Key Takeaways

  • Organizational culture defines the values, beliefs, and behaviors that guide how people within a company interact and perform.
  • A strong culture improves employee engagement, retention, and business performance.
  • The organizational culture definition includes visible elements (dress code, office setup) and invisible elements (values, communication style).
  • There are several types of organizational culture, such as clan, adhocracy, market, and hierarchy cultures.
  • Building and sustaining a positive culture requires leadership commitment, employee feedback, and alignment with company values and goals.
  • Culture must evolve alongside the organization to remain relevant and supportive of long-term strategy.

Organizational Culture Definition

The organizational culture definition relates to the structure of an organization such as a company or non-profit and the values, sociology, and psychology of that organization.

Some examples of organizational culture include philosophy, values, expectations, and experiences. Typically, the people within an organization try to develop and maintain similar customs, beliefs and attitudes, even if all of this is unwritten.

Other examples of organizational culture include how the company treats its customers and employees and how the company does business overall.  Companies that have good organizational culture generally tend to have employees who are happier and will stay with them longer. Organizational culture is important because it has a direct influence on how well the organization performs.

Understanding the Levels of Organizational Culture

Organizational culture operates on multiple levels that influence how employees think and behave. Edgar Schein, a renowned organizational psychologist, outlined three levels of culture:

  1. Artifacts: These are the visible, tangible aspects of a company’s culture, such as office design, dress code, rituals, and communication patterns.
  2. Espoused Values: These reflect what an organization says it believes in—its stated values, mission, and goals.
  3. Underlying Assumptions: These are the deep-rooted, often unconscious beliefs that truly shape behavior and decision-making across the company.

Understanding these levels helps leaders identify gaps between what the organization claims to value and what it actually practices.

Why You Should Care about Organizational Culture

Culture is a necessary part of how an entity operates. There is also a consistency about culture that makes it easier to track patterns, observe behavior, and draw conclusions on the accumulated data. A big part of what develops culture is having incentives for employees. Company culture is necessary to make sense of things and appropriately gage the level of contentment of the employees and the productivity of the entire company. Good organizational culture is upheld through shared values and specific rituals. In a way, having a good company culture is like having a strong, healthy immune system. When the culture is compromised, so is the company.

The Impact of Organizational Culture on Performance

A positive organizational culture is directly tied to improved business outcomes. Research from Gallup shows that companies with strong cultures experience higher productivity, better customer engagement, and significantly lower turnover rates.

Culture affects how employees:

  • Approach problem-solving and innovation
  • Communicate across departments
  • Feel motivated and aligned with company goals

When culture is ignored, disengagement rises, leading to higher absenteeism and reduced performance. On the other hand, when employees feel connected to their organization’s mission and values, they become brand ambassadors who drive growth and innovation.

Understanding Organizational Culture

If you go to a concert, sports game, or other event that draws a crowd, it won’t take long for you to notice there is a similar way that people behave and dress at those events. If a newcomer enters a certain arena where many like-minded people have gathered, that newcomer should take note of the behavior and rituals and learn to assimilate to them. Fortunately, humans are very observant and adaptable creatures and fitting into a culture is something most people can do quite quickly.

Types of Organizational Culture

Different organizations foster distinct cultural models that influence behavior and priorities:

  • Clan Culture: Focuses on collaboration, mentorship, and teamwork. Employees feel like part of a family.
  • Adhocracy Culture: Values creativity, innovation, and adaptability. Ideal for startups and tech companies.
  • Market Culture: Emphasizes competition and achieving measurable results. Common in sales-driven organizations.
  • Hierarchy Culture: Centers on structure, procedures, and control. Found in government or large corporations.

Recognizing your organization’s dominant culture type helps you understand how decisions are made, how employees interact, and where improvements may be needed.

The Characteristics of Organizational Culture

Every entity has a distinct organizational culture. Some companies highly value risk-taking, innovation, and creativity. In an organization like this, slow, methodical processes wouldn’t easily fit into the company culture. Even though every company culture is unique, the companies with the best culture value important characteristics like attention-to-detail and accuracy. Many companies put a lot of the emphasis on results and what is achieved by the company. Other common characteristics of a company culture include fairness, healthy competition, and collaboration.

