Organizational culture forms the foundation of every modern organization and impacts all aspects of its operations – from daily interactions between employees to long-term strategic decisions. According to research, 90% of managers agree that the importance of organizational culture is growing in today’s business world, and 46% of them admit that improving it impacts employee productivity, engagement, and retention. Moreover, 75% of employees are eager to achieve business success if they evaluate the organizational culture as “good.” This article offers a comprehensive discussion of this crucial aspect of business operations, presenting both theoretical approaches and practical applications.
Definition and Essence of Organizational Culture
Organizational culture is a term that has received many definitions in scientific literature. Schein defines it as “a set of beliefs and values that spread within the company about how to do business, how employees should behave, and how they should be treated.” Piętkiewicz and Kałużny define it as “the proper organizational climate, management style, system of incentives, qualifications, and interpersonal relations.”
According to MIT Sloan Management Review, organizational culture is one of the main factors shaping the identity of a company and distinguishing it from other organizations. In simple terms, it is a system within which certain ways of action, thinking, and values, unique to that organization, operate. The functions of organizational culture include, among others, conveying desired behavioral patterns to employees and helping them identify with the company’s mission, vision, and values.
Organizational culture consists of shared values, internal practices, and norms followed by leaders and employees in daily work. Therefore, it can be concluded that organizational culture greatly influences employees’ actions at every level, playing a key role in shaping the work environment, motivation, engagement, and overall operational effectiveness.
Components of Organizational Culture
Studying organizational culture involves analyzing the values, norms, behaviors, and beliefs dominant within a company. It is significant for companies because it helps to understand the prevailing values, relationships between employees, and how this impacts the effectiveness and performance of the organization.
According to the competing values framework by Cameron and Quinn, four main types of organizational cultures can be distinguished, each characterized by specific traits:
- Clan Culture – A friendly workplace where people enjoy collaborating. The organization thrives due to employee loyalty and attachment to tradition. There is a high degree of involvement. The organization emphasizes long-term benefits of personal development and places great importance on cohesion and morale.
- Adhocracy Culture – A dynamic, entrepreneurial, and creative organization. People are not afraid of risk. The cohesion of the organization comes from the desire to experiment and introduce new things.
- Hierarchy Culture – An organization that relies on procedures, stability, and predictability.
- Market Culture – An organization focused on results, competition, and achieving goals.
In daily business practice, elements of organizational culture manifest through:
- Management and leadership style
- Internal communication
- Decision-making processes
- Approach to innovation and change
- Interpersonal relationships and work atmosphere
- Reward and performance evaluation systems
- Approach to development and learning
The Impact of Organizational Culture on Business Operations
A strong organizational culture builds a sense of belonging and strengthens identification with the company. Studies show that companies with a strong, positive organizational culture achieve better business results. According to Harvard Business Review, 77% of directors believe that culture is one of the main drivers of business results.
Organizational culture also plays a key role in organizational change processes. According to a Gartner report, 74% of HR leaders say managers are unprepared to lead change, and 73% agree that employees are tired of constant transformations. Moreover, less than one in four employees says they understand the values driving the organizational culture. This is a significant challenge because, according to a McKinsey study cited by Psico-Smart, 70% of change initiatives fail due to organizational resistance.
In the context of multicultural work environments, the importance of organizational culture is particularly significant. Organizational culture primarily serves to eliminate organizational ambiguity of behaviors and promotes effective employee behaviors, which is especially important when employees come from diverse cultural backgrounds.
Shaping Organizational Culture
Organizational culture is built at every level of the organization; however, it is extremely important for members of the board and organizational leaders to be particularly concerned with its shape. Only then is it possible to guide it in such a way that it achieves the intended goals and increases profits.
Gartner suggests that the key to activating culture lies in equipping leaders at all levels of the organization with tools to embed it in values, behaviors, and processes. As a result, everyone becomes responsible for it. To do this, leaders should:
- Help employees understand the values underlying the organizational culture
- Explain what these values mean and how they affect the team
- Ensure that employees know what they need to do to build the culture they desire
- Optimize the processes governing employee work to support the culture they aim for
In the process of shaping organizational culture, tools and methodologies such as retrospectives play an important role – a workshop format used by agile teams for continuous improvement of collaboration and team development.
Practical Examples of Organizational Cultures
When analyzing specific examples of organizational cultures, it is worth looking at various models that have been successfully implemented in business:
Example 1: Technology Startup Echometer
The startup Echometer uses holacracy as its organizational model. Holacracy is a methodology that allows decentralization of significant responsibility, which should enable quicker decision-making. This type of collaboration suggests that the organizational culture in Echometer is based on the values of ownership and personal responsibility. In Echometer, employees’ working hours can also be flexibly organized, which is another indicator of the value placed on personal responsibility.
Example 2: Organizational Culture in Alan
Alan, a French insurance company, presents a unique organizational culture based on the following principles:
- Zero meeting objective: all decisions are made in writing
- No traditional managers
- Full transparency: 100% of the team has access to 100% of information
- All employees are shareholders in the company
- Everyone knows the salaries and equity of all individuals
- Work flexibility: employees can work from anywhere on the continent, with no time restrictions, and decide when to take vacation
Example 3: Organizational Culture in Traditional Companies
In organizations with a longer history, changing the organizational culture is often a bigger challenge. As shown by the example of L’Oréal, an effective cultural transformation requires not only defining new values but also introducing innovations in work practices and management. The company combines traditional values with modern working methods that promote collaboration and value team performance more than individual achievement.
In my consulting experience, I have encountered companies that tried to change their organizational culture by introducing new values and missions, while not changing management practices. The result was cynicism and frustration among employees, who saw a disconnect between declared values and daily reality. On the other hand, I have observed organizations that introduced cultural change from the ground up – starting with the transformation of leadership behaviors and organizational processes, leading to an authentic change in attitudes and values across the company.
Challenges in Managing Organizational Culture
Des
