Are you a CEO, an HR director or other decision-maker new to Organisational Culture and interested in getting started? Or are you tasked to find information about it on someone's behalf, a consultant who is interested in the topic, or are you simply curious to learn about it for personal growth?
No matter what you are looking for, in this article, you will find what you need to know in order to get started in the area of Organisational Culture.
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Introduction
Organisational Culture is a fascinating topic. Delving into your Organisational Culture can provide you with valuable and unique insights to confidently take your next steps towards your goals. However, the term in itself, at first glance, can sound somewhat vague. It doesn't help that Organisational Culture is spoken about in very different ways, depending on the source.
At The Culture Factor Group (previously known as Hofstede Insights), we have a very specific approach to Organisational Culture. On this page we explain everything you need to know in order to get started with the topic.
1. What is Organisational Culture?
Culture is one of the most widely used - and often misunderstood - terms in business. Professor Geert Hofstede, defined culture as “The programming of the human mind by which one group of people distinguishes itself from another group.” It is a shared, learned phenomenon, shaped by the environment in which we grow, and the experiences we have.
To understand how culture works, think of it as an onion. The outermost layer consists of symbols, like, logos, dress codes, or food. Just beneath these are the heroes, the individuals we admire, whether real or fictional. Deeper still lie rituals, such as how meetings are conducted or success is celebrated. At the core are values: the deeply held beliefs about what is right, important or desirable. These layers help us understand how culture is expressed and how it can be analysed across different contexts.
In a business setting, the two most relevant types of culture are National Culture and Organisational Culture. National Culture refers to the underlying values that shape the behaviour and expectations of people from a particular country. It is formed early in life, tends to be stable over time, and is not easily changed. Organisational Culture, on the other hand, refers to how people within a particular organisation relate to their work, to one another, and to the external world. It is shaped by practices - the observable patterns of behaviour within the workplace - which makes it more accessible to measurement and change.
The distinction between values and practices is key. National Culture is rooted in values and offers stability. Organisational Culture is based on practices and, therefore, can be adapted and influenced. This does not mean the two are unrelated. In fact, National Culture often shapes how Organisational Culture is perceived and interpreted, especially in diverse or international environments. Understanding this relationship is crucial for navigating organisational dynamics in a global context.
2. Why is Organisational Culture important?
Organisational Culture is one of the most important factors determining business performance. It dictates how things are done in an organisation, and it can be a powerful force for good or bad. If we imagine an organisation as an engine, Organisational Culture would be the oil for that engine. The right culture can be the reason for the success of your organisational strategy while the wrong culture can lead to poor performance or even complete failure.
Unfortunately, many managers fail to understand the importance of Organisational Culture, and instead focus exclusively on strategy. This is a mistake. Organisational Culture should be seen as an important tool that can help to achieve organisational goals. It can either support or hinder your strategy, and should be given the attention it deserves.
It's also the most distinctive aspect of your offering, and helps you stand out from the competition. Even if one can replicate a product, a design, or even a service, they'll never be able to duplicate all of the organisational methods and concepts that impact people's actions and decisions.
The question isn't whether or not you have a culture, but whether or not your culture is helping you achieve your business goals.
3. What are the different types of Organisational Culture?
When going deeper into analysing Organisational Culture, it becomes necessary to make divisions between different types. In our approach, we divide Organisational Culture in four different themes, based on what it is that is being discussed.
1. Optimal culture
Optimal culture is the organisational culture that best supports your organisation's strategy in order to be successful. It should take into account the restrictions that apply to your organisation and the strategy your organisation has. Restrictions such as rules, legislation, economy or other limiting factors should always play a role in designing Optimal culture. It is crucial to keep in mind that optimal culture should always be tailored for each organisation, or function of an organisation. It is never a good idea to try to apply the culture of another organisation as the optimal culture for yours. Your context is unique, the founders of the organisation are different, and the economical landscape is likely to be different.
2. Actual culture
Actual culture should be the basis for all Organisational Culture change projects. It is the culture your organisation or department currently has. In order to guarantee accuracy and objectivity, actual culture should be measured using a valid and objective method, such as our Multi-Focus ModelTM on Organisational Culture. It is an easy to use, yet systematic and data-driven, tool based on sound, scientific research that thousands of global organisations have relied on for shaping their culture, since 1985.
3. Perceived culture
Perceived culture is the culture people in the organisation think it has. It is also the culture you think your organisation has. You can get more insight on the perceived culture by asking others and this might change your perception of your organisation's culture. However, due to the subjective nature of perceived culture, it is not useful for aligning your culture with your strategy as you will most likely not get the complete and correct picture about your organisation's actual culture. Implementing changes based on perceived culture alone, without measuring the actual culture, is one of the reasons why many Organisational Culture change projects fail.
