Organizational culture: Why invest and work in good companies?

January 3, 2020 | Gaurab Subedi

“Culture is simply a shared way of doing something with passion.-Brian Chesky, CEO Airbnb”

Previously, I tried to explain how you can design your portfolio to get the maximum return on your investment. In this article, what I am trying to elucidate is how companies with a strong organizational culture and their inclusion in your stock portfolio can profit you in the long run. Furthermore, I am trying to exemplify that if you are looking for a job career then choosing good companies with a strong culture as your employer is extremely necessary. So, at first, let me explain what organization culture means.

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Introduction to organizational culture:

In simple words, organization culture is a system of shared meaning held by members that distinguish the organization from other organizations. It represents the common values, beliefs, and concepts that create the social and psychological environment of an organization. In the present world, ethics and integrity occupy greater importance in every corporate culture.

Companies with good organization culture promote innovation, teamwork, and fair competition, acknowledges employee contribution, participation in decision making and maintains organizational stability. A strong culture has a strong influence on organizational members and creates committed employees by imposing clear cultural values and beliefs in them. Good organization culture can address the problem of employee turnover efficiently.

On the other hand, weak culture leads to confused, inefficient and unproductive employees. Besides, negative behavior like favoritism, harassment, fraudulent activities, cheap gossips, irregularity, tardiness, etc. at the workplace eventually leads to developing a negative attitude towards the company. The company deviates from its goals and values in the absence of a good culture. Weak organization culture can seriously damage the goodwill and image of the company in society.

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Investing in companies with good organizational culture

From an investment viewpoint, it is always safe to invest in companies promoting a strong organizational culture. Good company culture directly associates with the goodwill of the company which will eventually profit you in your investment in the long run. It is because positive and negative news circulation hugely influences the share price in the Nepalese stock market. In addition, a company driven by its mission, goals, and objectives will maintain the performance and stability of the organization.  This will make sure that the shareholders will get a consistent return over the period of time. Market responds positively to the companies providing good dividends regularly. During the bearish market, strong image and goodwill of the company will certainly provide resistance to severe price fall.

Again, financially, the company with a strong culture can increase its profit by reducing the management cost of the organization. Strong culture ensures an effective management system handled by capable leaders, managers, and teams that will definitely check out frauds and errors. Likewise, a company driven by ethics and integrity will look for good business partners i.e. investors, suppliers, creditors, and customers.  In doing so, the company can significantly reduce the cost of funds. This will give a competitive edge to the company over the rivals. Maintaining a good relationship with stakeholders is very important for the success of the business.

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Customers and Employees: Impact of organizational culture

Similarly, a loyal customer base will help the company to excel in the long run. Apple, one of the world’s leading tech companies profited from their loyal customers sticking to their products and ruled the tech world for 10 years as a leader. In the same way, companies with a strong market image need not reinforce their products and services to the customers, which will reduce the promotion and advertisement cost. A company culture that promotes innovative ideas at work can hugely benefit from the sale of innovative products.

As an employee, working in such companies helps you to develop the sense of ‘my-company’ feeling at work which further pushes you to contribute towards the organizational objectives. Once you can associate yourself with the growth and achievement of the company then you gain that extra motivation to perform better at work. Once you can internalize the values and beliefs of the company then you feel good to be the part of the company and develop loyalty and faith towards the company you work for. You will then think about making your career in this particular company. Good organization culture assures job satisfaction through good payment, rewards, recognition, promotion, benefits, etc.

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Organizational culture in Nepal

We have seen many companies thriving through good organizational culture. In recent times, the banking sector in Nepal has hugely profited from good corporate culture. It has been one of the distinguishing features among the banks which provide similar products and services. Giant companies of Nepal like Surya Nepal, Chaudhary Group, Khetan Group, and Jyoti Group, etc have strengthened their company image through strong corporate culture.

“Nepal Rastra Bank has been pushing BFIs for mergers and acquisitions in recent years. Maintaining a corporate culture is one of the important challenges to banks and financial institutions once it gets merged with another company operating in different cultural backgrounds.”

Many companies in Nepal have begun to understand the importance of organizational culture for the long term sustainability of the company. However, there is still a traditional work environment in most of the companies. Many companies still run for profit at the expense of employees. The employees become underdeveloped and demotivated. Also, there are some companies where employees are better off at the expense of the organization.

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There are two aspects of organizational culture- ‘Organization for people’ and ‘People for the organization’. If anyone of these is forgotten, then the company will slowly march towards its extinction. Companies are run by people. And, if people become dissatisfied with the culture of the organization, then the company will go on the wrong track. Also, people are sustained by the companies they work for. If the company doesn’t survive and prosper, so will the people. Thus, it is essential that the company promote good culture among its people.

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