What Is the Relationship between Corporate Culture and Performance?

E. Reeder

Corporate culture and performance are related because the more positive a company's environment is, the greater its performance may be in terms of profits and customer satisfaction. Businesses with negative or less than positive cultures, alternatively, are likely to suffer in overall performance. Corporations are capable of earning more profits when employees are highly invested in the company and feel like part of the team.

Corporate culture in companies can help set the tone for employee performance and productivity.
Corporate culture in companies can help set the tone for employee performance and productivity.

Employee morale can affect the performance of a company. A corporate setting in which low morale is prevalent might suffer from lowered performance in terms of customer service, lower profits and higher employee turnover. When employees do not feel valued and do not have a pleasant climate in which to work, they are much less likely to be productive or to work to improve themselves as employees and to increase corporate profits. This is one way in which corporate culture and performance are related.

Shared vision and buy-in also are affected by corporate culture and performance. Corporations that have cultures and organizational structures in which the opinions of every employee and other stakeholders, such as customers, are valued tend to have positive cultures, as well. When almost all employees, from part-time workers to mid-level management to executives share a common vision for the corporation and feel invested and responsible for the success of the business, performance is likely to stay at a high level. Performance can be measured by factors such as profit, market prominence and customer service ratings.

A corporate environment with a negative culture could be identified in several ways. All decisions might be made at the top levels of management, and orders might be expected to be carried out without question. Dedication, hard work, loyalty and obedience would be expected in an environment such as this, though it would not be properly recognized or rewarded. Employee absenteeism and turnover might be high. Customer concerns and complaints might not be a high priority, while a focus on profit at the expense of employees and customers might be prevalent.

A positive corporate culture and performance that corresponds might be present in an environment where employees genuinely want to come to work and truly care about the needs and concerns of their clients. Some companies are attentive to the needs of their workers and provide adequate vacation, a focus on balancing work and family, and flexibility in making decisions. In a corporation such as this, employees would not be micromanaged but would be entrusted with the responsibility to do their best and to make decisions in the best interest of the company. Work environments such as this, which could be considered enjoyable, would likely result in heightened performance.

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