4. Ideal work environment
Ideal work environment is measured exactly the same way as actual culture, except that instead of asking questions about the current work environment, the respondents describe the Organisational Culture they would love to have.
Measuring Ideal work environment gives valuable information about the preferences of the people working in the organisation. It can offer insights into how the targets for Optimal culture should be set and how difficult it will be to reach them. For this reason it is useful to measure, even though it does not offer information about the current state of things nor should it usually be the goal your organisation should strive for.
4. What is the ideal Organisational Culture for your business strategy?
There is no one best Organisational Culture to aim for, because the best Organisational Culture is always contextual. The key thing to keep in mind is that the best Organisational Culture your organisation should aim for should be a culture that best supports your strategy.
An up-and-coming start-up will most likely have a very different strategy than an already established international organisation, and the Organisational Culture should reflect that. Similarly, the Optimal Culture of that up-and-coming start-up will probably change over time. Bigger organisations tend to operate in different contexts and face different requirements and restrictions and, therefore, one day there may be a need for more structure and processes. If the Organisational Culture of the start-up remains extremely flexible and employee oriented, those processes will be difficult to implement.
It is important to note that the National Culture of the organisation always affects how the Organisational Culture is perceived by its employees. This is why you should think about The Culture Factor as a whole, even when focusing on the Organisational Culture side of it. An open and approachable Organisational Culture can create an effective self-steering organisation if the National Culture is fairly Individualistic and low on Power Distance (more about the 6 Dimensions of National Culture). But in cultures where seniority-based expertise is expected, it may seem weak and even incompetent.
If you’re unsure whether your current culture is enabling or hindering your goals, it’s worth exploring whether your Organisational Culture might be sabotaging your success. Recognising misalignments early can help avoid costly cultural mismatches down the road.
5. How can we measure Organisational Culture?
Organisational Culture can be measured by looking at the practices that define how people work together. These include how decisions are made, how teams collaborate, how feedback is given, and how leadership is exercised.
To get a reliable picture, it's essential to focus on what people do rather than what they say they believe. That means capturing data from a wide cross-section of the organisation and, in larger companies, recognising the presence of subcultures across different departments, teams, or locations.
Accurate measurement involves identifying the current, shared patterns of behaviour - the Actual Culture - alongside a clear view of the culture needed to support the organisation’s goals - the Optimal Culture. When we talk about Optimal Culture, we’re not talking about vague and abstract ideas, but a practical, tailored set of behaviours that align with your organisational strategy, regulatory environment, and market realities.
Looking at both, the Actual Culture and the Optimal Culture, helps you uncover the gaps, the areas where existing practices may be misaligned with what the organisation is trying to achieve. As outlined in this explanation of how to measure your company culture, this comparison is essential for guiding purposeful change.
It can also be useful to explore what kind of workplace employees would like to be part of - their ideal work environment. While this doesn't define what the culture should be, it offers insight into employee expectations and can inform how change is introduced and communicated.
When done properly, measuring Organisational Culture gives leaders the clarity they need to take targeted action, based on evidence, not assumptions.
6. How Do You Change Your Organisational Culture?
Changing Organisational Culture means shifting the way people work together. It’s not about changing individual personalities or abstract values, it’s about adjusting the shared practices that shape everyday behaviour.
The first step is to measure your Actual Culture, so you know what you're working with. This involves assessing how things are done across the organisation: how decisions are made, how people collaborate, and how leadership operates in practice. At the same time, the leadership team defines the Optimal Culture - the set of practices that would best support the company’s strategy within its real-world context. This dual focus creates a foundation for change by making the invisible visible. (See more on how to measure your company culture).
Once the Actual and Optimal Cultures are mapped, the next step is to identify the gaps, and decide which ones to prioritise. Change doesn’t need to happen all at once. It begins with clear priorities and targeted practices that start moving the culture in the right direction.
From there, deciding how to introduce change is critical. This could involve direct actions, such as adjusting meeting formats or performance feedback processes, or more indirect ones, like restructuring teams or shifting how decisions are communicated. In either case, someone must ensure follow-through. Implementation only works when it’s owned. Assigning responsibility for tracking progress and maintaining momentum is what turns strategy into reality.
Leadership plays a pivotal role. Leaders must actively model the behaviours they expect from others. Culture follows what people see, not what they’re told. When leaders “walk the talk,” they send a powerful signal that the change is real.