Measuring and Evaluating Organizational Culture

To ensure your organizational culture remains aligned with company goals, it’s essential to measure it regularly. Common tools and approaches include:

  • Employee Surveys: Measure engagement and perceptions of leadership, communication, and purpose.
  • Focus Groups: Gather in-depth qualitative insights about cultural strengths and weaknesses.
  • Turnover and Retention Metrics: High turnover may indicate cultural misalignment.
  • Performance Data: Track productivity, innovation rates, and employee satisfaction.

Regular evaluation allows leadership to spot cultural drift early and reinforce desired behaviors before issues escalate.

How to Create Company Culture

People in leadership positions within the company play an extremely important role in developing productive, healthy company culture. In addition to leaders of the company building the culture, the culture of the company also influences the leaders. Great leaders have a thorough understanding of the importance of shaping a company culture that steadily evolves and flourishes and that also easily adapts and modifies its characteristics whenever it is necessary.

Building a Sustainable Organizational Culture

Creating and maintaining a strong organizational culture takes intentional effort. Leadership plays a pivotal role by modeling values and ensuring alignment between words and actions. Key strategies include:

  • Define Core Values: Identify principles that reflect your organization’s identity and goals.
  • Hire for Cultural Fit: Recruit individuals whose values align with the company’s mission.
  • Reinforce Through Recognition: Celebrate behaviors that exemplify company values.
  • Maintain Transparency: Open communication fosters trust and accountability.
  • Encourage Feedback: Employees should feel empowered to suggest improvements.

Sustainable culture also depends on consistent leadership involvement and periodic reassessment as the organization grows.

The How and Why of Changing Company Culture

Company culture never stays the same and that is a good thing. The cultures that survive are the cultures that make progress and evolve. While core beliefs should remain steadfast, careful review of goals, procedures, and the company image should be conducted incrementally. There are incredible benefits that can come with change and a huge part of a company leader’s responsibility is to remind employees of these benefits and persuade them to recognize the benefits of the right changes.  With that said, although change is good and necessary, before you decide to change something about the company culture, you need a precise, strong vision and strategic plan put in place beforehand. Additionally, your employees need to see that management sees the change as good and important and that management is confident in that decision before they too can be confident about the decision.

Overcoming Resistance to Cultural Change

Shifting organizational culture can be challenging, especially when long-standing habits and power structures are in place. To overcome resistance:

  1. Communicate the Vision: Explain why change is necessary and how it benefits everyone.
  2. Engage Influencers: Involve respected employees who can champion the change.
  3. Provide Training and Resources: Help employees understand and adapt to new expectations.
  4. Celebrate Early Wins: Acknowledge progress to build momentum.

Change initiatives succeed when employees trust leadership and see that management is equally committed to the transformation.

Important Principles for Good Company Cultures

  1. Work cooperatively with the current cultural model your company has while slowly introducing new changes.
  2. Introduce informal, yet influential leaders to your employees to set the tone for how your company culture will be created.
  3. Stay active when managing and maintain the current culture of the company.

The Role of Leadership in Shaping Organizational Culture

Leaders define and model the values that shape culture. When executives embody the behaviors they want employees to emulate—such as accountability, empathy, and innovation—it sets a tone that permeates the organization.

Strong leadership also ensures culture is integrated into every aspect of operations, from hiring and performance management to decision-making and strategy. By aligning leadership behavior with stated values, organizations create authenticity and trust—two foundations of a thriving workplace.

Frequently Asked Questions

  1. What is the organizational culture definition in simple terms?
    It’s the shared values, beliefs, and behaviors that shape how people work together and make decisions within a company.
  2. What are examples of organizational culture?
    Examples include companies with collaborative team environments, innovative and risk-taking mindsets, or customer-first approaches.
  3. How can you identify your company’s culture?
    Observe how decisions are made, how leaders communicate, and how employees interact. Surveys and focus groups can also help reveal underlying values.
  4. Why does organizational culture matter?
    A strong culture improves employee engagement, productivity, retention, and overall company reputation.
  5. Can organizational culture change over time?
    Yes. As businesses grow and adapt to new challenges, evolving the culture ensures it continues to support long-term goals and innovation.

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