Culture is described as the sum of the shared assumptions, values and beliefs that create the unique character of an organization. Culture, if managed well, can deliver value to stakeholders through the behavior and actions of employees. Culture is how the values of the organization are practiced on a daily basis, reflected in the behavior of employees toward stakeholders. The culture of a company can be known especially during turbulent times based on employees behavior in times of stress.
Culture is not only related to the way the company treats employees but also based on the way it communicates with customers, vendors and other stakeholders. It goes beyond financial gain, and can leave an impression on the people and the organization it serves. Culture also acts as an instrument for an organization in linking principles of strategy and business in a positive way by creating value. Organizations that take seriously cultural factors such as mission, consistency, and employee involvement tend to have higher returns on assets, sales growth rates, and other business success indicators.
The following are factors that create healthy culture in an organization:
- Alignment: There should be proper alignment between desired culture and actual culture, and organizations should develop a way to measure this.
- Accountability: Culture should be such that mistakes are identified, remedied and included as lessons learned; blame shouldn’t be pushed on others due to fear of criticism.
- Transparency: Employees should be encouraged to report mistakes, issues, or risks without any fear of disciplinary action.
- Resilience: The organization should be able to withstand turbulence due to internal and external factors and not “change with the wind.” Changes should happen in a conscious and deliberate manner.
The following six focus areas are recommended for healthy culture in an organization:
- Board oversight responsibilities: The board and senior management should ensure adequate policies, rewards and controls are created to support the desired culture.
- Assessing culture: The culture of the board and various units of the organizations should be assessed on a regular basis.
- Embedding culture into discussion about strategy, risk and performance: The board should assess whether compliance, risks and other internal controls are aligned with the organization’s culture.
- Selection and evaluation: The organization’s culture should be an explicit part of the criteria when hiring for important roles as well as be incorporated during leadership development and succession planning.
- Reward and recognition system: Incentives should be provided so that the desired culture is reinforced in the organization.
- Communication with shareholders and stakeholders: Stakeholders should be communicated with regarding how to best monitor and assess the company’s culture.
These factors create powerful, successful and durable companies with lasting value and play an important role in achieving competitive advantage. Strong organizational culture plays a very important role in managing crises such as the current COVID-19 pandemic. Factors such as loyalty, flexibility, teamwork and intrinsic motivation among employees helps organization to manage crises. Embedding the right mindset in the organization comes with leadership initiatives in hiring, customer service and employee interactions. During a crisis, culture will determine how the crisis is handled and remembered by the public. For instance, during the lockdown in India, companies like Mahindra Group, instead of closing down their resorts and factories, took the opportunity to serve people by allowing their resorts to be used as COVID hospitals and diversified their business, helping the nation in times of crisis by manufacturing face shields, low-cost ventilators and hand sanitizers in record time. They also used some of their locations as kitchens to feed the public and distribute rations.
Apart from crisis management training and policies, aligning the mindset of the people in the organization with the culture and brand makes the difference. Organizational culture should be regarded as an asset like human, physical, information and other business-critical assets.