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How to change organizational culture

supportive teammates are part of an organizational culture

Think of organizational culture as the overall spirit of your organization. It encompasses a company’s values, ethics, goals, and overall way of getting work done. 

When you walk into a business and get a “vibe” from the employees or other customers, that reflects on the business’ culture. 

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Organizational culture is proven to be a key component of a company’s success

Here’s what recent research shows about the impact of culture in an organization:

  • Cultural factors such as collaboration, employee engagement, employee retention, and customer satisfaction have a clear relationship with revenue growth. [1]
  • Executives who say their culture is extremely healthy are 1.5 times more likely to report average revenue growth of more than 15% over three years. [1]
  • Those with extremely healthy cultures are nearly 2.5 times more likely to report significant stock price increases over three years. [1]
  • Half of employees would leave their jobs for a lower-paying job in exchange for a better organizational culture [1]
  • Among executives, 57% say that the workplace environment is important to culture, but only 36% of employees agree. [1]
  • 76% of executives say their organization has a defined value system that is understood and well-communicated, while just 31% of employees believe this to be true. [1]
  • 15% of employees strongly agree that their organization's leadership makes them feel enthusiastic about the future. [2]
  • 15% of employees worldwide and 35% in the U.S. fall in the "engaged employee” category. [3]
  • Organizations with employees in the top quartile of engagement resulted in 41% fewer quality defects, 64% fewer safety defects, and 81% lower absenteeism. [3]
  • 70% of the variance in team engagement is determined solely by the manager. [3]
  • Employees who rate their work-life balance highly are 10% more likely to stay at their company. [4]
  • Employees who rate their culture poorly are 24% more likely to leave their organizations within a year’s time. [4]

What are the key elements of organizational culture?

Now that we’ve established organizational culture is important for the health, happiness, and success of your team and entire company, let’s get into the details of what makes up a company’s culture

1. Vision and values

A business without a vision or values is an organization with no direction. Think of values and a vision or purpose statement as the baseline of your business’ culture. What do you want your culture to look like? What do you want your employees to feel like when they come into work every day? Establishing a set of values and a purpose or vision statement can show employees what success looks like and what is expected of all team members. 

Once a baseline is set, it makes it easier for leaders and employees to act accordingly. If you need to make a tough decision, refer to your values or purpose and decide what the best outcome is that reflects both core components of your culture. Then, use the vision and values to explain to your team why the decision was made so they can see the company guidelines in action and know that they really reflect what the company believes in.

2. Hiring and onboarding processes

The beginning stages of recruiting, hiring, and training a new team member are important to maintain an organization’s culture, as well as to implement culture changes. When a person considers a career with a business, they pick up on subtle cues about the organizational culture, from their interactions with a recruiter to the verbiage on the company’s website. 

While the hiring process hinted at the company culture, onboarding fully teaches new employees the organization’s value system, norms, and desired behaviors. If a new hire doesn’t pick up on a company’s way of working or dislikes the organizational culture, it can lead to a frustrated employee and high turnover rates.

3. Communication and collaboration

A company’s way of communicating and collaborating has a huge influence on organizational culture. These two elements go hand in hand since they both are done by employees every day, regardless of role or rank. 

Overall, an organization that is transparent with its employees and encourages different business units to talk and work together probably has a culture of honesty and teamwork—two positive traits. Additionally, teams that are quick to communicate and bring others into the conversation ahead of time promote an environment where people feel heard, looped in, and like they can contribute to the solution. 

In contrast, companies that avoid telling employees difficult news or promote an “every team for itself” mindset foster a culture of distrust and competition that can be detrimental to employee morale and the company’s success. 

4. Leadership

For better or worse, leaders play a crucial role in organizational culture. It’s up to an organization’s leadership to set the tone for the business and act with integrity so employees feel like they can trust their leaders and believe in what they say. If leaders follow the organization’s values and promote a positive culture, others will follow suit. 

Poor managers can leave employees feeling frustrated, micromanaged and unhappy with their workplace. If a company accepts managers who promote unhealthy or uncomfortable team cultures, it can spread and ultimately lead to a negative organizational culture. Therefore, it’s up to business leaders to invest their time into building a culture that keeps employees fulfilled, whether it be through training for managers or developing policies that encourage more work-life balance and time away from the office. 

What are the 4 types of organizational culture? 

Now that you understand the core elements of organizational culture, what does it look like in action? There are four main types of organizational culture and all produce different workplace results. Let’s take a look at a few examples of what company culture can look like: 

Type 1: Clan culture

Clan culture is often seen in smaller companies or startups because it puts a large focus on being collaborative and team-oriented. This type of organizational culture puts leaders into more of a mentorship or coaching position, rather than giving orders. It also puts a lot of emphasis on team decisions and feedback. 

Example of clan culture

A new tech startup has a team of 10 people, including the CEO and two other leaders. The entire team gathers weekly to discuss business issues, and the CEO runs potential decisions by the team to gather feedback and additional perspectives. There is an “open door policy” and leaders to encourage other team members to stop by and ask questions. 

