What Is Corporate Culture? (Definition And Different Types)
By Indeed Editorial Team
Updated 17 September 2022 | Published 6 June 2021
Updated 17 September 2022
Published 6 June 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
You may want to consider the corporate culture of a company before you decide to work for it. If it is compatible with your values and working style then it can help you to be productive and successful. Understanding the common types of such cultures companies typically have can help you identify the company you would enjoy working with. In this article, we explore the meaning, importance, elements and attributes of corporate culture and look at their different types that companies usually have.
Related: What Is Organisational Culture?
What Is Corporate Culture?
It refers to the values, behaviour and working style of a company. It indicates how a company treats its employees, customers and community. For example, one company may give more importance to the environment than profitability, while another one may be more concerned about increasing its bottom line even if its operations negatively impact the environment. Similarly, one company may want to get the most out of its employees, even at the cost of their health and personal life, while another one may be more generous towards its workforce.
Although one policy or instance of behaviour does not constitute the corporate culture by itself, it definitely indicates the culture of the company. For example, a company guided by the belief of developing quality products would never try to pass on substandard quality products to its customers, even if that translates into higher profits. Companies may define their culture through company culture statements just like they define their mission through mission statements. But, it mostly develops organically over a period of time from the cumulative personality and attitude of the management and the employees it recruits.
External factors like local customs and traditions, national economic policy and the industry in which the company operates may also influence the culture of a company. Corporate culture often reflects in the dress code, office environment, recruitment policy, client satisfaction and all other aspects of the company operations. Companies with good corporate culture usually have higher employee retention rates, productive employees and a motivating work environment.
Why Is Corporate Culture Important?
It is important because it influences a company's policies, operations and working style. Following are some reasons and examples that underline the importance of it:
Employees often get attracted to companies with a culture they identify with.
It impacts the way a company treats its employees, which in turn impacts employee retention, turnover and productivity.
It impacts the way a company deals with its customers.
It can help build a strong brand identity as it creates a certain image and perception in the minds of the customers.
Strong corporate culture can transform employees and customers into brand advocates.
Good corporate culture can promote a healthy team environment.
Elements Of Corporate Culture
Following are the essential elements of corporate culture:
The vision of a company defines its business objectives and what it strives to achieve. It indicates why the company exists and where it sees itself in the future. Companies usually communicate their vision through a vision statement. The vision of a company strongly influences its corporate culture. Customers, suppliers, creditors, potential employees and other stakeholders can get a fair idea of a company's culture through its vision statement.
The values of a company guide the behaviour and approach it takes to realise its vision. A value statement declares the priorities of the company and tells you how it conducts itself. Thus, values greatly impact the mindset and behaviour of the employees and the expectations of the company's external stakeholders.
Related: Core Values: Overview and Examples
The vision and values of a company reflect in the practices it follows. For example, how a company communicates its policies, how much freedom it gives its employees, what process it follows for making decisions and how it looks after its customers' concerns all give you an idea about its culture.
A company's culture exists largely because of the people it employs. The mindset, attitude and behaviour of the people working for the company can give you a strong hint about the company's culture.
Attributes Of Corporate Culture
Following are the important attributes you would find across all types of corporate cultures:
1. It is shared
Corporate culture exists as a group phenomenon. A single individual cannot form a corporate culture. For example, a customer service representative may personally want to refund the amount to the customer, but the company's policy may not allow them to do so. Since all the employees are bound by the company's policy and business practices, how they act in their capacity as the company's representative is important in determining a company's culture. Employees may learn a company's culture either formally (e.g., through training) or unconsciously (e.g., being influenced by coworkers' behaviour).
2. It is pervasive
Corporate culture exists across several levels of the company. For example, if a company has a customer-centric culture, its employees across different departments are likely to look for ways to solve customers' problems. If the customer service department is overenthusiastic about helping the customers while the sales department is only focused on increasing the revenue without being concerned about the customers, it might not qualify as a customer-centric culture.
3. It is enduring
Corporate culture develops over a long period of time and guides the company's working for a long time to come. A company first starts working with its mission and values. It then recruits people to support its mission. Similarly, people who share the values of the company get attracted to it. Thus, the culture reinforces itself and becomes stronger over time.
4. It is implicit
A company may not expressly ask you to subscribe to its culture. But, when you join a company, you give tacit approval to act according to its culture. Corporate culture evolves because employees implicitly learn from their peers and supervisors.
Types Of Corporate Culture
Corporate culture may vary widely among companies. But, you may encounter some common cultures between different companies. Here are some common types of corporate cultures to help you determine whether your core values align with them:
1. Team-first culture
In this type of culture, companies focus on building a team of people that share the company's values and beliefs. During recruitment, the company gives a higher priority to values than skills and experience. As a result, the company usually has highly motivated employees who find their work meaningful. Companies following the team-first culture look for ways to keep their employees happy. They may organise activities like team outings and frequently seek employee feedback.
2. Elite culture
Dynamic and rapidly growing companies often follow an elite culture. Such companies prefer recruiting people that are talented and confident. They expect their employees to think out of the box and go beyond traditional boundaries. These companies are often involved in meaningful work, such as path-breaking research or developing some cutting-edge technology, which makes employees feel proud of their efforts.
3. Horizontal culture
This type of culture is often found in small and mid-sized companies. Companies with a horizontal culture keep the hierarchical levels in their organisational structure to a bare minimum. Team members often take up multiple roles and work in a collaborative environment. You get the opportunity to learn several different aspects of the company's business. You may even have a CEO actively involved in the daily operations of the company.
4. Conventional culture
You can find this culture in traditional companies like banks and public sector enterprises. Companies with conventional culture often have a tall organisational structure with clearly defined roles and job titles. The flow of authority, too, is clear. The procedures are standardised and employees typically require to follow the commands of their supervisors. Although it may look outdated, conventional culture may be effective in certain industries like mining and refining, where work procedures are well-established.
5. Progressive culture
You can encounter this culture in companies that are in the transition phase. The transition could be due to acquisition, merger or change in management. Progressive culture often requires a review of the company's goal and mission statements, which may also result in redefining job titles, roles and responsibilities. Since there would be an environment of uncertainty, you are required to be able to communicate your ideas clearly and quickly adapt to changes to flourish in a progressive culture.
6. Market culture
A market culture focuses on competition and growth. Companies with this type of culture place a high priority on profitability. Each position in the company looks to contribute to the company's bottom line. The work environment is result-oriented rather than being focused on personal satisfaction. You can find market culture in large companies that aim to be or are already industry leaders.
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