- There is no single “right” corporate culture; every organization must create its own unique culture, based on its industry, size, mission, values and beliefs.
- Senior leaders in high-performance cultures emphasize the importance of providing employee training, creating a strong customer focus, fostering trust in senior leadership, and providing clear strategy and goals.
A strong corporate culture has been linked to a number of important positive business outcomes, from higher employee engagement, retention and productivity to improved financial performance.
The question is, what makes a corporate culture strong?
Leaders often look to the examples of well-known brands like Zappos, Southwest or Google to find answers. But what’s right for one company isn’t necessarily right for yours. In fact, the only “right” culture for your organization is the one you decide is right for your organization.
Of course, there are some qualities that make up a clearly bad corporate culture, no matter the industry or circumstances. If you’ve ever worked in a highly dysfunctional organization, you can probably list off the attributes pretty quickly: distrust, lack of strategy, widespread negativity, backstabbing, fear.
But aside from cultures that suffer from those kinds of crippling elements, any given culture is neither inherently good nor bad. The strength of an organization’s culture really has to be evaluated in relationship to the environment in which it competes. Let’s take a closer look at what that means.
The Context for Corporate Culture
In each company’s situation, there may be certain cultural elements that are well-suited to achieving success and others that aren’t. For example, many of those “great” corporate cultures we hear about all the time are praised for being highly innovative. And there are certainly many companies where a highly innovative culture would be desirable. But if you think about it, there are also plenty of companies where innovation is secondary to other, much more cultural elements.
Take, for instance, luxury hotel chain Ritz Carlton. Guests value the brand for its high service standards and luxurious but relatively traditional setting. While there must be some room for innovation, the central elements of their corporate culture must reflect a respect for those traditional high service standards. You can see this in their motto: “Ladies and Gentlemen serving Ladies and Gentlemen.”
Just as some cultures value flexibility and adaptability, others may require stability and predictability. An innovative culture that prioritizes a willingness to push the boundaries, take risks and fail isn’t necessarily appropriate for a business operating in a highly regulated environment.
You can’t evaluate whether you have the right culture without looking at it within the context of what it takes to succeed in your market and business environment. What’s more, “A strong culture can be a significant liability when it is misaligned with strategy,” note researchers Boris Groysberg, Jeremiah Lee, Jesse Price and J. Yo-Jud Cheng. In other words, a good culture that’s not the right culture for you could backfire.
That said, our research has shown that organizations with high-performing cultures do have a few common characteristics, regardless of other factors.
4 Signs of a High-Performing Corporate Culture
While every organization is unique, there are some specific actions that contribute to a high-performance corporate culture. The senior leaders of the “Culture Champion” companies in our recent study on How Senior Leaders Create Successful Workplace Cultures identified the following four critical areas of focus as “extremely important” for creating a high-performing corporate culture:
- Providing employee training: Training is essential for getting everyone aligned behind the core values, principles and behaviors you identify as central to your culture. Sixty-four percent of Culture Champion (CC) leaders in our study consider training to be extremely important, and 60% said they’re excellent in providing it.
- Creating a strong customer focus: The customer experience comes from more than just the front-line transaction; it’s a product of every action and decision that’s made throughout the business. In other words, it comes from the culture, which is why 62% of CC leaders place such a heavy emphasis on it, vs. 34% of all other leaders.
- Developing and maintaining trust in senior leadership: If senior leaders’ decisions and behaviors aren’t consistent with the espoused values, employees can quickly lose trust in them. It’s worth noting that while 62% of CC leaders say creating trust in senior leadership is extremely important, even many Culture Champion companies continue to struggle in this area. Just 38% say they do an excellent job of it — and only 18% of other companies claim that they do.
- Providing clear strategy and goals: When leaders clearly articulate desired business outcomes in the context of the culture that’s required to achieve that strategy, employees will have a guidepost for shifting their behaviors. CC leaders place a high value on strategy and goal clarity, with 57% saying it’s extremely important (vs. 34% of other leaders).
The Building Blocks of Your Culture
Whether you want it or not — and whether you consciously work to shape it or not — a culture develops in every organization. But to maintain a strong, healthy culture, leaders have to work at it. As senior leaders from our study’s Culture Champion companies revealed, creating and maintaining the desired corporate culture is an ongoing process. Particularly when leaders suspect that a part of their culture is no longer supportive of overcoming the challenges they face, they must act to improve it.
So, what’s the right culture for your organization? Only you can answer that question. But as you consider the characteristics or features that you would like to be part of your culture, think about how you can appropriately incorporate the four overarching areas our Culture Champions identified as extremely important contributors to a healthy culture. Together with the factors that serve your mission and objectives, they can provide a solid foundation for building a strong culture that works for your people, your business and your customers.