This is an excerpt from a regular column that I write – Neely Ready – which appears in a magazine called Australian Anthill.

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The Importance of Culture

Every organisation has a culture. Spend time observing the day-to-day goings on within, say, a medical practice, a law firm, an airline and a fast food franchise, and you will notice some stark differences. While each business might have common objectives – serving clients, generating profits – it is very likely they go about these objectives in vastly different ways.

Culture, broadly defined, is the personality of an organisation. It is the collective, learned behaviour of its staff (“the way we do things around here”,) and the values, norms and beliefs that shape that behaviour.

Culture drives the behaviour of people. It drives how your staff choose what is done, and what is left undone; what is valued, and what behaviour, actions and outcomes are rewarded. Culture operates (and can be influenced) at three levels:

  • Behaviours and artefacts – This is the observable level of culture, its behaviour patterns and external manifestations, such as dress codes, formal policies, usage of technology (including where it is utilised), the physical layout of the office and protocols dictating how various business teams interact.
  • Values – Although not directly observable, values underlie and determine behaviour to an enormous extent. Many companies often have written value statements, but it is common to find differences between stated values and the values of an organisation in practise.
  • Assumptions and beliefs – When a given value becomes so entrenched, it becomes taken for granted (part of the “social fabric” of the company). At this point, many employees become unaware of, or are unable to articulate, the beliefs or assumptions influencing their behaviour.

Organisational culture is a potent tool. Quite literally, culture is often the difference between success and failure. There is a plethora of case studies and research reports documenting how often companies develop brilliant strategies, yet fail to execute them. Equally, many companies have invested millions of dollars into innovation initiatives, only to see creative ideas and innovative plans stymied.

In most cases, the root cause of these failures is incompatibility between management’s objectives and the prevailing corporate culture.

So how can you create – or change – culture within your company? The first step is to decide exactly what kind of cultural environment you want within your company; that is, what kind of company you want to be running (or work for). As noted, this is a crucial decision, because a mismatch between culture and business objectives could spell disaster.

The second step is to require the company leadership team to take responsibility for creating and nurturing the desired culture. It is through the leadership team that a company learns which behaviours, goals and outcomes are expected, and which means of achieving those goals and outcomes are acceptable.

The leadership team has at its disposal several levers for effecting cultural change:

  • Control systems – The processes in place to control and monitor activities will instruct employees what is and isn’t considered important.
  • Power structure – The delegation of decision-making powers and the basis upon which power is bestowed will tell employees who is in charge, and the basis for which they were given authority (i.e. what skills, traits and behaviour is rewarded).
  • Rituals and routine – Regular activities (such as meetings and performance reviews) that become part of accepted daily business life is a powerful influencer of culture.
  • Visible symbols – Physical symbols (such as logos) and intangible symbols (such as allocation of car spaces) are effective yet implicit cultural drivers.
  • Performance management system – Finally, the basis upon which individuals are managed, recognised and rewarded is a powerful tool for positive reinforcement.