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Understanding Organizational Culture and its Benefits

By University Alliance
Understanding Organizational Culture and its Benefits

Organizational culture can be defined as the culmination of values, visions, language, behaviors and beliefs that make up an entity’s unique operating environment. Although the personality of a business may be difficult to articulate, it can have a huge impact on how members of an organization deal with each other, customers and other stakeholders.

In a 2010 presentation to the International Atomic Energy Agency, Canadian consultants Kenneth Desson and Joseph Clouthier noted that having the appropriate organizational culture “is widely acknowledged to be among the most important determinants of how effective or successful the organization will be.”

They wrote that organizational culture can determine, among other things: how effectively and quickly tasks can be performed; how receptive a company is to change; and how employees interact with each other.

“In short, an organization’s culture can be supportive of – or hinder – the implementation of new initiatives and the achievement of its overall goals,” Desson and Clouthier noted.

For example, Google is often credited with nurturing a workplace environment designed to encourage creativity and loyalty, and the search engine company’s undoubted success is seen as providing evidence to the importance of organizational culture.

Google’s well-known motto of “Don’t Be Evil” sets the stage for the company’s policies and decisions. “Trust and mutual respect among employees and users are the foundation of our success, and they are something we need to earn every day,” states the Google Code of Conduct.

In addition, Google’s executives have promoted a culture of innovation through a process known as the 70/20/10 Model. Essentially, that philosophy calls for employees to dedicate 70% of their time to fundamental job tasks, 20% to core-related projects and 10% to new initiatives.

Strengthening Organizational Culture

Of course, not every company is destined to dominate its arena as Google has done in the search engine industry. Still, any business likely can benefit from attaining an understanding of the various aspects of organizational culture.

In unhealthy organizational cultures, a shared standard of excellence may be absent, leading employees to focus solely on personal goals rather than business goals. For example, a pervasive culture of greed was among the primary reasons cited for the well-documented collapse of Enron.

Cultures can be bolstered and they also can be transformed. Such measures typically require a comprehensive assessment and understanding of an organization’s current strengths and weaknesses, including corporate values and behavioral norms.

Additionally, effective cultural transformation requires leaders to create buy-in among all stakeholders and nurture enthusiasm for change that may push employees beyond their comfort level.

An August 2012 article in the Harvard Business Review (HBR) pointed to the example of health insurer Aetna, which had faced financial losses and turbulence in its leadership ranks. The company’s organizational culture took much of the blame for creating a workforce that accepted mediocre performance and avoided risk.

The appointment of a new chief executive in 2000 marked the beginning of a cultural change at Aetna, the HBR article noted. Senior managers met with frontline employees and involved them in the planning process, while also tapping into employees’ pride in the company.

Organizational culture is a vital aspect of any successful business or organization. A positive culture can help attract and retain loyal and committed employees, which, in turn, can strengthen relationships with customers and other partners. Just like any other asset, organizational culture must be monitored and nurtured to ensure that it reflects the organization and its vision.

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