Michael D. Moberly July 31, 2009
A company culture is a shared system of values that defines what is important (to a company). Blended into a ‘company culture’ are certain norms and beliefs that convey appropriate – accepted attitudes and behaviors (for a company). Dr. Edgar Schein suggests a company culture will emerge – be exhibited as management teams and employees recognize the beneficial (economic) outcomes that will accrue as they engage and solve problems through those shared norms, values, beliefs, and attitudes in the form of efficiencies, competitive advantages, new knowledge, and reputational value.
Positively linked to a company’s culture is it’s reputation which is the ‘perceptual representations of past actions and future prospects that describe (drive) its overall appeal to key constituents, e.g., customers, clients, investors, employees, and the general public. A company’s reputation is often multi-dimensional however, because
constituent groups tend to use their own criteria to assess (a company’s) reputation vis-a-vis competitors.
Executive surveys and studies consistently report culture and reputation to be key factors and contributors to business success because they:
1. add value through differentiation and competitive advantages
2. are positively linked to enhanced (financial) performance
3, are difficult to imitate or replicate (by competitors).
Intuitively then, management teams should be (more) receptive, not reluctant or hesitant, to better understand how intangible assets such as culture and reputation favorably influence their company’s performance, success, and sustainability.
One starting point to achieve this is for management teams to recognize that a strong company culture will favorably influence a company’s performance by attitudinally positioning a company to produce, sustain, exploit, and extract more value from those assets, e.g.,
1. performance is enhanced because the parties perceive their actions are ‘chosen by them’.
2. the parties have greater clarity about what the company’s goals are and how to attain them and thus, will make better (more facilitating) decisions.
3. the consensus of values, beliefs, and norms enables more social control within a company which is more effective and efficient than formal controls, especially when addressing deviations from the norms established through the company culture.
Ultimately, company’s with strong cultures produce equally strong reputations, both of which are intangible assets that can deliver strategic advantages and higher financial performance!
(Some insights for developing this post was gleaned from ‘Creating Competitive Advantage Through Intangible Assets: The Direct and Indirect Effects of Corporate Culture and Reputation’ by Sylvia J. Flatt and Stanley J. Kowalczyk)
