What is organisational culture?
Organisational culture is intangible; something important you know is there but can’t see. A great analogy is culture is like water in a fish tank. A more common definition is that organisational culture refers to the shared values, beliefs, practices, and social behaviours that shape the way members of an organisation interact with each other and with people outside the organisation. It can include factors such as:
- The level of collaboration and communication among employees.
- The tone and atmosphere of the workplace.
- The risk appetite of how decisions get made by employees.
- The feeling of inclusion within an organisation.
- The extent of the social interactions.
- How people provide feedback to each other.
- How innovative an organisation is.
Culture is often created and shaped by leadership and the core group of employees. It can also result from a rich history or sense of identity within the workplace.
Why is culture so important?
Peter Drucker quipped that “culture eats strategy for breakfast”. Culture is important because it shapes the behaviour and attitudes of its employees. It also provides an invisible rulebook for how new employees should behave.
When people and the culture align, it leads to increased motivation, engagement, and employee experience. Employees who feel challenged and supported in the workplace tend to be more productive.
Do not confuse ‘culture’ and ‘climate’
It is important to recognise the difference between culture and climate. Organisational culture refers to the behaviours of employees in an organisation. These behaviours can include what employees expect from one another, what their values are, and how they treat one another.
Climate refers to the environment in which they operate in. These include policies, systems, and processes that are in place to operate.
Climate creates and influences the culture of an organisation. In the instance an employee is unable to move into a role that may suit their skillsets better than the current role, this could cause the perception an employee is underperforming and not a great culture fit.
If high-performing employees do not receive recognition or rewards for their achievements, this leads to negative employee experience. This is often mis-attributed to the employee being a bad cultural fit. In fact, the climate was not set up properly to support and reward employees.
What are the consequences of bad climate?
The New York Times published an article detailing the intense and often cut-throat work climate at Amazon in 2015. Working long hours and sacrificing the personal lives for the progress of the company was the expectation set. Many high-performing employees at Amazon reported feeling burnt out and undervalued. This led to an increase in turnover, with many employees leaving the company to join other competitors.
A few examples of consequences businesses may face due to bad organisational climate are:
- Decreased motivation and morale: When employees do not see the direct benefits of their hard work, it will usually lead to decreased motivation and a drop in morale. This can result in decreased productivity and a lack of enthusiasm for the job.
- Increased turnover: High-performing employees may feel undervalued and start looking for other opportunities where their contributions will be recognised and rewarded. This can lead to increased turnover and the loss of valuable talent.
- Decreased job satisfaction: Employees who feel that their hard work and achievements are not being recognised are less likely to be satisfied with their job. This can result in decreased job satisfaction, which can in turn impact overall job performance and ultimately the performance of the business.
- Reduced commitment and engagement: When high-performing employees are not being rewarded, they may feel that their contributions are not valued by the business. This can reduce their level of commitment and engagement to their work, which can have a negative impact on overall productivity and, again, the success of the organisation.
- Decreased motivation to innovate and take risks: Employees who do not feel recognised or rewarded for their achievements may be less motivated to innovate or take risks while they work. This can limit the organisation's ability to adapt to changing and unexpected circumstances, as well as staying ahead of their competition.
Although organisational culture and climate may sound very familiar to one another, it is important to understand that organisations may be underperforming due to its climate, rather than its culture.
How can culture affect employee experience?
Strong workplace cultures promote excellent employee experiences by creating a healthy work environment and building a shared focus on what is most important to the company. Employees that are surrounded by positive workplace cultures are more resilient and confident, resulting in higher engagement levels. In addition, research has shown that employee morale is positively influenced by the optimistic interactions that occur between co-workers.
On the other hand, poor workplace cultures can create toxic work environments where employees may feel disrespected, undervalued, and unsupported. A negative workplace culture can lead to increased stress and burnout, low morale, high turnover rates, and a lack of trust and engagement among employees. A poor culture can inhibit employee engagement and motivation, making it difficult for employees to feel invested in their work and the organisation as a whole.
Examples of workplace culture that can negatively impact employee experience include favouritism, corporate ladder bias, and lack of diversity in the workplace. For example, a workplace that encourages favouritism may be seen as segregating its employees by gender, age, or ethnicity - this can lead to employees feeling "forced" to compete for scarce positions despite their skillset. Poor workplace cultures can lead to lack of trust, collaboration, and communication amongst employees which can result in significantly reduced productivity and overall performance.
How can employee experience affect the overall performance of an organisation?
When employees feel valued, supported, and engaged, they are more likely to be productive, motivated, and committed to the success of the organisation. This subsequently leads to more stability and continuity within the organisation which can help improve overall performance of the business.
When employees are dissatisfied with their work environment, they are less likely to provide excellent customer service or innovate and come up with new ideas. This can lead to a decrease in revenue and high turnover rates. High turnover rates can indicate a number of issues within the company, such as poor management, a lack of job satisfaction, or a lack of opportunities for advancement.
It is usually also costly for the organisation, as this can lead to a loss of institutional knowledge and the need to continually hire and train new employees, meaning an increase in overall operational costs. Furthermore, negative employee experience can lead to negative perceptions of the company among potential candidates, which can make it harder to attract and retain top talent.
How can culture be measured in an organisation?
It is important to recognise that measuring culture in an organisation can be challenging, as culture is a complex and multi-faceted concept that is difficult to quantify. Some of the complications that come with trying to measure culture include:
- Subjectivity: Different people may interpret and experience the culture of an organisation in different ways, making it difficult to obtain a clear and consistent understanding of the culture.
- Hidden aspects of culture: Some aspects of culture, such as unspoken norms and assumptions, may be difficult to identify and measure.
- Resistance to change: People may be resistant to changes in the culture of an organisation, which can make it difficult to implement changes or measure their effectiveness.
- Difficulty to measure: Culture is not a tangible thing and it is difficult to measure it.
Typically, culture is measured through surveys, interviews, and observation of behaviour. These can be used to gather qualitative data on employees' perceptions of the organisation's culture. However, the challenge with these approaches are that:
- It is often collected sporadically or at best, a few times a year.
- Participants may not be transparent about their true perceptions as they either not convinced the data will be used anonymously or they don’t believe management will take any action.
- There are limited data points to draw meaningful conclusions.
There are new HR & people analytics software being developed which address a number of these challenges by using big data techniques to look at many more data points that are passively collected and combined with qualitative data. This allows organisations to look at actual employee behaviour within the organisation as signals for their cultural behaviours.
One such solution is Culturate which uses AI to allow organisations to analyse and compare the behaviours of model employees against the rest of the organisation to identify differences in behaviours in real-time. It accesses data sources from HR, communication, productivity and financial systems.
Either way, measuring culture in an organisation requires a comprehensive approach that takes into account multiple perspectives and data sources. Measuring culture within an organisation also requires ongoing monitoring and evaluation to track changes that may occur over time.