What is Organizational Culture? The Five-Part High-Impact Model

Organizational culture is the next frontier in organizational performance. Get the company culture right, and everything else will fall into place. As a statement to the power of culture, the late Peter Drucker famously said, “culture eats strategy for breakfast.” Yet while spending millions on strategy, companies spend relatively little on organizational culture. The challenge is making organizational culture tangible. Traditional definitions of culture are too nebulous. When culture is defined as a set of “shared values,” many companies and leaders will just walk away because operating by any set of values is so challenging. Operating based on a set of shared values assumes everyone agrees and their leadership will be uncompromising in their execution of the shared values. However, if one leader or manager finds her personal values conflicting with corporate values, then they are no longer shared. However, by understanding leadership as the platform on which culture stands, we can design organizational cultures of high impact and performance. Then we can teach, train, and coach every leader to the requirements of the platform.

Pulling Back the Curtains a High-Impact Organizational Culture

Organizational leaders and academics talk glowingly of culture but frequently find it impossible to improve it. The reason is that organizational culture appears to be much like the iceberg where ninety percent is below the surface. It is hard to improve on something that is unseen. Yet organizations of high-impact are recognizing the value of building their cultures and they are highly successful as a result. They recognize that their organizational culture has the power to control the company’s speed and velocity toward high performance. When employees are introduced to a designed high-performance culture, the company or organization becomes a home. Attracting and retaining talent becomes easier, and teams become resources for innovation and creativity.

This article will explain the parts of organizational culture when seen through the lens of leadership. The aim is to pull back the curtain to see what is behind the mystery.

The Five Part Model of a High-Impact Organizational Culture

Designing the High-Performance Organizational Culture

It would be impossible for an architect to design a house if they have never seen a house. In the same way, it would be impossible for a software engineer to design a new software system if they had no idea what value the system was supposed to deliver. Without some solid structure, corporate culture will always be mystical. Conversations I heard about corporate culture remind me of the old fable about blind men “seeing” an elephant.

  • One man feels a tusk and pronounces an elephant is like a spear.
  • Another feels a leg and pronounces an elephant is like a tree.
  • Another feels the trunk and believes the elephant is like a snake.

All are correct, yet all are also wrong.

Discussions of organizational culture are much like the blind men “seeing” an elephant. Culture is too often something that we cannot describe, but we know it when we see it. However, by looking at culture through the lens of the leadership system, we can see all the parts and design corporate cultures that will engage employees while delivering unparalleled value to customers.

The High-Impact Organizational Culture Model Explained

Part 1: The Business Need Drives High-Impact Team performance

This sounds simple enough, but it is stunning how many companies do not understand their basic identity and the value they deliver to their customers. For example, there are two transportation agencies within the same state government. They are both agencies that fund transportation infrastructure. However, the cultures within each agency could not be more different. One agency sees its business as funding transportation projects that will increase public safety. Therefore, the opportunity to save lives is a high motivation for employees. In contrast, the other agency believes it is funding transportation infrastructure that will improve access. However, it has fallen into the trap of seeing its primary role as regulatory. Since much of the money they distribute is federal, they have evolved into an organization whose primary value is to oversee federal regulations so they do not get penalized. Consequently, employees are not motivated and do not feel appreciated. The difference is nuanced, but the impact on organizational culture and the people who work there is massive. The nobility of saving lives drives the culture of the first agency. The second agency has evolved into a culture that has become self-protective by correctly interpreting federal regulations so they do are not penalized. Instead of the nobility of purpose, it has become an organization that is focused on self-preservation. Assuming a risk of any kind is too much for leadership or employees.

Part 2: The Employee Experience in Building the High Performance Culture

The impact on the employee experience can be transformative. Employees in the first organization are engaged by the nobility of saving lives. Their experience is one of personal growth, professional learning, expanding mission, and customers who are raving fans. They can feel gratitude when members of the State Legislator appropriate money without requests for it. In contrast, the experience of employees in the second organization becomes one of completing tasks designed to maintain the status quo. Their daily work experience can be described as “putting round pegs into round holes.” Employees feel little need to develop their professional skills because the agency has no need for professional learning. And if employees question the status quo they are immediately considered a threat. Creativity and innovation are squashed as they represent a threat to the regulatory identity. Any kind of two-way communication between management and staff is squashed. Therefore, employees can leave their creativity and ingenuity (the best part of the human being) at the door.

