Organizational culture is often simply referred to as “how we do things around here”. While this is certainly an accurate statement it does understate to some degree the influence that cultural values and norm have on the operations and performance of an organization, such as a company. Culture impacts a number of crucial issues—how are work activities within the company carried out, how do employees communicate with one another, who is accepted into the company and who is ostracized, and what is the company’s overall morale.
The people who join an organization are probably the most important influences on the organizational culture and a large part of the cultural differences among organizations can be explained by the fact that these organizations recruit and retain members with distinctly different values, personalities and ethics. Once the personality-based elements of an organization’s culture have been formed they are constantly reinforced by the way in which the organization selects and socializes new members. In the company context, as time goes by the values and personality characteristics of managers and employees tend to become more similar, and distinguishable from other companies, and those who do not share those characteristics do not seek employment with that company or, if they are already employed by the company, leave to pursue other opportunities that are more in line with their personal beliefs.
The personal values and beliefs of the company founder or founders obviously have a very strong and potentially long-lasting impact on company culture. The influence begins at the time that the company is formed and the members of the founding group reach agreement on the reasons for forming the company in the place and establish and define the overall goals and mission for the company. As part of this process the founders knowingly or unknowingly develop the initial cultural values and norms, including the terminal and instrumental values of the company, which will guide their actions and behaviors and those of each employee that eventually joins the company. For example, from the time that he was involved in the launch of Microsoft Bill Gates was known for his passion for hard work and long hours and these became the basis for that company’s terminal values of excellence, innovation and high quality and for the related instrumental values of hard work, creativity and high standards. His work ethic and manic commitment pushed other employees to come in early and stay late since that was the way that he worked and employees soon developed similar expectations of innovation and quality relating to their activities and the work of others within the company. Decades later the same story can be told about how the founders of Google introduced certain practices and norms that have contributed to the creation and maintenance of an entrepreneurial culture even as the company has gone through exponential growth—common offices, lobbies and recreational areas encourages interaction among employees and sharing of ideas, news and excitement about new products and technologies; explicit empowerment of employees to invest time in pursuing new ideas increases the likelihood of successful innovation; and rewarding creativity that leads to new products and services through distribution of ownership interests.
The influence of the founders is also heavily felt through the way in which they recruit and socialize the first employees of the new company. Since the founders are presumably heavily involved with the recruitment process at that stage there is a high likelihood, if not certainty, that these new hires and the founders will share the same personal values, interests and goals for the future of the company. Eventually these persons, if they remain with the company, can be expected to rise to positions of leadership within the organizational structure and serve as important emissaries and teachers of the values and beliefs of the founders even as the founders themselves become more and more removed from day-to-day interaction with employees as the company grows. In fact, the contribution that the founders make to development of the company culture can often be so strong that it overrides the influence of subsequent members of the senior management team and makes it more difficult for new leaders to make their own mark on cultural values and norms and orchestrate a change in the culture to coincide with a new strategic direction.