The past two decades have seen increasing recognition of the importance of corporate culture in businesses. This is because many organisations have begun to realise that corporate culture not only sets the tone at work but also affects the bottom line. While culture is not the only determinant of business success, creating and reinforcing a positive culture within an organisation can indeed prove to be a significant competitive advantage over those businesses with which the firm competes.

Indeed, Rob Goffee a professor of organisational behaviour at the London Business School and co-author of The Character of a Corporation: How your company’s culture can make or break your business (2003) argued: “Culture may be the one long-term source of competitive advantage because it can’t be copied quickly. Most technologies, most channels of distribution and so on, can be copied quickly, but not cultures. Work out what is in your DNA and use it to win; don’t try to pretend to be what your very successful competitors are.”

Some well-known organisations that have been using culture as a competitive advantage are Google, Gore, 3M and General Electric. The latter represents a great example of how an organisation can use culture to its competitive advantage. General Electric’s strategy is to be the first or second in every business. To achieve this, it needs the best people, so it decided to create a state-of-the-art leadership development programme that builds exceptional leaders at all levels. This programme has been so successful that GE always promotes people from within the organisation and never recruits managers from outside. In this way, GE’s managers breathe and live the organisation’s culture, knowledge, values and goals. Such a culture allows for a high level of operating effectiveness, which is one of GE’s competitive advantages.

In order to stay ahead in business in today’s rapidly changing world it is of great value to have a competitive advantage in order to differentiate from, and keep your company or product ahead of, your competitors. Dollsy Darmanin, HR manager with one of the leading companies within the local automotive sector, commented that corporate culture is the invisible asset that can help organisations gain this competitive advantage. “In an organisational culture where employees are given the opportunity to express their creativity, they will generate new ideas that will drive the company forward. Having a culture whereby employees feel valued and trusted not only improves their morale and reduces turnover but also enhances the company’s reputation, as employees who are satisfied in their job will talk positively about the organisation. This will influence the perception of customers that the company is reliable and trustworthy and will therefore generate more business.

To use culture as a competitive advantage, businesses need to be able to develop a culture whereby the expectations of their employees are clearly defined. Furthermore, managers and leaders need to be able to explain clearly how their employees are expected to contribute to the culture and how their behaviour and contributions can help support the goals of the business. Businesses that clearly define themselves as to what they expect from those within their organisations are the ones that excel in using corporate culture as their competitive advantage. Jane Watson, HR Manager for Theiss said: “You can’t make clones of everybody and so it is not about crushing the spirit of people to make them all the same. It’s more about raising people’s awareness of how behaviour really makes a difference in terms of constructive outcome.”

However, despite the importance and recognition of corporate culture as a source of competitive advantage, one must not forget that culture is hard to define and manage, or even influence. This is because it is constantly changing, being subject to pressures from outside such as clients, suppliers and the economic environment, as well as being influenced by those who move in and out of the corporate sphere. Hence, one of the challenges for leaders today is to be able to identify the kind of culture they have and to determine the kind they need to be able to succeed. Indeed, noted management educator Dave Ulrich says that while leaders of most organisations, especially multi-nationals, acknowledge the importance of culture, they often do not know how they can manipulate it to create a competitive advantage. As such, Ulrich commented: “Only a handful of the very best leaders know how to craft a culture that consistently delivers positive results. Good organisations have leaders everywhere who are actively attempting to shape and develop culture.”

The way to go about creating a desired culture that creates a competitive advantage, says Goffee, is to manage behaviour. He clearly states: “Culture is mainly an outcome of day-to-day behaviour and behaviour is manageable. Leaders should be modest and not make grand claims for culture-change programmes but focus on driving coordinated substantial shifts in behaviour.”

However, having said that, it must be appreciated that corporate culture should not be solely about bottom-line success. Businesses always need to ensure that they operate in an ethical way that meets the community’s norm of acceptable behaviour.

Ms Camilleri is a researcher at the Foundation for Human Resources Development