Understanding the dynamics of Organisational Culture is crucial for any business aiming to thrive. Organisational Culture impacts how things are done within an organisation, helps define where employees find motivation, and shows your connection to your clients. Whether you are starting a new business or you are looking to make improvements to your current organisation, you might be wondering what is the best Organisational Culture to aim for. We regularly receive this question, so you are not alone. This article explores what constitutes the perfect Organisational Culture, how it varies according to your strategy, and how it can be achieved.
What Is Organisational Culture and Why it Matters
First, let’s outline what we are talking about and why it is important to your organisational success. The definition we use for Organisational Culture is the way in which people in an organisation relate to each other, their work and the outside world, in comparison with other organisations. You can read more about Organisational Culture (and how it differs from National Culture) here.
Your Organisational Culture shows how your organisation works: how things get done, the interactions between people, and employee relationships to their work and the outside world. Organisational Culture determines how and if you are reaching your goals or key performance indicators (KPIs), so, it's crucial to ensure that your way of working supports what you want to achieve, rather than hinders it. By shaping an Organisational Culture that fits your needs, you will be positioning the organisation to be able to reach these goals. However, finding the best Organisational Culture is not just about copying good industry practices or observing what others are doing. It requires that you take a hard look at how you can support your strategy through culture.
Let’s look at a quick example: the difference between two car manufactures. Recently, Tesla has been making waves with innovative advances in the world of cars. The company has an Organisational Culture oriented towards new technology and innovation, over, for instance, build quality. Alternatively, Jaguar has a history and reputation of premier build quality. If these two companies were to try and switch their Organisational Cultures, their ability to focus on these areas would undoubtedly change. Tesla would unlikely be able to be as innovative because it would be too focused on processes ensuring absolute build quality, and Jaguar would likely lose some of its recognition as a high build quality car company because it would be trying to continuously innovate also the processes that earned it its reputation. In these two cases we see how Organisational Culture supports the companies to achieve their respective end goals.
Key Elements of an Effective Organisational Culture
To create an effective Organisational Culture, it is essential to align it with your strategy. While there isn't a universal checklist for success, understanding the key elements that foster a positive culture is crucial. Each organisation must tailor its culture to support its unique strategy. This might involve emphasising various aspects such as:
- Promoting innovation
- Growing within your current market
- Following strict safety guidelines
- Being customer focused
- Aiming for a successful M&A
- Looking to reduce production costs
- Protecting confidential information
- Sustainability
- Employee focus
Once you have decided on your point of focus or interest, you have to direct your Organisational Culture according to your strategy to reach that goal. What that looks like in practice may differ drastically depending on many factors such as your industry, your size, and National Cultures differences. We will touch a bit more on some suggestions on how you can do it but at The Culture Factor Group (Previously known as Hofstede Insights) we’re specialised in supporting companies throughout this process. In our Organisational Culture Transformation Package, you can see how our methodology allows a data-driven approach to streamlining the experience.
One thing you should keep in mind from the very beginning, however, is that Organisational Culture is not static and will need to adapt and evolve along with your organisation. This means that you should expect that over time, as your strategy and needs develop, your Organisational Culture will change. You will have to review and repeat your Organisational Culture process to ensure that you are not continuing with a culture that used to fit your strategy but hinders where you want to go now.
Organisational Culture in Practice
Let’s look at another example: differences between a start-up and a bank. There are obviously a number of differences between start-ups and banks, ranging from the number of employees to the type of products and/or services offered, etc. But one of the most important ones is the Organisational Culture. While most start-ups aim to be innovative and agile as they are often still looking for their own niche within the market, the same is usually not an option for banks. Banks are required - both strategically, but also legally - to remain a lot more precise in their processes.
The stories of the startups skyrocketing to success have made words like ‘innovation’ or ‘agile’ big buzzwords of our era, but the truth is that few organisations want to be as innovative or agile as those startups. In fact, even those startups don’t want to remain as innovative and as agile if they become successful enough because it might not be sustainable if they will need to start to scale up rapidly.
Banks on the other hand need to follow rules meticulously for regulatory reasons. Compared to startups, they have very different obligations to the state and their stakeholders and need to follow very specific regulations. They simply cannot take a strictly innovative standpoint on their day-to-day business and processes. Of course, banks can be innovative too. While they would never be competing with the most innovative startups, they can be as innovative as their reality allows, and can be innovative compared to other banks.
Hopefully, with this example, you are beginning to see how what is the best Organisational Culture for most startups is probably different from the best Organisational Culture for banks. However, you would also find differences in strategy and, consequently, in Organisational Culture in two different types of banks or two different start-ups. No two organisations, no matter how similar, are the same. That is why we believe it is important to understand your Organisational Culture as it impacts your organisation’s ability to achieve your goals.
Your Best Organisational Culture
While this may seem complicated at first, here are five key steps that we suggest to better understand the process of finding the best Organisational Culture for your organisation.
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Define your strategy: Before you are able to align your Organisational Culture with your strategy, you have to clearly define what that strategy is.
- Understand your current Organisational Culture: Aim to get an impartial understanding of how your Organisational Culture is today. Try to get input for different areas of your organisation and establish an overall view of the situation.
- Identify areas of improvement: Once you have clearly defined your strategy and have an overview of your current Organisational Culture, you are ready to identify the gaps where improvements could be made.
- Create an action plan: With the whole picture in mind, you are now ready to create an action plan. In most cases you will have too many gaps to address at one time and that is why we suggest starting with the most beneficial/important ones to your organisation.
- Monitor the progress: In order to ensure consistent monitoring, we recommend creating what we call Culture Squads. This means tasking a group of people with driving and monitoring change. The Culture Factor Group provides training and mentoring for this as well.
- Reevaluate regularly: Consider evaluating and reevaluating your Organisational Culture on a regular basis in order to make sure you are continuously moving in the right direction. This also helps you to understand if the actions you are taking are having the desired impact on your Organisational Culture or if different actions could have more impact.
How Does The Culture Factor Group Do This?
Our objective is to make sure you reach your own goals, based on your own strategy. If you work with our team of experts, we follow our own advice given above. While it is on the management team to identify the strategy, we support the team through the entire process of clarifying and aligning strategy with the Organisational Culture.
For an impartial understanding of the current culture, we use our Organisational Culture Scan. This scan is based on six independent dimensions (read more about them here) and each of these dimensions help identify the gaps between where your organisation is and where it wants to be. Once the gaps have been determined, we can begin to evaluate which ones are most relevant to success.
We also support organisations to create an action plan based on the most critical issues they are facing. By training and supporting “Culture Squads”, The Culture Factor Group help you maintain and track progress. Finally, because our Scan is standardised, Organisational Culture can be measured when necessary and progress can be evaluated.
Editor's Note: This post was originally published in May 2018, rewritten in June 2021, and last updated in June 2024.
