5 Top Misconceptions about Corporate Culture

Misconceptions about Corporate Culture Picture of hands rubbing a genie lamp and wishing for the right corporate culture

There Are Far Too Many Misconceptions about Corporate Culture
Too many leaders have far too many misconceptions about corporate culture.  If you believe, as we do, that a healthy, purposeful and aligned corporate culture is what sets a company apart, you should be committed to promoting a culture that works.

Why Culture Matters To Your People and Your Business
We define culture as how things truly get done in an organization.  Culture includes the known and unspoken values and assumptions that drive key business practices and behaviors – especially in leaders and in who they hire, fire and promote.

  • A recent Harvard Business School research report described how an effective culture can account for up to half of the differential in performance between organizations in the same industry.
  • Our own organizational alignment research found that cultural factors account for 40% of the difference between high and low growth companies.

Culture Exists by Design or By Default
But you can’t just magically wish an organizational culture into place. A corporate culture exists either by design or by default. It evolves from the way employees treat each other and can be measured by the way people think, behave and work. An aligned culture can have a significant impact on your bottom line. But you must go about it the right way.

The Top 5 Misconceptions about Corporate Culture
Here are the five top misconceptions about corporate culture that you should know.

1.  Culture is NOT Just About Fun
Sure, people like to enjoy their work and have fun with their co-workers. Fun can be a wonderful part of a strong corporate culture, but what really matters and what keeps employees happy about coming to work each day is a more important and lasting and more purposeful attribute…like innovation, or authenticity, or service, or quality.

2.  Culture is NOT Just About Perks
Perks like free dry cleaning and gourmet cafeterias are certainly appealing. They quantifiably add to the “plus” column when employees evaluate their levels of employee engagement. But unless those perks are connected to a core belief, they lose both value and appeal over time.

External expressions of a culture alone don’t retain employees; a sense of purpose that underlies the organization does.

3.  Culture is NOT Just a Nice-to-have
Culture matters to the bottom line. A positive culture engages employees and reduces turnover. People want to identify with a company that has a strong culture and positive brand. Engagement is symptomatic of high morale and high morale translates into high retention rates.

The opposite is expensive. You pay the price of low retention in higher expenses and performance gaps.

3.  Culture is NOT Just About Behaviors and Values
This trips up even the most passionate culture practitioners. Yes, behaviors and values are an important ingredient for a healthy corporate culture.  Every organization wants to be healthy.  We define cultural health, the little “c” of culture, as how values are lived consistently across the organization.

Those values manifest themselves in observable behaviors.  We believe that organizational health is necessary for success regardless of industry, geography or size.  We measure seven characteristics of organizational health in the areas of:

  • Leadership
  • Organizational trust
  • Individual trust
  • Individual capability
  • Team capability
  • Organizational climate
  • Organizational capability

We also believe that organizational health can be measured on a “good” to “bad” scale.  Organizational health however, is just the ticket to play the game and one component of the cultural fabric.

The differentiating impact comes from the big “C” of culture in terms of its level of alignment with the corporate strategy.   A purposeful and aligned culture is the secret sauce -the DNA of an organization – that determines success or failure.  A purposeful and aligned culture means that teams are operating with the same objectives in mind, and approaching those objectives in the same way.

Because strategy must go through culture to produce results, how the company culturally views areas like customer intimacy, market leadership, focus, risk tolerance, process variation and decision making plays a key role in strategy execution.  Unlike the little “c” of culture, the big “C” of culture is not measured on a “good” to “bad” scale.  It is measured on a “aligned” to “unaligned” scale in terms of its ability to drive the strategy forward in a way that makes sense.

Remember that a high performing culture is about both the little “c” (health) and the big “C” (alignment).

4.  Culture is NOT Just Defined by Employees
Employees reflect the company values articulated and modeled by the organization’s leadership. Culture flows from the top. In companies where leaders understand this, they work to define their mission, what is unique about their organization and how they will treat each other on the path toward their business goals.

Leaders can purposefully design the underlying values and assumptions that drive key business practices and behaviors across the strategic dimensions that matter most.  As a leader, recognize how much organizational culture matters and be thoughtful about how you shape and cultivate it to move your strategy forward.

The Bottom Line
Too many leaders have far too many misconceptions about corporate culture.  A healthy, high performing and aligned corporate culture is what sets a company apart.  Do not fall pray to these four misconceptions about corporate culture if you want to outperform your peers.

To learn more about defining an aligned and high performing culture, download How to Build a Purposeful and Aligned Corporate Culture.

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