Corporate Culture

This section explains Corporate Culture covering, Strong and Weak Cultures, Classification of Company Cultures, How Corporate Culture is Formed and the  Difficulties in Changing an Established Culture.

Strong and Weak Cultures

Corporate culture refers to the shared values, beliefs, and practices that shape how employees within an organisation behave and interact with one another, as well as with customers, stakeholders, and the wider community. The strength of a corporate culture can significantly impact business decisions, employee motivation, and organisational performance. Cultures within companies can generally be classified as strong or weak, depending on how deeply ingrained and consistent the values and behaviours are within the organisation.

• Strong Corporate Culture: A strong culture is characterised by shared values and norms that are widely accepted by employees at all levels of the organisation. In such cultures, employees align their behaviour with the organisation’s mission and values, leading to high levels of commitment, trust, and teamwork. Strong cultures tend to foster a sense of belonging, loyalty, and consistency, which can improve organisational performance and support strategic goals.
• Weak Corporate Culture: In contrast, a weak culture is characterised by a lack of shared values and inconsistent behaviour across the organisation. Employees may not feel fully aligned with the company’s objectives or may be less committed to the organisation’s values. A weak culture can lead to confusion, inefficiency, and low employee morale, which may undermine business performance and decision-making.

Example: Companies like Google or Apple are often cited as examples of organisations with strong corporate cultures, where innovation, collaboration, and creativity are core values that shape the company's decisions and employee behaviours.

Example: A company that experiences frequent leadership changes, a high turnover rate, and inconsistent communication between departments may have a weak corporate culture, making it difficult for employees to work cohesively towards common goals.

Classification of Company Cultures

Organisations can have various types of corporate cultures, which can influence their strategic decisions, organisational structure, and employee engagement. One popular framework for classifying corporate cultures is based on four distinct types: power culture, role culture, task culture, and person culture.

Power Culture:

• A power culture is centralised around a dominant individual or small group of people at the top of the organisation. In such cultures, decision-making is highly concentrated, and authority is typically vested in one or a few key figures. These companies tend to be flexible and quick in their decision-making, but they can also become overly dependent on the leaders’ judgement and direction.

Example: A small start-up or family-owned business, where the owner makes all key decisions, may have a power culture. Similarly, companies like Amazon under Jeff Bezos's leadership also exhibited strong power-driven characteristics.

Role Culture:

• Role cultures are typically bureaucratic and formal, with clearly defined roles, responsibilities, and rules. These organisations rely on standardised procedures and policies to ensure smooth operations. Employees are expected to adhere to their specific roles and follow established protocols. While this type of culture provides stability and clarity, it can sometimes stifle creativity and flexibility.

Example: Large, established companies in industries such as banking or insurance, where employees follow strict procedures and hierarchy, often reflect a role culture.

Task Culture:

• A task culture focuses on achieving specific objectives or tasks, often through teamwork and collaboration. This culture values expertise and problem-solving, with the organisation's structure designed to facilitate collaboration on particular projects or challenges. Employees are empowered to contribute their knowledge and skills to meet the company’s goals, making it more adaptable and dynamic than role cultures.

Example: Consulting firms like McKinsey or Accenture often exhibit a task culture, where teams are formed around specific projects or client needs, and success is measured by the completion of specific tasks.

Person Culture:

• In a person culture, the primary focus is on individuals rather than the organisation itself. This type of culture is less common and tends to exist in professional or specialist environments where personal development is emphasised. Employees are seen as highly skilled professionals, and the organisation supports them in achieving their personal goals rather than enforcing strict organisational goals or structures.

Example: A legal practice or an architecture firm may reflect a person culture, where individual experts are given the autonomy to make decisions based on their expertise.

How Corporate Culture is Formed

Corporate culture is shaped by various factors, both internal and external, and evolves over time as the organisation grows and develops. The formation of corporate culture typically occurs through:

• Leadership and Management: The behaviour, values, and beliefs of senior leaders play a critical role in shaping the organisation's culture. Leaders set the tone for the culture by modelling the behaviours they want to see in others. This can include setting strategic goals, communicating the company’s vision, and reinforcing values through decision-making and daily interactions.
• Company History and Founding Values: The culture of an organisation can often be traced back to its founders and the principles they established when the company was first created. As the company grows, these founding values tend to become embedded in the organisation's identity and shape how employees interact with one another and approach their work.
• Employee Experiences and Socialisation: Employees themselves contribute to the development of corporate culture through their interactions, behaviours, and shared experiences. When new employees are hired, they go through a socialisation process where they learn about the company’s values, expectations, and ways of working, which further reinforces the existing culture.
• External Influences: The external environment, such as the industry in which the company operates, its market conditions, and the broader socio-cultural context, can also influence corporate culture. For instance, a company operating in a highly competitive industry may adopt a culture of innovation and risk-taking, whereas one in a more regulated industry may emphasise compliance and efficiency.

Difficulties in Changing an Established Culture

Changing an established corporate culture is a complex and challenging process that often requires significant effort and time. There are several reasons why changing culture can be difficult:

• Resistance to Change: Employees may be resistant to cultural change, particularly if they feel it threatens their established way of working or their sense of identity within the company. Long-established employees, in particular, may find it difficult to adapt to new values or behaviours that are not aligned with the previous culture.
• Lack of Leadership Commitment: Culture change must be driven from the top, with strong commitment from leadership. If senior leaders do not fully support or model the desired changes, it will be difficult to convince employees to embrace the new culture. Inconsistent messaging or lack of action can undermine efforts to change the culture.
• Deeply Embedded Norms: Corporate culture is often deeply embedded within the organisation’s routines, practices, and even physical spaces. These deeply ingrained behaviours and assumptions can be hard to alter, especially if they have been part of the organisation for many years.
• Misalignment with Organisational Strategy: Changing corporate culture may require realignment with the company’s overall strategy, goals, and business model. If the culture is too entrenched or misaligned with these objectives, the change effort may be ineffective or counterproductive.
• Time and Patience: Cultural transformation is not an overnight process. It often requires consistent effort, communication, and a long-term commitment to reshaping attitudes, values, and behaviours across the organisation. Quick fixes or superficial changes are unlikely to result in lasting cultural shifts.

Summary

Corporate culture plays a significant role in shaping business decisions and strategy. Strong cultures can drive performance, align employees with organisational goals, and promote a sense of belonging. In contrast, weak cultures can lead to confusion and disengagement. Understanding the different types of cultures—power, role, task, and person—helps businesses determine how their culture influences their operations and decision-making. Corporate culture is formed through leadership, history, employee experiences, and external influences, but changing an established culture is a complex process fraught with challenges, requiring time, commitment, and careful management.