Organizational culture plays the most crucial role in the development and expansion of an organization, as it influences the organizational behaviors of employees. In fact, companies with a strong organizational culture have a higher likelihood of revenue growth compared to others. Organizational culture is often established by organizational leaders and helps unify team members. In this article, we will answer the question, "What is organizational culture?" so you can make the most of this concept in organizational psychology.
What Does Organizational Culture Mean?
To answer the question of what organizational culture is, it’s essential to note that there is limited consensus on defining the term. Generally, however, organizational culture is a set of values and beliefs that shapes the behavior of team members and employees. Organizational culture essentially defines the personality of your organization and significantly impacts employee satisfaction. Creating a suitable and effective organizational culture requires substantial focus, as the culture established by leaders should accurately reflect the organization’s values, goals, and regulations.
Why Is Organizational Culture Important?
Initially, we answered what organizational culture is, but why is this concept so important?
• Enhancing Employee Efforts
Organizational culture plays a critical role in fostering employees' sense of belonging, making it a key factor in team satisfaction. According to statistical analysis, this concept is the primary reason two-thirds of employees stay in their jobs, even with low pay. Therefore, having a suitable and ethical culture supports the effective efforts of your team members, resulting in increased organizational success, which is vital for any organization’s sustainability.
• Building Organizational Identity
An organization’s values and attitudes shape its identity. A weak and flawed culture causes foundational issues within the organization, leading to alienation by employees and customers alike. As mentioned, organizational culture forms the collective personality of a business, as it dictates how team members interact, how executives make decisions, and how individuals behave within the organization.
Thus, organizational culture impacts all aspects of your business. When your organization’s culture aligns with your employees, team members are likely to feel more secure and at ease. Businesses that prioritize creating and maintaining a proper organizational culture are more adaptable and can more easily adjust to changes in the business environment. Consequently, this concept greatly influences role assignments, collaboration, problem-solving, and business understanding.
Key Determinants of Organizational Culture
Creating an effective organizational culture is not easy, as it depends on various factors, including:
• Leadership Power
In fact, leadership power establishes the foundation of organizational culture. Strong leaders can guide their teams and employees effectively, teaching flexibility to the rest of the team.
• Type of Business
The nature of the business affects how organizational culture is shaped. For example, service-oriented businesses often focus more on customer-oriented cultures, whereas creative businesses emphasize individuality and creative expression.
• Team Members and Customers
Team members and customers hold substantial power to influence the type of culture. Employees contribute to sustaining culture through their beliefs, behaviors, and interactions with colleagues. Employees who are committed to the organization foster a culture of cooperation and dedication, supporting business sustainability. Customers also shape or alter organizational culture based on their preferences and experiences with the organization. By conducting a simple evaluation, you can assess their satisfaction to help improve and refine your organizational culture.
Types of Organizational Culture
To gain a deeper understanding of organizational culture, we’ll examine its various types. There are, in fact, four main types of organizational culture:
• Adhocracy Culture
This culture type is characterized by a high level of risk-taking. Organizations with an adhocracy culture encourage employees to showcase their ideas and creativity. Flexibility and risk tolerance are key features of this type of organizational culture. One well-known company with such a distinct culture is Google.
• Clan Culture
In an organization, collaboration signifies teamwork and social engagement. This type of culture places significant value on employee well-being, personal growth, and long-term cooperation.
• Hierarchy Culture
This type of organizational culture provides a clear and powerful structure for employees. Organizations with a hierarchical culture focus on well-defined roles, standard methods, and stability within various positions.
• Market Culture
As the name implies, market culture emphasizes market competition and organizational achievements. Organizations with this culture often operate in highly competitive environments.
Conclusion
What is organizational culture? Organizational culture is a concept within organizational psychology that supports the integration of your systems and organization. It essentially gives your business identity and personality, leading to better collaboration among team members. In this article, we thoroughly explored the question of what organizational culture is and its types.