Understanding the process is one thing. Managing the roadblocks is another. Resistance, confusion, and misalignment can derail even well-designed efforts. For more on how to navigate those challenges, see The Biggest Challenges in Changing Organisational Culture – And How to Overcome Them.
Cultural transformation is rarely fast. But with clarity, consistency, and accountability, it becomes not only possible, but sustainable.
7. How does leadership influence company culture?
Leadership is one of the most important aspects of any organisation. What leaders do and how they act sets the expectations for employees and customers alike. When it comes to shaping the culture of an organisation, leadership can play a particularly important role. Who sets the organisational culture of a business are all the people working for it, but the leaders are the ones who have the most influence over shaping it.
If, for instance, the employees are advised to follow strict guidelines and stick to processes but management is known for disregarding these same rules, it is not surprising that this contradictory behaviour trickles down. On the other hand, if leaders are known for living the organisational values, it is likely that employees will follow suit.
It is important for leaders to be aware of how their behaviour is influencing the culture of their organisation. Are they setting the right example? Do their actions align with the organisational values? These are important questions for leaders to consider.
With our Cultural Executive Ownership Programme, leaders can gain invaluable insights into how they're performing and what changes they could make to align their behaviour with the culture of their organisation.
8. What are the dimensions of Organisational Culture?
Organisational Culture is defined as the way in which members of an organisation relate to each other, their work and the outside world in comparison to other organisations. It can either enable or hinder an organisation’s strategy.
Our Multi-Focus Model on Organisational Culture is the result of a study on organisational cultures research which showed that a large part of the differences among the units could be explained by six factors related to concepts within the field of organisational sociology. These six factors became the six dimensions of Organisational Culture.
It is important to keep in mind that, from a strategy and culture alignment point of view, the individual dimensions work together. Each dimension is independent from the other dimension, yet they can reinforce or mitigate each other´s relative impact.
Are you working on Diversity and Inclusion? Dimensions to keep in mind are Organisational Effectiveness, Professional focus and Approachability.
Are you facing issues with agile ways of working? Dimensions to keep in mind are Organisational Effectiveness and Level of Control. These two dimensions also connect to innovation.
DIMENSION 1: ORGANISATIONAL EFFECTIVENESS
Means-Oriented VS. Goal-Oriented
This dimension is closely connected to the effectiveness of the organisation. In a means-oriented culture, the key feature is the way in which work has to be carried out; people identify with the “how”. In a goal-oriented culture, employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks; people identify with the “what”.
In a highly means-oriented culture, people perceive themselves as avoiding risks and making only a limited effort in their jobs, while each workday is pretty much the same. However, in a very goal-oriented culture, the employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks.
DIMENSION 2: CUSTOMER ORIENTATION
Internally Driven VS. Externally Driven
In a highly internally driven culture employees perceive their task towards the outside world as a given, based on the idea that business ethics and honesty matter most and that they know best what is good for the customer and the world at large.
In a very externally driven culture the only emphasis is on meeting the customer’s requirements; results are most important and a pragmatic rather than an ethical attitude prevails.
DIMENSION 3: LEVEL OF CONTROL
Easygoing Work Discipline VS. Strict Work Discipline
This dimension refers to the amount of internal structuring, control, and discipline. A very easygoing culture reveals a fluid internal structure, a lack of predictability, and little control and discipline; there is a lot of improvisation and surprises. A very strict work discipline reveals the reverse. People are very cost-conscious, punctual and serious.
DIMENSION 4: FOCUS
Local VS. Professional
In a local company, employees identify with the boss and/or the unit in which one works. In a professional organisation, the identity of an employee is determined by his profession and/or the content of the job.
In a very local culture, employees are very short-term directed, they are internally focused and there is strong social control to be like everybody else. In a very professional culture it is the reverse.
DIMENSION 5: APPROACHABILITY
Open System VS. Closed System
This dimension relates to the accessibility of an organisation. In a very open culture newcomers are made immediately welcome, one is open both to insiders and outsiders, and it is believed that almost anyone would fit in the organisation. In a very closed organisation it is the reverse.
DIMENSION 6: MANAGEMENT PHILOSOPHY
Employee-Oriented VS. Work-Oriented
This aspect of organisational culture is most related to the management philosophy. In very employee-oriented organisations, members of staff feel that personal problems are taken into account and that the organisation takes responsibility for the welfare of its employees, even if this is at the expense of the work. In very work-oriented organisations, there is heavy pressure to perform the task even if this is at the expense of employees.