There are many different definitions of “corporate culture” in the organizational theory literature. One accepted definition is: the corporate culture is the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. It has also been defined as: a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business. Corporate culture distinguishes one group from another. It reflects the identifiable components of practices, customs, beliefs and values.
Practices: These represent the surface level of a culture i.e. the visible elements such as language, etiquette, form of greeting, clothing, artifacts and also include the physical layout of the business. These practices do have relevance as it greases the functionality of the organization. Such practices keep the employees motivated and concerned, and encourage everyone to achieve the common corporate objective.
Customs: These are the accepted modes or norms of behavior within the organization, reflecting the values and beliefs, which provide guidelines for the way people and groups are expected to behave towards each other. These often shape aspects of the physical appearance of the organization.
Beliefs: These are the assumptions that members hold about the organization and the situation within it—about what practices work well in this business, for example, how people make decisions, how teams work together, and styles of problem-solving.
Values: Values are deeply held ideas of members regarding what is right or wrong, fair or unfair, and anything that has personal worth or meaning. These values are expressed in operating beliefs and norms of behavior.
Organizations should strive for what is considered as a “healthy” organizational culture in order to increase productivity and efficiency, and reduce employee turnover. A variety of characteristics describe a healthy culture, including:
● Acceptance and appreciation for diversity.
● Regard for and fair treatment of each employee as well as respect for each employee’s contribution to the company.
● Employee’s pride and enthusiasm for the organization and the work performed.
● Equal opportunity for each employee to realize their full potential within the company.
● Strong communication with all employees regarding policies and company issues.
● Strong company leaders with a strong sense of direction and purpose.
●Ability to compete in industry innovation and customer service, as well as price.
● Lower than average turnover rates.
● Investment in learning, training, and employee knowledge.
Additionally, performance-oriented cultures have been shown to possess better financial growth. Such cultures possess high employee involvement, strong internal communication and an acceptance and encouragement of a healthy level of risk-taking in order to achieve innovation.
The corporate culture develops as people come to share a set of beliefs and then they use these to establish norms about the way they should behave towards each other and to outsiders. If the outcomes are positive, it reinforces their shared belief and the values underlying their behavior. In this way, the organizations develop deep-seated values and beliefs about the way that staff should run things. It looks simple and straight forward in theory, but when it is referred in the practical life, it is a big task to make a success story. It can be concluded that a healthy and valuable corporate culture can be a source of sustained competitive advantage for a company.