By Julianna Davies
How do we define “culture” in today’s global world — and, perhaps more importantly, how should we? Culture can mean different things in different spheres, but when it comes to business, understanding how to capitalize on it is all but essential. Business guru Julianna Davies stops by Diversity Journal today to look at ways modern small businesses can improve and grow their company culture. Ms. Davies has written profiles of more than 30 top-ranked MBA programs of 2012, and is passionate about helping b-school grads find success in the marketplace.
The Best MBA is Optional, Leadership When Creating Company Culture is Not
In recent years, the historically whitewashed, male-dominated perception of corporate culture has given way to a startup culture that is more diverse and creativity-driven. Modern company executives are taking a different approach to business management in order to thrive in the current global market.
“Corporate Culture” vs. “Startup Culture”
Corporate culture, also sometimes called organizational culture, is essentially the “personality” of a given company. The culture reflects guidelines set in place by the organization’s founders, including values, ethical parameters, managerial practices and company policies. However, each individual employed by the company contributes to the overall culture by representing the firm to the outside public.
Historically, the term “corporate culture” has been synonymous with white men in suits conducting business in top-floor boardrooms while the company’s workforce toils like cogs in a machine. In recent years, however, this perception has shifted as a result of the startup movement. These smaller companies, created from the ground up and comprised of individuals from diverse backgrounds, have effectively changed how the public views the business world. The boardrooms have been replaced with dorm rooms and garages, and the white men in suits have evolved into a much more diverse group of successful corporate leaders.
Workplace diversity has been bolstered by a number of studies suggesting that companies who employ more women and individuals from minority groups perform better overall. A study by Business Women Rising found that Fortune 500 companies with a large number of female senior leaders had 53 percent higher returns on equity, 42 percent higher return on sales and 66 percent higher return on invested capital. F500 companies with the strongest record of promoting women earned between 18 and 69 percent higher profits than companies with weak records in this area. On the other hand, the Center for American Progress recently noted that a lack of ethnic diversity in the workplace – measurable across various employment sectors – has hurt the overall perception of big corporations in the United States, as well as the national economy.
Today, Forbes contributor Emily Jasper notes, corporate culture of the past has fused with startup culture of the present. Large companies have adopted startup strategies in order to streamline production and improve employee retention, while smaller firms that began as startups are achieving global success and employing millions of people. The role of employee responsibilities have also shifted from singular duties to the ability to multitask.
With the emergence of startup culture, employees nationwide have also shifted their expectations of company leaders. Traditionally, companies have operated with a top-to-bottom structure – and workers have simply coped with it. But a recent article in The Economist notes that the balance of power inherent to so many startup firms has led employees to expect a higher degree of self-governance and mutual acquiescence at the workplace. According to a recent study commissioned by LRN, 43 percent of those surveyed said their company thrived on “blind obedience.” Meanwhile, more than 90 percent employees at “self-governing” companies claimed that “good ideas are readily adopted by my company.” There was also a discrepancy between manager and employee perceptions of the company structure: supervisors were “eight times as likely” to believe their company was not reliant on blind obedience than their subordinates.
Colleges Are Also More Diverse
The increased diversity among America’s workforce is directly linked to a more diverse crop of U.S. college students. An October 2012 article published by The Chronicle for Higher Education notes that, within the next 10 years, more than half of the nation’s high school graduates will belong to non-white minority groups. As underrepresented ethnic groups (especially African-Americans and Hispanics) complete high school and enroll in higher education, these students will “fill the gaps left by a shrinking number of white students.”
Figures compiled by the National Center for Education Statistics support this projection. Between 1976 and 2010, college enrollment increased among several minority groups. Hispanic enrollments increased from 3 to 13 percent, Asian/Pacific Islander enrollments rose from 2 to 6 percent and African-American enrollments grew from 9 to 14 percent. During the same period, enrollment numbers for white students dropped from 83 to 61 percent. Enrollments among women are also on the rise; between 2000 and 2010, the number of female college students increased 39 percent, while the number of male students grew 35 percent.
However, enrollment in math, science and engineering classes – the cornerstone of many of today’s startup companies – has remained low among female and minority group students. NPR contributor Amy Standen recently wrote that black entrepreneurs comprise only one percent of the technology startup sector, while female entrepreneurs made up eight percent. Measures have been taken to combat this disparity. One example is the New Media Entrepreneurship (NewMe), a three-week “boot camp” aimed at underrepresented student demographics in the technology industry. Participants attend seminars, visit corporate offices and make pitches to investors; these activities are intended to boost startup skills for male and female students of all ethnic backgrounds.
The End of Corporate Culture as We Know It?
Many of today’s business experts note that shifting perceptions of company culture now require corporate leaders to adapt with the times. Steven Bowman of Conscious Governance recently posited that a company’s CEO is, by definition, the most influential person in the organization. Effective CEOs provide “a conscious culture of awareness and innovation”; others take the unconscious approach and lose control of their staff, while the least effective leaders foster an anti-conscious environment that leads to a negative company culture. The traditional corporate structure, which gravitated toward either the unconscious or anti-conscious approach, is today seen as “autocratic” and “fear driven.”
Forbes contributor Bill Fischer also notes that startup culture has generated a widespread appreciation of innovation in the workplace. However, many firms have yet to adopt this approach. “Global Innovation 1000,” a recent study commissioned by Booz & Company, found that half of surveyed organizations believed that innovative practices drove their corporate culture. “Every organizational manager, no matter how modest the organization, can make a difference in how innovative their organization can be,” Fischer writes. “It all starts … with a precise and inspiring vision of the role that innovation will play in the organization’s vision of strategic success.”
Finally, Ruth Mayhew of Chron urges company leaders to foster a diverse corporate environment. A workforce comprised of male and female employees from various ethnic backgrounds benefits the workplace dynamic, as well as the company’s reputation among customers, investors and prospective employees. “An organization known for its ethics, fair employment practices and appreciation for diverse talent is better able to attract a wider pool of qualified applicants,” she writes. “Other advantages include loyalty from customers who choose to do business only with companies whose business practices are socially responsible.”
At a time when traditional notions of corporate culture are being replaced by the dynamic and diverse reputation of the startup sector, company executives should take note. Expectations of business culture today greatly differ from those in decades past, and the companies that adapt to the shifting trends stand to earn the most success in the long-term.
Julianna Davies is a writer and researcher for MBAOnline.com. Feel free to check out more of her writing!