Type 2: Adhocracy culture

Adhocracy culture is heavily focused on creativity, innovation, and taking risks. While employees are given a lot of freedom to try new things, this culture can create a sense of competition among teams and put pressure on employees to constantly come up with new ideas that may or may not work. 

Example of adhocracy culture

Giant conglomerate Amazon is known for its rapid innovation and for constantly evolving products and services. The company encourages a bias for action in its leaders and avoids anything that may slow it down from its pace of growth. 

Type 3: Market culture

Market culture prioritizes external results and gaining market share. This type of culture is usually fast-paced and focused on profitability every step of the way. A drawback to this type of culture is sometimes leaders will focus more on numbers and external factors, rather than employee satisfaction.

Example of market culture

A retailer makes customer growth and profitability its two core focuses, and requires that every business decision helps the company advance toward those goals. Weekly reports are distributed to analyze the competition and leaders set aggressive growth goals every year. 

Type 4: Hierarchy culture

This is a more formal, structured culture that places emphasis on role and rank within an organization. This culture is typically found within large corporations. Hierarchy cultures typically have processes in place to get work done, which can limit a team's creativity and innovation. 

Example of hierarchy culture

Large government organizations tend to follow hierarchy culture, such as the military. The organization is heavily focused on rank, and there are protocols to follow for nearly every situation. Lower-ranked officers are not encouraged to offer ideas or try a new way of doing something unless ordered to do so. 

So...which culture is best?

In practice, there are a lot of benefits to each style of organizational culture. However, the best company culture for your organization is going to depend on your type of business and the personalities of your employees. 

For example, the military may never be able to implement a clan culture because there is too much at stake and there’s a long-standing history related to giving or following orders. In contrast, a startup won’t thrive with that same hierarchy culture, as people wear a lot of hats and require plenty of flexibility and autonomy. 

Your organizational culture likely falls into one of the four categories above, but you can include a blend of traits from each style to make it your own unique workplace culture. 

For instance, a business with a hierarchical culture may want to allow its employees to have a bit more creativity and freedom to discover innovative solutions. To encourage this, the company hosts a pitching competition among its employees every year to see who can bring forward new ideas for the business.

How to change your organizational culture

Maybe you’ve made it this far and have that sinking feeling that your company’s culture might not be the best fit for your company goals and your employees. 

Don’t panic yet—the great news is that cultural change is possible, and many businesses and companies have needed a cultural overhaul at some point in their tenure. Identifying the need for a transition is the first step, though there are a few more actions to take if you want to make meaningful change in your organization. 

1. Start with where you want to end up

To better your company culture, it’s helpful to picture what a good culture would look like at your organization. What do you want employees to feel? To do? 

Part of this practice includes taking a look at your business’ purpose statement and values. Consider if the statement and values reflect what the company wants to become, and then decide if there is different language to use that better reflects your workforce and would resonate more with employees. 

2. Determine the biggest negative forces

So you’ve decided your organizational culture needs to change, but what exactly is the root of the problem? Is there a culture of mean-spiritedness and competition? Are employees expected to be glued to their email and laptops at all hours? After you’ve envisioned your ideal company culture, identify the issues that are standing in the way. 

The best way to determine the largest issues? Asking your employees. Many companies conduct regular employee surveys or cultural assessments to understand what employees are thinking about work. The results can reveal the top areas that employees would like to see improved for a better workplace culture. Plus, the act of asking for employee feedback through surveys is often a good step in the right direction because it makes employees feel heard and appreciated.

Once you’ve identified areas for improvement, you can make a game plan to tackle each issue to move your business closer to a positive organizational culture. Remember, you can’t just collect information—you also need to act on it. 

3. Engage your company leaders and influencers

Any widespread organizational change will require buy-in from your top company leaders. When you’ve covered issues and have proposed solutions you’d like to implement to address those problems, share that information with your company’s decision makers. If you think your leaders will need more information to be convinced, try sharing the handy data listed at the top of this article.

Once you have the support from your leaders, ask them to take steps and show visible support for the new initiatives, like having them send out a letter to employees or speak on the topic at a company town hall meeting. If employees see leaders making this initiative a priority, they will be more likely to embrace the change. 

4. Take action and continue to improve

Now that you’ve determined where you’re going, understand what needs to change to get there, and have your leadership support, it’s time to implement the new programs—whether it’s employee resource groups (ERGs), learning and development opportunities, a culture committee, or something else. 

As you roll out each new initiative, be sure to gather feedback from employees to assess what’s working and what isn’t. Not every new idea will work immediately, or maybe even at all, but continuous improvement is a step in the right direction to develop a more positive organizational culture. 

Continue to assess your culture and employee engagement on a regular basis. Understanding employee motivations and overall workplace sentiment will help your business identify behaviors to continue and new opportunities for improvement. 

Organizational culture doesn’t just happen—it’s honed

Organizational culture isn’t something that goes away, and if it’s not considered or refined, it can be a huge deterrent for a business’ success. 

The steps and ideas above can help you start thinking more about your workplace culture and the actions you can take to improve it. It’s a constant learning process—but definitely a worthwhile one. 

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