Why do organizational values and culture matter?

Although they are not biological creatures, it is not wrong to say that organizations are alive. That is because every company has a personality and a culture. The way its employees and leaders act is what we call Culture. That is why we need to talk about organizational values and culture.

Today, especially with the arrival of new generations in the job market, organizational values and culture have stopped being just an “extra” and become essential elements.

Generations such as Millennials and Gen Zopens in a new tab want to identify with the companies they work for. They want to know that the organization’s values align with theirs and that the environment fosters a sense of belonging.

This cultural connection has a direct impact on performance and talent retention. When employees share the same values and feel they are part of a culture aligned with their beliefs, they deliver better results.

This is the famous “cultural fit” in action: finding the balance between the right people and the right culture can be a game changer for any business.

But well, want to know more about organizational values and culture? Stay here and I’ll explain.

What are organizational values and culture?

Organizational values and culture are the essence that defines how a company operates, positions itself in the market and interacts with its employees (and among them too), customers and society. They are the foundation on which the organization’s decisions, behaviors and identity are built.

Organizational valuesopens in a new tab are the principles that guide a company’s actions. Think of them as the “code of ethics” that defines what is important to the organization. These values reflect the fundamental beliefs that guide everything from strategic decisions to the way employees interact with each other.

It is when the company defines its commitment to sustainability and ESG and applies it in its day-to-day, for example.

Organizational culture, in turn, is the practical expression of those values in the company’s day-to-day. It can be understood as the set of behaviors, habits, norms and attitudes that define how people work together and relate to each other in the corporate environment.

Organizational culture is largely perceived through rituals, celebrations, feedback and leadership style.

Why organizational values and culture matter for your business

When the organization grows and the owner or CEO can no longer be present at every moment, a problem of organizational values and culture arises. At that point it is crucial that the employees responsible for decision-making represent and replicate the same organizational values and culture that were presented to them until then.

For that, everyone needs to be aligned and connected with the company’s organizational values and culture.

Below I try to explain why they are so important:

1- Market implications

Organizational values and culture have a big impact on the market. Companies that are well regarded by the market and by employees get the best people and also the best customers.

Today, we live in a time when employees do not choose their company only for the salary. What they want is to work in a place where they belong, a company whose values they share.

Likewise, customers tend to be attracted to salespeople who fit their way of being and have the same principles. Simon Sinek, author and creator of the Golden Circle methodologyopens in a new tab, argues that customers do not buy from your company for what you deliver but for what you believe.

Citing Apple as an example, he says the company did not build a cult of fanatical consumers only by producing computers and smartphones.

People are drawn to Apple because of what it believes: challenging the status quo, knowing how to develop products that are innovative in their conception, application and design. That is Apple’s positioning, which underlies its organizational values and culture and helped make it the number 1 company in the world in 2011.

This set of rules that forms organizational values and culture works like a living organism inside companies. It needs to be always in motion, whether inside or outside the organization. Everyone must be aligned with its Culture so that there are no problems in executing your strategyopens in a new tab and in the day-to-day, whether with customers, suppliers or among themselves.

To keep your organizational values and culture alive and make sure they are applied in your company, here are some tips on where to practice them so they permeate your employees:

2- Recruiting

Good recruiting has to have “fit.” Do the people you are hiring fit your company’s organizational values and culture? Are they good representatives of your brand?

More and more, companies are recognizing the importance of hiring people who share the same organizational values and culture. This practice, known as cultural fit, is essential to create teams that are aligned, engaged and contribute to collective success.

To find out, you need to test the person’s values during the interview. If your company encourages learning, for example, you can ask which books the person is reading to keep up their professional knowledge or which courses they took in the last year to stay relevant in the market.

The answers to this type of question will tell you whether that is the best candidate for your company.

So when organizational values and culture are taken into account in recruiting, the company makes sure new employees not only have the necessary skills but are also aligned with the expected principles and behaviors.

This reduces conflict, increases talent retention and promotes a more harmonious, productive work environment.

3- Performance

Employee performance is directly influenced by how aligned they feel with the company’s organizational values and culture.

Performance reviewsopens in a new tab, for example, should cover not only the results of the employee’s deliverables, but also their relationship with the environment they are in and their connection with the company’s pillars.

You should also assess whether that employee’s attitude is the one you want for your company, and whether they live its values inside it. That way, you will know whether they are suited to the role they perform or would be better off elsewhere.

In general, companies built on organizational values and culture based on solid pillars tend to get better results than those that are not.

How to develop solid organizational values and culture

Developing solid organizational values and culture is not a simple task, and it does not happen overnight. It is a strategic process that requires alignment, commitment and consistent actions from all levels of the company.

Here is a step-by-step guide that can help you:

1- Define genuine values aligned with purpose

Organizational values need to reflect what the company believes in and seeks to accomplish, and not be just “pretty phrases.”

To define them, it is important to involve the main stakeholdersopens in a new tab, such as leaders and employees, in conversations about what really matters to the organization.

These values must be specific and practical, avoiding generic abstractions such as “excellence.” They must guide decisions and behaviors, be able to set the company apart in the market and inspire the people who work there.

2- Communicate the values and build them into the routine

Communicating values must go beyond mentioning them in training or internal materials. They need to be repeated, exemplified and reinforced constantly.

• Use internal campaigns to show how the values are lived in practice.
• Make sure leaders demonstrate the values in their actions and decisions, serving as an example.

In addition, values must be built into company policies, such as performance review criteria, marketing strategies and business decisions. This keeps them from staying only on paper and shows their real impact on the day-to-day.

3- Create practices that sustain the culture

Organizational values and culture need to be sustained by consistent rituals and practices. Celebrating achievements that reflect the values is an effective way to reinforce them, while recognition systems can highlight employees who exemplify what the company values.

For example, a company that prioritizes innovationopens in a new tab can set up awards for creative ideas that affect results. Likewise, continuous feedback aligned with the values helps reinforce desired behaviors and correct deviations.

4- The role of leadership in cultural development

Leaders play an essential role in building and maintaining a solid organizational culture. They must act as living examples of the company’s values, making sure their actions are aligned with cultural expectations.

In addition, effective leaders are able to spot opportunities to reinforce the values in everyday interactions, from strategic decisions to hallway conversations.

Next steps

Stratwsopens in a new tab is a strategic management solution built to help companies reach their objectives and strengthen organizational practices in a structured, efficient way.

With features that make goal deployment, indicator tracking for performance and project management easier, the system lets organizational values and culture be built directly into the business strategy.

By centralizing information and promoting transparency, Stratws helps companies align the efforts of the whole team, reinforcing the principles that guide the organization and strengthening employee engagement.