What is organizational culture? Definition, types, examples and why it matters
What is organizational culture? Ask ten managers and you will hear about values, perks, dress codes, the founder's personality and "the vibe". Each of those touches culture. None of them is culture.
The confusion is expensive. A leadership team that cannot say what culture is cannot see its own, and a team that cannot see it ends up changing posters instead of habits.
The short answer: organizational culture is the shared, mostly unwritten set of assumptions, values and habits that decides how work actually gets done in an organisation: who speaks up, what gets rewarded, how decisions are made and what happens when something goes wrong. People learn it by watching what happens around them, not by reading the values statement. Company, corporate and workplace culture usually mean the same thing.
What is organizational culture?
It is how a group of people has learned to work together: shared assumptions about what matters, what is safe and what gets rewarded, and the everyday practices that follow from them. Put simply, it is how things are really done here when nobody is reading the rulebook.
Researchers say it more formally. In their review of the field, Benjamin Schneider, Mark Ehrhart and William Macey define organizational culture as "the basic assumptions about the world and the values that guide life in organizations" (2013). Four features matter in practice:
- It is shared. One person's habits are personality. Culture is what a group does without having to coordinate it.
- It is learned. People pick it up by watching what happens to colleagues who raise a problem, miss a target or bend a rule, and they adjust.
- It is mostly unwritten. The values statement is one input, and often the least reliable one.
- It shows under pressure. You see culture most clearly when the policy is silent, the deadline is close or the boss is away.
So when someone asks what you mean by organisational culture, the honest answer points at behaviour, not at a document: watch how a meeting ends, who gets promoted and what happens to the person who reports bad news.
Is company culture the same as organizational culture?
Mostly, yes. The terms describe the same thing and differ in register and scope rather than meaning. Organizational and organisational are simply the US and UK spellings of one word. The differences that do exist are worth knowing, because two of the terms often point at countries rather than companies.
| Term | Where you usually hear it | What it usually means | Watch for |
|---|---|---|---|
| Organizational culture | HR, academic research, consulting | The shared assumptions and practices of one organisation | The broadest and most precise term |
| Company culture | Job adverts, careers pages, everyday talk | The same thing, for a single firm | Often used as a recruitment promise rather than a description |
| Corporate culture | Business press, large companies | The same thing, usually in big organisations | Little real difference in meaning; mostly a matter of register |
| Workplace culture | Wellbeing, safety and inclusion discussions | Culture as employees experience it, often for one site or team | Can describe a single location, not the whole organisation |
| Work culture | Everyday talk and country comparisons | Either one organisation's culture, or a country's norms about work | Check which one is meant |
| Office culture | Everyday talk | The visible, social layer of one workplace: dress, hours, how people talk | A slice of culture, not all of it |
| Business culture | Travel, trade and international management | A country's or region's norms for doing business | Closer to national culture than to any one company |
When a colleague says "our culture", they mean your organisation. When someone says "the work culture in Saudi Arabia" or "business culture in Japan", they mean a country. The two need different evidence and lead to different decisions.
What is organizational culture made of?
Layers. The best-known model comes from Edgar Schein, who describes three levels:
- Artifacts: what you can see and hear, such as structures, processes, office layout, meeting rhythm, the language people use and the stories they tell.
- Espoused beliefs and values: what people say the organisation stands for, such as the strategy, the values list and the answer a manager gives in an interview.
- Basic underlying assumptions: the taken-for-granted beliefs nobody discusses any more, such as "bad news travels up only once it is fixed" or "the person who talks most in the meeting is the one who matters".
When the levels disagree, behaviour follows the assumptions, which is why a new values list rarely changes much on its own. Our guide to the Schein model of organizational culture goes through each level and how to read it.
A second answer comes from Geert Hofstede and colleagues. In a study of 20 units in 10 organisations in Denmark and the Netherlands, they found that units differed mainly in their everyday practices rather than in the values their people held. For a manager, that is useful: the part of culture you can observe and influence is the routine, such as how meetings run, how decisions are recorded and how newcomers are treated.
