The term “culture” is getting much use these days, but I’m afraid it has become a Rorschach for whatever people want to say about an organization. In an interview for the Wall Street Journal, Mark Pincus, CEO of the fast-growing, online social-gaming company Zynga Inc., was asked, “What is the company’s culture?” He answered by talking about employee attrition, competitiveness of teams, and number of promotions. All of these things might be indicators of culture, but they don’t tell us the nature of Zynga’s culture.
So, what is organizational culture and why is it so important? Edgar Schein, in his book, Organizational Culture and Leadership, says that culture consists of the values, basic assumptions, beliefs, expected behaviors, and norms of an organization. An organization’s culture affects what people think, how people feel, and what people do. If a leader focuses on mission, strategy, and finances to the exclusion of culture, that lack of alignment will get in the way of success.
Shawn Parr, a Fast Company blogger, writes this in his post titled, Culture Eats Strategy for Lunch:
Culture is a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation. A strong culture flourishes with a clear set of values and norms that actively guide the way a company operates. Employees are actively and passionately engaged in the business, operating from a sense of confidence and empowerment rather than navigating their days through miserably extensive procedures and mind-numbing bureaucracy. Performance-oriented cultures possess statistically better financial growth, with high employee involvement, strong internal communication, and an acceptance of a healthy level of risk-taking in order to achieve new levels of innovation.
Parr argues the case for aligning culture with strategy. Strategy tells everyone what the company does and culture is how it does those things. If achieving the goals of the organization depends on cross-functional teamwork in the "white space" but management reinforces org-chart work silos, then the strategy cannot be implemented. I found this lack of alignment to be the case in the pre-turnaround U.S. auto companies. Parr writes about this kind of cultural discrepancy in a follow-up post:
People matter. More than machinery, products, or real estate. People invent and build. People support and serve customers. Your people either create or undermine value, cultivate or kill relationships, drive or reduce success. A well-conceived strategy living in the hands of unhappy, misdirected, misinformed people is a sure way to a slow and painful death. There is no comparison to being in the hearts and hands of energized, informed, and motivated people.
Kevin Eikenberry takes a slightly different slant on organizational culture. He says that if you want to understand culture you have to pay attention to:
- How we do things around here. What are the policies and procedures that are written down, but, more importantly, what are the unwritten and unspoken ways of doing things that are learned by example?
- The stories we are told. What is the lore of the workplace, both truth and fiction? What is the narrative that gets repeated again and again over time?
- The behaviors that get you promoted. These are not necessarily the categories on the performance review form. What really is valued? Is it long hours, achieving production goals, cultivating the right relationships, not making waves, coaching others, or something else?
- The values the organization lives by. These aren’t the values posted on the conference room wall or laminated for wallets and purses. These are the values-in-action.
Every organization has values, beliefs, norms, and traditions that shape behavior. A leader’s challenge is to guide an organization in developing the kind of culture that will help it achieve its strategic goals. Without purpose and strategy an organization has no reason for being, but without a culture that is in line with that purpose and strategy, long-term success is highly unlikely.