What is organisational culture?

Organisational culture can be described as “how we do things around here”, and it plays a central role in whether employees feel engaged at work. It encompasses all of the human interactions that make up working life, so can be difficult to define.

How individuals, teams, divisions and entire companies interact with one another and with their customers, suppliers and with other stakeholders, all contributes to what might judged to be the “culture” of the organisation.

Why is organisational culture important?

The success of a business can often hinge on its organisational culture: a positive workplace culture can lead to better retention as employees who feel a sense of belonging are less likely to leave. It is also good for an employer’s reputation so helps attract new recruits, and it can improve productivity as employees have to overcome fewer obstacles to achieve their work goals.

Is there a definition?

Defining organisational culture is a challenge as it is unique to every employer. If you’re studying business names such as Edgar Schein or Charles Handy will crop up.

Psychologist Edgar Schein describes organisational culture as having three levels:

• artefacts of culture (symbols and language)
• norms and values about what is appropriate behaviour, and
• underlying assumptions and beliefs (conscious and unconscious).

Schein argues that culture is often defined by the leadership, as it is passed on or “taught” to people who join an organisation.

Another popular definition of organisational culture comes from Charles Handy. He proposes that there are four types of culture followed by organisations:

• power culture (where only a few people have authority)
• task culture (where teams form to achieve targets)
• person culture (where employees feel they are more important than the organisation), and
• role culture (where employees are delegated roles and responsibilities based on their specialisation).

Business leaders often look to other workplaces whose organisational culture they wish to emulate. Companies such Apple and Google are often associated with having a strong workplace culture. Rankings of the best places to work can often shape people’s definitions of where has a good organisational culture.

Management consultancy Bain & Company has been named Glassdoor’s best place to work in the UK in 2023. It achieved a rating of 4.7 out of 5 on the employee feedback platform, based on anonymous reviews from employees over the previous year.

How is organisational culture evolving in 2023?

There have been multiple factors influencing organisational culture in the past few years, including the impact of the Covid pandemic, accelerating digital transformation and increased political and social instability.

The pandemic has changed organisational culture irreversibly, with many workplaces now enabling staff to work in a hybrid way, with some days spent in the office and some at home.

Managing workplace culture remotely can be a challenge for managers given that the essence of an organisation’s culture has until now stemmed from day-to-day physical interactions.

According to a survey by recruitment company Morgan Philips in 2022, almost half of employees felt that working from home during the pandemic had diminished their sense of belonging to an organisation.

Technology has also had a dramatic influence on workplace culture because it can accelerate important factors that define it. For example, feedback becomes immediate via platforms such as Teams or Slack. On a less positive note, remote working and a reliance on digital messaging rather than face-to-face conversations can mean that interactions are misinterpreted.

Impact of toxic culture

When assessing the health of an organisation’s culture, people often focus on the extremes. There have been a number of examples in recent times where toxic workplaces’ cultures have placed the reputation of organisations at risk.

A recent independent review into the London Fire Brigade found that the organisational culture was “institutionally misogynist and racist”, including bullying targeted at ethnic minorities and women.

The Metropolitan Police also attracted a barrage of criticism for a culture of misogyny, racism and homophobia. The Casey review into organisational culture at the Met was commissioned earlier this year after a serving police officer was convicted of murder.

It found evidence of complaints not being dealt with, racial disparity in misconduct processes and retention issues because misconduct claims were mishandled.

Measuring workplace culture

Although organisational culture can impact employees on a deep level, it can be very difficult to measure as it is unique to every employee. That said, organisations can use tools such as employee engagement surveys or feedback systems to gauge whether people’s feelings about the workplace have changed for the better or worse.

Another approach is to ask for feedback on whether an organisation lives up to its stated values.

Web-based technology and artificial intelligence means feedback on organisational culture can be immediate, allowing leaders to identify any areas where employees feel there is a misalignment between the stated culture and their experience.

Changing organisational culture

For the same reasons as it is a challenge to measure organisational culture, changing it hinges on a multitude of different factors. These include:

• How leadership style shapes organisational culture
• Dynamics between teams
• The nature of roles and workloads
• Policies and flexibility around processes.

In different organisations these cultural ‘levers’ will have more or less emphasis on transforming culture.

Why inclusion is important for organisational culture

According to research by coaching platform BetterUp, if workers feel like they belong within an organisational culture there is a 56% increase in job performance and a 50% drop in turnover risk.

Creating an inclusive workplace plays a crucial role in achieving this sense of belonging, as it supports employees from all backgrounds and under-represented groups to feel comfortable and productive.

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Where groups feel they receive unequal treatment or are ‘outsiders’ compared to a majority population in the workforce, this can lead to higher attrition and absence. These are both factors in an unhealthy organisational culture.

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