Part 3: The Role of Leaders Within Elite Company Culture

We all play different roles throughout the day. For example, a woman will play the role of mother, wife, federal prosecutor, and community volunteer – all in one day. She moves from one role to the next with hardly a thought. Much of this is based on her identity. In the same way, a leader in transportation agency #1 will see their role as a creator of value for their customers. Their company culture that focuses on saving lives propels them to get better at every level. Thus they are constantly developing new skills in their staff because this translates into customer value – saving lives. Their identity as creators of value drives them to look for ways to improve processes that will eliminate waste, and create procedures for organizational learning. In contrast, leaders in agency #2 will see their role as protectors of a stagnant culture that protects federal assets. Not only is this a boring role, but it rewards compliance rather than customer value. Therefore, there is little need to develop the workforce, improve processes, or design organizational learning procedures. There is no sense of team a need for a great culture.

Part 4: The Daily Practices of Leadership in Constructing an Elite Culture

Elements of organizational culture such as shared values and common practices ultimately result in the daily interaction of leadership and staff. These interactions can be organized into three elements: behaviors, routines & rituals, and rules.

Part 4.A. Designing Values That Will Drive Behaviors Which Strengthen Culture

Great values drive behaviors that support organizational culture. When an organization develops a new set of company values, the rank and file sit back and watch. They want to see those values in the behaviors of leaders. All too often, values are good ideas to be modeled when it is convenient to do so. However, employees understand the there is a difference between espoused values and actual values. Espoused values only have meaning if they are backed up by modeled by the personal behavior of management. High impact organizations realize this and hold leaders accountable for modeling corporate values by their personal behavior. For example, if a company is developing a culture that respects diversity and inclusion yet its leaders are not called to account when they ignore diversity and inclusion, the culture will suffer. In contrast, employees see the relevance of a core value of respect, when a physician is pulled offline because he spoke disrespectfully to a nurse.

Part 4.B. Routines and Ritual to Maintain Culture

Organizations are as much about routines and rituals as people. Aristotle reportedly said: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Routines are the institutional muscle memory that creates keystone habits. These habits are the support structure for organizational culture. For example, the U.S. Army and the Marine Corps have built the simple routine of eating last into the daily practice of its officers. In this way, they reinforce the core value of “selfless service,” which the army defines as, “putting the welfare of the nation, the army, and your subordinates, before your own.” Therefore, the routine that requires the highest-ranking officer to eat last in the cafeteria is a simple way of reinforcing a culture of servant leadership. These simple routines become institutional muscle memory that supports organizational culture.

Part 4.C. Rules To Drive Culture

Every organization and culture has rules. Anyone who has traveled in Asia understands that the rules of personal space is different than in the west. For a company, the most important rules are the unwritten rules and who makes them. For example, the first consulting firm I worked for had a rule that did not appear in any employee manual. It was just understood that no personal effects should be on our desks. They did not want clients, to see family photos in personal work areas. In spite of the fact that clients never came to our offices. Since the CEO was way of in his company C-Suite and nobody could remember who made the rule, everybody put all the family photos in their personal workspace they wanted. The value of rules is to reinforce and align them with the culture. For example, one of the safest hospitals in the nation has a rule – leaders are NOT to become problem-solvers for their staff. They are developing a culture of patient safety and they want their front line staff to have the confidence that they can solve the problems of patient safety. When leaders take on the role of problem-solver, they rob their staff of this empowerment and the joy of creating an environment of patient safety.

