Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires. A company’s culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction, and every other aspect of operations.
History of Corporate Culture
Awareness of corporate or organizational culture in businesses and other organizations such as universities emerged in the 1960s. The term corporate culture developed in the early 1980s and became widely known by the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to describe the character of a company. This included generalized beliefs and behaviors, company-wide value systems, management strategies, employee communication, and relations, work environment, and attitude. Corporate culture would go on to include company origin myths via charismatic chief executive officers (CEOs), as well as visual symbols such as logos and trademarks.
By 2015, corporate culture was not only created by the founders, management, and employees of a company, but was also influenced by national cultures and traditions, economic trends, international trade, company size, and products.
There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake of globalization and the increased international interaction of today’s business environment. As such, the term cross culture refers to “the interaction of people from different backgrounds in the business world”; culture shock refers to the confusion or anxiety people experience when conducting business in a society other than their own; and reverse culture shock is often experienced by people who spend lengthy times abroad for business and have difficulty readjusting upon their return.
To create positive cross-culture experiences and facilitate a more cohesive and productive corporate culture, companies often devote in-depth resources, including specialized training, that improves cross-culture business interactions.
Examples of Contemporary Corporate Cultures
Just as national cultures can influence and shape a corporate culture, so can a company’s management strategy. In top companies of the 21st century, such as Google, Apple Inc. (AAPL) and Netflix Inc. (NFLX), less traditional management strategies such as fostering creativity, collective problem solving, and greater employee freedom have been the norm and thought to contribute to their business success.
Progressive policies such as comprehensive employee benefits and alternatives to hierarchical leadership—even doing away with closed offices and cubicles—are a trend that reflects a more tech-conscious, modern generation. This trend marks a change from aggressive, individualistic, and high-risk corporate cultures such as that of former energy company Enron.
High-profile examples of alternative management strategies that significantly affect corporate culture include holacracy, which has been put to use at shoe company Zappos (AMZN), and agile management techniques applied at music streaming company Spotify.
Holacracy is an open management philosophy that, among other traits, eliminates job titles and other such traditional hierarchies. Employees have flexible roles and self-organization, and collaboration is highly valued. Zappos instituted this new program in 2014 and has met the challenge of the transition with varying success and criticism.