fit into the organization’s culture. This practice illustrates how culture can support the realization of the company’s strategic mission.
The Role of Leaders in Shaping Organizational Culture
Research clearly shows that leaders play a key role in shaping and maintaining organizational culture. According to the Gartner report, 57% of HR leaders agree that managers do not enforce the desired vision of culture in their teams, and 53% believe that team leaders do not feel responsible for “leading by example.”
Manny Maceda of Bain & Company, a company that topped the list of large employers in the USA on the prestigious Best Places to Work 2024 list, emphasizes the importance of four key principles for building a cohesive organizational culture:
- Helping employees understand the values underlying organizational culture
- Explaining what these values mean and how they affect the team
- Ensuring employees know what to do to build the desired culture
- Optimizing processes that support the culture the organization strives for
Real-life example: Satya Nadella, CEO of Microsoft, transformed the company’s culture from one of confrontation (known from the Steve Ballmer era) to one based on development and collaboration. Nadella introduced new values, such as the “growth mindset,” and consistently modeled desired behaviors—listening, empathy, and curiosity. As a result, Microsoft underwent a cultural transformation that translated into record financial results and renewed innovation.
The Impact of Organizational Culture on Efficiency and Financial Performance
More and more studies confirm a direct link between organizational culture and business financial performance. Research by Harvard Business Review shows that companies with a strong organizational culture can achieve results 20-30% better than competitors with less developed cultures.
This correlation is backed by specific mechanisms:
Higher employee engagement – research by R. Cooke and C. Lafferty highlights a strong link between the company’s culture profile and the level of motivation, satisfaction, willingness to stay in the company, and readiness to put in extra effort for the organization.
Constructive behaviors over defensive ones – a culture oriented toward achievement and self-realization encourages initiative-taking and proposing innovative ideas. Employees in such organizations exhibit a positive attitude toward coworkers, share information, and build constructive relationships.
Consistency of actions with strategic goals – when organizational culture aligns with the business strategy, employees at all levels make decisions that support the company’s long-term goals, leading to better financial performance.
Real-life example: Netflix is known for its culture of “freedom and responsibility.” The company eliminates traditional controls, such as vacation policies or approval of expenses, instead focusing on hiring the best talent and giving them autonomy in decision-making. This culture has led to the company’s remarkable adaptability and growing market value, which has increased by over 1000% over the past decade.
Changing Organizational Culture
Changing organizational culture is one of the most challenging tasks in management. Studies show that 97% of CHROs (Chief Human Resources Officers) would like to change some aspect of their organization’s culture. However, this process requires a systematic approach and understanding of the various levels of culture.
Edgar Schein notes that changing organizational culture should proceed according to the sequence of levels:
- Change artifacts (easiest)
- Change norms and values (more difficult)
- Change basic assumptions (most difficult)
Studies published in the “Journal of Applied Psychology” indicate that successful cultural change requires:
- Engagement from top leadership
- A clearly defined vision of the desired culture
- Consistent communication system
- Adaptation of human resources management systems (recruitment, evaluation, compensation)
- Patience – deep cultural change may take 3 to 7 years
Real-life example: When Alan Mulally became CEO of Ford in 2006, the company was on the brink of bankruptcy, and its culture was marked by organizational silos and internal competition. Mulally introduced a radical cultural change, starting with a new ritual – weekly Business Plan Review meetings, where managers had to report their results using a simple color-coded system (green, yellow, red). Initially, no one wanted to admit to problems, but when Mulally praised the first manager who marked their project as red, the culture began to change. Over the next few years, Ford transformed from a culture of hiding problems to one of transparency and collaboration, which helped the company survive the financial crisis without government assistance, unlike its competitors.
Organizational Culture in a Global Context
Studies show that organizational culture is strongly rooted in the cultural context of the country in which the company operates. French and Spanish research offers valuable perspectives on the global understanding of organizational cultures.
French studies highlight specific features of the organizational culture of French companies:
- High power distance
- Opposition to high levels of individualization
- Low risk tolerance
- Protective management system
These cultural traits can impact the effectiveness of French companies’ operations, particularly in the context of innovation and adaptation to changes.
Spanish studies, published in the “Revista de Psicología del Trabajo y las Organizaciones” (Journal of Work and Organizational Psychology), focus on the impact of organizational culture on employee engagement and their mental well-being. Spanish researchers emphasize the importance of work-life balance as a key element of modern organizational culture.
Real-life example: IKEA, a company with Swedish cultural roots, has created a global organizational culture based on values such as simplicity, thrift, and equality. However, the implementation of this culture varies by country. In collectivist cultures in Asia, the company places more emphasis on community aspects, while in more individualistic Western countries, it highlights individual development opportunities. This flexibility in adapting organizational culture to local cultural contexts is one of the keys to IKEA’s global success.
Conclusion and Key Takeaways
Organizational culture is a complex system consisting of artifacts, norms and values, and basic assumptions. Each of these elements plays a crucial role in shaping the organization’s identity and influences its functioning at multiple levels.
Scientific research unequivocally shows that a strong and consistent organizational culture translates into tangible business benefits:
- Higher employee engagement
- Lower turnover
- Better adaptation to changes
- Higher innovation
- Better financial performance
However, building the desired organizational culture requires a conscious and systematic approach. Leaders play a key role by shaping values and behaviors within the organization through their example and consistent actions.
In today’s global challenges and rapidly changing business environment, understanding the components of organizational culture becomes an essential tool for any manager aiming to build an effective and adaptive organization.
Empatyzer – The Perfect Solution for the Topic at Hand
Feature 1: AI Chat as an Intelligent 24/7 Coach
The chat understands the personality, character traits, preferences, and organizational context of the user and their team. This allows it to provide hyper-personalized advice tailored to both the individual user and the realities of their team. Recommendations are provided in real time, helping managers solve problems on the spot rather than waiting for training.
Feature 2: Micro-Lessons Tailored to the Audience
Twice a week, users receive short, condensed micro-lessons via email that can be absorbed in three minutes. The lessons are personalized – they either address the manager’s own strengths and weaknesses and ways to leverage them, or team relationships and communication. Practical tips include real-life scenarios, ready-made action techniques, and even specific sentence formulations that can be used in a given situation.
Feature 3: Professional Personality and Cultural Preference Diagnosis
The tool analyzes the user’s personality, strengths and weaknesses, and unique traits in the context of the team, company, and population. It enables understanding of one’s position within the organization, identification of talents, and the determination of the best approach.
Empatyzer – Easy Implementation and Immediate Results
Quick deployment – the tool requires no integrations and can be launched in a company of 100-300 employees in less than an hour. Zero additional workload for HR – users do not generate extra questions or tasks for HR, saving significant time. Instant value for the business – the tool is designed to be quick, easy to deploy, generate immediate results, and be cost-effective.
Why Empatyzer is Unique?
It understands not only the individual asking but also their organizational environment, providing solutions tailored to real-world challenges. It’s a comprehensive tool that combines coaching, education, and analysis into one, available with no effort from the user.
If you are interested in online communication training, visit our main page: online communication training .
Check out the details of the online communication course on our website: online communication course .
