In the recent times, organisational culture has become a central point of discussion in the business and academic worlds. Schein defines the culture of an organisation as “… the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to these problems” (Schein, 1985). For academics, corporate culture acts as a link between macro and micro analysis between strategic management and the firm’s interests. On the other hand, it becomes a live experience for the business sector to understand the organisation in a less rational and descriptive way (Smircich, 1983). This essay will review how organisational culture affects organisations, scrutinising its positive and negative impacts on the company and its performance. Primary focus will be laid on the discussion of how an invigorating company culture becomes one of the determinants of an organisation’s success giving it a competitive edge over its rivals. Furthermore, it will also critically analyse the impact of corporate culture on a company’s performance with the use of certain cases to support the argument in favour of the need for a strong culture.
2. The Rise of Organisational Culture
Individuals from various ethnicities and cultural heritages with different personalities brought together by a common work environment were able to manifest themselves in a variety of ways in an organisation. Over time, a set of norms was established guiding the way to accept diversity and accomplish success and growth, giving rise to the concept of corporate culture (Sadri and Lees, 2001). This culture has become a focal point in studying organisations as they aim to orchestrate changes in a dynamic business environment in accordance with organisational goals. Attempts made to analyse and understand the superior performances of firms in the industry focus on the values and beliefs under which the firms’ organisational cultures operate and conduct business. For a firm to have competitive advantage derived from a strong organisational culture, it must act in accordance with strategies that deliver high sales and have qualities that are uncommon to a large chunk of other firms in order to attain superior financial performance. The culture must also be imperfectly imitable in order for other firms to not take advantage of their culture and duplicate their success (Barney, 1986). Academics and managers find the culture of an organisation important due to a number of reasons, emphases is laid on social control to influence the decision making process and behaviour put forth by the employees. It also works as a glue to combine highly-motivated employees together instilling a feeling of belongingness, it attracts new members of staff and helps retain high-achievers to offer a positive corporate experience. Additionally, a strong culture in an organisation helps assist in the ‘sense-making process’ through which employees are able to understand organisational aims and objectives and enhancing their efficiency and effectiveness (Shahzad et al., 2012). It acts as a driving force for enhancing the performance of an organisation and its employees, fostering innovation and superior financial performance with and efficient control of management. The strength of a culture also varies depending on the consensus on organisational norms by the employees and the intensity to which they are applied. It has often been noted that firms that have a higher cultural norm consensus and intensity perform better than firms that take time to adapt to cultures and showcase low consensus and intensity (Rees and Smith, 2014).
3. The Merits of a Positive Culture
A company with a positive culture reaps benefits as employees enjoy working in the organisation and the culture helps boost morale and create openness to new ideas and a higher achieving performance by teams. Employees are also more confident and willing to freely communicate with associates, fostering healthy working relations. Actual companies have been studied to showcase the positive effects of organisational culture, these include:
Google is one of the most admired companies around the world for its unique, highly energetic and fast paced work environment. It instills a culture of teamwork and creativity through breeding a lifestyle of innovative superiority. The company offers a wide range of benefits to ensure employee satisfaction. It offers healthcare and transportation services, and numerous leave days to its employees. At the offices, they are offered free gourmet meals and childcare facilities, etc. In order to maintain their culture, they also hired a designated Chief Culture Officer to ensure their constant focus on the core values of the company in a collaborative environment, actively changing their culture as it is crucial to their success. With the constant mergers and restructures in the corporate world, employees often feel unimportant however, Google has managed to create a company that attracts, motivates and retains efficient and highly-motivated employees and has been described as ‘one of the most most positive, influential, all-encompassing, productivity-inducing environments the world has ever seen’. All employees have a common goal- to promote innovation, they have the passion to flourish the company and hold their position as leaders in the online world contributing to the widely accredited success of Google as an organisation (Tsygankova, 2010).