Peter Drucker may never have actually said that culture eats strategy for breakfast, but Ford Motor Company President Mark Fields certainly did when he put it on a sign on his office wall in 2006. This is much more than a catchy slogan. It underlines a critical truth: no matter how well-crafted a strategy might be, it will fail if the culture in an organisation doesn’t actively encourage its people to live it. In short, without a coordinated framework for supporting the culture that will drive the company’s vision forward, achieving it will not be possible.
Conversely, organisations with a strong, positive, supported culture enjoy significant benefits, including improved performance, enhanced employee recruitment and retention and better overall reputation.
The cultural wake-up call
The 2008 global financial crisis spotlighted cultural failings in financial institutions as a key contributing factor.
By 2012, corporate culture began to be seen as a key strategic element to prevent future crises. In 2018, the Central Bank of Ireland conducted a behaviour and culture review of Irish banks. What followed was the establishment of the Irish Banking Culture Board, which was set up to drive cultural change in financial institutions. More recently, other high-profile scandals have led a number of public sector authorities, agencies, and charitable bodies to look seriously at organisational culture as part of essential governance oversight and reputation protection.
Defining and assessing organisational culture
The challenge facing organisations is how to determine if they have the right culture and, indeed, what that culture should be. There is no identikit for setting the ideal or target organisational culture. The nature of the individual organisation and the circumstances in which it operates are of fundamental importance and must considered. For example, the culture required for a commercial, sales-focused organisation may be different to that of a public service provider; where a number of organisations are merging, they may need to define a new culture for the new entity; when a new agency is being established or has an expanded remit, they may require to reset their target culture. In all cases, the target culture must be aligned with what the organisation and its leaders want to achieve to support their mission, vision and values.
Organisational culture, if not actively supported and monitored, tends to grow and evolve organically and frequently in unintended and unexpected ways. It is created through the behaviours that are displayed by both the top management and local leaders through their day-to-day actions.
Four common culture types
Broadly speaking, organisational culture will often fall into one of four general categories: clan, hierarchy, adhocracy and market. Each is based on different value drivers, which depend on various factors, including whether the organisation is more internally or externally focused, how flexible and innovative it needs to be to deliver on its mission and what its risk appetite should be.
- Clan culture: Internally focused, promoting long-term cohesion, with core values of commitment, communication, and staff development.
- Hierarchical culture: Also internally focused, prioritising efficiency, consistency, and structure towards a common goal.
- Adhocracy culture: Externally oriented, with a long-term vision, competitive, driven by innovation, agility, and transformation.
- Market culture: Also externally focused, with a sharp emphasis on customer service, goal achievement, market share, and profitability.
In reality, most organisations exhibit a blend of these types. What really matters is if it is the right target culture for what the organisation needs and, if not, what the right one would be.
Characteristics of strong vs. weak cultures
Strong organisational cultures typically exhibit traits such as:
- Honesty and transparency
- Strategic and forward-thinking approaches
- Respect and accountability
- Adaptability and reliability
- A shared sense of purpose
In contrast, weak cultures are often characterised by:
- Siloed thinking
- Short-term focus
- Low employee morale
- High staff turnover
- Over-concentration of power
- Lack of trust and engagement
Cultural variation across departments
It should be emphasised that uniformity of culture across different parts of an organisation is not necessarily critical for mission delivery. As long as the people within the organisation are aligned with the same goals and values, then cultural variation or sub-cultures across departments and divisions can co-exist.
For example, adhocracy may suit an R&D department, while the sales operation may find a market culture more appropriate. As long as they share the behaviours and values of a strong, positive culture, they can work together in harmony or at least in a mutually supportive environment.
How Forvis Mazars can help
To support our clients, Forvis Mazars has developed a comprehensive tool for setting target culture, aligning cultural levers, such as HR and communications policies and procedures, and conducting cultural audits and organisational culture reviews. Our approach is to go beyond risk culture and bring our expertise in auditing, governance, communications, behavioural psychology, leadership and organisational conduct and behaviour to bear on the assessment of the overall culture in the context of a company’s strategy and goals, customer focus and conduct in the market.
The review tool is used to assess an organisation across six separate cultural dimensions, which include leadership, values, attitudes and behaviours, people development, and decision-making, with each dimension having a number of variables or areas of focus within it.
In reviewing these variables, we consult with senior executives, hold focus groups with staff at all levels, conduct behavioural tests, carry out leadership assessments, and survey staff using anonymised questionnaires.
Since the physical design of workplaces significantly impacts organisational culture – whether through open-plan layouts, hybrid models, or remote arrangements – we incorporate on-site observations and a review of relevant documents and policies into our assessment process.
The insights gained offer a comprehensive understanding of the organisation’s existing culture and/or the culture required to support it in executing its strategy and achieving its goals. Based on that, we produce a full report which includes findings and recommendations on the key actions critical to achieving the target culture by way of a structured roadmap.
The benefits of this process are not limited to organisations facing governance and other challenges rooted in culture. Any organisation embarking on a transformation programme should engage in a review to ensure that the existing culture will support and facilitate the proposed changes. Equally, companies entering into a merger or acquisition need to ensure a cultural fit with the target.
Continuous culture management
There is real value in carrying out periodic culture reviews. Organisations do not stand still and neither do their cultures. A culture that may perfectly align with a company’s mission and vision today may be hopelessly out of kilter tomorrow if not carefully monitored and managed. Periodic culture reviews ensure alignment remains intact and that the organisation is well-positioned for sustainable success.
In conclusion, organisational culture is not just a 'soft' issue – it is a strategic imperative. Whether preventing crises, driving transformation or ensuring long-term resilience, getting the culture right is one of the most important investments an organisation can make.