Definition of corporate culture

What is corporate culture?

Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle external business transactions. Often the corporate culture is implicit, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires.

A company’s culture will be reflected in its dress code, hours of operation, office layout, benefits, revenue, hiring decisions, treatment of customers, customer satisfaction and all other aspects of operations.

Key points to remember

  • Corporate culture refers to the beliefs and behaviors that determine how employees and management of a company interact.
  • Corporate culture is also influenced by national cultures and traditions, economic trends, international trade, company size and products.
  • Corporate cultures, whether they are intentionally shaped or organically developed, go to the heart of a company’s ideology and practice and affect all aspects of a business.

Understand the corporate culture

Alphabet (GOOGL), the parent company of Google, is well known for its employee-friendly corporate culture. It explicitly defines itself as unconventional and offers benefits such as telecommuting, flexible hours, reimbursement of tuition fees, free lunches for employees and on-site doctors. At its headquarters in Mountain View, Calif., The company offers on-site services such as oil changes, car washes, massages, fitness classes, and a hairdresser. Its corporate culture has enabled it to regularly obtain a high ranking on Fortune magazine’s list of “100 best companies to work for. ”

History of corporate culture

Awareness of corporate or organizational culture in companies and other organizations such as universities emerged in the 1960s. The term corporate culture developed in the early 1980s and became widely known in the 1990s. Corporate culture was used during these times by managers, sociologists and other academics to describe the character of a business.

This included generalized beliefs and behaviors, company-wide value systems, management strategies, communication and employee relations, work environment and attitude. The corporate culture would continue to include the myths of the origin of the company via charismatic CEOs, as well as visual symbols such as logos and brands.

In 2015, the corporate culture was not only created by the founders, management and employees of a company, but was also influenced by national cultures and traditions, economic trends, international trade, the size of the company and the products.

There are a variety of terms that relate to businesses affected by multiple cultures, especially in the wake of globalization and increased international interaction in today’s business environment. As such, the term cross-culture refers to “the interaction of people from different backgrounds in the business world“; culture shock refers to the confusion or anxiety that people experience when doing business in a company other than their own; and reverse culture shock is often experienced by people who spend long stays abroad on business and find it difficult to readjust when they return.

To create positive intercultural experiences and facilitate a more cohesive and productive corporate culture, companies often dedicate in-depth resources, including specialized training, that enhance cross-cultural business interactions.

The current awareness of corporate culture is more acute than ever.

Examples of contemporary corporate cultures

Just as national cultures can influence and shape corporate culture, so can the management strategy of a business. In large 21st century companies, such as Google, Apple Inc. (AAPL) and Netflix Inc. (NFLX), less traditional management strategies such as promoting creativity, collective problem solving and greater freedom of employees were the norm and the thought. contribute to the success of their business.

Progressive policies such as full benefits and alternatives to hierarchical leadership – even removing closed offices and cubicles – are a trend that reflects a more tech-conscious modern generation. This trend marks a shift from aggressive, individualistic and high-risk corporate cultures like that of the former energy company Enron.

High-profile examples of alternative management strategies that significantly affect corporate culture include holacracy, which was used in a shoe company Zappos (AMZN) and agile management techniques applied to the music streaming company Spotify.

Holacracy is an open management philosophy that, among other traits, eliminates job titles and other traditional hierarchies. Employees have flexible roles and self-organization, and collaboration is highly valued. Zappos instituted this new program in 2014 and has taken up the challenge of transition with varying degrees of success and criticism.

In the same way, Spotify, a music streaming service, uses agile management principles as part of its unique corporate culture. Agile management, in essence, focuses on deliverables with a flexible trial and error strategy that often brings employees together in a startup environment approach to creatively tackle business issues.

Characteristics of successful corporate cultures

Corporate cultures, whether intentionally shaped or organically developed, reach the heart of a company’s ideology and practice and affect every aspect of a business, from every employee to the customer. by public image. The current awareness of corporate culture is more acute than ever.

The Harvard Business Journalw identified six important characteristics of a successful corporate culture in 2015. First and foremost the “vision”: From a simple mission statement to a corporate manifesto, a corporate vision is a powerful tool. For example, Google’s infamous modern slogan, “Don’t Be Evil” is a compelling business vision. Second, “values”, although they are a broad concept, embody the mindsets and perspectives necessary to realize a company’s vision.

Likewise, “practices” are the tangible, ethically-guided methods through which a company implements its values. For example, Netflix emphasizes the importance of high performing, knowledge-based employees and, as such, Netflix pays its employees at the top of the market salary scale, rather than following a philosophy access to the summit. . Next are “people”, with companies employing and recruiting in a way that reflects and enhances their overall culture.

Finally, “story” and “place” are perhaps the most modern features of corporate culture. Having a powerful narrative or origin story, like that of Steve Jobs and Apple, is important for growth and public image. The “place” of business, like the city of choice but also the design and architecture of offices, is one of the most avant-garde advents in contemporary corporate culture.

What is corporate culture?

The term “corporate culture” refers to the beliefs and practices associated with a particular company. For example, corporate culture can be reflected in the way a company hires and promotes its employees, or in its corporate mission statement. Some companies seek to be associated with a specific set of values, for example by defining themselves as an “innovative” or “environmentally conscious” organization.

What are some examples of corporate culture?

There are many examples of companies with well-defined corporate cultures. Alphabet Inc. (GOOGL), for example, is known for its employee-centric culture and focus on working in a creative and flexible environment, while Amazon (AMZN) is known for its relentless pursuit of customer service and operational efficiency. Often, national cultures will play a role in determining the type of corporate culture that prevails in society. For example, Japanese companies are known to have very different corporate cultures than American or European companies.

Why is corporate culture important?

Corporate culture is important because it can support important business goals. Employees, for example, can be attracted to companies whose culture they identify with, which in turn can foster employee retention and the acquisition of new talent. For innovation-driven companies, fostering a culture of innovation can be essential to maintaining a competitive advantage in patents or other forms of intellectual property. Likewise, corporate culture can also play a role in marketing the business to customers and to society as a whole, thus doubling as a form of public relations.

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