Organizational Culture — What it is and Why is it Important?

by Rashmi Airan, Consultant, The Franchise Consulting Company

I have been a professional in the legal, business, government, and community sector during my years as an adult. Though I was not aware of it as I was working in these various positions, I was exposed to an organizational culture that focused on outcomes and results over values and behavioral norms. As a young twenty-something fresh out of college, I worked in a culture that emphasized roles withhierarchy and thrived on competition. Later as an eager lawyer, I worked in a culture that inherently operated with many sub-cultures embedded within the organization.

I am often asked to help others on finding the right franchise opportunity where there is a foundation of integrity in the organization’s culture. I have spent a significant amount of time doing research and understanding how corporations within one industry would operate in an organizational culture that is completely different from an entity that functions in another area altogether. As defined by Merriam Webster’s Dictionary, culture is defined as “the set of shared attitudes, values, goals, and practices that characterizes an institution or organization.” Clearly, however, every organization (whether corporate, governmental, or non-profit) formulates and operates with a culture unique to that entity, thus begging the question: What is organizational culture, why is it important, and can it be defined? Culture is, essentially, the underlying values, assumptions, and beliefs that act as the heartbeat of an organization. These all contribute to the distinct social and psychological environment of an organization. (See www.businessdictionary. com) Every company is made up of individual people, each of whom should understand, uphold, and be inspired by the organizational culture in his/ her workplace. Culture will include the written rules on how to do things, but also include the passed-down stories and experiences from those that have helped shape the culture. Leaders are instrumental in formulating and sustaining the culture of an organization.

So, why is organizational culture important to a franchisee and why are companies placing time, energy and resources to training on, evaluating, and, at times, working to cultivate and change the culture within their organizations? In essence, a strong culture can be the key driver of performance and strategic advantage. A culture can act as an ignition switch turbo-boosting an organization with overall improvement in efficiencies and compelling positive metrics. An organization that is clear about its culture will hire and affiliate with those individuals and other entities that support the foundational values and beliefs of the culture. The leaders of such organizations model behavior and actions that are in line with the culture and lead by example.

It is important to understand, however, that cultures are dynamic and depend largely in part on the people that operate within the culture. Shifts will eventually take place thereby mandating an assessment of the culture on a regular basis. As people are constantly evolving and ever-changing, the cultures within which they work will necessarily need to be re examined and revised.

IDENTIFYING THE COMPANY CULTURE

The way in which the culture of an organization can be identified with these aspects of an organization:

1. Treatment of employees, customers, and the larger community – insist on fairness, tolerance, and respect for individual(s)?

2. Integrity of the functions and operations– value ethics and morality?

3. Freedom in decision-making and personal expression – are team members encouraged to express their emotions and concerns and have the business discipline for decision-making to do the right thing?

4. Commitment to innovation –encourage experimentation and risk-taking?

5. Flow of power and information - opportunity to speak openly in safe spaces and to challenge if there is disagreement? What is the distribution of power

6. Structure and hierarchy of the team - rigid roles and hierarchy?

7. Incentive structure - motivation to make good choices, to act as a team, to empower each other, to contribute to the community, to lead, and to help the company grow?

RASHMI AIRAN 305-772-8712 Rashmi@thefranchise consultingcompany.com