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Corporate culture deciphered: you need to know these basics
Corporate culture is a tough competitive advantage, but the concept is complex. In this article we break down corporate culture for you: Find out which unconscious factors influence your corporate culture - and how you can actively shape culture.
Culture for download: In this practical guide you will find specific tools and strategies with which you can strengthen your corporate culture.
Definition: what is corporate culture?
A corporate culture is based on a system of shared values, social norms and symbols and attitudes that influence how participants within an organization make decisions, how they act and feel.
How leadership is exemplified, how relationships (with colleagues, customers, etc.) are designed, how decisions are made, all of this is derived from the corporate culture that takes place at all levels of an organization. It includes upper management as well as ordinary employees.
An organizational culture can be formulated using the following questions:
- What does the organization stand for?
- What is important to the organization?
What does corporate culture do?
A good corporate culture lays the foundation for
- that companies achieve their goals.
- Employees get support in times of crisis.
- that employees feel comfortable - that is, they are committed - and do not quit.
With a strong culture to success
Expert insights, step-by-step instructions and numerous practical examples: In this guide you will learn how to set specific goals, anchor clear values and control and measure your corporate culture in a targeted manner.
Corporate culture and corporate success
Values shape behavior and behavior influences the result. According to a study by the Federal Ministry of Labor, one third of profit before tax can be explained by an employee-oriented corporate culture.
A positive corporate culture has an impact on employees: in the best case scenario, they become more satisfied, which, conversely, means: more productive and more willing. Fewer employees quit when they feel comfortable, which on the one hand saves recruiting costs and on the other hand enables long-term deployment planning.
Factors influencing corporate culture
In addition to market conditions that influence companies in their daily activities, there are other external factors that need to be taken into account - social and socio-political:
Challenges for companies in the 21st century:
- Globalization. Economic actors operate internationally and sometimes in complex interdependencies, and they do so at high speed. In the future, speed and complexity will increase rather than decrease.
- Achievement society. More and more should be achieved in ever smaller timeframes, which leads to pressure to perform, which can cause psychological stress. Not only does health suffer, but also motivation and performance.
- Demographics. On the one hand, people retire later, which brings new demands for the workplace and health care. On the other hand, the younger generation (Gen Y, Z) demand a work-life balance and flexible working hours.
- Equality. Whether in the form of a quota regulation or without: companies have to restructure themselves to a large extent and make personnel decisions differently in the medium and long term.
These influencing factors require companies to rethink and re-establish processes and structures. This can lead to a change in culture, because changing behavior always means changing values.
How companies can respond:
- The company has an identity that is clear to the employees and that they can articulate.
- The employees know the strategic goals and align their actions accordingly.
- Employees can develop and use their potential in line with strategic goals.
- Employees receive further training and are able to master new challenges.
- The ability to innovate has priority and means that employees are allowed to make mistakes.
- Communication with one another is transparent.
- Leadership is based on cooperation rather than competition.
- The company knows how to address all stakeholders - from investors and customers to the media public.
- Demands and behavior are in harmony.
How does corporate culture show itself in everyday life?
Corporate culture is something like the character of a company that manifests itself in different ways, e.g. B .:
- Dealing with conflicts and mistakes
- Identification of employees with the company
- Communication behavior
- Appreciation of commitment and performance
- Dealing with stakeholders
- Willingness to take risks
- Feedback culture
- Family friendliness
How employees or customers experience an interaction is culture. An example: a customer has made a purchase, after which the company hardly ever gets in touch. Such behavior is an expression of a certain culture.
Another example of an internal experience of corporate culture. Employee Y is faced with a difficult task and discusses it with colleagues over lunch. They get involved straight away, even though they have to invest overtime for it. Is also an example of corporate culture.
Against this background, it makes little sense to ask applicants about certain values (“Are you proactive?”). It is more expedient to ask about behavior so that the candidate can actually “prove” that he is acting according to certain values.
Best practice corporate culture
An organization can be perceived as service-oriented and innovative or as backward and dismissive. By then, at the latest, culture is no longer abstract, but on the contrary: a hard fact in the sense of a competitive advantage or disadvantage.
The following best practice examples show how corporate culture can be practiced specifically and successfully.
# 1 - Granini: Employees take on managerial duties
Culture is not prescribed or even enforced; it is lived by employees - only then does it bring something to the organization.
"Employees are much smarter than their bosses in German boardrooms often believe," said Heribert Gathof once when he became head of the juice manufacturer Granini. What did he do? He closely involved employees in strategic issues, including in multi-million dollar investment decisions.
