A 2021 PWC survey revealed that a strong Organizational Culture drives better business outcomes. The overriding consensus is that a 69% of senior leadership surveyed credit much of their success during the pandemic to culture. Almost 70% who said that their organizations were able to adapt over the past year also reported that their culture has been a source of competitive advantage. Interestingly 67% of survey respondents said culture is more important than strategy or operations. But there’s more than just one type of Organizational Culture. We’ll start by defining Organizational Culture.
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What is organizational culture
Organizational culture is the way in which people in an organization relate to each other, their work and the outside world, in comparison with other organizations. Your Organizational Culture shows how your organization works: how to things get done, the interactions between people, and employee relationships to their work and the outside world. The best organizations often place equal emphasis on strategy and culture. Such organizations create a culture that motivates their teams. Organizational Culture is what differentiates your business, so it is important to know the various factors that contribute to your company’s culture.
Types of Organizational Culture
Optimal culture: is the organizational culture that best supports your organization's strategy in order to be successful. It should take into account the restrictions – such as rules, legislation, economy, that apply to your organization and the strategy your organization has.. It is crucial to keep in mind that optimal culture should always be tailored for each organization, or function of an organization. It is never a good idea to try to apply the culture of another organization as the optimal culture for yours.
Actual culture: should be the basis for all Organizational Culture change projects. It is the culture your organization or department currently has. In order to guarantee accuracy and objectivity, actual culture should be measured using a valid and objective method, such as our Multi-Focus ModelTM on Organizational Culture. It is an easy to use, yet systematic and data-driven, tool based on sound, scientific research that thousands of global organizations have relied on for shaping their culture, since 1985.
Perceived culture: the culture people in the organization think it has. It is also the culture you think your organization has. You can get more insight on the perceived culture by asking others and this might change your perception of your organization's culture. However, due to the subjective nature of perceived culture, it is not useful for aligning your culture with your strategy as you will most likely not get the complete and correct picture about your organization's actual culture. Implementing changes based on perceived culture alone, without measuring the actual culture, is one of the reasons why many Organizational Culture change projects fail.
Ideal work environment: is measured exactly the same way as actual culture, except that instead of asking questions about the current work environment, the respondents describe the Organizational Culture they would love to have. Measuring Ideal work environment gives valuable information about the preferences of the people working in the organization. It can offer insights into how the targets for Optimal culture should be set and how difficult it will be to reach them.
Our Organizational Culture Scan allows you to divide your organization into subcultures. A subculture covers a section within the organization that should have their own specified culture. Subcultures can be based on a variety of factors such as function within the company, department or geographical location.
