Corporate culture is undergoing a transformation. As organizations evolve and reinvent themselves in response to societal changes, new technologies, and competitive disruption, they’re finding that hierarchical cultures of the past must change as well.
And while the shape and impact of corporate culture is changing in the 21st century, the role it can play as a determinant of success is not waning anytime soon. As the researchers of the MIT SMR/Glassdoor Culture 500 put it, “To survive and thrive in today’s market, a healthy corporate culture is more important than ever.”
My company, Gapingvoid, helps businesses of all sizes design, build, and update their cultures. (Full disclosure: MIT Sloan School of Management is a client.) Unfortunately, my colleagues and I often find that, despite all the talk about culture, many business leaders remain confused about what it really boils down to. Some mistake culture for a set of lofty statements or goals made by executives. Others try to project a certain kind of culture externally that is at odds with what employees inside the company experience.
Culture runs deeper than that. As a 2012 study defines it, organizational culture is “the shared basic assumptions, values, and beliefs that characterize a setting and are taught to newcomers as the proper way to think and feel, communicated by the myths and stories people tell.”
Often, executives ask me how to instill assumptions, values, and beliefs in a way that will be communicated throughout the entire organization. One approach I’ve found that helps is to think of culture as a management system. To many, this makes the idea much more concrete. They know that their entire staff, including managers, has to make all sorts of decisions every day — and that those decisions, in aggregate, determine what the experience is like for employees.
When you frame culture as a management system, you see how quickly the assumptions, values, and beliefs at the heart of the organization can translate into actions.
For example, managers need to know whose needs and interests take precedence in any given situation — those of customers, shareholders, employees, or other stakeholders. They need to know how much free-flowing debate they should encourage about corporate initiatives. They need to know how much support to give for work-life integration and flexibility. All of these questions, and many more, have answers when you look through the lens of culture.
The Financial Rewards
For years, I’ve seen anecdotally that when companies build cultures as management systems, they prosper. At Gapingvoid, we recently sought to quantify that through new research.
For our study, we focused on businesses with the kinds of cultures that we’ve found to be most successful. We call these High-Purpose Cultures because they’ve done the best job of motivating employees with what Julian Birkinshaw of London Business School and his coauthors once described as a “sense of purpose that transcends making money.”
Companies with High-Purpose Cultures are focused equally on the needs of employees and customers. They clearly communicate internally what the organization stands for, and they work actively to engage everyone in the organization. In these companies, it is established that all operational decisions must balance the needs of employees, customers, and other stakeholders.
We combed through extensive data from Glassdoor in which employees review and rate their companies and their CEOs. Focusing on the best- and worst-rated companies (in which employees praise or trash the corporate culture), we selected a group of the best-rated organizations that had corresponding companies in the same industry among the worst-rated. These covered industries including health care, communications, and automotive.