What is Organizational Culture and Why Is It So Important in Human Resources?

We live in times when the terms “organizational culture” and “company culture” are frequently used in the world of Human Resources and by recruitment agencies. However, despite being very common, many people still does not know what those terms mean and their importance for modern organizations. 

Organizational culture has visible effects internally (on employees and the company’s performance) as well as externally (on the audience and new potential talent). Do you know the real meaning of organizational culture? All businesses have it, but very few actually use its full potential. So, if you are wondering: “What is organizational culture?” here we show you what it means and its influence on modern companies. 

What is organizational culture? 

We can define organizational culture as a set of principles that can be explicit or implicit in an organization. These define the way people think and act at work. In other words, organizational culture sets the way of working for employees and the company’s philosophy of work. 

We must keep in mind that any organization or social group develop its own culture as time goes by. Whether it be a family, a company or a nation, over time that group of people will have a distinct identity, values and way of operating.

Organizational culture and company culture 

It is important to understand the similarities and differences between the terms “organizational culture” and “company culture” since they tend to be used indistinctly. Both refer to the group of principles and values that define a way of acting. 

However, the main difference between them lies in the scope. Organizational culture focuses on organizations in general, and those can be of many different types: by their size (big, medium and small sized businesses), by their constitution (private, nonprofit), etc. On the other hand, company culture is more specific and applies only to for-profit organizations. 

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Importance of organizational culture 

When it is built correctly, organizational culture has a positive effect on the company. The results can be seen in the business’ internal operation. Let’s take a look at the main benefits of organizational culture.

1. Employee satisfaction

One of the most important consequences of a good organizational culture is that the company builds a distinct identity. With clear values and principles, employees can develop a sense of belonging in the organization. That is a key fact for employee satisfaction.

2. Enhanced performance

A secondary effect of employee satisfaction is a visible increase in the commitment of workers with the company. When the organization’s culture fit employees, they take the companies initiatives as their own. That way, employee performance increases noticeably.

3. Better labor climate

We have to remember that organizational culture sets the behavior that is accepted, encouraged or rejected inside the company. Therefore, it also determines the way employees interact with each other. As a result, chances of internal conflicts and problems decreases and we have a better work environment.

4. Talent retention

Also, since they share the company’s values and way of working, the turnover rate decreases, which is important for modern organizations. Retaining the most valuable employees helps the company save time and money that otherwise would be invested on looking for new employees and training them.

5. Talent attraction

Additionally, we cannot forget that organizational culture is a key element for creating a good employer branding. With an attractive organizational culture, companies can attract new talent more easily.

6. Brand awareness

Organizational culture not just makes companies more attractive in the eyes of their employees and new potential talent. It also helps organizations having their own identity that set them apart from the rest. That allow them to create a recognizable image towards their audience. 

Now you know the definition of organizational culture and its importance for companies. Do you have a defined culture? Does it have the desired effect? Give that concept the necessary importance and you will achieve positive results.  

 At Talent2Win, we strive to align your company’s business objectives with the best Talent Acquisition strategies available. If you want to learn more about the services we offer, do not hesitate to contact us.