Organizational Culture

Organizational culture refers to the shared values, beliefs, and underlying assumptions that shape how members of an organization behave, make decisions, and interact with one another. It operates largely beneath the surface of day-to-day operations, yet it strongly influences everything from employee engagement to how a company responds to a crisis.

Schein’s three-level model

MIT Sloan School of Management professor Edgar Schein, who studied organizational behavior for decades until his death in 2023, developed one of the most influential frameworks for understanding culture in his book Organizational Culture and Leadership. Schein described culture across three levels: artifacts, the visible structures and processes such as office layout and dress code; espoused values, the stated beliefs and norms an organization claims to hold; and underlying assumptions, the deeply embedded, often unconscious beliefs that actually drive behavior.

Culture versus climate

Organizational culture is sometimes confused with the related concept of organizational climate. Climate generally refers to employees’ shared perceptions of policies, practices, and procedures at a given point in time, while culture runs deeper, encompassing the assumptions and values that persist over much longer periods and shape the climate itself. A company can tweak its climate with a new policy far more quickly than it can change its underlying culture.

Examples of strong corporate culture

Southwest Airlines is frequently cited as an example of a strong, distinctive corporate culture built around employee empowerment and a commitment to customer service that leadership has reinforced for decades. Google is often cited for a culture emphasizing innovation, autonomy, and open internal communication, reinforced through specific practices such as dedicated time for employees to pursue independent projects.

Why culture matters

Research has repeatedly linked organizational culture to measurable business outcomes, including employee engagement, retention, and overall performance. A culture misaligned with a company’s strategy can undermine even well-designed plans, while a culture that reinforces desired behaviors can make execution far smoother, which is why many organizations treat culture as a strategic asset rather than a soft, secondary concern.

Shaping and changing culture

Because culture lives largely in unconscious assumptions, changing it is notoriously slow and difficult. Schein argued that lasting culture change requires sustained, consistent leadership behavior over time rather than top-down announcements or one-time initiatives, since employees ultimately judge culture by what leaders actually do, not merely by what they say they value.

Types of organizational culture

Researchers Kim Cameron and Robert Quinn developed the Competing Values Framework, which identifies four broad culture types. Clan culture emphasizes collaboration and a family-like atmosphere. Adhocracy culture values innovation and risk-taking. Market culture focuses on competitiveness and achieving results. Hierarchy culture prioritizes structure, control, and efficiency. Most real organizations blend elements of more than one type rather than fitting neatly into a single category.

Subcultures within organizations

Large organizations rarely have one single, uniform culture; different departments, business units, or geographic offices often develop their own subcultures shaped by local leadership and the nature of their work. An engineering team’s norms around communication and risk-taking may differ noticeably from a sales team’s within the same company, and researchers note that managing these subcultures while maintaining a coherent overall identity is one of the persistent challenges large, multinational organizations face.

Measuring organizational culture

Researchers and consultants use tools such as employee surveys, the Organizational Culture Assessment Instrument built on the Competing Values Framework, and structured interviews to assess a company’s culture, comparing espoused values against employees’ actual day-to-day experience. Discrepancies between what leadership says it values and what employees report experiencing often signal a gap between espoused values and Schein’s deeper underlying assumptions.

Culture during mergers and acquisitions

Cultural mismatch is frequently cited as a major reason mergers and acquisitions fail to deliver expected value, since combining two organizations with incompatible norms and assumptions can create friction long after financial and legal integration is complete. Many companies now conduct cultural due diligence alongside financial due diligence before major acquisitions, specifically to anticipate and plan for this kind of friction.

Leadership’s role in shaping culture

Schein argued that founders and senior leaders are the single most powerful source of organizational culture, since their early decisions about what to reward, tolerate, and model become embedded as assumptions that persist long after the original leader has moved on. This is part of why culture change efforts so often focus on leadership behavior and succession planning rather than on policy documents or mission statements alone.

Onboarding and cultural transmission

New employee onboarding is one of the clearest moments where organizational culture gets transmitted, as new hires observe which behaviors colleagues and managers actually reward or ignore, often learning more from these informal signals than from written employee handbooks. Companies that invest deliberately in onboarding, pairing new hires with mentors and reinforcing cultural norms through early feedback, tend to see culture take hold more consistently than those that rely on orientation documents alone.

Culture and remote work

The shift toward remote and hybrid work arrangements has complicated traditional approaches to building organizational culture, since many of the informal signals employees once picked up in a shared office, from how colleagues handle deadlines to how leaders react under pressure, are harder to observe remotely. Companies have responded with more deliberate virtual onboarding, explicit documentation of norms, and intentional in-person gatherings aimed at reinforcing culture that used to form more organically.

FAQs

What are the three levels of organizational culture in Schein’s model?

Artifacts, espoused values, and underlying assumptions, ranging from the most visible to the most deeply embedded.

Is organizational culture the same as organizational climate?

No, climate refers to shared perceptions of current policies and practices, while culture refers to the deeper, longer-lasting values and assumptions that shape those perceptions.

Editorially reviewed by Specialty Digest Editorial TeamLast reviewed November 1, 2026Researched and drafted with AI assistanceReport an issue