Building a Company Culture: What You Need to Know

This article is an excerpt from the Shortform book guide to "How Will You Measure Your Life?" by Clayton M. Christensen. Shortform has the world's best summaries and analyses of books you should be reading.

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Do you want to find out how to build a company culture? What do you need to know about building a company culture successfully?

A company culture is a mix of values, behaviors, processes, and priorities within a company. Building a company culture successfully can have huge benefits for a business.

Learn more about building a company culture with a few practical steps.

Company Processes and Priorities

Before we cover building a company culture, it’s important to know about company processes and priorities:

Processes

These are the ways employees communicate, coordinate, and make decisions. 

Unlike resources, processes don’t appear on a balance sheet. But while less visible, processes facilitate the use of resources to solve problems. Processes include:

  • The methods or systems by which products are developed and produced.
  • Methods of market research, budgeting, employee development, compensation, resource allocation, and so on.

Strong processes work regardless of who performs them (employees doing them are more or less interchangeable).

Priorities

This may be the most important of the three factors determining capabilities. Priorities guide a company’s decisions, including what the company invests in and chooses not to invest in. Leaders need to communicate clear company priorities so employees make decisions aligned with the company’s priorities and strategy.

How to Build a Company Culture 

People often think that perks and policies, such as casual dress, free food, company T-shirts, and bringing kids or dogs to work, define a company’s culture. While these may reflect office culture, a culture itself is less visible.

Organizational expert Edgar Schein of MIT defined culture as an ingrained way that employees go about their work—it’s a sense of the way a company does things, which becomes so automatic that people don’t think of doing things any other way. This sense develops over time from working together and seeing what works (the first time something works, others repeat the process and it becomes the way to do it). Together, employees reach an understanding of the company’s priorities and the processes for implementing them. 

Managers don’t need to supervise everything because the organization essentially runs on its own. People instinctively do things in the prescribed way. Another way to define culture is as the combination of an organization’s priorities and processes.

The animation studio Pixar is an example of a company with a strong culture. Its creative process differs from that of other studios. Instead of a development group assigning ideas to directors to pursue, Pixar helps film directors refine their own ideas. Nearly everyone in the company provides no-holds-barred feedback on each film; the timetable takes a back seat to quality. The processes and priority of creating top-quality films have become a unique creative culture. 

Steps for Building a Company Culture

If you want to know how to build a company culture, it’s important to have some practical steps for getting there. 

Many companies proactively create a culture, writing it down and talking about it frequently. For example, Netflix posts key elements of its culture online, including:

  • Not having a vacation policy: Employees may take off as much time as they want as long as they’re doing great work and meeting their responsibilities.
  • Expecting all employees to be outstanding performers; those with merely “adequate” work will be let go.
  • Giving employees “freedom and responsibility,” rather than operating on a command and control model.

According to Schein of MIT, a company can create a culture by following these steps:

  • Identify a recurring problem.
  • Assign a group to figure out how to solve it (and have them keep trying until they come up with a good solution).
  • Every time this problem comes up, assign this team to solve it so that the process becomes instinctive; this way of doing things becomes the group’s culture.

If leaders define a culture but don’t embody or enforce it, the company will evolve a different culture based on the priorities and processes that have worked and become embedded. Knowing this is essential when building a company culture successfully. 

For example, the energy company Enron had a “vision and values” statement articulating four values: respect, integrity, communication, and excellence. However, starting with its leadership, Enron failed to live by these values, and the company collapsed amid scandal.

To determine whether you are building a company culture successfully, ask yourself whether, when faced with making a decision, your employees have made the ones you wanted them to make (and whether you followed up with feedback). If leaders and managers are inconsistent or inattentive, poor decisions can evolve into a culture.

Building a Company Culture: What You Need to Know

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Elizabeth Shaw

Elizabeth graduated from Newcastle University with a degree in English Literature. Growing up, she enjoyed reading fairy tales, Beatrix Potter stories, and The Wind in the Willows. As of today, her all-time favorite book is Wuthering Heights, with Jane Eyre as a close second. Elizabeth has branched out to non-fiction since graduating and particularly enjoys books relating to mindfulness, self-improvement, history, and philosophy.

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