“Maintaining an effective culture is so important that it, in fact, trumps even strategy.”

– Howard Stevenson

Culture. It’s probably a word you hear often if you follow blogs on entrepreneurship or read articles on business and management. But what is it exactly?

According to Frances Frei and Anne Morriss at Harvard Business Review:

“Culture guides discretionary behavior and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which is of course most of the time.”Culture, personally for me has always been an important part of judging the current and future performance of the organization, especially in the Indian management scenario. Nowadays more and more companies are fostering cultures that can be classified under terms such as innovation, openness, talent development, leadership etc. Culture of a company also defines the overall enthusiasm and commitment of an employee and zeal to work harder and improve every day. You want happy employees because happiness means more productivity. And when a business is more productive, that means it is working faster; and when it works faster, it can get a leg up on the competition. So it’s worth the investment for companies to build and nourish their culture. In Indian scenario, especially in manufacturing sector, the structure and hierarchy or organizations are very rigid, true even for European and American companies that come to India, hence culture can be an impediment sometimes to rapid growth and, more importantly, responsiveness during the times of crisis or distress.

Culture also encompasses why people do what they do. As the Titanic’s captain grasped a little too late on that fateful night in 1912, 90 percent of an iceberg’s mass lies beneath the surface. Culture is similar as it includes observable behaviors (the what and how above the surface) as well as everything underneath – the shared mindsets and beliefs that influence how people in an organization behave. Just like a captain navigating frigid waters, anyone trying to understand an organization’s culture must recognize that most of what matters cannot be readily seen.

Thus, as can be surmised from the few of the many reasons that are listed above, Culture is very important for building and managing a good brand equity for the companies, retention of the key talents and gaining a competitive edge over the competitors (ah…this is a big topic in itself as to why Culture can be a USP in the ultra-competitive landscape, especially for start-ups and SMEs). Based on research by McKinsey & Co. organizations that encompass more than three million individuals, those with top quartile cultures (as measured by our Organizational Health Index) post a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile. Culture management strategy is a top-down approach and top management has ensure that it makes significant steps to change and manage the culture in line with the company’s long term vision and continuously monitors the culture w.r.t changing external and internal environment.

References

1.   www.McKinsey.com; Culture- why it matters

2.   www.Forbes.com; Importance of culture

3. www.webmd.com