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Organizational Culture: Best Practices & Examples

By Anthony Taylor - March 17, 2022

Today I want to talk to you about organizational culture. What is it? What are some best practices for driving it forward? And what are some practical examples of what it looks like out in the wild.

My name is Anthony Taylor, I'm the Managing Partner at SME Strategy. We facilitate strategic planning sessions, and we help teams implement their strategic plans. And one of the critical components of a successful organization is its organizational culture, not only because it sounds good, or it's the right thing to do, but ultimately it really does drive performance. It'll help your team accomplish its biggest goals, and its most important objectives. So being able to understand organizational culture, what it is, what drives it is going to be critical for your success. So let's get into it.

So what is organizational culture? It's the sum of all the values and beliefs that are shared throughout the entire organization. It's 'how we do things around here' within your organization. Ultimately, it affects everyone, whether they're internal or external to your organization. So it's really like the guiding set of behaviors.

>>Watch: Why Culture Eats Strategy for Breakfast

Now, within organizational culture, you might have various subcultures, or various different beliefs, whether you have a small organization, large organization, or internationally - you might have different cultures within that. But if we look at individual behaviours, combined in terms of what guides your organization and drives the behaviour of your people, that - in a simplistic way, is your organizational culture.

Now, why is understanding your organizational culture important? Well, in the grand scheme of things, culture can provide a competitive advantage. It's one of those differentiators that, if all things were equal, culture would trump other organizations without an effective culture. Culture can attract talent. So if you have a positive culture or one that attracts people, it can be good. Conversely, you can have a culture that can repel people. So by understanding how important culture is, you can use it to drive business results. Organizational culture tells people what's encouraged and acceptable, and what's not. So by formalizing those values and behaviours, and of course living them, which we'll talk about later, it serves as a guide and decision making tool for everybody within your organization.

 

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Now, the flip side of that is an ineffective or a toxic culture can lead to disengaged people, it can lead to higher turnover, bad customer service, and lower profits. So at the end of the day, most businesses, whether you're a for-profit or not-for-profit organization, you're trying to have impact and make money. And culture really can be a significant driver to profitability, or lack thereof. So to summarize, culture unlocks a lot of potential, or it can send you down a pathway of frustration and loss of money. Culture, in the grand scheme of things, pretty much controls everything.

So the question then is, how do you use it to your advantage? Or what if you're already suffering from a negative culture? How can you move it in the right direction, so that you can have positive benefits from your culture?

So before we get into the how, I want to talk about what culture is. Separate from individual behaviours, some of those individual behaviours in action. So the level of work-life balance is an indicator of culture. How people are recognized and compensated is a manifestation of the culture. It's going to show what you value and how you do things. The physical workplace shapes the culture is and is also impacted by the culture. Your communication structure - if you have people who communicate well, there's probably a positive structure. If you have people who communicate poorly, it's probably a negative structure. The company's history and vision for future. Organizations with negative cultures typically have a lot of bumps along the road, whereas ones with positive cultures have fast growth trajectories. In fact, they just did a study on the Inc 5000 of the fastest growing companies. There was a strong correlation between the fastest growing companies and their culture index.

So if you take a snapshot of your own organization, and look at these kind of six different areas, they're good barometers or indicators of how your culture is doing. If it's positive and moving things in the right direction, then you might have a good culture. And if it's not, you might not have one.

But how does that manifest itself into bigger organizations? So I haven't worked for any of these organizations myself. But if you look in the news, there's positive, good stories about it, and bad stories about it. I can do a whole video about positive and not so positive organizations. But when you read these stories, or if you do a quick Google search, there'll be some things you hear about that they do well. Again, work-life balance, communication, working conditions, salary raises, salary increases, and how the person feels within an organization. So this is just one of those examples that your culture, if it's good or bad, will kind of speak for you in the public domain. So whether you're a small or micro business or a large business, be aware of how important culture can be into the public perception, and ultimately, success of your organization.

So we've talked a lot about what culture is, what it looks like, how it manifests itself. Now, I want to give you some ideas on how you can actively shape it and move your culture in the right direction. Okay. So the first thing I want to encourage you to do is encourage specific behaviours. My recommendation all the time when organizations are doing strategic planning sessions, is that you take the time to intentionally look at the values and behaviours that you want to foster, and make sure that they're explicit. Then you want to make sure that those values and behaviours are contributing directly to your culture. Ultimately, it should shape how you want people in your organization to act. If they don't have a clear understanding of what's expected of them, how could they act in line with that? So you want to reward aligned behaviours, and you want to address non aligned behaviours.

