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The importance of organisational culture (and how to change it)

Organisational culture has a powerful influence on everything from how a company operates and performs to how it is perceived by its customers. In fact, one could go further and suggest that it also has a huge bearing on whether an organisation lives or dies. It is, therefore, something you need a good understanding of.

So what makes up an organisation’s culture? 

It’s perhaps best viewed as a tapestry which is woven from a number of different threads. These include an organisation’s history, systems and structures, its goals, mission and vision, and most of all, its people.

Why’s there so much attention on culture?

Today, there’s unprecedented interest in organisational culture and, specifically, in how to understand and potentially change it. 

This is being driven by businesses looking for every possible competitive advantage to help them to better attract and retain talent and, ultimately, to improve the bottom line.  

Companies such as Google and Apple have blazed a trail in this respect and are almost as well known for their culture and people agenda as for their products. You see, it’s not just their products that have made them the most desirable companies to work for, it is their modern, collaborative, creative and empowered working culture.

Another major catalyst for a review of organisational culture was the global financial crisis. In fact, this could even be seen as a watershed moment. It brought the spotlight (and regulatory reform) on financial institutions and, in turn, has had a profound effect on organisational culture in this sector. 

Before, a culture of risk-taking was normal and even rewarded within financial services firms. Since then there’s been a dramatic transformation of the culture. Companies have made considerable efforts to change their processes, values, and encourage behaviours as well as working on how they’re perceived externally by customers. 

One company we work with – RBS – offers a good case study example of how 360 degree feedback can play an important part in embedding this kind of cultural or organisational change.

How do you define organisational culture?

It’s important you can define your organisational culture in order to understand it and, potentially, change it. 

Geert Hofstede, an academic and pioneer in this area, suggests that an organisational culture can be described by how it falls on five dimensions: 

1)      Power distance (hierarchical vs egalitarian power structures)

2)      Individualism (individualism vs collectivism)

3)      Uncertainty avoidance (tolerance for ambiguity vs rule bound)

4)      Masculinity/femininity (assertive/competitive vs caring/modest)

5)      Long term orientation vs short term orientation.

By understanding where an organisation falls on the above dimensions, you can start to build an understanding of its culture. This overview also allows you to assess whether the current state is desirable, or if change is needed. Gaining this cultural knowledge first is absolutely essential to be able to guide effectively any change you wish to undertake. You can then, of course, use these same dimensions to see what change has been achieved. 

What can you do to understand better and change your culture?

  • Run an employee survey as this can provide broad insights and inform you of how your employees perceive the culture
  • Alongside this, try to get more in-depth employee insight using a series of focus groups
  • Carry out a risk audit to assess employees’ attitudes to risk-taking within the organisation. 

Collectively, these research tools will provide you with a credible picture of your organisational culture, as well as informing which areas to act on if you want to make changes. Such findings could have implications across your businesses, including for recruitment practices, reward systems, performance appraisal and customer relations. 

Ultimately though, whether you’re currently looking to change your organisational culture or not, understanding and being able to influence your culture is imperative. Its influences over things like attracting and retaining talent, employee engagement and performance are too powerful and far-reaching to be ignored. 

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