What Makes a Strong Organizational Culture?

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‘An organization’s culture must evolve in the next five years for their company to succeed, grow, and retain the best people.’ That’s what 80% of people said in an eye-opening 2018 study from Deloitte. Culture no longer fits in the confines of token birthday cakes and team outings. Culture today is an integral part of corporate strategy and has been shapeshifting over the years to include multiple meanings.

So, what does culture mean exactly?

According to Richard Perrin, Partner, Head of Advisory, KPMG Moldova, “Organizational culture is the sum of values and rituals which serve as ‘glue’ to integrate the members of the organization.”

In today’s increasingly dynamic job market, this need to integrate members has become more urgent than ever. There has also been a tectonic change in how candidates, especially millennials, look for a job. In addition to the normal parameters of pay scales and benefits, job seekers today evaluate organizations for the best fit. While you may be looking for the people who best fit your company’s culture, they are trying to find whether your company is the best fit for them.

And how can you be that organization? The one that everyone would be excited to work for? In my 20 years of experience working in across multiple industries, I have seen that there are a host of factors that go into the making of a culturally strong organization. I am attempting to describe a few top of the list here.

Establishing clear values

When terrorists took over the Taj Hotel in Mumbai on that fateful evening in November 2008, it immediately made headlines the world over. But as the harrowing attack was being brought under control, another piece of news grabbed the world’s attention. Of how various employees showed exemplary behaviour by risking their lives to save the lives of several guests and helping them escape. They had clearly acted on their own imbibing the core values of the Tata Group, which are hospitality and service.

Laying down well-defined values gives employees watchwords to belong to. It inspires them, mobilizes them, and creates a sense of involvement, making them feel part of the organization be it internal engagements or business relations.

The IKEA effect

Participation and involvement is one of the crucial ingredients of a strong organizational culture and can be illustrated by the IKEA effect. The concept, described as part of consumer psychology, is quite simple. When a person is involved in building even a part of a product, they are immediately filled with a sense of pride and tend to assign a greater value to the end result. Similarly, in an organization, employees feels more motivated and experience higher job satisfaction when they feel that their participation is crucial to the company’s success.

A 2017 study from Bain & Company across 400 companies who had successfully achieved their goals for transformation rated engagement and participation as the top factor. The ability to effectively engage all the employees as one towards achieving the company’s goals was rated more than 50% higher than even competitive strategies. Among the participants, four out of five agreed that “today’s business leaders must trust and empower people, not command and control them.”

For any transformative program to succeed in the workplace, it needs to function as a unified whole with employees being the engine. As Antoine De Saint-Exupery, said in The Little Prince, “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”

Driving entrepreneurship

In other words, employees feel empowered with the autonomy they have been given, and this fosters entrepreneurship. “Self-organization enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do,” says Jon Wolske, former Culture Evangelist and Insights Manager at Zappos, in an E&Y article.

Indeed, after Zappos CEO, Tony Hsieh, introduced holacracy, a system of decentralization and self-management, in 2013, the company announced sales in excess of US$ 2 billion by the end of 2015. Interesting, right?

Organizations across sectors have been attempting to create and assign P&Ls two to three levels below the CEO and empowering them with financial decisions. This helps mid-level managers understand the linkage of their decisions to the top and bottom line a lot more clearly, thereby driving real entrepreneurial behaviour at each level.

A rewarding culture

Not only is individual entrepreneurship a crucial part of a robust organizational culture but also one that is bound to create palpable impact. As a Salesforce 2017 report pointed out, employees who felt their voices were heard were 4.6 times more likely to put in their best effort.

But embedding transformation at all levels in the organization also calls for follow-through; an acknowledgment of the employees’ dedication.

After all, who doesn’t want recognition for a job well done?

A good recognition program is one of the key ingredients for a balanced culture. In a Globoforce report, 85% of HR managers surveyed said that employee recognition and reward programs are an important part of organizational culture and boots engagement. It does go a long way in humanizing employee experience at the workplace, which in turn increases retention and productivity.

Designing a reward and recognition program that goes beyond rewarding performance and includes aspects like recognising desired behaviours (and thus strengthening desired culture at workplace), celebrating life events, and rewarding new business ideas have an extremely positive impact on employee morale.

A diverse culture

But there is another reward that you can give your employee, which is crucial to establishing a harmonious work culture. Recognizing their identity, background, and individuality.

The recognition of diversity is a key factor in assessing the robustness of an organization’s culture. It is also inexorably linked to the performance, profitability, and effectiveness of an organization.

Qantas Airlines CEO Alan Joyce can vouch for that. In 2017, the airline registered its second-highest profits ever, and Joyce attributed their success to a very diverse environment and a very inclusive culture,’ as he told The Australian Business Review.

And how do you define that inclusion? A truly robust diversity and inclusion initiative is all-encompassing. The Nukkad Teafe in Raipur gained popularity and has excellent customer retention for not just its food but also because it employs hearing and speech impaired staff. In Wipro’s sprawling campuses, Braille signages, wheelchair ramps, and voice-activated elevators well and truly embrace and include the differentially abled into the organization.

This year, L’Oréal USA was one of the companies that achieved a perfect 100% score on the Human Rights Campaign Foundation’s annual Corporate Equality Index, which ranks US companies for their efforts to include the LGBTQ community. The company is proud of its partner benefits programs, awareness and accountability programs, and other initiatives that drive its mission of ‘Beauty for All.’

A Manpower report that came out in 2015 shows that 59% of corporate leaders believe that one of the most powerful changes that an organization can bring about is a gender-neutral culture. And it can be achieved only by getting past what Manpower calls an ‘entrenched male culture,’ and consciously including all genders and sexual orientations across all levels, diversity in leadership, and recognizing different needs. And that, I strongly believe, is a potent ingredient in making a culture rich and vibrant.

Infrastructure that supports culture

However, even the most lovingly built cultures can begin to unravel if an equally carefully designed physical infrastructure does not support it. Workplace design is crucial in effectively maintaining the company’s culture as it has been shown to have an impact on employee wellbeing and engagement.

Again, it comes down to having autonomy. A 2016 global study by Steelcase noted that 88% of employees who had more control over their workspace with the flexibility to choose where and how they worked along with accompanying equipment like good lighting were highly engaged and productive.

An open office plan, for example, promotes transparency and encourages a healthy and collaborative culture. It is more welcoming, immediate, and fosters a sense of community. Offices these days are following the No cabins, No doors culture which along with beautifully designed collaborative spaces enable employees to be more interactive and approachable.

However, an open office plan does not suit all types of businesses, and one needs to choose wisely. Perhaps, designing some areas in the open office model while retaining privacy in others might work better. Ultimately, the key is to leverage office space to the maximum in building a resilient workplace, which is in effect, the core of a strong organizational culture.

Building culture that’s unique to one’s company is tricky and requires investment of thought and leadership time more than any other resource. There is no perfect recipe, but there are tried and tested ones. One needs to keep working on it, keeping room for culture to evolve positively given that changes in economy, competitive landscape or organization’s business strategy itself may warrant a change in some if not all aspects of the culture.