Corporate Culture: What It Is and Why It Is Important

By Adrian Furnham

A functional corporate culture benefits both the company and its employees. In this article, the author provides an overview on the origin and concept of corporate culture and illustrates the change strategies organisations can deploy to move the current corporate culture to the desired one and achieve better organisational success.

As well as national culture there is also the powerful force called corporate culture. It is easiest defined as “the way we do things round here”. Many consultants will attest to the desire of senior managers to “change the corporate culture” which they perceive as causing poor productivity, engagement and turnover. How easy this is to do is another matter!

Anyone who has recently changed his or her job is acutely aware of the corporate culture whilst “old timers” have ceased to notice the oddities in the “usual behaviour around the office”. 

The culture dictates everything from dress code to timekeeping; email style to coffee-break etiquette; job titles to after-work behaviour. Corporate culture is often dramatically different from the pre- and pro-scribed behaviours in the mission statement or values declaration: what they say they believe and do is very different from what actually occurs. 

Dysfunction in organisational culture can erode a business from within, causing it to lose its commercial edge and making it difficult to retain or recruit talent.

More importantly, corporate culture has a direct and powerful effect on both productivity and satisfaction. Clearly, dysfunction in organisational culture can erode a business from within, causing it to lose its commercial edge and making it difficult to retain or recruit talent. 

An individual manager’s decision-making and success is a part function of the corporate culture. This is why researchers take an active interest in the “dynamics of the team”.

For the past 30 years in management circles, corporate culture has been “flavour of the month”. Books, articles and papers appearing on this topic have been numerous and it is now widely adopted in both professional and academic circles.

It has been used to predict and explain a great variety of behaviours in organisations, both successful and unsuccessful, and many large and small organisations have attempted what they call culture change programmes.

It has taken a long time for some managers and management scientists to realise that “soft” human resource issues may play such an important part in any organisation’s success (or failure).

How is it that so many individuals within an organisation share basic attitudes, behaviour patterns, expectations and values? In other words, how does a culture form and how is it maintained? What is the origin of corporate culture? 

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About the Author 

Adrian Furnham is Principal Behaviour Psychologist at Stamford Associates in London. He was Professor of Psychology at University College London 1981 to 2018, and now also Adjunct Professor of Management at the Norwegian School of Management in Oslo. He has written over 1200 scientific papers and 90 books.

References
1. Cooke, R. A., & Lafferty, J. C. (1989). Organisational Culture Inventory. Plymouth, MI: Human Synergistics.
2. Cooke, R. A., & Rousseau, D. M. (1988). Behavioural norms and expectations: A quantitative approach to the assessment of organisational culture. Group & Organisation Studies, 13(3), 245-273.
3. Furnham, A. (2005). The Psychology of Behaviour at Work. London: Taylor and Francis
4. Furnham, A. (2014). Corporate Culture or Cult: What is the difference? Sunday Times, January 7th
5. Xenikou, A., & Furnham, A. (1996). A correlational and factor analytic study of four questionnaire measures of organisational culture. Human Relations, 49(3), 349- 371.
6. Xenikou, A., & Furnham, A. (2013). Group dynamics and organisational culture: effective work groups and organisations. Basingstoke: Palgrave Macmillan

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