What is Corporate Culture and How it Affects Performance

Among the many factors that affect an organization’s ability to innovate, compete, and engage employees and customers is corporate culture. Corporate culture is the amalgamation of values, vision, mission, and the day-to-day aspects of communication, interaction, and operational goals that create the organizational atmosphere that pervades the way people work. It’s hard to define and even harder to get right. No amount of modern furnishings, stocked kitchens, happy hours, or young, hip workers can create a corporate culture.

But what difference does it really make? A pretty big, one according to the data—this article from Science Daily on a study from the University of Southern California and the University of Minnesota puts it in stark terms: ”Corporate culture is, above all else, the most important factor in driving innovation.”

Doesn’t get much more cut-and-dry, so the question on the minds of business leaders should be how to create an effective corporate culture. If corporate culture can make the difference in performance, innovation, and employee development and retention, then what is the bottom line for fostering that organizational environment? The fact of the matter is that, at the most basic level, an organization is simply a group of individuals working towards a goal—the generation of corporate culture, therefore, stems from the individuals who make up the organization, from leadership to the front-line workers.

If culture is about people, let’s take it a step further–what is going on in an employee’s head and how they affect (and are affected by) others can build a positive, effective corporate culture or deteriorate into a negative corporate culture. This article from Fast Company describes the brain and the way we work with others. The brain is built to mimic, and in that way, we often conform subconsciously to the energy and actions of those around us. Obviously, this has huge implications for corporate culture. Think, if employees are motivated and committed, how mimicry can build to create a powerful, embedded positive culture.

No matter how powerful our neurological impulses may be, it still takes real, demonstrable and measurable behavior to build a sustainable, positive corporate culture of performance. Getting to behavioral change requires understanding, open-mindedness and an appreciation of diversity.

• It is important that leadership have an understanding of the thinking and behavioral tendencies of their employees and how mental energy manifests itself in outward behavior.
• Leadership must relate corporate goals in a way that allows each employee to identify with and internalize those goals.
• Leaders need to promote diverse thinking and a shared knowledge base to create a true sense of collaborative cohesion within the organization, which propels culture forward positively.

Corporate culture is an ongoing system of checks and balances that needs to be reinforced at all levels of the organizational and employee life cycle. New hires to the organization can be attracted by a strong corporate culture (look at the thousands of applications that Facebook and Google receive for every open position), but motivation and job fit must match a desire to integrate into the culture. Unmotivated employees breed a negative culture with those around them and all that work can quickly disintegrate, so realizing what drives all employees from a motivational standpoint and matching that with work and thinking and behavioral preferences is a better, more holistic approach to hiring, training, and retaining the employees who make up an organization–and who make up the culture of an organization.