What is Organizational Culture?
In this article, we will explain the steps to creating organizational culture and we’ll walk you through how category design can help you identify and frame the key component of your corporate culture in the first place.
Often referred to as company culture or corporate culture, organizational culture does not have one singular definition, though Wikipedia makes an attempt. (Note: it’s a terribly dry read.)
A simple way to think about organizational culture is as the collection of rituals and values that bond the members of an organization. It’s closely linked to purpose, which is the reason your organization exists. Culture is the glue that keeps your employees or team members pulling in the same direction, especially when faced with curve balls or challenges. Culture impacts why employees want to get up and go to work in the morning. And why someone might want to join your company in the first place.
Components of Organizational Culture
You can break down the components of organizational culture roughly into these three parts:
1. Incentives
You, the leadership team, can directly influence the culture in your organization by incentivizing or disincentivizing certain behavior. These include things like
financial rewards, such as salaries and bonuses
non-monetary rewards like recognition (awards), status (titles), and promotions
sanctions, for example, when policies are not followed or targets are not met
2. Leadership Behavior
The way you and your fellow executives behave is absolutely critical. You’re setting examples every day in the way you carry yourself, the way you interact with those around you, the way you speak, and yes, even the way you dress. All of these add up to form a whole.
But perhaps the most important aspect of leadership behavior as it influences company culture is how you hold yourself, and each other, accountable.
Whatever you do and how you do it rubs off on the rest of the organization. If you cut corners, so will your employees. On the flip side, if you own your mistakes, so will they. (We suggest you aim to lead by example.)
3. Shared Values
A shared understanding of the values that drive us, the things we agree on and that motivate us is essential to establishing or shaping organizational culture. In other words, culture is a manifestation of meaning.
It helps to write down these values, and many companies attempt to do that with their Vision/Mission statements. Unfortunately, most of them suck! (This is not your fault; this is difficult to distill.) They’re usually full of empty words and meaningless corporate speak. If people can’t get excited while reading them, can’t look at them and think “yes, that!” then these mission statements do not serve their purpose of articulating the shared “why” of an organization.
As humans, once we understand and agree on these shared values we shape our behavior accordingly, and we also show new team members the ropes. Agreement and consistent behavior create culture.
Adding it all up
So here’s the basic formula:
shared values + leadership behavior + incentives = culture
Pretty straightforward, right?
Why Organizational Culture matters
Culture matters because it helps your employees pull in the same direction when faced with unexpected challenges or day-to-day, in-the-moment choices.
That’s because strategy is prescriptive (and tactics even more so), whereas culture gives you a blueprint for what “doing the right thing” means in your organization. This allows your team members to execute successfully even when no prescriptive steps exist. It gives them a framework for creative problem-solving within the shared values and in support of the purpose of the organization.
(That’s why “culture eats strategy for breakfast,” as the well-known management consultant Peter Drucker once said.)
How Category Design helps your Culture
Forward Momentum uses category creation to turn our clients into market leaders, sometimes at launch and often during a rebrand or pivot. One component of category design is the understanding and articulation of organizational culture in their Point of View (POV).
When we go into an organization we begin with fact-finding interviews and those learnings inform our later workshops and discussions. But along the way we always craft an organization’s POV. It’s a document that outlines all the shared values, motivations, and the goals that motivate the client, its leaders and the team members.
We even go a step further and paint a picture of how we envision the world in success, when our client’s product is used by its customers and improving their lives or work.
It’s a highly interactive process with a few rounds of revisions to get it just right – but it’s without fail one of the things our clients end up loving the most about working with us (aside from the commercial results, of course).
POVs can even form the basis of fundamental whole-company strategy reviews.
It also helps with hiring and retention: a well-crafted POV not only contains the shared values that form the basis for an organization’s culture but it also gives a hopeful vision of the future. In short, it articulates why a current employee wants to get up and go to work in the morning. Why the things they do at work matter. And why a prospective employee might want to join this company in the first place.
Want to talk?
We’d love to discuss your challenges and see if parts of our framework can help you solve your current challenges around organizational culture. We won’t waste your time (promised!) so let’s find out if we are the right fit!