Part 5: Rewards and Recognition that Support the High-Performing Culture

Every culture comes with a system of rewards, whether intentional or not. For example, a manufacturing company with a culture of “production at any cost” will have a reward system that focuses on maximizing production. Unfortunately, this reward system may lower the value of employee safety. Conversely, another manufacturing company may have a system of rewards that focuses on employee safety. As a consequence, employees reward their employer with greater productivity at lower cost and higher quality.

In conducting the research for Leveraging the Genetics of Leadership, I found a manufacturing company that is obsessive about eliminating waste. By following the requirements of servant leadership, every leader is assigned the role of supporting their team in the pursuit of finding and eliminating waste. However, it does not stop with leadership. Every time an employee discovers an opportunity to eliminate waste, their receive PTO – paid time off. It is not a lot, thirty minutes in fact. But the PTO is a nice incentive that rewards staff and supports their culture.

Part 5.A. Rewards and Recognition for Staff in the Execution of Organizational Culture.

Rewards for staff and team are all too frequently, disconnected from the culture. In many cases, outside the monthly paycheck, there are no rewards at all. Bonuses are nice, but they often reward staff for production and keeping costs low. There is a basic disconnect between what is being rewarded and the demands of culture. However, a manufacturing company I profiled in “Leveraging the Genetics of Leadership” rewarded their workforce with Paid Time Off (PTO) for finding and eliminating waste in the manufacturing processes. In doing so, they were intentionally supporting their culture where staff are the front lines of maximized value for their customers.

Part 5.B Rewards and Recognition for leadership in the Execution of Culture

Similarly, organizational culture is often disconnected from the rewards for leaders. If the only rewards leaders receive are based on production, then production is what they will get.

For example, in 2011, an iconic hospital in Seattle, Washington, was acquired by a larger healthcare system. As a result, they began an overhaul in the system that had built a culture of patient safety and community care. One part of the overhaul was changing the salary structure of surgeons in the Neurological Institute. In an effort to get more surgeries, they compensated surgeons with bonuses for their surgical revenues rather than putting the bonus money into a pool to be shared. As a consequence, surgical revenues skyrocketed. However, in 2016, the local newspaper exposed the abuse, unprofessional conduct, and actual harm to patients. Consequently, the director was forced to resign and lost his license to practice medicine. In addition, the CEO resigned, and the parent company took out a full-page ad in the local newspaper apologizing to the community, patients, and staff.

As Jeffrey Pfeffer of Stanford University writes, “When leaders’ own jobs and salaries depend on how well they look after others, they will do so.” Until rewards and recognization are aligned with the requirements of the corporate culture, employee engagement will remain low, profits will not be what they could be, and customers will never receive the value they deserve.

Conclusion: The Five-Part Model of High-Impact Organizational Culture

There is a growing body of research that links high-performance and organizational culture. I would argue that culture is the next frontier of organizational performance. However, capturing the opportunity that culture provides for both the organization and its people will be a challenge. When culture is defined as “shared values,” “unwritten expectations,” and “common practices,” the parts are too nebulous. Many see culture like the 90% of the iceberg that is below the waterline. It is largely unseen, but yet it has the power and the mass to set the course and speed.

This article seeks to dispel the mist, pull back the curtains and demonstrate the structure of corporate culture as an output of the leadership system. When organizational culture is understood in this way, it can be designed, modeled, and constructed. The fact is, organizational culture does have form. Through the lens of leadership, each of the parts can be clearly understood and replicated. This cultural map is a framework for effective leadership. Leadership drives culture. Therefore, by understanding culture from the perspective of leadership we can design cultures from the framework of these five parts of the map:

About the Author

author, speaker, consultant

Daniel Edds, MBA is a management consultant who supports high-impact organizations to develop courageous cultures. He is the author of two books. The most recent is titled, Leveraging the Genetics of Leadership, cracking the code of sustainable team performance. This book documents how high-impact organizations transform their cultures to engage the full breadth of the human opportunity, teams that build community while also delivering unparalleled customer value. In addition, Dan serves on the boards of several community-based nonprofits.

Dan can be reached for comment at (425) 269-8854, or by connecting here.