Most organisations also contain more than one culture. Schein argued in 1996 that every organisation holds three particular subcultures: an operator culture that grows out of day-to-day operations, an engineering culture of designers and technical experts, and an executive culture of the chief executive and top team. Two of them have roots outside the organisation, and he saw the lack of alignment between them as a main reason organisations fail to learn.
In multi-site organisations the gap that matters most is often between head office and the frontline: the branch, the ward, the warehouse, the night shift. Across Egypt and the Gulf, where a frontline workforce and a corporate core may work in different languages, a culture survey sent only in English through corporate email reads the head office and calls it the company. Our article on Arabic-first employee surveys explains why the language of the questions changes the answers.
What are the types of organizational culture?
There is no official list. Types come from models, and each model sorts culture along different lines. Three are worth knowing.
The Competing Values Framework, measured with Kim Cameron and Robert Quinn's Organizational Culture Assessment Instrument (OCAI), names four types. Respondents divide 100 points among four descriptions on each of six dimensions, once for the culture they have and once for the culture they would prefer. Because each person's points must add up to 100, scores are relative within that person, which limits some comparisons and statistics.
- Clan: internally focused and flexible; values people, loyalty, teamwork and development.
- Adhocracy: externally focused and flexible; values innovation, experiment and initiative.
- Market: externally focused and controlled; values results, targets, winning and customers.
- Hierarchy: internally focused and controlled; values process, rules, efficiency and predictability.
The Denison model describes culture through four traits rather than types: involvement, consistency, adaptability and mission. Its survey reads each trait through three indexes, twelve in all, and compares you with the provider's proprietary benchmark.
The Hofstede practice dimensions do not sort you into a box at all. They place an organisation on six scales: process- versus results-oriented, employee- versus job-oriented, parochial versus professional, open versus closed system, loose versus tight control, and normative versus pragmatic. They rest on one 1990 study, so treat them as a vocabulary rather than a standard.
Do the types predict anything? A meta-analysis by Chad Hartnell, Amy Ou and Angelo Kinicki (2011), covering 84 studies with 94 samples, tested three of the framework's four types. Clan, adhocracy and market cultures were all positively associated, to differing degrees, with employee attitudes, operational performance and financial performance, though not always as the framework predicts, and the data did not support some of its assumptions about how the types relate to each other.
So use types to start a conversation, not to issue a verdict. Most organisations are a blend, and the useful finding is the gap between today's profile and the one people prefer or the strategy needs. Our comparison of culture assessment tools sets out which instrument suits which decision.
Online lists often add labels such as "people-first", "customer-centric", "innovative" or "toxic". These describe a culture's emphasis or its health, not a researched type. A toxic work culture is a condition any type can develop, not a fifth category.
What are examples of organizational culture?
Search for company culture examples and you will find plenty of famous firms' culture pages. Read them sceptically: they describe espoused values, the middle of Schein's three levels, and they are written to recruit. The examples that show a culture are the moments when someone has to decide what to do.
| Moment | In one organisation | In another | What people learn |
|---|---|---|---|
| A project will miss its deadline | The lead tells the sponsor early and asks for a decision | The team works weekends and reports "on track" until the last day | Whether bad news is safe to share |
| Someone makes a costly mistake | A short review asks what in the process allowed it | The first question is who did it | Whether to report errors or hide them |
| A top performer is rude to colleagues | The manager addresses it, and it counts at promotion time | It is tolerated because the numbers are good | Whether results matter more than how they are achieved |
| A meeting ends | Decision, owner and date are stated before people leave | People leave unsure, and the real decision is made later in a smaller room | Where power actually sits |
| A junior employee disagrees with a director | The director asks a follow-up question | The room goes quiet, and the employee is spoken to afterwards | Whether challenge is welcome |
| A new joiner arrives | The manager has a plan for the first week | The laptop arrives on day four and a colleague explains the unwritten rules at lunch | How much the organisation values its people |
| A customer complaint reaches head office | Frontline staff are asked what went wrong | A memo reminds staff of the policy | Whether the frontline is trusted |
Notice how many rows turn on a leader's reaction. Schein describes six main ways leaders embed culture: what they pay attention to, measure and control; how they react to critical incidents; how they allocate resources; what they model, teach and coach; how they allocate rewards and status; and how they recruit, select, promote and remove people. Most rows above show one of those mechanisms at work. To find examples in your own organisation, collect a handful of recent stories of each kind and look for the pattern.
