COMPONENTS OF CORPORATE CULTURE

JACKSON Aneth BAPRM 3 REG NO 42565
 Components of a Great Corporate Culture
   
The benefits of a strong corporate culture are both intuitive and supported by social science. According to James L. Heskett, culture “can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.” And HBR writers have offered advice on navigating different geographic cultures, selecting jobs based on culture, changing cultures, and offering feedback across cultures, among other topics.

But what makes a culture? Each culture is unique and myriad factors go into creating one, but I’ve observed at least six common components of great cultures. Isolating those elements can be the first step to building a differentiated culture and a lasting organization.

1. Vision: A great culture starts with a vision or mission statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers, and other stakeholders. Nonprofits often excel at having compelling, simple vision statements. The Alzheimer’s Association, for example, is dedicated to “a world without Alzheimer’s.” And Oxfam envisions “a just world without poverty.” A vision statement is a simple but foundational element of culture.

2. Values: A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviors and mindsets needed to achieve that vision. McKinsey & Company, for example, has a clearly articulated set of values that are prominently communicated to all employees and involve the way that firm vows to serve clients, treat colleagues, and uphold professional standards. Google’s values might be best articulated by their famous phrase, “Don’t be evil.” But they are also enshrined in their “ten things we know to be true.” And while many companies find their values revolve around a few simple topics (employees, clients, professionalism, etc.), the originality of those values is less important than their authenticity.

3. Practices: Of course, values are of little importance unless they are enshrined in a company’s practices. If an organization professes, “people are our greatest asset,” it should also be ready to invest in people in visible ways. Wegman’s, for example, heralds values like “caring” and “respect,” promising prospects “a job [they’ll] love.” And it follows through in its company practices, ranked by Fortune as the fifth best company to work for. Similarly, if an organization values “flat” hierarchy, it must encourage more junior team members to dissent in discussions without fear or negative repercussions. And whatever an organization’s values, they must be reinforced in review criteria and promotion policies, and baked into the operating principles of daily life in the firm.

4. People: No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies. According to Charles Ellis, as noted in a recent review of his book What it Takes: Seven Secrets of Success from the World’s Greatest Professional Firms, the best firms are “fanatical about recruiting new employees who are not just the most talented but also the best suited to a particular corporate culture.” Ellis highlights that those firms often have 8-20 people interview each candidate. And as an added benefit, Steven Hunt notes at Monster.com that one study found applicants who were a cultural fit would accept a 7% lower salary, and departments with cultural alignment had 30% less turnover. People stick with cultures they like, and bringing on the right “culture carriers”.