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Corporate Culture: What it Is and What Makes a Good One | Fairygodboss
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Corporate Culture
Is Your Corporate Culture Healthy? How to Tell (And How to Fix It)
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AnnaMarie Houlis,
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Journalist & travel blogger

Corporate culture can make or break employee experiences. While a good corporate culture could be a primary reason why a company does well both attracting and retaining talent, poor company culture could be a primary reason why a company has trouble doing just that.

Employees who enjoy the corporate culture perform better, are more productive, have a higher morale and overall more satisfied with their work-life balance than employees who work in toxic work environments. 

But what exactly is corporate culture, what are the different types of company cultures, and how do you ensure that you create an enticing company culture?

What is corporate culture?

Corporate culture refers to "the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions," according to Investopedia. "Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires."

Corporate culture can make a serious impact on employee satisfaction. It can also seriously impact how well a business does in the long run, since people and how they work together all matters.

So just how important is corporate culture, exactly? According to the data from the University of Southern California and the University of Minnesota: ”Corporate culture is, above all else, the most important factor in driving innovation.”

Moreover, according to James L. Heskett, culture “can account for 20 to 30 percent of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.”

What is the history of the phrase "corporate culture?"

The history of the phrase "corporate culture" is relatively recent. 

"The concept of corporate culture emerged as a consciously cultivated reality in the 1960s along-side related developments like the social responsibility movement — itself the consequence of environmentalism, consumerism and public hostility to multinationals," according to Inc's encyclopedia. "Awareness of corporate culture was undoubtedly also a consequence of growth, not least expansion overseas — where corporations found themselves competing in other national cultures."

The U.S. competition with Japan, which boasted a unique corporate culture, for example, was an influence. As was the rising prominence of management gurus and their growing awareness of themselves as "actors on the social scene," according to Inc. Corporate culture quickly became an important aspect of a business to both keep an eye of and to evaluate — just like more tangible measures such as "assets, revenues, profits and shareholder return."

What are 5 types of corporate culture?

Corporate culture is certainly different from startup culture. Startup culture tends to bend the corporate "rules" and shake up expectations of the workplace. Startups are forgoing "traditionalist" office norms (think: no more cubicles or structured work hours, valuing the what of results over the how of results, etc.).

But beyond that, there are certainly different types of corporate culture, in and of itself, too.

Here are five types of corporate culture.

1. Team-First Corporate Culture

Companies that boast a team-first corporate culture are ones that hire new talent based on how well they fit into the company culture first and foremost. In other words, their skills and their experiences come second to how well they'll fit into the culture. 

Likewise, they focus on their team members' happiness, so they're dedicated to employee feedback reviews, team outings and other ways of building team togetherness.

2. Conventional Corporate Culture

Conventional corporate culture refers to "traditionalist" culture. These companies tend to have very clearly defined hierarchies. These companies tend to value results, profits and authority above all else.

3. Horizontal Corporate Culture

Many startups are good examples of horizontal corporate culture. That's because these companies usually take a more collaborative approach to structure — an approach in which titles are less important and everyone pitches in. These cultures tend to be more flexible and receptive to feedback, and, of course, work better for small companies.

4. Elite Corporate Culture

Companies with elite cultures often set out to make a substantial change in the world. They do this by hiring only the best of the best in order to push the envelope. They look for people who not only fit the bill and meet their requirements, but who also add something new to the table and can lead and think in innovative ways.

5. Progressive Corporate Culture

Progressive corporate culture has polarizing pros and cons.

"Mergers, acquisitions or sudden changes in the market can all contribute to a progressive culture," according to the Enplug blog. "Uncertainty is the definitive trait of a progressive culture, because employees often don’t know what to expect next (see almost every newspaper or magazine ever). 'Customers' are often separate from the company’s audience, because these companies usually have investors or advertisers to answer to. But it’s not all doom and gloom. A major transition can also be a great chance to get clear on the company’s shifted goals or mission and answer employees’ most pressing questions."

What are 15 components of corporate culture?

There are major components of corporate culture. A company's culture is often reflected in the following ways:

  1. Dress code
  2. Business hours
  3. Office setup
  4. Organizational structure
  5. Employee benefits
  6. Organization goals
  7. Turnover rates
  8. Retentions rates
  9. Hiring decisions
  10. Treatment of clients
  11. Client satisfaction
  12. Approaches to labor
  13. Treatment of investors
  14. Treatment of customers
  15. Attention to social causes, responsibilities and obligations
  16. Values

The Harvard Business Review also says that vision starts what makes a great company culture.

"A great culture starts with a vision or mission statement" according to the researchers. "These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers and other stakeholders. Nonprofits often excel at having compelling, simple vision statements. The Alzheimer’s Association, for example, is dedicated to 'a world without Alzheimer’s.' And Oxfam envisions 'a just world without poverty.' A vision statement is a simple but foundational element of culture."

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AnnaMarie Houlis is a feminist, a freelance journalist and an adventure aficionado with an affinity for impulsive solo travel. She spends her days writing about women’s empowerment from around the world. You can follow her work on her blog, HerReport.org, and follow her journeys on Instagram @her_report, Twitter @herreportand Facebook.

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