Why does organizational culture matter?
Because it decides what happens between the strategy and the result. The evidence is stronger than sceptics assume and weaker than most culture marketing claims.
- Culture can come before performance. Anthony Boyce and colleagues (2015) followed 95 franchise car dealerships over six years. Culture consistently predicted later customer satisfaction and vehicle sales, rather than the reverse, and its effect on sales ran through customer satisfaction. It is one industry, and one co-author created the Denison model described above, but it is a rare study designed to test which comes first.
- Culture predicts who leaves. An MIT Sloan Management Review analysis of 34 million online employee profiles in the US, covering the Culture 500 companies from April to September 2021, found that a toxic culture was 10.4 times more powerful than compensation in predicting a company's attrition rate compared with its industry. The finding is predictive, not causal, and the authors have commercial interests in culture analytics.
- Stated values rarely reach daily work. In Gallup's 2016 research, 23% of US employees strongly agreed that they can apply their organisation's values to their work every day, and 27% strongly believed in those values. The figures are about ten years old, but the gap they describe is still the one most culture work starts from.
A competitor can copy your pay scale. It cannot copy how your teams behave on a bad day.
How is organizational culture different from national culture?
They sit at different depths. Hofstede, summarising decades of research in 2011, argued that national and societal cultures are acquired from earliest childhood and live in deep, often unconscious values, while organisational cultures are acquired on the job and live in visible, conscious practices. The 1990 study he led found large differences between units in daily practices but only modest differences in values once nationality, education, gender and age were taken into account.
| Aspect | National culture | Organizational culture |
|---|---|---|
| Learned | From childhood, through family, school and society | On the job, from colleagues and leaders |
| Lives mainly in | Values: what people feel is right and normal | Practices: how work is done here |
| Described, in Hofstede's model, by | Power distance, uncertainty avoidance, individualism versus collectivism, masculinity versus femininity, long- versus short-term orientation, indulgence versus restraint | Practice dimensions, culture types or traits, depending on the model |
| Can an employer change it? | No, and it should not try | Yes, slowly, through what leaders do, decide and reward |
The two are not independent. In the 1990 study, open versus closed system was the only practice dimension with a systematic difference between the Danish and the Dutch units, which shows national culture leaking into organisational practice. Hofstede himself cautioned that 20 units from two countries are too narrow a base to treat the six dimensions as universal.
The practical lesson: build culture from explicit practices, especially when many nationalities share one organisation. In a Dubai or Riyadh office whose staff come from many countries, people will differ on how directly to disagree with a manager or how strictly a meeting starts on time. A shared culture there comes from stated, repeated practices (how meetings run, how decisions are recorded, how disagreement is raised), not from values everyone is assumed to share. Our country guides cover the local context for work culture in Saudi Arabia, the UAE, Egypt and Oman.
How do you find out what your culture really is?
Start with evidence of decisions, not opinions about values. Five steps a People team can begin this month:
- Collect stories. Ask people at every level for a recent example of what happened when someone raised a problem, missed a target or challenged a decision. Stories reveal assumptions that survey items miss.
- Read your systems. Look at who was promoted in the last two years and why, what the bonus really rewards, and which rules have exceptions, and for whom. These are Schein's embedding mechanisms in written form.
- Compare groups. Head office against the frontline, new joiners against long-serving staff, one site against another. The differences are usually the finding.
- Add one instrument for scale. Choose it by the decision it must support, and keep the same one so you can compare over time. Questions that make people choose between two realistic options can be harder to answer on autopilot than statements to agree with.
- Put the values list next to the stories. The gap between what you say and what people describe is your real culture brief.
Our earlier guide to measuring organizational culture without guesswork covers how to combine survey, interview and behavioural data into one baseline. If what you find is not what your strategy needs, read whether organizational culture can be changed and which levers actually move it.
If you want a structured read, our Persona Quest culture diagnostic asks people to respond to workplace scenarios, maps their answers to the OCAI's four culture types, and shows current against desired culture with heatmaps by unit and role. Our organisational culture work covers what comes after the diagnosis: target culture, behaviours and activation, in Arabic and English.
