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What is company culture and why is it important?

10 January 2018

     

Company culture is fast becoming the differentiator between successful businesses and unsuccessful ones. It has hit headlines with that Google memo which “perpetuated gender stereotypes” and opened an almighty can of worms. Worms that are crawling into the holes of sexism, science, and even human rights. One worm that has wiggled into the forefront is culture. And it’s important that small businesses understand why company culture is so important and why they need to get it right from the outset.

What is company culture?

Company culture, organisational culture, or corporate culture, refers to the social order of an organisation. It shapes and determines the behaviour of individuals and groups of people, that are accepted as the norm within a business. A company’s culture is unique and personal to them, and, when aligned with personal values, can drive the business towards their purpose.

The Culture Economy report reveals the price that the UK economy is paying for poor company culture

Why is company culture important in small businesses?

It’s a “must-have” rather than a “nice-to-have”

Businesses are failing to realise that their culture matters. And that it’s not just ping-pong tables and beer Fridays, which are the nice-to-have byproducts of a well thought out company culture. Many small businesses dismiss company culture as the ‘fluffy stuff’ as they are unaware of the impact that giving due thought and consideration to their company culture can have. The recent revelations of toxic culture in tech giants like Uber and Google are prime examples of this. They are companies which, on the surface, appear to be great places to work, with plenty of ‘perks’ available. But the reality is that these are companies that didn’t prioritise company culture from the beginning and, as a result, are appearing in the headlines for all the wrong reasons.

Company culture is the invisible maker or breaker of all businesses. It isn’t something that can be picked up two years down the line when you might have a bit more time on your hands. It’s something that requires your thought and time right now, making it a must-have at the start of your venture.

More of a call for businesses with a purpose

The most profitable companies are not the most profit-focused. It’s a paradox, but it occurs because instead of focusing on profit, successful businesses focus on their purpose; an aspirational reason for their existence which benefits local and global society. This shift in priorities has largely been introduced by the millennial workforce who are more inclined to look at a company’s culture, values, and meaning to find a wider purpose in their career and role within a business.

As a result, a business's purpose has the potential to shape the company’s culture, indicating the societal and behavioural norms that are widely accepted within the company that will contribute to achieving the company’s aspirational purpose. To attract and retain the modern workforce there is a call to businesses to focus on their purpose and company culture.

Linked to productivity levels

The UK’s low productivity levels have been hitting recent headlines. The Chancellor’s Autumn budget slashed predictive productivity growth meaning in 2020 the economy will be 3% lower than expected. However, the Office of National Statistics have reported that UK labour productivity grew by 0.9% in Quarter 3 (July-September).

This is all significant because an organisation’s culture is what will determine productivity. Some cultures encourage productivity and many do not. And a culture that is centrally aligned with the business’s purpose and strategy can positively impact organisational outcomes. In a working environment, a little can go a long way to achieving this, such as offering flexi-time working or working from home options to aid a healthier work-life balance and give employees a greater sense of freedom and trust.

Company culture is brand

Just as your company’s brand determines the customer experience, your company culture creates the experience your employees live whilst they’re at work. The focus of many small businesses is to gain customers and retain them, and so a lot of work is put into the brand and customer experience, however, the same cannot be said for company culture.

By interlinking your brand and your company culture you are able to start thinking about your people. And that is where you can benefit from competitive advantages. Just look at Netflix. It’s pioneered several new HR approaches that have broken the mould, all tied to its ‘freedom and responsibility’ ethos that trusts people to make reasonable judgements about their working lives. The result? Netflix has disrupted an entire industry from the ground up and is seen as a beacon of innovation.

Although it might seem like common sense, company culture is easy to get wrong or not take seriously as lessons from Google have demonstrated. It might not seem like the most important thing to invest your time in when your company is just starting out and you are trying to juggle other things, but it does need to be prioritised to avoid repercussions further down the line. 

Culture economy

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