Stanford Social Innovation Review : Informing and inspiring leaders of social change


Nonprofit Management

Focus on Culture

Why strong organizational culture matters—and four practical ways organizations can achieve it.

If we want to make innovation and sustainability accessible and commonplace throughout the nonprofit sector, it is time that we get serious and intentional about establishing nonprofit organizational culture.

Organizational culture is the amalgamation of an institution’s habits and structures over a period of time. Whether established consciously or subconsciously, organizational culture exists, and has a profound impact on organizational successes and challenges.

The theory of organizational culture was first articulated in 1980 by preeminent Dutch sociologist Gerard Hendrik (Geert) Hofstede. While working at IBM, Hofstede developed the cultural dimensions theory, which evolved into a framework for understanding how culture influences performance.

Over the past 30 years, the understanding of the role of culture in the corporate sector has expanded tremendously. Multiple studies and reports by institutions such as McKinsey & Company and Harvard Business Review indicate that culture’s impact on sustainability is undeniable. A strong organizational culture can help institutions:

  1. Recruit and retain top talent. No matter the sector, competition for high-performing talent is always high. A paper published by HAART at UCLA in 2005 concludes that the best way to ensure employee retention is to articulate a progressive corporate culture and hire people who identify this as a workplace priority. 
  2. Increase customer satisfaction and sales. Former Zappos’ CEO Tony Hsia has become a micro-celebrity because of his success establishing a culture of customer service. The intense focus on culture at Zappos ultimately led to its tremendous growth, and Hsia’s lessons on building the culture at Zappos are captured in his book, Delivering Happiness. A happy customer is a repeat customer.
  3. Stimulate innovation. If innovation is the key to opening new revenues, developing a culture that fosters innovation isn’t wise, it’s essential. A culture that values creativity provides space for dialogue and that can leverage lessons learned from failures is well on its way to building a culture that offers new solutions to common challenges.

According to the 2013 State of the American Workplace by Gallup, 70 percent of American employees are disengaged, unenthusiastic, or not committed to their work. With many nonprofits working at the edge of their capacity, the focus on resource maximization is critical. How do we maximize the potential of our employees—our most valuable assets? By focusing on culture.

Consider the following statistics:

We can no longer afford to think about “sustainability” as only an economic ideal; we must see it as a cultural value that includes sustainable business practices that allow for the health and wellness of our employees, our constituents, and our revenues. Nonprofit employees deserve to feel nourished, engaged, and supported; when they do, our institutions will get better results.

To have a true paradigm shift in organizational culture in the nonprofit sector, we as nonprofit leaders need to:

  1. Establish cultural values and make them visible. Whether your organization takes its cue from the Ford Foundation’s focus on results or Twin Cities RISE!’s prioritization of customer satisfaction, communicate your values in recruitment materials, orientation processes, and throughout the life-cycle of your employees.
  2. Create space for dialogue. Culture is an ever-evolving, dynamic aspect of our work. As exemplified in the work of TED, it is important to create space and opportunity for dialogue within your organization. By establishing easy and accessible communication opportunities, such as employee newsletters and suggestion boxes, leadership can gain access to important feedback, and the better your organization can articulate what is and what is not working, the quicker it can reach solutions and move forward.
  3. Be intentional and accountable. Aristotle once said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Every organization can benefit from prioritizing a healthy company culture. If you are reading this, remember that establishing new organizational habits takes time; however, as articulated in a 2012 paper by Bridgespan, it is possible.
  4. Make sure your employees know you care. At the end of the day, your employees are people. In Buckingham and Coffman’s seminal management text, First Break All the Rules, they explain that employees perform best when they know that their employer cares about them as a person. Whether through employee recognition events, staff wellness activities, or other ways, your institution should communicate that it values its employees. 

As stable funding may remain elusive and the workforce becomes increasingly diverse, we must root sustainability in the nonprofit sector in the maximization of existing resources. Whether hiring a new executive or maintaining the morale of your direct service staff, culture matters.

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  • DCMatthews's avatar

    BY DCMatthews

    ON December 21, 2013 06:51 PM

    As a consumer/client I find one big difference in for profit and non profit is the new employees willingness to invest extra time to learn the ropes and be good at the job or to complete work in a timely manner. to maximize consumer/client success.  Clock watching ,even if they are salaried, seems to be the norm.

    Do others see this?
    What are the industry standards ?

    I can’t imagine that clock watching and many meetings during service hours creates a client focus or motivating workplace.

  • BY Toby Barazzuol

    ON January 6, 2014 03:21 PM

    Thank you for bringing attention to this important issue. So many nonprofits are doing important work to improve people’s lives, however in doing so they often overlook the wellbeing of the very people who are doing the work!  Every organization should aspire to a strong culture because it will increase the chances of succeeding at anything they attempt.  As well, a strong culture is often the result of engaged and motivated staff, so it signals that people are focused and present in their work.

    Nonprofits are doing some of the most important work in the world today and we need them to succeed. Build culture by recognizing things that you value and appreciate people for their efforts. When you develop a culture of appreciation, you will be amazed by what follows!

    Remember, recognition and appreciation is not an afterthought - it should be budgeted for like marketing or accounting. Never lose sight of the fact that your people are your greatest assets…nurture them accordingly.

  • Injecting sustainability thinking into an organization’s culture is very important but extremely difficult to do. To add to the four great tips in this article, take a look at this case study where TD Bank made going green go viral with their 27,000 employees in 1,300 locations. I think the strategies are quite applicable to non-profits as well.

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