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. 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.
1. Vision and mission: A great culture starts with a vision statement. These simple turns of phrase guide a company’s values and provide it with purpose. That purpose, in turn, positions 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. Sometimes a great vision statement is complemented by a mission statement, which attempts to make the vision more tangible by articulating concrete goals for the organization. A vision is the company’s purpose while a mission spells out more specifically what the company is seeking to achieve with that purpose.
2. Values and practices: A company’s values are the core of its culture. They 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. 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.
3. People: No company can build a coherent culture without people who either share its core values or possess the willingness and ability to embrace those values. That’s why the greatest firms in the world also have some of the most stringent recruiting policies. According to Charles Ellis, as noted in a recent review of his book What it Takes: Seven Secrets of Success from the World’s Greatest Professional Firms, the best firms are “fanatical about recruiting new employees who are not just the most talented but also the best suited to a particular corporate culture.” Ellis highlights that those firms often have 8-20 people interview each candidate. And as an added benefit, Steven Hunt notes at Monster.com that one study found applicants who were a cultural fit would accept a 7% lower salary, and departments with cultural alignment had 30% less turnover. People stick with cultures they like, and bringing on the right “culture carriers” reinforces the culture an organization already has. A small number of misaligned people, however, can often quickly poison a culture.
4. Narrative: Marshall Ganz was once a key part of Caesar Chavez’s United Farm Workers movement and helped structure the organizing platform for Barack Obama’s 2008 presidential campaign. Now a professor at Harvard, one of Ganz’s core areas of research and teaching is the power of narrative. Any organization has a unique history — a unique story. And the ability to unearth that history and craft it into a narrative is a core element of culture creation. The elements of that narrative can be formal — like Coca-Cola, which dedicated an enormous resource to celebrating its heritage and even has a World of Coke museum in Atlanta — or informal, like those stories about how Steve Jobs’ early fascination with calligraphy shaped the aesthetically oriented culture at Apple. But they are more powerful when identified, shaped, and retold as a part of a firm’s ongoing culture. In today’s multi-media environment organizational storytelling may involve video, podcasts, social media, customer testimonials, townhalls, and simple word of mouth in the halls of the office. In today’s post-COVID world, this ability to tell stories across a very physically fragmented employee base may be more difficult and important than ever.
5. Place: Almost no element of corporate culture is undergoing as radical a transformation as the idea of “place.” Post-COVID, many firms have fully embraced either flexible hybrid models which allow employees to split time between the office and home or fully remote environments in which few or no physical offices exist. In their own ways, however, even these choices create a place for the culture, cultivated through home offices, Zoom, virtual hangouts, and company retreats. Where do we go from here? No one knows, precisely. But place has been critical to culture for thousands of years. It’s why countries with different geographies developed such disparate cultures, and why world religions have paid such close attention to the design, construction, and congregation habits of houses of worship. Sure, the once heralded “open office” concept has faded from prominence (though it still may be critical in companies like Pixar). And some firms, like Coinbase, may lean into the remote first dynamic by eschewing luxurious campuses like the veritable temple city erected by Apple. But the places in which people work together—virtual or real world, permanent or temporary—will continue to play a critical role in cultural formation and wise organizational leaders will devote real time to considering what that means in the context of their own firms.
6. Language: Almost all great cultures make distinctive linguistic choices. This is, again, obvious in the world’s oldest cultural institutions like tribes, religions, and nations (which have not just their own linguistic choices but their own languages). But it’s overt in modern organizational cultures as well. The Marine Corps, for example, one of the most high functioning and distinctive organization’s in the world has a series of both formal and informal language choices that make a Marine identifiable almost immediately in the way he or she speaks. Silicon Valley darlings like Google—and the Googlers who populate the organization—have leaned heavily into crafting the language of their community. And even formerly staid organizations like hedge funds often develop distinctive linguistics, where firms like Bridgewater have cultivated an environment of radical transparency by codifying the unique words and phrases that define their culture. This serves several purposes. One, it creates a simple short-hand for concepts that would otherwise take a long time to communicate. Two, it creates a sense of in-group and out-group, so essential to culture. Those in on the language feel a special sense of community and distinctiveness from those in other firms. Such language isn’t prohibitively difficult to cultivate, but it’s built over time as leaders and employees coin terms for the common elements of the organization’s culture that make it unique, and those terms get consciously used and reused by future generations. Leaders who approach this process thoughtfully can accelerate and deepen the process.
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.
An earlier version of this piece previously appeared at HBR. I thought it was time for a modest update. More of my thoughts on culture can be found in the HBR Guide to Crafting Your Purpose. Please consider purchasing a copy and writing a review!