By: Juliana Davies, Guest Blogger
Corporate culture is the amalgam of operations, goals, values, attitudes and workplace environment that comprises a given company or organization. This comprehensive term is today considered an integral aspect (if not ‘the’ integral aspect) of business management, whether that company’s workforce numbers in the tens, hundreds, thousands or even millions. But regardless of the importance placed on fostering a positive corporate culture, the concept is overlooked by a large number of today’s employers.
According to Rajesh Chandy, a professor of marketing at the University of Minnesota’s Carlson School of Management, driving innovation should be the chief concern of any organization. And as Chandy told Science Daily, “Corporate culture is, above all, the most important factor in driving innovation.” According to a 2008 study, corporate culture was more important to driving innovation than other factors like government policy, labor force, capital and national culture. The study considered more than 750 companies from 17 different countries. Regardless of location, the most innovative companies shared common factors such as a solid internal infrastructure led by ‘product champions’; a workforce motivated by incentives; and the ability to adapt quickly in order to stay relevant within any current market.
Though Mr. Chandy and others have repeatedly touted the importance of corporate culture, the idea remains widely ignored in today’s business world. According to a 2011 survey conducted by Boston Research Group, 43% of those polled described their company’s culture as, “command-and-control, top-down management or leadership by coercion,” according to The Economist. Fewer than one in five of this contingent believed that their employer was readily receptive to “good ideas”; incidentally, half of these individuals claimed to have witnessed unethical behavior at the workplace. Only 3% said their employer led with a “set of core principles and values” – corporate culture, in other words – that motivates everyone to align themselves with the company’s goals.
The study also indicated that a large discrepancy exists between the perceptions of employers and their workers in regard to corporate culture. Roughly 27% of bosses surveyed believe their company inspires employees, and 41% of employers said their firms award employee performance based on values, not financial results. However, only 4% of employees said their company inspired them, and 86 percent believe that performance is awarded solely based on financial results.
Many prominent companies and organizations have been recognized for their solid corporate culture. According to CNN Money, one brand that effectively exemplifies this trait is Zappo’s, an online shoe company headquartered in Las Vegas that employs more than 2,200 people. The company fosters positive culture from the get-go by asking applicants how “weird” they are and whether or not they enjoy socializing with co-workers. In addition, human resources representatives are able to veto new hires if they are not deemed a “cultural fit” for the company. And to ensure fairness, junior hires are given the same benefits as senior employees.
But the company is as practical as it is employee-friendly. All new hires are required to spend at least a month in the call center to master their customer service skills, and the company’s user-friendly online store is constantly updated to ensure a good standing against the competition. Strengths like these almost always lead companies to success.
On the other hand, organizations that fail to take trends and current technology into consideration when developing their corporate culture are likely to fail. One well-publicized example is Blockbuster, a now-defunct movie and game rental chain that went bankrupt in 2010. By opening thousands of locations nationwide and offering nice employee incentives (such as five free rentals per week), the company was touted for its corporate culture for a long time.
However, the importance of innovation was overlooked; in an article titled, ‘Why Companies Fail’, Atlantic correspondent Megan McCardle notes that the company failed to notice as other companies (like Netflix) began to offer ‘streaming’ movies that could be viewed without leaving the house. The company also failed to update its technology; as late as 1999, DVDs were offered at less than 1,000 Blockbuster locations. Ultimately, customers chose companies whose goals were a little more in line with current trends – and, as a result, Blockbuster went out of business.
For many companies today, corporate culture is a top priority. And as a reward for giving it its due, these companies often experience financial prosperity. Others have seemingly overlooked corporate culture, or merely relegated the term as a meaningless buzzword. But as history has shown, these companies are often overtaken by their more forward-thinking competitors.
Researcher and writer, Julianna Davies contributes to the online MBA resource, http://www.mbaonline.com, which works to provide its readers with information about MBA education. In today’s post, Julianna focuses her attention on the important aspect of company culture–an aspect that is too often overlooked by MBA programs.