At the core of every company lies its culture, encompassing all the tiny threads bringing people together and stimulating them to work toward shared goals. It is what lights the path amidst uncertainties and reminds people they’re a part of something.
Despite its paramount importance, it’s hard to define, track, and measure a company’s culture. After all, it may mean different things to different people.
Yet, not getting this element right has a high price. – For instance, stable company culture can increase employee engagement, stimulate workforce growth, and increase net profit by 85 percent over five years.
Moreover, job seekers typically avoid organizations without a positive shared ethos, making talent attraction and retention difficult. That can affect team performance, recruitment strategies, and business continuity.
Hence, it’s crucial to understand different company culture aspects and what causes it to fail.
What is Company Culture?
Company culture represents an organization's shared behaviors, attitudes, values, characteristics, and objectives. It manifests in how leaders and employees interact with each other and third parties, their decision-making, priorities, and expectations.
Despite being an intangible element, company culture is noticeable in the work atmosphere, ethics, and workplace connections. Some also call it organizational or corporate culture.
How Does Company Culture Function?
Every organization has unique culture management, and some have a deliberate approach, while others don’t cultivate it intentionally. Instead, it shows in their decision-making and goals over the years.
However, only a strong company culture helps guide employees’ behaviors and provides them with an understanding of desirable business outcomes. That also enables people to coordinate their actions and hit the targets more efficiently.
Some organizations encourage team-based workplace culture, encouraging workers’ participation across all levels. Others prioritize traditional management and strict hierarchy.
The latter creates a work environment with clearly defined job responsibilities, standards, and objectives. However, this company culture management often makes job promotions and internal mobility more challenging without a formal program.
On the other hand, flexible workplaces make it easier for employees to take on new job roles, projects, and opportunities. Here’s why company culture is critical, regardless of how leaders cultivate it.
Why Company Culture Matters?
People are more eager to direct their effort toward something if it aligns with their objectives, values, and visions. The same applies to the company culture – it provides a higher meaning to everyday responsibilities and helps workers establish more profound relationships with their coworkers.
But company culture can also help people overcome challenges and find solace in times of crisis due to providing direction and clarity. According to the report by SHRM (2021), 74 percent of Americans claim their organizational values helped guide them through the pandemic.
Thus, 94 percent of people managers agree a positive workplace culture creates a resilient team of employees. Another survey (PWC, 2021) found that 66 percent of C-suite executives and board members believe culture is more significant to performance than the organization’s strategy or operating model.
No wonder poor company culture could lead to a negative reputation, erode productivity, and block employee engagement. That also makes it crucial to understand what causes it to fail.
Top 6 Reasons Company Culture Fails
1. Lack of Values and Visions
Companies should have well-defined values and visions that guide their efforts, activities, and objectives. They should also clarify these qualities to attract compatible candidates and retain top performers.
If a company lacks a mission and principles, employees might feel confused about whether their responsibilities have a higher purpose. Over time, that can cause people to lose motivation and a sense of meaning behind their jobs, resulting in a company culture failure.
2. Lack of Transparency
Closed-door decision-making can alienate employees and eliminate their input. It can also impact the company culture, as it diminishes trust and prevents people from having a say in conversations that affect their lives and job roles.
Instead, employees start talking among themselves, creating a rift and causing second-guessing. Moreover, they might feel disempowered and unable to identify with the company's values and objectives.
3. Poor Example Coming from the Top
In most companies, employees perceive their managers and bosses as authority and expect them to set a good example. If executives act contrary to the company values, they send wrong cues to the people.
For instance, according to Strategy Business, 2018 was the first year with over 39 percent of CEOs leaving their jobs due to unethical behavior, such as fraud and sexual misconduct. These issues shatter company culture and make it impossible for employees to trust the leadership and perceive them as the epitome of integrity.
4. Lack of Diversity, Inclusion & Equity
Positive company culture is inclusive and makes every employee feel accepted and welcome. Thus, more than three out of four workers prefer diverse companies.
An equitable culture prevents hostile environments and high turnover. People must feel a sense of belonging and that they fit well in the time, or they might look elsewhere.
5. High-Pressure Work Environment
Many business leaders focus solely on profits and revenues, often at the expense of employee well-being and company culture and values. As a result, people feel overwhelmed with hectic deadlines, aggressive expectations, sales targets, and no incentive systems.
According to the 2022 Global Culture Report, poor workplace cultures lead to a 157 percent increase in the incidence rate of moderate-to-severe burnout. – Role ambiguity, role stress, and conflicts in cooperation contribute to exhaustion and lack of motivation.
6. Lack of Recognition and Rewards
Every employee hopes their employers will recognize their hard work and effort. That also reminds them their company values them and cares about their progress.
Recognition and rewards can enrich the workplace culture, reinforce the connection between workers and their jobs, and strengthen team bonds. Moreover, these elements also provide employees with a sense of endless opportunities and encourage their engagement.
How to Prevent the Company Culture from Failing?
- Commitment & Accountability from the Top – Everyone should be accountable for their actions. Ensure the leadership body acts accordingly to the company values and carries out the business vision. They should also understand the importance of company culture vigilance and commitment to respectful communication and behavior.
- Establish Clear Company Values – Define your company values and visions and ensure everyone in the workplace understands them and acts accordingly. Let these qualities guide you through uncertainties and turn your teams into a thriving community.
- Set Up a Culture Vigilance Team – The HR department shouldn’t be the only one responsible for company culture. Instead, establish a culture vigilance team consisting of the CCOs, legal professionals, and Diversity, Inclusion & Equity Risk Management.
- Leverage Technology – Modern tech can help you track your company culture and use various features to enrich it. For instance, motivac.io is a platform that allows employers to determine the company values they want to bolster or use a suggested corporate value system. They can also boost employee motivation by providing small gifts and rewards, such as cinema tickets or a day off.
Company cultures aren’t bullet-proof and can fail without stable foundations and well-defined values. Organizations must ensure accountability, set a stellar example from the top, nurture DE&I, and acknowledge their employees’ efforts.
But they can also reinforce their company culture strategies with top-notch technology. Click here to discover how to enrich your corporate values and increase employee motivation.