Organizational culture is a term used to refer to the shared values, customs, beliefs, behaviors, and attitudes that exist within an organization and between its people.
An organization’s culture is its collective personality that defines how employees interact with one another, how they approach their work, how they perceive their roles within the organization, and, ultimately, how the organization is perceived by outsiders.
A Renewed Focus on Culture
In the post-pandemic working world, there has been something of a renewed interest in organizational culture that has largely centered around the benefits to employees.
Recent studies have said that today, culture is an important factor for almost half of all job seekers and that 94% of executives and 88% of employees believe a distinct culture is important to business success.
Despite this, only 12% of executives believe that their companies are driving the right culture, and fewer than one-in-three executives (28%) report that they actually understand their organizational culture despite knowing it’s important.
Why Organizational Culture is Important
Organizational culture is important because it has a huge impact on the overall success and health of an organization, its people, and its customers.
Perhaps most important of all is how it defines a company’s internal and external identity. As Peter Ashworth, the CEO of Humanity We, puts it, organizational culture “defines for you and for all others, how your organization does business, how your organization interacts with one another and how the team interacts with the outside world, specifically your customers, employees, partners, suppliers, media and all other stakeholders.”
In other words, organizational culture—whether positive or negative—reverberates across all areas of your business because it represents the way in which you do business. It’s your identity and your image, and as such it determines how people both internally and externally perceive you.
5 Warning Signs of a Negative Culture
Despite its critical importance, organizational culture—and indeed, figuring out how to promote a positive one—is something that many leaders struggle with.
This is because organizational culture can be influenced by a variety of factors, such as leadership vision, employee behavior, organizational structure, communication, history, and more.
The reality is that culture is increasingly becoming a liability for companies that haven’t paid attention to it. As such, the first step to promoting a positive culture is first making sure that you don’t have a negative one.
Warning Sign 1: Little Investment Into People
Investing in your people is an investment in a healthy culture, and so it follows that a lack of investment is one of the biggest cultural risk factors.
When employees join a company, they are doing so in return for fair compensation, career development, and various benefits. If you’re not upholding your end of the deal by providing these things, they are less inclined to give their work their all and will often become disengaged and uncaring about their work. If these conditions exist among a large pool of employees, the organization can quickly become vulnerable.
Warning Sign 2: A Lack of Accountability
Employees who are under the impression that there are no consequences for their actions and aren’t held accountable for things that they do will naturally be more careless. Doubt about a company’s commitment to its core values can begin to creep in, and cultural stewardship erodes.
The impact of this is not only that it creates a great potential for employees with bad, lax attitudes to their work to deliver little value to the organization and potentially harm it, but it also alienates good employees who want to do things right, potentially pushing them out the door. This can have a domino effect and lead to an organization where all the good people eventually leave for new opportunities.
Warning Sign 3: A Lack of Diversity and Inclusion
Diversity, equality, and inclusion (DEI) have come a long way in recent years thanks to movements such as #MeToo and Black Lives Matter.
With issues of sexual harassment, gender discrimination, and discrimination based on sexuality taking center stage, companies quickly scrambled to revise their policies, ensure more diversity at the board level, and create dedicated executive-level positions responsible for overseeing DEI internally. Although it’s impossible to quantify just how much DEI efforts have helped to reduce instances of discrimination, we do know that one of the biggest indicators of cultural risk is a lack of it,
Warning Sign 4: A Lack of Enthusiasm
If you look around at your employees, does everyone seem deflated? Do they seem like they just don’t care? That they would rather be anywhere than at work?
Attitudes like this create a self-fulfilling prophecy, and all that negativity will be down to cultural issues that need to be rectified. What’s more, a lack of enthusiasm doesn’t just affect those individuals but hinders everyone’s desire and ability to get work done—93% of employees say that they’re less productive when they are working with miserable people.
Also, consider whether there’s a fear of failure among workers. Although nobody wants to make mistakes, they shouldn’t be scared of this happening. This could be indicative of a widespread lack of psychological safety among the workforce which, according to Google, has a detrimental impact on team effectiveness.
Warning Sign 5: High-Pressure Environments
We’ve all seen those companies, where there’s a culture of “grinding” to the max to get the job done, where its followers will stop at literally nothing to try and outshine their peers. Although admirable (albeit to a limited extent), high-pressure environments are another indicator of cultural risk.
Companies that operate in these environments often do little to manage them, often leading to situations where profit and growth are coming at the expense of values, ethics, and employee wellbeing. Unrealistic deadlines, poorly-structured incentive systems (bonuses, commission), over-the-top sales tactics, and “alpha” environments can lead employees to take extreme measures to get the job done—and this isn’t necessarily a good thing.
Safeguarding Against Cultural Risk
Organizations today must work hard to build and maintain cultures that not only represent their values and ways of working but are built to withstand today’s volatile and unpredictable business environment.
Although managing cultural risk is something that takes time and effort, being vigilant and addressing negative cultures is the only way for organizations to effectively safeguard against critical vulnerabilities and take action to stop crises from arising before they take hold.