Culture Matters. Just Not in the Way We Think.

Part 2: If Culture Improves Performance, How Exactly?

At work, we often say “culture drives performance” as if the pathway is obvious. This series explores what the evidence actually shows about that claim. It is for leaders, HR, and OD practitioners who are under pressure to “use culture” as a performance lever and want more clarity before investing time and money. The aim of this part is to help you move from culture as a slogan to culture as a clearer cause-and-effect story you can scrutinise and, where appropriate, act on.

Introduction

We often hear that culture drives performance.

It is said with confidence:

• Strong cultures outperform weak ones.
• Winning companies have distinctive cultures.
• Culture is a competitive advantage.

But once you ask a simple question, the certainty becomes harder to sustain:
How, exactly, is culture supposed to improve performance?

What is the mechanism?
Not the slogan, the mechanism

The Science

The CIPD evidence review explicitly examined the assumed logic model linking organisational culture to performance. Their conclusion is striking. It is unclear how organisational culture enhances performance.

The claim that culture affects performance rests on three assumptions:

1. Organisations have an identifiable culture.
2. Culture is related to performance.
3. Culture can be changed to improve performance.

But when researchers look for a coherent, unified theory explaining how culture produces performance gains, they do not find one. Instead, what exists is a collection of loosely related hypotheses.

For example:

• An “adhocracy” culture is said to enhance innovation by encouraging autonomy and risk-taking.
• A “market” culture is said to improve financial performance by emphasising results and competitiveness.
• A “clan” culture is associated with collaboration and internal cohesion.

These are plausible stories. But plausibility is not the same as causal clarity. There is no single, integrated model explaining:

• Through which pathways culture affects behaviour.
• Under what conditions it matters more or less.
• Whether it precedes performance or follows it.

In fact, some longitudinal studies suggest the direction of causality may run the other way: performance can shape culture, not just the reverse.

Key Findings

The evidence on culture and performance shows:

• Correlations are moderate to low (mean around 0.16 across studies).
• Associations are substantially weaker when objective performance measures are used.
• Culture is a weaker predictor of performance compared with factors such as general mental ability, personality traits, or structural variables.

Importantly, correlations do not explain mechanism. If culture correlates with innovation in certain contexts, that still leaves open critical questions:

• Is it culture that drives innovation?
• Or do innovative firms retrospectively describe themselves in certain ways?
• Or do both emerge from underlying leadership, incentives, and strategy?

Without a clear cause-and-effect story, culture risks becoming an explanatory shortcut.
When something works, we attribute it to culture. When something fails, we diagnose a culture problem. But that may be post hoc reasoning.

What Does This Mean in Practice?

In HR and leadership conversations, culture is often treated as a performance lever.
The implicit model looks like this:
Define desired values
→ Communicate them clearly
→ Align behaviours
→ Improve performance

But if the mechanism is unclear, the intervention pathway becomes fragile. So before launching a culture initiative, it may be worth asking:

• What behaviour are we trying to change?
• What system currently stabilises that behaviour?
• What incentives reinforce it?
• What leadership signals normalise it?
• What consequences make it costly to act differently?

If culture influences performance, it likely does so indirectly:

• By shaping coordination.
• By reducing friction.
• By influencing trust and psychological safety.
• By stabilising expectations.

In other words, culture may not be the engine, it may be the operating conditions. Operating conditions matter, but they are not the same thing as horsepower. The risk for practitioners is not believing culture matters, the risk is assuming you understand the pathway without interrogating it.

If You’re a Leader or HR Practitioner, Try This Week
To move from slogans to mechanisms, you can run a few focused experiments:

1. Name the specific outcome, not just “performance”.
   Choose one outcome that matters this year (for example, faster decision-making, fewer safety incidents, better cross-team collaboration). Write it down in a single sentence.
2. Sketch your current “culture story”.
   For that outcome, write how you currently believe culture helps or hinders it. For example: “Our culture of openness helps us spot risks early” or “Our blame culture slows reporting.” Then ask: what is the actual behaviour in meetings, emails, and decisions that makes this true?
3. Map system levers behind the story.
   For the same outcome, list:
   • How are decisions really made?
   • Who has authority to say “yes” or “no”?
   • What gets rewarded or penalised (formally and informally)?
   • What happens when someone raises a problem or makes a mistake? This starts to separate “culture” from the concrete levers you can adjust.
4. Test one assumption about cause and effect.
   Take one belief such as “we need a culture of accountability to improve results” and reframe it as: “We think clearer goals, regular follow-up, and consequences for missed commitments will improve results.” Run a small experiment (for example, weekly progress reviews in one team) and see what changes before you launch a broad “accountability culture” programme.
5. Be explicit in your language.
   In your next communication or slide deck, replace one phrase like “our culture drives performance” with a more precise statement: “These three practices (X, Y, Z) are how we expect to improve performance; over time, if we repeat them, they will shape what people experience as our culture.”

These steps will not produce a perfect logic model. But they will force you to be clearer about how you believe culture connects to performance - and where you might be relying on story rather than evidence.

A Quote to Reflect On
“The logic model for the culture–performance link is not based on a single coherent theory, but rather a number of separate, loosely related hypotheses.”
— Organisational Culture and Performance: An Evidence Review

A Question to Reflect On
When you say culture drives performance in your organisation:
Can you clearly articulate the mechanism? or are you inferring cause from correlation?

If your answer is closer to the second, your next step may be to pause the next broad “culture” initiative and first map the specific pathways you are actually trying to change.
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Further Reading

• Barends, E. & Rousseau, D. (2022). Organisational culture and performance: An evidence review. CIPD
• Chatman, J. & O’Reilly, C. (2016). Paradigm lost: reinvigorating the study of organisational culture.
• Schneider, B., Ehrhart, M., & Macey, W. (2013). Organisational climate and culture.

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