Company culture is a vital component of self-identity, giving the business a purpose and meaning. Critically, it also shapes how employees act and behave at work.
Essentially, it’s often said that it’s a reflection of what employees do when the leader leaves the room! To this end, a good company culture can bring incredible benefits to any organization.
This guide discusses what company culture is, some definitions, the benefits it brings, as well as useful strategies to implement and sustain a healthy culture that works wonderfully for the organization itself and its employees.
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What is company culture?
Company culture essentially refers to the shared values, beliefs, behaviors and practices that shape how employees interact, make decisions and achieve goals within an organization. It reflects the company’s identity, and it sets the tone for its work environment. Indeed, a positive culture fosters collaboration and innovation, and ensures employee satisfaction, while a negative one can lower morale and increase turnover.
It's influenced by many things, including leadership, organizational structure, communication style and workplace policies. It covers everything from how meetings are conducted to how employees are recognized and supported.
Ultimately, a strong, healthy company culture aligns with the company’s mission and drives long-term success.
Why does it matter?
Company culture goes hand in hand with organizational success. Some of the top-performing companies in the world, like Google or IKEA, are famous for their positive and powerful cultures.
Below, we’ll explore five benefits that a healthy culture can bring:
Attraction and retention of top-tier talent
A good company culture can act as a magnet for the best candidates in a job market. Jobseekers often look for companies whose culture is in direct alignment with their own values and needs, such as organizations being ecologically minded or known for work–life balance or diversity.
Organizations with positive cultures attract individuals who fit the environment, ensuring a more synchronized and harmonious workplace. And people who find a workplace culture that they thrive in are less likely to leave. This high retention means the organization can keep skilled professionals, reducing the cost of high turnover.
Enhanced collaboration and teamwork
Companies with a collaborative culture are known for open communication, teamwork and shared responsibilities. This drive to have employees work together creates a more unified approach to problem-solving and innovation.
Meanwhile, strong cultures promote environments where employees feel comfortable with sharing their ideas and working towards a common target, which, in turn, fosters creativity and motivation.
Effective collaboration can then lead to faster and improved decision-making, as well as employees feeling supported by their peers, which creates an atmosphere of respect and trust.
Improved adaptability and innovation
A culture that values continuous learning and open-mindedness is in a great position to adapt to change as well as drive innovation, especially important for fast-moving industries where organizations need to stay agile and responsive to external factors.
Organizations that foster this, as well as risk-taking and creativity, are better placed to generate innovative solutions to problems as well as sustain competitive advantage. This also involves employees feeling safe to suggest new ideas and ways of working without a fear of failure or reprimand.
If an organization adopts this approach, it can provide long-term growth and success, and allows them to remain competitive in ever-changing operational landscapes.
Improved employee engagement
Employees value purpose and belonging — companies with a strong culture will help foster this. Indeed, when employees feel aligned with an organization's purpose, they’ll be likelier to feel motivated and engaged in their work. This means they’re likelier to put in discretionary effort, contribute to team goals effectively, and invest themselves emotionally in the company’s success.
In turn, this drives proactivity and a sense of dedication in the workforce, which enhances overall productivity and morale as well. To this end, engaged employees are likelier to stay with the organization for longer, effectively reducing overall labor turnover.
Increased productivity and efficiency
Company culture goes hand in hand with shaping employee efficiency and productivity. In fact, cultures that place value on — and prioritize — accountability, efficiency and results will encourage your employees to work diligently on tasks, improve what they do, as well as streamline processes.
Employees will be rewarded for this. Organizations that promote trust, autonomy and empowerment will also see increases in productivity, as well as a reduction in distractions and other negative influences; this has the added benefit of allowing staff to focus completely on their work.
How to develop a good company culture
Developing a great company culture requires a bit of skill, effort and patience. Indeed, it doesn’t come easy, and there are no shortcuts. Here are ten tips for developing a great company culture.
1. Build trust through transparency
The cornerstone of any effective organizational culture, trust is vital and should be fostered from day one, because once it’s lost, it’s very difficult to regain.
Build trust through communicating company decisions and changes that impact employees, setting out a charter that explains how this is done. Trust will also help people feel connected to the organization and create an ethical, collaborative and open environment that enables future growth and success.
2. Create an inclusive environment
Company cultures should celebrate diversity, equity and inclusion. Central to this is making the effort to recruit a diverse workforce and, from day one, ensuring that every employee feels respected, welcomed and at ease at work.
