What Is Corporate Culture?

Even with great products and strong management, a company cannot be successful without an effective company culture.

Company culture influences all aspects of employee behavior, from C-suite executives down to the regular staff.

A poor company culture results in disengaged employees and high turnover, while a strong one unites all individuals under shared values and goals.

In this article, we’ll explain precisely what company culture means and its common types. We’ll also discuss the benefits of building a cohesive culture in your organization, as well as how to do so.

Key Takeaways:

• Corporate culture is a company’s shared values, attitudes, and policies that characterize an organization’s behavior.

• Corporate culture is shaped by communication styles, leadership behavior, and celebrations.

• There are 4 types of corporate cultures: hierarchy, market, clan/family, and ad-hoc.

• There are 4 types of communication styles in corporate culture: analytical, intuitive, functional, and personal.

• A positive corporate culture leads to better retention and higher productivity.

What Does Corporate Culture Mean?

Corporate culture, also known as company culture, refers to the shared values, attitudes, and policies that characterize an organization internally. This is usually built over time through hiring decisions rather than defined by a central source.

Corporate culture manifests itself in a company’s channels of communication, hierarchy, staffing, and brand. It also affects the quality of the goods or services a company provides. Due to this, it is extremely important for a company to consider its culture because a healthy culture leads to greater success, while a toxic culture harms a company’s future.

The 4 Types of Corporate Culture

Generally speaking, there are four types of corporate culture:

1. Hierarchy culture. This is a culture that has great respect for authority and process. Much of what is done revolves around structure, planning, and achieving risk-free results with low mistakes.

2. Market culture. This culture is about getting the best results possible and defines it success by market penetration and rising stock prices. It is a culture that values winning and being a leader in its industry.

3. Clan or family culture. This is a culture that focuses on the relationships of its employees and clients. Participation and collaboration are highly valued. Success in a clan business culture is defined by the strength and growth of its relationships.

4. Ad-hoc culture. This is a culture that values risk taking, innovation, and creativity. It can seem chaotic, but an ad-hoc culture works towards growth through its ability to be adaptable. There is a greater focus on being at the forefront of new products and services.

What Shapes Corporate Culture?

You can identify an organization’s culture through key elements such as:

1. Leadership behavior. Leaders set the standard for how all other individuals in any organization should act.

   Honest, transparent leaders result in workers that are more responsive and easy to work with in kind.

   Leaders that don’t respect their co-workers lead to employees that disparage their supervisors amongst each other and view their employment as nothing more than a paycheck or stepping stone towards their next job.

2. Communication style. Communication style refers to how individuals in an organization seek to inform and influence their colleagues’ decisions.

   This is mostly determined by leadership positions in a company, as those are the individuals for whom others try to adapt their communication styles in order to persuade or inform.

   An analytical and purely statistics-based communication style may be effective at one firm, but perhaps less so at another with management that prefers a certain flair or level of creativity during presentations.

3. Internally distributed messages. This is how a company communicates and distributes information with its workers, including what is the expected tone for emails and what technology is used.

4. Corporate celebrations. Observing what an organization celebrates is an excellent way to see what it values.

   If you’re aware of any companies with a “bad company culture,” you likely gained that perception by hearing the experiences of former employees.

   A common type of complaint you might hear about a company is that it overworks its workers and then throws celebrations over record quarterly earnings, which most employees probably don’t care about and feel is irrelevant.

   The celebration essentially becomes a statement about how the company doesn’t care about the attendees of the celebration, creating a company culture that results in employee dissatisfaction and high turnover.

   In contrast, some companies encourage teams to celebrate milestones in their members’ lives, such as weddings and accomplishments.

   These types of celebrations increase employee engagement and performance at work. They also improve the reputation of the company’s culture and help attract top talent.

Corporate Culture: Communication Style

Within corporate cultures, there are four main communication styles:

1. Analytical. Analytical communicators cite data to back up their arguments and make their points very quickly and clearly.

   This communication style is most frequent among upper management, as their decisions have larger consequences and must be informed by real data.

2. Intuitive. Intuitive communicators use a broader, big-picture approach when conveying their point.

   These individuals prefer presentations with visual examples, such as charts and diagrams.

   When working with intuitive communicators, it’s essential to get to the heart of the subject before diving too deep into the details.

3. Functional. Functional communicators are the opposite of intuitive ones.

   These individuals focus less on the big picture, at least at first, and prefer to hear about all the details, timelines, and processes from the very start.

   They’re often sticklers for context and will raise their finger for more clarification before you move onto your next point.

   If you’re presenting for a functional communicator, make sure you’ve prepared thoroughly and have answers for any questions they could possibly ask.

