From culture to performance: Peeling back the layers of organisational culture

Tuesday 2nd Dec 2025

Organisational culture matters. You’ve probably heard that phrase many times. But what exactly does good organisational culture look like and how does it translate into performance? In this blog I explore how your organisational culture influences outcomes, what the evidence says about the link with performance, and how you can map the path from culture → engagement → organisational results.

What we mean by organisational culture

Organisational culture refers to the shared values, assumptions, norms and behaviours in an organisation.

It is more than your vision statement, it’s “how we really do things around here”.
Researchers identify dimensions such as innovation orientation, teamwork, results-orientation, involvement and power distance as part of organisational culture.
For organisations in health, care and professional services, culture also shows up through how leaders behave, how decisions are made, how much trust and psychological safety people feel.

The logic model: culture → engagement → performance

Here’s a simplified model of how organisational culture can drive performance:

Step	What happens	Why it matters
1. Culture shapes employees’ perceptions of the work environment	People decide whether they feel trusted, included, valued, empowered or excluded.	These perceptions influence behaviours like cooperation, innovation, discretionary effort
2. Those behaviours support engagement and favourable work states (e.g., psychological safety, authenticity, motivation)	If culture enables voice, influence and fairness, people engage more.	Engagement is linked to retention, productivity, quality of work.
3. Engagement leads to organisational performance	Better performance may show up as innovation, efficiency, wellbeing, client outcomes.	For a leader this is the business case for investing in culture.

Relevant research supports the links: for example, a 2025 study in healthcare found that culture factors (leadership, communication, teamwork, decision-making, recognition, autonomy) were associated with work satisfaction and thus performance.

What the evidence actually shows:

It’s tempting to assume “better culture = better performance” in a straight line. But the evidence gives a more nuanced picture. Key findings:

A broad evidence review by CIPD found that the correlation between aspects of organisational culture and performance outcomes is moderate to low. They found typical correlation coefficients around 0.16.
The link is weaker when “hard” performance outcomes (financials, objective KPIs) are used, compared with subjective measures (employee perceptions).
A 2024 systematic review found organisational culture influences workplace dynamics (interactions, treatment, management) and pointed to dimensions like innovation, teamwork, involvement.
In healthcare specifically, a 2024 review reported that a positive organisational culture/climate is consistently linked to lower work‐related stress among nurses.

What this means for you:

Investing in culture is valid, but you should manage expectations: culture alone is unlikely to move performance metrics dramatically in short time without other supports.
The effect size is modest; culture acts via intermediate mechanisms (engagement, wellbeing, innovation) rather than being a magic lever.
Context matters: what type of culture, what performance outcome, what environment (healthcare, manufacturing, services) all influence the strength of the link.

So what do we know about which culture elements matter most?

While evidence is not definitive, some culture elements particularly show promise when you’re seeking performance impact:

Teamwork and collaboration: Cultures that enable good team working show stronger links with outcomes such as innovation or quality.
Innovation / results-orientation: A culture that values change, improvement and outcome-focus tends to link with stronger performance in those domains.
Leadership and involvement: The role of the leader in shaping culture, and employees’ involvement/decision‐making, emerges in recent reviews.
Psychological safety / positive climate: Especially in high-risk or care contexts, a positive climate reduces stress and supports performance.
Alignment with strategy / structure: Culture needs to be aligned with business strategy and organisational systems to deliver performance value.

Practical steps to map your culture to performance

Here’s how you can translate the research into practice in your organisation or coaching work:

1. Diagnose your existing culture

Use tools or surveys to map beliefs, norms, behaviours (for example around teamwork, innovation, involvement).
Link findings to your performance measures: e.g., where is workload high, turnover high, customer/patient outcomes poor?
Pay attention to the gap between “what we say” vs “what we do”.

2. Identify pathways to performance you care about

Choose which performance outcomes matter for you: quality, innovation, retention, patient safety, cost efficiency.
Map which culture dimensions support those outcomes (e.g., teamwork + psychological safety → fewer errors; innovation orientation → new service models).

3. Focus on the levered culture dimensions

Instead of attempting a broad “culture makeover”, prioritise 2-3 cultural dimensions with the strongest link to your chosen outcomes.
Tie these to behaviours, leadership actions and structures (e.g., meeting norms, decision rights, feedback loops).

4. Align systems and processes

Culture doesn’t live in isolation – systems like recognition, workload management, role clarity, resources matter.
For example: if your culture promotes innovation but your structures limit autonomy or reward risk avoidance, you will hit a mismatch.

5. Monitor progress and intermediate metrics

Given the weak direct links, track intermediate outcomes: engagement, psychological safety, discretionary effort, team climate.
Use these as signals that the culture shifts may be influencing performance pathways.

6. Be patient and realistic

Culture change takes time; the evidence shows the link with performance is modest and indirect.
Manage expectations with stakeholders: emphasise that culture work supports performance rather than guarantees it.

Key take-aways

Organisational culture plays a role in performance, but the link is moderate to low and depends heavily on context and measurement.
The strongest value of culture tends to show up when it supports intermediate mechanisms such as engagement, psychological safety, collaboration and innovation.
For HR, OD and executive leaders the practical focus should be: diagnose your culture, map it to key performance outcomes, select targeted dimensions, align systems, track intermediate metrics.
Avoid broad “one-size fits all” culture change; instead use focused, evidence‐informed levers in alignment with business strategy and desired outcomes.

References:

Bogale, B. (2024). Organizational culture and performance: A systematic review. Cogent Business & Management, 11(1), Article 2340129.

Charalambous, A., et al. (2024). The relationship between organisational culture, work-related stress and nurse outcomes: A systematic review. BMC Health Services Research, 24, 12003.

Chartered Institute of Personnel and Development (CIPD). (2023). Organisational culture and performance: Scientific summary. London: CIPD.

Whysall, Z., et al. (n.d.). Organisational culture: What it is and why it matters. Nottingham Trent University.

Zhang, Y., et al. (2025). Organisational justice, leadership and innovation: The moderating role of trust and engagement in healthcare settings. (Manuscript in press / preprint).