Organizational Culture: Why Does It Matter?

Organizational culture in its simplest terms is the way a company thinks, behaves, and performs its work. In other words, organizational culture is how management trains and leads its employees to accomplish their work. Whether intentional or accidental, every company has its own, unique culture.

If every company has a culture, then what’s important is having the right culture. According to Deloitte’s Global Human Capital Trends 2016 report, more than 82 percent of over 7,000 surveyed global CEOs and HR leaders agree that culture is a potential competitive advantage. However, only 28 percent of those surveyed believe they understand their own culture very well, and only 19 percent of those surveyed believe they have the right culture for their business plan. Does your organization have the right culture?

Whether changes are needed or not, who is responsible for culture? While everyone in management plays an important role in positively influencing culture, the ownership of a company’s culture lies with the CEO or president and executive team. Culture change is not another HR project. However, no function in an organization is positioned like HR is to support executives and managers in molding and shaping your organization’s culture. So if you’re in HR, you’re the go-to resource to help establish and maintain the right culture for your organization.

One way HR can provide value and assist the executive team’s efforts to strengthen your desired culture is to make sure HR’s policies, practices, and activities are aligned with and support your company’s strategies and desired culture. The following are a few examples of how HR can immediately begin to support and strengthen your organization’s culture.

Selection and New-Hire Processes – This is likely an applicant’s first exposure to your company’s culture. Like the saying goes, you never get a second chance to make a first impression. Was the application process simple, or was it more like an obstacle course for the applicant? Was the interview process warm and welcoming or cold and intimidating? Was orientation and onboarding interesting and engaging or boring and tedious? In addition to being qualified, are your new-hires also a cultural fit? In the selection process, HR acts as the gatekeeper to your culture. Make sure your selection process supports achieving and maintaining your desired culture.  

Employee Handbooks – This is a new employee’s first, in-depth look at your company’s culture. Not only do your company’s individual policies reflect your company’s culture, but the tone of your policies says a lot about your culture. Is your handbook positive and upbeat, or does it sound strict and harsh like your new-hires are being read their Miranda Rights? Is your employee handbook reasonable in length, or is it filled with lengthy, irrelevant policies that dissuade employees from reading it in the first place? Make sure the policies in your handbook properly portray the culture your organization is trying to create or preserve.

Performance Management – Do performance reviews and appraisals include holding employees accountable for behaviors that support the company’s mission, vision, values, and strategy, or do they skip those altogether? As employees and managers work together to set employee goals, use this opportunity to better align the employee’s goals with the company’s strategy and culture.

Corrective/Disciplinary Action – As long as companies have employees, a small percentage of them will need correction. Is your corrective action process treated like a coaching and training opportunity, or is the process harsh and punitive? Is the employee treated with dignity and respect and like an asset, or like a liability or a disposable item? While difficult conversations can’t be avoided, how HR and managers handle this process is critical to maintaining a positive culture that helps employees improve their performance and behavior and continue to be assets in your organization.

Is all this effort around culture worth it? Absolutely! Not only does a positive culture help attract and retain good employees (poor culture is a leading cause of voluntary turnover), it also leads to better engagement, productivity, and a bottom line. Not surprisingly, companies with strong, attractive cultures, like those found on Fortune’s list of the best places to work, have stock performance that consistently outperforms other organizations.

Establishing and maintaining a desired culture in your organization won’t happen by accident or by wishful thinking. Neither will it happen overnight. It may take months or even years of consistent, focused effort to achieve your desired culture. However, achieving the right culture for your organization is not optional if your organization is to remain successful and competitive now and into the future. Fortunately, as an HR professional, you are perfectly positioned to provide the assistance and support your executive team needs to improve your organization’s culture!