If you are a basketball fan, you must have read about the Chicago Bulls' struggles before Michael Jordan's arrival. The franchise could not win a single title in the history of the NBA. With Michael Jordan's arrival, it won multiple consecutive NBA titles. One of the biggest reasons for its success was the culture Jordan helped to establish at the franchise. This goes to show how much impact culture can have on the success of an organization. In this explanation, we discuss organizational culture definition and its impact on the fate of an organization.

Organizational Culture Definition Business

Human species have had culture from the start of civilization. It drives our social behaviors and helps us differentiate between good and bad. It also acts as a tool to distinguish us from others. There are many cultures in the world. These cultures help in forming distinct societies. For instance, using the left hand while eating is considered bad in some cultures; in others, there could be something else regarded as taboo. Undoubtedly, culture provides a set of values or patterns through which people conduct themselves.

When we talk about business organizations, it is crucial to address the organizational culture definition and the ways to establish a strong culture within an organization. The question is, what does it mean?

Organizational culture creates a distinct identity for an organization. It provides a framework for the actions and decisions of the employees. An organization with healthy culture tends to perform better than others. The reason is simple, it provides clarity to the employees in terms of expectations and ensures their actions conform to the organizational culture.

Fig. 1 - Netflix believes in people over process

Organizational Culture Definition and Characteristics

Organizational culture is a shared value and belief system that employees follow in an organization. There are six main characteristics of organizational culture that help define it.

1. Adaptability – It encourages innovation and flexibility within the organization. Employees should have leeway to bring new ideas to the table and work on projects that could contribute to the organization's success. The employees should be given the chance to experiment and add value to the organization.

2. People – It is about factoring in the effect of management's decisions on the employees and the customers. This is a vital characteristic to consider while developing the organizational culture. Employees and customers contribute directly to the success of an organization, and protecting their interests must be a priority.

3. Detail – It is about focusing on attention to detail in the organization. The organization must develop a culture in which employees take attention to detail seriously. It helps employees develop key skills such as analytical thinking and active listening.

4. Results – This characteristic concerns the management's focus on the results rather than the process. It is a culture where employees can use any method or technique they want as long as they complete the projects and tasks within the expected timeline.

5. Collaboration – It talks about the priority of management to create a collaborative work environment. An organization performs better when its teams can work well together. Employees should put the interests of the organization before their social interests.

6. Integrity – Concerns instilling ethical practices in the work environment. Every organization wants to perform optimally and achieve more, but it should not jeopardize its integrity.

Organizational Culture Definition Importance and Development

Organizational culture directly impacts all aspects of an organization. From employee performance to achieving the set objectives, it contributes to almost all aspects of an organization. An organization with healthy work culture could increase employee engagement. When there is clarity in terms of expectations and purpose, it means employees know their roles. This could motivate them to match those expectations resulting in increased productivity.

A healthy organizational culture fosters employee loyalty toward the organization. They understand that the organization appreciates their efforts and will support them whenever required. It means the employees feel valued and less likely to leave the organization.

Organizational culture could also promote harmony among team members. It is important to have teams working collaboratively on projects. It ensures that employees complete tasks on time and that no petty organizational politics are involved.

Now that we have discussed the importance of organizational culture let's shift our focus to how we can develop a culture within an organization.

In an organization, the top management is tasked with developing the culture. They identify the elements essential to the organization and incorporate them into the culture. However, an organization cannot create a culture in one day. It requires time and persistent efforts by management. To develop the culture, the founders/top managers set the tone, and then the behavioral norms that are consistent with the organizational culture develop over time. It is essential to recognize the importance of communication in the organization. It helps management improve the culture and sustain it in the workplace.

Parts of Organizational Culture

Developing an organizational culture requires time and planning. The management needs to identify the parts of organizational culture that are essential to them. These parts help them develop the culture and provide clarity to the employees in terms of expectations.

Leadership – Creating a healthy organizational culture starts with leadership. Leaders are the ones who set the tone for others to follow. It is the responsibility of leadership to identify the aspects of organizational culture that need to be improved. When there is good communication and respect between employees and the leadership, the organization prospers.

Community – Creating a community is an integral part of organizational culture. Employees must have a sense of belonging in the organization. They feel valued and take ownership of their actions when they feel part of a community.

Employee empowerment – It creates an environment where employees exercise their freedom to innovate. It gives them a feeling that the organization trusts their abilities and they can contribute to the success. Empowered employees take ownership of their decisions.

Values – Management needs to communicate the organizational values to the employees transparently. Employees must understand and identify with the values of the organization. It can help them live these values on a day-to-day basis.

Communication – Effective communication is key to developing a strong culture in an organization. It helps the leadership communicate the expectations of the employees. It also helps employees connect with leadership and suggest ways to improve the culture.

Fig. 3 - Employee empowerment is a key aspect of organizational culture

Types of Organizational Culture

There are four main types of organizational culture. The management weighs the pros and cons of each before selecting them. The selection depends on the organization's objectives and the kind of culture it wants to develop.

Clan culture – The basis of this type of culture is human affiliation. It is a culture where employees work collaboratively to achieve objectives. The focus is on establishing a culture where clear communication and teamwork are a priority. Employees tend to feel more valued and satisfied in such an environment. This culture is often seen in startups where employees can freely express themselves.

Adhocracy culture – The basis of this type of culture is innovation. The idea is to develop a culture where employees are encouraged to take risks, experiment, and innovate. The management instills traits such as attention to detail and autonomy in the employees. In an adhocracy culture, the objective is to innovate to achieve high-profit margins.

Market culture – The basis of this type of culture is an achievement. Employees are expected to shine in their respective roles to help the organization grow. The organization focuses on maximizing profits and evaluating employees on their productivity. In such a culture, the management focuses on results rather than processes.

Hierarchy culture – The basis of hierarchy culture is stability. The management focuses on developing a structure where each employee knows their role. In this type of culture, there is top, middle, and bottom-tier management. The communication flow is vertical, and employees are expected to follow the rules.

Ethical & Adaptive Organizational Culture

In ethical organizational culture, the management and employees are expected to uphold honesty and integrity in the workplace. It focuses on how things are done and the purpose of business decisions. Management considers the impact of business decisions and practices on employees, customers, and the external environment. Top management needs to lead by example because it will urge employees to follow suit.

In adaptive organizational culture, employees are allowed to innovate and experiment. It allows them to bring new ideas/approaches to the table. It enables the workforce to adapt according to different circumstances. In such a culture, the employees can deal with internal and external pressures effectively.