Why is organizational culture important to a company’s success?

One of the most popular objectives that our customers in Weekdone identify as the highest priority is to increase employee happiness, improve engagement, and boost motivation. 

The good news is that positive cultural change is definitely possible. The terrible news is that it’s not an easy process that you can complete within a month, a quarter, or sometimes even a year. And you will require everyone to participate in this process. Culture is not something you can give to people, it is something you co-create in an environment that allows everyone to do their best job.

You might say that it is hard to measure cultural change but somehow everyone in the organization can always feel if this change is happening. So if bad culture is so obvious, and changes for the better are immediately noticeable, how can this change be impossible to measure? 

Actually, the relationship between culture and a company’s success is a two-way street: when employees are happy – they are productive, hence, higher business results. And when the results are good, it makes everyone happy. Looking at interdependencies between organizational culture and business results as a type of give-and-take marriage makes it a little easier to realize how to measure cultural changes and what outcomes you ultimately want to achieve. 

It also means that you should be directing your attention towards how many people across the organization understand your company strategy and vision, and if they have the means and the process to contribute to that strategy.

There are many components of organizational culture that make up its essence. Here, we will discuss the importance of communicating the company goals throughout the organization in the digestible and practical form, and what happens when you don’t do that. 

Communicating strategy and leading everyone towards the same goals is what leaders should do, so, naturally, we will be talking about different management styles and common issues that come to surface when you undervalue setting up a proper goal-setting process.

Different management styles and behaviors they inspire

If you are looking up “how to improve employee engagement”, it’s important to understand what kind of real-life behaviors have an impact on organizational culture, figure out the underlying reasons for those behaviors and plan the steps to positive change.  

There are 3 types of cultural environments that correlate directly with the style of management that is established in the organization. 

The first one is bad: 

  1. An environment where people are indifferent to the work they do (unfocused management style).

The second one is somewhat popular: 

  1. An environment where people are always busy but nothing changes in the business so the leadership is always unhappy and everyone is under a lot of stress (command and control management style).

And the third is what a good organizational culture should offer: 

  1. An environment where people are taking initiative to pursue impactful opportunities and solve problems that move the business forward (outcome-focused management style).

Evidently, there are many things to say about each type of the work environment but we will focus on the biggest issues that can be fixed with a proper goal-setting process. 

The “nothing is ever good enough so why bother” syndrome

This syndrome is brought to life by the unfocused management style. People lose motivation and complain about a company’s culture mainly because their work is not connected to the real world and real business value. They don’t get to experience that “kick” that happens when you see your work having an impact on something bigger than you. 

Saying “good job” occasionally and patting people on the back will not solve this problem. No one would care. The only way to get rid of this syndrome is by creating a sense of urgency around your company vision and following a goal-setting process that is driven by purpose and connects what people do every day to a bigger picture.

Being afraid to make mistakes

Nothing says “command and control” quite like people being intellectually paralyzed or discouraged by their fear of not meeting the manager’s expectations. So they do things to keep busy but those things don’t amount to explosive growth or sustainable improvements. 

We need to recognize that sometimes teams fail not because people didn’t work hard, or didn’t want to deliver good results, but simply because different people had a completely different understanding of what the outcome of their work should be. And there’s nothing worse than doing the same thing over and over again and being told that it is not what was expected. 

Interestingly, one study shows that teamwork and overall productivity of a group can increase dramatically when the leader of the group admits vulnerability and accepts the fact that he/she might be wrong sometimes. When a leader openly admits the possibility of failure, he/she invites innovative thinking and taps into the collective intelligence of the group. 

All great things in the world are accomplished by teams, and “you win as a team, and you lose as a team” but it is not enough to put this quote on the wall as a motivational poster. This idea has to be obvious in everything that you do, and especially in the way that you run your weekly meetings. Do you ask for opinions? Do you admit when you’re wrong?  

Great organizational cultures are built on the principles of openness and accountability which means that people are accepting their own weaknesses and mistakes while also helping each other to solve problems. Healthy feedback and regular information exchange is not an accidental occurrence, you need a plan to make it happen. Having to share information all the time might feel like an overwhelming task unless you come up with a process that would organize everyone’s collective effort.

The power of focus and freedom in organizational culture

In a highly competitive world where your only advantage is your ability to respond fast to changes, your organization needs to function like a living organism where each team is responsible for a particular function but everything they do is pointed to a specific overarching focus area – company-level strategic goal. 

It is absolutely impossible to create any kind of innovative environment unless you invite your people to the strategic conversations and show them how their work directly relates to the company’s success and vision. 

So as a leader, you need to communicate strategic priorities and explain what matters to the business right now. And then… give the teams the freedom to choose the means of how to produce these outcomes and make things real. Focus and freedom will bring you incredible results, and transform your company’s culture. 

To create an environment for innovative thinking and continuous improvement, ambitious companies change the way they set their goals and implement the OKR methodology. The underlying principles of the Objective and Key Results framework provide you an elegant and straightforward structure to focus everyone on the outcomes the organization needs to achieve. But don’t be fooled, the benefits of the methodology will not present themselves easily – you will need to change the way you work and how you think about improvement. To read some examples of how OKRs can help you change the organizational culture in your company, check out this blog post.

Willingness to learn and an open mind is what you need to be a good leader. And the culture that your leadership inspires should be the one that motivates people to grow personally and professionally. So be bold, and don’t fear change – embrace it.