Organizational culture can make or break a business. Here’s why

There are plenty of factors a viable business simply can’t go without. Starting capital, a cash reserve, and a product consumers actually want to buy, just to name a few. Beyond the nuts and bolts of building a profitable new venture, any experienced entrepreneur, executive, or business owner will attest that certain intangibles are key to determining if a promising business will ultimately fail or thrive. 

Organizational culture is perhaps the most integral of such intangibles. Scientific study after study tells us that the underlying customs, values, and vibes permeating throughout a given workspace hold a tremendous sway over both the productivity and efficiency of the business itself and overall employee wellbeing. Read on to learn more about why organizational culture is a consideration no business can afford to ignore.

Positive workplace culture – You know it when you see it

A positive organizational culture is typically characterized by a handful of key elements:

• Learning & development opportunities: The modern employee is eager to continue learning new skills, and the ideal modern employer is more than happy to provide ample opportunities to do that. Strong organizational culture often goes hand in hand with supporting workers’ continued education. This helps bring more value to the company, and increases organizational loyalty.

• An open-minded, trustworthy environment: There are plenty of offices where the workers are afraid to speak their minds, and none of those workspaces offer a healthy organizational culture. It’s been shown time and time again that professionals are more efficient, creative, and inspired when they feel comfortable speaking their mind on the job. Organizational leaders should always prioritize a free flow of ideas around the office.

• A legitimate sense of community: While no one needs to treat their colleagues quite like a close-knit family, there’s absolutely something to be said for knowing that your boss, and the entire organization for that matter, have your back at the end of the day. Employees reporting to a job with a positive organizational culture feel like valued members of the team, not just another replaceable cog in the machine.

When organizational culture goes wrong

One relevant study published in Graziadio Business Review likens organizational culture to the rhythms of music. Each organization and office works to the beat of its own unique tune, and the culture imposed by those in positions of power plays a big role in determining if each department will successfully harmonize like a band putting together a new hit single.

So what can happen when a negative workplace culture strikes the wrong chord with workers? One of the most common outcomes is an exceedingly higher rate of employee turnover, especially among younger professionals. Consider the findings of one research project, published in the scientific journal Sustainability. Study authors found that working millennials are much more likely to leave a particular job if they feel the company’s values and culture don’t align with their personal beliefs.

Organizational culture and creativity

Another relevant piece of research dived into a different, yet no less interesting, aspect of organizational culture’s influence on business outcomes: creativity and new ideas. Published in the Journal of Product Innovation Management, the report details how a company’s mindset and culture at the top exhibits something of a trickle-down effect on subsequent new product ideas and creative brainstorming sessions among all levels of the organization. Study authors found that when business leaders choose to prioritize emerging technologies over all else, it usually leads to more groundbreaking, disruptive ideas. 

Organizations that emphasize either pleasing consumers or beating competitors, meanwhile, tend to create more traditional products inline with current market demands. Neither outcome is necessarily better than the other, but researchers believe the ideal organizational culture for most businesses is one that blends both a focus on pushing the technological envelope while also ensuring consumers have a reason to care. 

Instilling the right organizational culture doesn’t happen overnight 

Imagine a group of employees working at a corporate company are called in for a “pow-wow” with the company CEO and other board members. The executive suite invites anyone and everyone to offer up new ideas and suggestions on how to improve business or streamline internal processes. 

While the premise so far sounds promising, there’s one big problem: The lower-level workers hardly ever interact with upper management, nor are they privy to the same information and datasets. Thus, employees have no idea what type of problems they’re supposed to be solving with their ideas, let alone how to pitch their suggestions in a compelling manner. 

Recent research published in the Strategic Management Journal tells us that only after weeks of direct interactions with their CEO did a group of workers begin to craft compelling new ideas and pitches receptive to upper management. The best results materialized if the CEO themselves actively engaged with and even “coached” employees on a regular basis on how to generate and conceptualize fully-formed ideas.

“The findings underscore the imperative for senior managers to actively engage in coaching and provide avenues for employee learning,” researchers stress in a press release. “By fostering a culture of inclusive discourse, organizations can unlock untapped potential for innovative strategic ideas.”

Organizational culture transcends physical locations

Don’t assume the importance of organizational culture goes out the window in a remote work scenario. Noteworthy findings just published in Proceedings of the 15th ACM Web Science Conference 2023 reports employers that support their remote workers’ outside interests, afford as much on-the-job autonomy as possible, and offer flexible policies are much more likely to boast a stronger remote workplace and more positive remote work culture in general.