For this purpose, Gathof put together an interdisciplinary team from all hierarchies, which was supposed to develop a five-year strategy. For one thing, the employees came up with ideas that the management team didn't have. On the other hand, the workforce fully supported the new strategy.
The result speaks for itself: Eckes-Granini Deutschland achieved sales growth of 70 percent. In the model of self-organization, employees take on responsibility not by title, but by role.
# 2 - Schmalz: feel-good working atmosphere á la Google
The vacuum technology manufacturer Schmalz from Glatten in the Black Forest advertises with a kind of all-round carefree package. Employees can leave their children in a company-related childcare facility, life coaches are available to help with private or professional problems, and in the in-house training academy, employees can choose from a range of 200 professional and leisure-oriented courses. The management is currently examining how employees who have one or more relatives in need of care can be relieved.
Schmalz is emulating large corporations like Google. With one difference: the separation of professional and private life is sacred to medium-sized companies. "We do this in order to be able to keep up with competitors who are often based in the cities," says HR manager Daniel Just. "In contrast to concepts á la Google, our 850 employees in Glatten should have a real private life. After work is the end of work, everyone should spend it how they want. "
For Just, the all-round carefree package is just one piece of the mosaic in the image of an ideal corporate culture. "The corporate culture is decisively shaped by the management team," says Just. "A sustainable corporate culture can only develop if the company's managers behave in an exemplary manner and treat their employees well."
Corporate culture models
There are many different models of corporate culture. Below you will find out the three most famous ones.
In the 1970s, Tom Peters and Robert Waterman developed the 7-S model, also known as the McKinsey 7-S, because the authors were consultants at McKinsey at the time.
The two consultants focus on the company as a whole, whose success can ultimately be attributed to a total of seven hard and soft factors.
Hard factors are openly visible, in the form of plans, concepts, etc. The soft factors, on the other hand, are less tangible because they describe values, skills and working methods that are constantly changing.
All factors, soft and hard, influence each other. Although the soft factors are harder to pin down, their influence on corporate culture is stronger than the hard factors. After all, they are the basis for the daily actions of the employees, which in turn has an influence on the result of the organization.
According to Peters and Waterman, a company is successful when it can strike a balance between the factors. However, if you only focus on the hard factors, e.g. B. starting a new department, but ignoring the interaction with the other factors (how will the cooperation work? What support measures are required? Etc.), this will destabilize an organization rather than improve it.
Edward T. Hall presents corporate culture in the form of an iceberg. He understands corporate culture as a pattern of basic assumptions with which internal and external problems are solved. The pattern has visible and invisible elements, so that outsiders do not always understand everything.
The tip of the iceberg sticking out of the water represents the visible elements of an organizational culture. Underneath are hidden structures of the corporate culture that make up the larger and therefore important part. They influence which elements come to the surface of the water.
An organization can only shape culture if it takes the invisible areas into account. So if you want a change or a culture change, you first have to know the hidden factors (what needs do employees have? How is management? How do you work together?) In order to initiate changes on this profound level that ultimately radiate upwards.
For Hofstede, culture is a kind of “software of the brain”, a collaborative programming that enables differentiation. Different people with different identities, experiences and values come together and “develop culture”.
Hofstede chooses the image of an onion for the concept of culture by identifying four layers of culture:
Through a common environment they experience a similar socialization, which allows orientation and stabilizes a system. It also separates one group from the other.
Corporate culture and leadership
Leadership = culture: It is so simple, so true. Employees who are well managed perceive their culture as a positive one and support the company accordingly. A good leader teaches that each individual is needed to achieve a bigger goal. It motivates, creates identification and creates togetherness, which are critical success factors for an organization.
Management or corporate culture becomes visible in the form of framework conditions, e.g. B .:
- working hours
- Greeting / farewell, e.g. For example, everyone is used at Ikea - internally as well as in job advertisements, advertising, etc. Should be conveyed: We have a friendly atmosphere.
- Dress codes
- Health promotion
So there is a good leadership culture in the small, sometimes invisible, gestures and actions. It can be experienced (customers feel well advised / employees feel valued) and has an impact on the image (customers recommend / employees recommend the employer). Although it is a soft factor, culture ultimately decides whether someone is a product or a service and whether someone is happy and good at working for a company. Nothing more, nothing less.
This is how you analyze where your company stands in terms of culture
A matrix of eight different culture styles will help you orientate yourself. It comes from the personnel consultancy Spencer Stuart and the Harvard Business School and is based on a survey of 230 companies worldwide and a survey of 1,300 executives.
