Why Team-Level Culture Outperforms Company-Wide Mandates

My review of Google’s research into team effectiveness revealed a critical insight: the quality of interactions within teams is one of the strongest predictors of success. This got me thinking about how organisations approach culture.

Most companies define their values and norms at the organisational level. But is this approach effective? Who does it really serve and what are the outcomes?

Prompt: A diverse leadership team that enables their teams to own their culture.

The Case For Company Culture

Defining company culture is often seen as a way to establish shared values and behaviours that guide an organisation. Leaders aim to "extract the DNA" of the company, making it relatable to employees, customers, partners, and the broader community.

The expected benefits include:

1. Attracting and Retaining Talent: A clear culture helps draw in job seekers who align with the company’s values and encourages employees to stay engaged and connected, reducing turnover.

2. Creating Consistency Across Teams: Cultural values provide a shared framework, ensuring alignment in decision-making, communication, and behaviour across departments.

3. Driving Innovation and Performance: A strong culture encourages behaviours that align with strategic goals, fostering productivity and creativity.

4. Navigating Change: During periods of growth, restructuring, or crisis, a well-defined culture provides stability and clarity.

5. Reinforcing Norms Without Micromanagement: A strong culture serves as an informal system for regulating behavior, reducing reliance on rigid policies.

But here’s the question: does a company-defined culture really achieve these goals?

Where Company Culture Falls Short

In practice, top-down definitions of company culture often feel too generic, rigid, or disconnected to make a meaningful impact. Here’s why:

1. Vagueness Dilutes Impact: To accommodate diverse teams, company culture statements are often too broad to be actionable. Terms like "innovation" or "collaboration" can feel hollow if not clearly tied to specific behaviours or practices.

2. Disconnect from Frontline Reality: Cultural definitions shaped by senior leadership often reflect their aspirations rather than the lived experiences of employees, creating a gap between stated and practiced values.

3. One-Size-Fits-All Doesn't Work: A single, monolithic culture ignores the unique needs, goals, and dynamics of different teams within an organisation.

4. Stifling Creativity and Diversity: Centralised culture can unintentionally suppress individuality and innovation by enforcing a uniform way of working or thinking.

5. Lack of Employee Ownership: When culture feels imposed from the top, employees may disengage, reducing their commitment to living out those values.

The Case for Team-Defined Cultures

What if teams were empowered to define their own cultures? Could this approach offer a better way forward?

Here are the potential benefits:

1. Tailored Focus: Teams could define values that resonate with their specific work dynamics. For instance, a sales team might prioritise competitiveness and relationship-building, while a product team might emphasise experimentation and user-centric thinking.

2. Authenticity: Collaborative, team-defined cultures result in actionable, relevant norms that reflect the day-to-day realities of the people involved.

3. Improved Effectiveness: When culture aligns closely with a team’s function, it enhances their effectiveness while still aligning loosely with broader company values.

4. Fostering Innovation: Empowering teams to create their own micro-cultures allows for diverse perspectives, strengthening the organisation’s overall adaptability and creativity.

5. Increased Ownership: Teams that define their own culture feel a stronger sense of accountability and buy-in, which drives engagement and consistency in behaviour.

Addressing the Challenges of Team Cultures

Of course, there are potential challenges to this approach. Teams operating in silos could create misalignment with company-wide goals or erode cohesion between departments.

How can organisations mitigate these risks?

1. Define Broad Guiding Values: Leadership can establish a small set of overarching values to ensure alignment across the organisation. For example, values like integrity or customer-centricity can serve as a foundation for all teams.

2. Create Space for Autonomy: Teams can use these values as a guide while defining specific norms and behaviours tailored to their unique context.

3. Encourage Cross-Team Collaboration: Regular communication and collaboration between teams can maintain a sense of cohesion and shared purpose across the organisation.

Conclusion

Defining culture at the team level offers clear advantages over a top-down, company-wide approach. It fosters relevance, authenticity, and ownership—empowering employees to build environments that reflect their unique needs and goals.

Imagine a future where senior leadership limits itself to defining only the core values it needs to succeed, sharing them transparently while encouraging teams to define their own cultural norms. This approach could unlock new levels of productivity, innovation and employee satisfaction across the organisation.