What Is Organizational Culture and Why Does It Matter?

What is organizational culture?

Simply put, organizational culture is the set of beliefs that defines the way people in an organization behave. More specifically, organizational culture consists of a strongly held and widely shared set of values that are reinforced and communicated throughout the organization and ultimately shape employee perceptions and actions. It informs and influences how they solve problems, treat customers, approach tasks, and understand their individual roles within the organization.


Why does organizational culture matter?

A strong, reinforced organizational culture is the one factor that all successful organizations have in common. These companies all have passionate leaders that are clear about their values and how those values in turn define the way things are done within their organizations. This commonality is no coincidence either. There have been many studies that indicate and emphasize the widespread benefits of establishing and enforcing a strong organizational culture. These benefits include enhanced trust and cooperation, more effective decision-making, higher rates of retention, elevated productivity, and establishing a stronger brand identity—all of which indirectly influence a company’s profitability. Conversely, having a weak organizational culture can hurt an organization in terms of lack of engagement, low productivity, high turnover, etc., and severely hurt a company’s bottom line.


How do you create a strong organizational culture?

 First, it’s important to note that creating a strong organizational culture will not happen overnight. Setting the foundation for your organization’s culture begins with a gradual shift in behaviors. If you change behaviors, then mindsets will follow.

If you are unsure about where to start, it can be helpful to begin by defining your organization’s Core Values and articulating a clear strategic vision. “Value Blueprinting” can be a useful exercise to run through with your organization’s top leadership to clearly define the values that will serve as the cultural cornerstones for your organization for years to come.


How do you reinforce organizational culture?

Organizational culture can manifest itself in a variety of ways, from how your CEO articulates strategic objectives to how your managers communicate with their direct reports. In any case, it must ultimately start with company leadership. For all members of your organization to get on board with your company’s cultural reset, the change needs to be modeled at the highest levels of the organization.

There are also plenty of concrete ways to model organizational culture. The most direct way to incorporate your values is through training and onboarding. Additionally, some organizations choose to establish a reward system to recognize high-performing employees that live out the company’s values on a daily basis. Finally, your organization’s values should play a meaningful role in your performance management system. Just as they are what defines the success of your organization, they also ought to inform how you judge the success of your employees.