With the following overview you can examine your corporate culture and diagnose which leadership styles are compatible and which do not, how you can maintain a target culture and which recommendations are made for recruiting.
- relationship means human connections and mutual trust. Managers consider sincerity, teamwork, and good relationships to be important. The employees are connected to one another through loyalty.
- sense (‘Purpose’ in English) shows itself in idealism and altruism. Employees work here to do good in the long term, they are tolerant and empathetic. Managers underline the common ideals.
- Learn is illustrated as a culture style through creativity. In a less restrictive work environment, employees like to try something new. The superiors encourage the will to innovate and to increase knowledge.
- joy As a culture style, it is characterized by enthusiasm and fun. The working atmosphere is characterized by cheerfulness and a positive attitude. The bosses create the framework for spontaneity and fun at work.
- power is defined by result orientation and the pursuit of profit. The employees want economic success, for the executives the achievement of the goals is most important.
- authority In this model means decisiveness and mental strength. The working environment is characterized by competition, the employees strive above all for their personal advantage. Managers lead with courage and confidence, but also with dominance.
- security is to be equated in this model with planning and caution. The workforce is risk-conscious and only makes decisions after a long and careful examination. The superiors lead with a sense of reality.
- order presents itself through respect, structure and common norms. The work environment is a place where people tend to adapt. Superiors value proven traditions and processes.
Measure corporate culture - that's how it works
Admittedly, it's not that easy. But those who create a clear framework and orient themselves on specific key figures can make the status quo and the progress in corporate culture visible. Corporate culture expert Dr. Georg Wolfgang in this video.
The role of HR
First of all, the HR department, just like the executives, can be a role model for a positive corporate culture. That means having internalized the values of the organization so well that they can be translated into behavior. In addition, the HR department can bring culture closer to employees. How? Through a personnel strategy that, for example, promotes further training, regularly trains or has executives trained and communicates management decisions at an early stage.
Measures how HR can support the corporate culture:
- Formulate and communicate the mission statement (together with management)
- Team development measures
- Offer advanced training
- Enable knowledge sharing
- Keep information consistent and make it public
Even during the recruiting process, the HR department can do something for the corporate culture, namely by ensuring that the "cultural fit" of applicants and the company is right. To do this, it should proceed in a standardized manner and ask candidates about values and norms in the form of behavioral questions.
It is also your job to convey the corporate culture to the outside world and thus contribute to your employer branding.
Adjust framework conditions
In a world that is changing rapidly - technologies, working methods, objectives change - the corporate culture must also be constantly on the move. For HR this means realizing changes early on and reacting to them. What framework conditions do employees need in order to be confident and motivated to go new ways? This question should be the focus.
Get an idea of your company, your goals and the market. Then you can create framework conditions. In the best case, record how individual employees are in harmony with the corporate culture, i.e. act in accordance with your values, e.g. B. through performance analyzes or in exchange with executives. Understand who is deviating and why, and how you can empower leaders to make a positive impact.
Change corporate culture
Hardly any company can refuse to change. It is all the more important to control and evaluate change processes. Studies show that more than half of change projects fail or do not bring the desired results. HR can control or support such a process.
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5 steps on the way to a culture change
1. The fundamental question
What goal should a new culture achieve? This is what you should find out before you do anything. To this end, your company should have internalized the knowledge that the best corporate cultures overlap: they are in line with the company's strategy, they reflect the challenges of the business environment and their implementation is of great relevance.
2. Status Quo: What is the current culture like?
So that you understand the status quo of your corporate culture, the history of the company, the environment and the tradition should be very present. In the past, these have shaped management styles, team dynamics, subcultures and the values of the company.
3. Discussion with decision makers
Together you should find out where the strengths of the previous corporate culture were or are and where the weaknesses, to what extent they can be influenced or were or are due to external circumstances.
4. Where do you want to go?
In addition, the current and future conditions and challenges of the company and its competitive environment should be assessed. It is essential to consider the strategic direction so that it can be defined which cultural styles should be emphasized and which should be weakened.
5. Formulate a goal
This can be, for example: Together we create a feedback-oriented and innovation-friendly corporate culture. Leaving the status quo aside, we now only have to look to the future. All that is relevant is the decision about which cultural style is necessary to support change as best as possible. You should focus on the management principles, the way in which communication takes place in the company and the organizational structure. This makes it easier to steer cultural development in the right direction.
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