Six Components of a Great Corporate Culture

Coleman, JohnHere is an excerpt from an article written by John Coleman for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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The benefits of a strong corporate culture are both intuitive and supported by social science.According to James L. Heskett, culture “can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.” And HBR writers have offered advice on navigating different geographic cultures, selecting jobs based on culture, changing cultures, and offering feedback across cultures, among other topics.

But what makes a culture? Each culture is unique and myriad factors go into creating one, but I’ve observed at least six common components of great cultures. Isolating those elements can be the first step to building a differentiated culture and a lasting organization.

[Here are the first three components.]

1. Vision: A great culture starts with a vision or mission statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, orients every decision employees make. When they are deeply authentic and prominently displayed, good vision statements can even help orient customers, suppliers, and other stakeholders. Nonprofits often excel at having compelling, simple vision statements. The Alzheimer’s Association, for example, is dedicated to “a world without Alzheimer’s.” And Oxfam envisions “a just world without poverty.” A vision statement is a simple but foundational element of culture.

2. Values: A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on the behaviors and mindsets needed to achieve that vision. McKinsey & Company, for example, has a clearly articulated set of values that are prominently communicated to all employees and involve the way that firm vows to serve clients, treat colleagues, and uphold professional standards. Google’s values might be best articulated by their famous phrase, “Don’t be evil.” But they are also enshrined in their “ten things we know to be true.” And while many companies find their values revolve around a few simple topics (employees, clients, professionalism, etc.), the originality of those values is less important than their authenticity.

3. Practices: Of course, values are of little importance unless they are enshrined in a company’s practices. If an organization professes, “people are our greatest asset,” it should also be ready to invest in people in visible ways. Wegman’s, for example, heralds values like “caring” and “respect,”promising prospects “a job [they’ll] love.” And it follows through in its company practices, ranked by Fortune as the fifth best company to work for. Similarly, if an organization values “flat” hierarchy, it must encourage more junior team members to dissent in discussions without fear or negative repercussions. And whatever an organization’s values, they must be reinforced in review criteria and promotion policies, and baked into the operating principles of daily life in the firm.

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There are other factors that influence culture. But these six components can provide a firm foundation for shaping a new organization’s culture. And identifying and understanding them more fully in an existing organization can be the first step to revitalizing or reshaping culture in a company looking for change.

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Here’s a direct link to the complete article.

John Coleman is a writer and consultant in Atlanta, Georgia. He holds an MBA with high distinction from Harvard Business School, where he was a Dean’s Award Winner and Class Day Speaker. He also holds and MPA from the Harvard Kennedy School, where he was a Zuckerman Fellow and a George Fellow. John is also a co-author of Passion & Purpose: Stories from the Best and Brightest Young Business Leaders. Follow him on Twitter at @johnwcoleman.

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