>>Watch: What You Know About Culture Transformation is Wrong

A lot of times people go through this exercise of determining their values and behaviours, the things that they want, but they don't attach a description of what it means. So it's important that you're explicit. When you say we value integrity - what does that mean? We value openness, what does that mean? Work life balance, what does that mean in practice, so that everybody in your organization top down, understands what it means and what it looks like?

Now, some people don't do that. Some people don't go through the process of identifying clear culture and behaviour, then cascading all the way down. So what ends up happening is that employees follow and emulate what the leaders do. And where you get into problems with it is when the leadership says one thing, and they do another. So the rest of the organization has no idea how to act. So if you want to have a positive culture, if you want to have a culture that is consistent, you have to make sure that the leadership (probably you) is acting in line with the values and behaviours that you expect of others.

Now, if you're watching this video, and you have a terrible culture, there's a possibility that what your leadership says and how they act are two different things. And then there's dissonance. It's frustrating, because you expect one thing, and they expect one thing and do another. As human beings, it doesn't kind of wire well in our brains, and then we get frustrated. Then we ultimately quit, because there isn't that leadership driven alignment that needs to happen for successful organizational culture.

So a couple other things that you can do. Making sure that you shape those values and behaviours internally first. If you really want to live those values, and reward those values, you can get involved in the community and actually live the values that you say outside of the four walls of your organization. But most importantly, setting those expectations internally, and then living them externally. Having a clear mission and vision -that's part of the strategic planning process. But making sure that your values behaviours align with your mission and vision. That way, you're going to tie your organizational productivity to it. And then help people develop the necessary skills.

 

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This is kind of an aside to culture, but one of the most frustrating things for employees is to be put in an organization where a lot is expected of them, but they're not given the support to do it. So while you might mean well, while you might have values and behaviours that ultimately support a positive behaviour, if people in the organization aren't supported materially, whether that's with like humans, human capital, or money, that even the best values and behaviours aren't going to help your people stick around. Because they just don't have what they need to help get the job done. So make sure you live the values, make sure that you've got the right system, structures and support internally. And then make sure that you can get outside of the four walls and live that whether that's with your community, or your customers.

So, in summary, as we talk about organizational behaviours, and what drives culture, culture is the sum of all of the behaviours in your organization. So just be aware, even if there's a small subsection of troublemakers, that behaviour is going to spread within your organization. And those values and behaviours drive everything in your organization. So it's the soft stuff, but it's the hard stuff. If you don't actively manage it, it will ruin you. So as a CEO, that's where I would recommend the first place that you focus to get your team moving forward.

Foster individual behaviors first. This idea of a company culture and an individual culture being different, it's just an amalgamation of individual behaviours - and your team will follow the leader. So if you're in a leadership position, make sure you're talking the talk and walking the walk. If you're not doing both of those things, then they're not going to know which way to act. And then it's going to get really frustrating and impossible to move forward.

Ultimately, culture is going to drive the bottom line. So whether you're a for-profit or not-for-profit organization, you need to make sure that your values, behaviours and organizational culture is tied to your vision and mission, and you'll be able to move forward successfully.

So what I want to leave you with here as you move forward, if you want to align your organization with your values and behaviours so that you can drive outcomes, talk to us about facilitating your strategic planning process. We can help you identify those values and behaviours, we can help make sure that they're tied into everything you do strategically, and help you move forward.

Values, behaviours, and organizational culture, are really like the key to unlocking so much success, the ROI behind it is huge. You just need to make sure that you take the right steps in order to move that forward.

So I hope this video helps you better understand organizational culture, how to shape it, what some of the challenges are with it, and the pros and cons of not prioritizing it. And I hope you enjoy all of our videos.

So if you haven't yet, be sure to subscribe, follow along for some more videos, and I'd love to hear your comments on what you think the drivers of organizational culture are. So drop them in the comments and then be sure to reach out to us if you'd like to have a conversation.

Once again. My name is Anthony Taylor from SME Strategy. Thanks so much for watching.

We'll see you in our next video!

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