Frequently asked questions
What is the difference between organizational culture and organizational climate?
Climate is what people perceive about their work now: in Schneider, Ehrhart and Macey's (2013) terms, the meaning people attach to the experiences they have at work. Culture is deeper: the assumptions and values that produce those experiences. The two are related but distinct, and the same review proposes studying them together. Many employee surveys read climate more than culture, so say which one you are measuring before you interpret the results.
What is business culture?
Business culture usually means the norms of doing business in a country or region: how meetings run, how trust and relationships are built, how directly people negotiate and how hierarchy is shown. It sits closer to national culture than to any one company's culture. A multinational can have one organizational culture operating inside several business cultures, which is why the same practice can land well in one market and badly in another.
What does office culture mean?
Office culture is the visible, social layer of one workplace: dress, greetings, lunch habits, noise, how late people stay and whether doors are open. In Schein's terms these are artifacts. They are real signals but easy to misread: long hours can mean commitment in one office and fear in another. With hybrid and frontline work, the office is only part of the picture, so judge culture by decisions as well as by atmosphere.
What is a strong organizational culture?
One whose assumptions are widely shared and consistently acted on, so people behave in similar ways without being told. Strong is not the same as good: a strongly shared habit of hiding bad news is still a strong culture. Strength makes behaviour predictable and the culture harder to change. The question to ask is whether what is strongly shared fits the strategy and treats people fairly.
Can organizational culture be changed?
Yes, but not by announcement. Culture changes when what people repeatedly see rewarded, tolerated and modelled changes, through leaders' behaviour, budgets, promotion and recognition. Specific behaviours can shift sooner than deep assumptions. Be wary of the claim that 70% of change programmes fail: a review of its sources found no valid empirical evidence for it (Hughes, 2011). Our guide on changing organizational culture sets out the levers.
Sources
- Schneider, B., Ehrhart, M.G. and Macey, W.H. (2013), "Organizational climate and culture", Annual Review of Psychology 64(1), 361–388. pubmed.ncbi.nlm.nih.gov
- Schein, E.H. with Schein, P. (2017), Organizational Culture and Leadership, 5th edition, Wiley. oreilly.com
- Schein, E.H. (1996), "Three cultures of management: the key to organizational learning", MIT Sloan Management Review. sloanreview.mit.edu
- Hofstede, G., Neuijen, B., Ohayv, D.D. and Sanders, G. (1990), "Measuring organizational cultures: a qualitative and quantitative study across twenty cases", Administrative Science Quarterly 35(2), 286–316. doi.org
- Hofstede, G. (2011), "Dimensionalizing cultures: the Hofstede model in context", Online Readings in Psychology and Culture 2(1). doi.org
- Cameron, K.S. and Quinn, R.E. (2011), Diagnosing and Changing Organizational Culture, 3rd edition, Jossey-Bass. oreilly.com
- Denison, D.R. and Mishra, A.K. (1995), "Toward a theory of organizational culture and effectiveness", Organization Science 6(2), 204–223, for the four traits; Denison, D., Nieminen, L. and Kotrba, L. (2014), European Journal of Work and Organizational Psychology 23(1), 145–161, for the twelve indexes. doi.org
- Hartnell, C.A., Ou, A.Y. and Kinicki, A. (2011), "Organizational culture and organizational effectiveness: a meta-analytic investigation of the competing values framework's theoretical suppositions", Journal of Applied Psychology 96(4), 677–694. doi.org
- Boyce, A.S., Nieminen, L.R.G., Gillespie, M.A., Ryan, A.M. and Denison, D.R. (2015), "Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships", Journal of Organizational Behavior 36(3), 339–359. doi.org
- Sull, D., Sull, C. and Zweig, B. (2022), "Toxic culture is driving the Great Resignation", MIT Sloan Management Review. sloanreview.mit.edu
- Dvorak, N. and Nelson, B. (2016), "Few employees believe in their company's values", Gallup. gallup.com
- Hughes, M. (2011), "Do 70 per cent of all organizational change initiatives really fail?", Journal of Change Management 11(4). research.brighton.ac.uk