The Importance of Company Culture

Corporate culture is not just an airy statement to appease stakeholders or lure potential employees to the fold. It matters, particularly in a competitive digitally driven market to have strong company culture in place.

The Importance of Company Culture

AT C-Level

93% of CEOs say it’s important their organisation has a strong corporate purpose that is mirrored in its values, culture and behaviours according to PwC’s 20th CEO Survey. However, at ground level, employees are more likely to have a keen sense of postive culture if these values and behaviours are reflected throughout the organisation. Kristi Riordan, COO at Flatiron School speaking to Silicon Republic notes that “a company’s culture is not just a list of words or a slogan, but rather the established norm of day-to-day behaviour exhibited throughout an organisation”.  She firmly agrees that for C-level executives who wish to get under the skin of their company’s culture, the best way is to “go to their employees first”.  She adds that “employees will articulate what the actual culture is, areas of strength and need for improvement, regardless of what is written on the wall”. Research agrees. A 2018 PWC Center Global Culture  found that 63% of C-suite and Board leaders believed their company culture was strong compared with just 41% of employees.  

It is key that in the C-suite, company-wide conversations with employees take place and that culture is nurtured from the top. After all, 65% of global respondents to the PWC Center Global Culture Survey cited ‘culture as more important to performance than an organization’s strategy or operating model’.  

Research from Deloitte’s insights centre puts the Chief Legal Officer (CLO) as the executive most able to steer company culture in a positive direction. Why? Thanks to a slew of recent corporate scandals, businesses are aware of the increasing need to reinforce a strong company culture that is also protective and mitigates risk. The CLO is experienced from their vantage point in the C-suite to strengthen positive culture while also drawing on their legal background to minimise reputational risks. This is particularly important in times of crisis. The CLO can develop a crisis contingency plan, while also accessing and honing the company’s code of conduct and making sure all employees have received training concerning their day to day expectations.

Bad Culture Bites 

Cultural conflicts within an organisation can lead to a toxic working environment but there is a silver lining through the fog. Jon Katzenbach, founder of the organizational culture Katzenbach Center, reasons that, “No culture is all good or all bad. Every culture has emotional energy within it that can be leveraged”. While Katzenbach is correct, executives still need to harness their leadership to examine and understand fully what negative cultural practices dominate within the enterprise. Negative culture can unravel employee engagement, affect performance and lead to negative branding and poor reputation which will undermine the enterprises competitive advantage.

McKinsey & Company regard company culture as vital because it is “something that enables a competitive advantage to sustain and grow over time”. Riordan agrees and argues that strong cultural conflicts “will lead to a virus” within organisations ill equipped to realise the extent of the problem.

So, how can executives alleviate negative company culture?  Leaders need to embody the values and behaviours they wish to underpin at work and work with employees to smooth and unravel core cultural issues. Forbes magazine recommend that organisations perform a culture audit to understand more clearly how to treat underlying problems and form a plan to treat these issues. There is no one company culture to adhere to or one specific solution to toxic company culture. However, there is a need for businesses to address these issues today in order to remain competitive in the future.

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