The Importance of Business Values & Culture (AQA A Level Business): Revision Note

The significance of business values

• Business values are the core principles and beliefs that guide how a business and its employees behave, make decisions and treat others

  • Business values are often expressed in a business's mission statement

Examples of business values

• Business values provide a shared sense of purpose and direction

  • They help employees understand what the business stands for beyond simply making a profit

  • They guide decision-making at all levels, helping staff and managers act consistently

  • They help attract and retain employees and customers who share or respect those values

  • They support consistent behaviour across a business

    • This becomes more important as it grows and senior managers can no longer oversee every decision directly

  • They can differentiate a business from competitors, particularly where customers increasingly favour businesses seen as ethical, sustainable or socially responsible

  • They build trust with stakeholders, including investors, regulators and the wider public, when values are genuinely reflected in day-to-day practice

Factors influencing business culture

• Business culture is the shared values, attitudes and beliefs that characterise a business

  • Culture is often described as 'the way things are done' within an organisation

• Culture is not accidental

  • It develops through deliberate choices and influences that build up over time

What determines a business's culture?

Leadership and employee values

• The personal values and behaviours of both senior leaders and employees shape the everyday culture of a business

• Staff often take cues on acceptable behaviour from those around them, especially senior figures

• Long-standing traditions and ways of working can embed particular cultures

  • Historical successes and failures shape attitudes and beliefs in the workplace

Example

Companies like John Lewis have long-standing employee ownership cultures due to their historical belief in staff involvement

Leadership style

• Whether managers lead in an autocratic, democratic or more relaxed way strongly affects how much trust, openness and initiative exists within a business's culture

• An autocratic leader might create a power culture, whereas a democratic leader might encourage a person culture

Example

Richard Branson’s relaxed, creative leadership style created a person-centred culture at Virgin.

Mission

• A business's stated purpose or mission can shape culture by giving employees a clear sense of what the organisation is trying to achieve

• It encourages behaviour that supports that goal

Reward systems

• How a business rewards employees, for example through pay, bonuses, recognition or promotion, influences what behaviour is encouraged or discouraged within the culture

Organisational structure

• A tall, hierarchical structure can create a formal, cautious culture

• A flatter structure often supports a more open, collaborative culture

Customer expectations

• Where customers expect high levels of service or ethical standards, a culture may develop that reflects and reinforces those expectations

• Businesses often mirror or react to wider societal values and expectations, such as sustainability, equality or work-life balance

  • Shifts in society's values, such as environmental awareness, can push businesses towards more ethical or environmentally conscious cultures

Example

Rising societal concerns over climate change have encouraged many businesses, such as Patagonia, to embed sustainability into their core culture

Positive and negative business culture

Positive business culture

• Where employees feel trusted, valued and motivated, and where everyday behaviour is in line with the business's stated values

Impact of a positive business culture

• Improves employee motivation, engagement and morale

  • This can increase productivity and reduce employee turnover

• Encourages employees to act in line with the business's values

  • This reduces the risk of poor practice or scandal

• Builds a stronger reputation with customers, investors and potential recruits

• Supports better teamwork and communication

  • It helps the business respond effectively to challenges or changes

Negative business culture

• Where trust, communication or morale have broken down, often leading to behaviours that conflict with what the business claims to stand for

Impact of a negative business culture

• Can lead to low morale, high employee turnover and difficulty recruiting or retaining talented employees

• Increases the risk of poor decision-making, unethical behaviour or scandal

  • Particularly if employees feel pressured or unsupported

• Damages a business's reputation with customers, investors and the wider public if problems become known

• Can reduce productivity and increase costs

  • For example through absenteeism, conflict or poor customer service

Example

A business known for a high-pressure, target-driven culture may see short-term sales increase, but risks high employee turnover, burnout and, in some cases, staff cutting corners or mis-selling to meet targets