4. Personal communication. Personal communicators place greater value on connection and emotion when making decisions.

   This communication style is most common between employees and their immediate supervisors.

   Your direct boss doesn’t always need you to prove the viability of a solution with a presentation and mountains of data.

   They’ve observed your prior success and integrity and will trust your judgment for most tasks.

It is important to note that a company may incorporate one particular style, however it is also possible to use a combination of them. Usually this depends on the size and structure of the company.

Corporate Culture: Internal Messaging

How a company communicates information to its workers is important to defining its culture. This is the result of two factors:

1. Communication tools. This refers to software that companies use to host team communication, as well as the physical work environment.

   An organization’s choice of communication software can affect its culture in significant ways.

   For example, Slack allows employees to create new channels and communicate through emojis and GIFs.

   Whatever the company’s culture was like before using Slack, it tends to become more casual and open after the switch.

   How offices are physically arranged also impacts work culture.

   Open floor plans are becoming increasingly common, especially among start-up companies.

   This work environment isn’t perfect and comes with its downsides, but it does tend to increase interaction and socializing between employees compared with traditional cubicle-based offices.

2. Formality. Some company cultures require professional language, tone, and customs even between immediate team members.

   Other organizations are much more casual in the regular interactions between staff.

   It should be noted that a more casual culture isn’t necessarily “better” than a more formal one.

   Individual employees have their own preferences for which environments they would rather work in.

   A safe bet for your own company is to not stray too far from whatever level of formality is typical inside your industry, as to not catch new employees off-guard.

   Many small businesses create a more casual work culture so that employees adopt a “we’re all family” mindset. It helps to improve their emotional investment in the company’s success.

Benefits of Building a Strong Company Culture

As the concept of company culture describes everything from the work environment to how co-workers communicate with each other, it should be obvious that building an effective culture is critical for any organization that wishes to be successful.

The key benefits of improving your company’s culture include:

• Higher employee retention. The cost of losing an employee varies, depending on their role, from 16% to 213% of their salary. This is due to the cost of training new employees, as well as disruptions caused by workers leaving.

  Creating a more engaging and positive corporate-culture for your staff directly helps to lower this cost.

• Attract better talent. According to a survey conducted by CNBC, 56% of workers consider a strong company culture to be even more important than a competitive salary.

  Company culture is likely even more important for top performers, as those types of workers tend to prioritize making valuable industry connections and being in environments that help them improve their skills.

  It’s also the top factor that interns consider when deciding whether to seek permanent employment after college.

  If you create a great company culture, you’ll notice high-quality candidates showing up to interviews.

• Brand reputation. Consumers are becoming increasingly mindful about how companies treat their workers and communities.

  It’s very easy for dissatisfied employees to spread damaging rumors online about your company. Conversely, if you create a welcoming working environment, people will hear about it, and your sales will improve.

• Greater productivity. A strong company culture increases worker productivity in several ways:

  • Happier, more driven employees.

  • Higher attendance and fewer sick days taken.

  • More open and collaborative communication.

• Better decision-making. An effective company culture also improves the performance of your managers.

  Creating a culture with a well-defined mission and corporate values makes it easier for leaders in your organization to find answers to their questions.

  As a result, their decisions will be more aligned with your company’s goals and increase its chances for success.

Tips for Building an Effective Company Culture

If there were a single one-size-fits-all strategy for building an effective company culture, there wouldn’t be hundreds of books out there all touting their own miracle method for doing so.

However, that doesn’t mean there aren’t any key tips or guidelines to help you along as you attempt to improve your organization’s culture.

Here are some of the most important ones:

• Clearly define your organization’s mission and values. Any particular type of company culture isn’t always better than another. It all depends on whether that culture helps your organization achieve its ends.

  Defining your company’s mission and core values not only helps you pick the right direction to guide its culture, but helps other leaders and decision-makers do so as well.

• Break down the elements. As company culture can be a nebulous topic, it’s much easier to change it by focusing on its more concrete elements, such as leadership behavior, physical work environment, and communication style.

  Focus on one element at a time and research strategies to influence it in a way that aligns with your company’s goals.

  For example, evaluate the merits of using an open floor plan versus other office arrangements. Think about the different effects and whether they’re conducive to the particular way that your company conducts business.

• Lead by example. The best way to influence behavior inside an organization is almost always to take a top-down approach.

  Managers should always exemplify the type of behavior expected from employees.

  No matter what policies you create to influence workers’ behaviors, they won’t follow along if leadership isn’t held to the same rules.

• Learn and adjust. Improving your organization’s culture is an iterative process rather than one you can expect to perfect immediately.

  Examine what types of policies, management styles, and other decisions achieved the effects that you hoped for.

  Research what other successful leaders in your industry are doing and continuously try to improve your methods.

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.