What is organizational culture?

What is its role in business?

Organizational Culture can be explained in two ways. Firstly, scientifically, as the set of variables and information that explains the preferential interactions between people, organizations, and tasks. These interactions categorically need to predict outcomes of a good/bad culture such as tenure, engagement, participation, and organizational satisfaction. This albeit a true statement, is not an ideal explanation of a complex system.

Alternatively, we can describe culture as the inherent preferences people - within a culture - have toward their environment (organization). The group of people that represents the organization has certain preferred methods of interaction with others and the organization at large. Organizational culture is the trend we can see in these interactions and the environment that hosts them. Hence, strong widely held preferences, tend to create strong cultures and weak individual preferences tend to create open and adaptable cultures.

The role in the business of organizational culture is to guide the behavior of people but also their expectations of the environment to create the most productive environment. Typically concepts like employee churn (tenure), satisfaction, participation, and productivity are affected by culture. Measuring culture is an important step to get a grip on these variables. Companies that have a strong unified culture outperform companies that don’t by having happier more satisfied employees (read more about this here: financial analyst journal).

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