Organizational culture impacts job satisfaction, performance, recruitment, and unethical behavior. Positive cultures lead to cohesion, innovation, and high morale, while negative cultures lead to stress and turnover. Defining culture is difficult, but understanding its impact can help shape it. Research is lacking, but observational studies show correlations between culture and performance. Business leaders can use these correlations to address cultural problems and improve organizational performance.
Looking at the impact of organizational culture, researchers have suggested that culture seems to reverberate down to the micro-level of organizations. If a company is pervaded by an adverse culture and employees are not matched to the organizational culture, this appears to lead to job dissatisfaction and inefficient performance. A positive organizational culture generates both direct and indirect benefits related to organizational performance. Business leaders can use these correlations to understand and address the impact of organizational culture.
A negative organizational culture also appears to be destructive to the recruiting process and is reflected in high turnover rates. Other affected areas might include underreporting unethical behavior, high levels of stress, and stifled creativity. Organizations with a positive culture might emphasize innovation and treat customers well. They tend to encourage cohesion at all levels of the organizational structure and intentionally seek to promote high employee morale. Such culture-instilled characteristics correlate with a competitive advantage, reliable and effective performance among employees, and an alignment of corporate resources with organizational goals.
Company executives can make decisions based on the impact of culture within an organization, especially when there are problems manifested in the organization due to cultural trends. If a company is having a problem with customer turnover and research shows that this problem is due to poor customer service, company leaders will need to find out why employees aren’t concerned about customers. By implementing an anonymous feedback mechanism, for example, leaders can find answers to such questions. After leaders have identified the answers, they can move forward to change the organizational culture to better reflect its customer base.
Defining organizational culture proves difficult due to the inherent tendency to define it from divergent perspectives. Determining the impact of organizational culture sometimes succumbs to the same conundrums. The main challenge is the lack of definitive research that conclusively demonstrates positive and negative attribution to organizational culture. Despite this, the research highlights some important correlations between culture and performance. Understanding these interrelationships and their impact can help an organization evaluate and shape its culture.
Experts often disagree on the best way to define organizational culture. Thus, two types of definitions commonly emerge in most of the literature on the topic: outcome-oriented descriptions and process-oriented expositions. Outcome-oriented terminology describes organizational culture as behaviors manifested, and process-oriented descriptions detail the mechanisms that produce those behaviors. Regardless of location or subject focus, most experts agree that organizational culture is an agency of social functions that cultivates disparate consequences.
The source of contention among experts commonly highlights the lack of research required. It’s not so much that organizational culture is neglected, but quite the opposite. The challenge is implementing the longitudinal studies required to produce conclusive evidence. Such research would require studying several organizations simultaneously under the exact conditions over a long period of time. Attempting to subject business organizations to such constraints is not feasible and presents ethical problems for researchers.
Instead of relying on empirical research, scientists usually study the impact of organizational culture with observational methods that leave room for different interpretations of the results. Such observational studies, however, shed light on the impact of organizational culture. The most commonly used tests are correlations of repeated observations of cultural behaviors and subsequent organizational performance.
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