Implement policies that promote equity in the workplace, and ensure there are processes in place to address bias or discrimination swiftly. Moreover, establish training programs designed to educate people about DEI to create a richer and more dynamic space for growth and collaboration.
3. Define your company values clearly
Well-defined core values are a great foundation for company culture. They should reflect the mission and vision of the company and act as a “guiding star” for expected behaviors and decision-making.
When these are clear, employees know what is expected of them, and they can better navigate various situations as they arise. Make sure these values are clearly and visibly communicated and lived by everyone in the organization, and recognized as appropriate.
4. Encourage professional development
Creating systems for employee development should be regarded as a critical investment rather than a chore. Offer plenty of opportunities for learning, upskilling and career advancement, using a wide array of learning approaches that ensure all learning styles are appreciated and catered for.
Your knowledgeable and skilled workforce will be more effective and create significant competitive advantages, as well as boost motivation and engagement.
5. Encourage socialization
Fostering socialization opportunities between employees creates a sense of much-needed connection in the workplace. Ensure this is implemented at an early stage through team-building activities, meetups and social events to allow employees to connect and form bonds inside and outside of work.
When employees feel that they’re part of a supportive network, it boosts motivation and reduces feelings of isolation, especially in larger companies or geographically diverse ones.
6. Foster open communication
A culture of open communication is crucial for every organization. If employees feel comfortable with sharing ideas, asking questions and offering feedback, this creates a more transparent and inclusive workplace. Central to this is building a two-way communication approach where managers are listening to their teams as well as directing them.
Tools such as one-to-ones as well as engagement surveys are central to the development of this strategy.
7. Lead by example
When it comes to company culture, it’s important that leaders walk the talk. They must, without exception, embody the very company’s values and behaviors that they wish to see in their people.
If they do this and consistently demonstrate integrity, transparency and a steadfast commitment to these core values, employees are more likely to do the same. This approach sets a particularly positive tone for the organization and makes it more likely for good behavior to be passed on as people naturally move on.
8. Promote a safe and healthy work environment
A clean, safe and comfortable physical working environment is essential for all organizational cultures.
Ensure that the workplace is designed to be easy to maintain, ergonomically friendly and free from hazards. Establish risk assessments to ensure this remains the case, and foster a culture where employees feel psychologically safe as well as physically so.
9. Promote work–life balance
Company cultures that prioritize work–life balance will see big improvements in employee wellness, job satisfaction and retention levels. When employees feel they have control over their work and personal lives, they will be happier and much more productive, as well as be less likely to experience stress or burnout.
Develop policies that encourage this, such as remote work options and flexible working practices, as well as ensure your leaders practice self-care as well.
10. Recognize and reward employees
Reinforcing company culture is best achieved through meaningful and sincere recognition, reward and benefit practices.
It’s vital to develop policies that recognize employees for work achievements, as this will boost morale and create a positive working environment where everyone feels valued. Ensure recognition happens in real time to create a sense of excitement and genuine care that will keep employees loyal to the organization.
How to assess company culture
After developing a company culture, it’s no good to just leave it and see what happens next. Cultures need to be assessed and evaluated, so HR teams and managers can see if changes need to be made. Here are 10 elements to assessing company culture.
1. Assess alignment between actions and values
A company’s culture is shaped not only by what is said, but what is done as well. This can be simply assessed by observing that company promises and commitments are being kept.
For example, if a company states it places high importance on work–life balance, ensure that this is the case by looking at time sheets and investigating practices relating to overtime and working hours. Regularly checking these matters will help you understand if a company values its commitments and cultural ideals.
2. Assess employee engagement levels
Engaged employees are typically more aligned with the company culture. Engagement isn’t just assessed through surveys. HR teams and managers can also assess it through performance reviews, exit interview feedback and direct feedback from managers.
Through these interventions, identifying disengaged employees will help you understand the reasons behind this and how cultural gaps can be addressed.
3. Conduct employee surveys
Employee surveys are a great way to assess company culture. They’re designed to measure many aspects of it, including employee satisfaction, working environment, engagement, communication, and how the company values are being communicated.
The results of employee surveys give leadership powerful insights into what can be improved, especially if they’re conducted regularly and in a consistent manner. Employee surveys are typically anonymized so that employees feel comfortable giving accurate feedback.
4. Conduct regular pulse checks
Pulse checks are short and frequent surveys or check-ins, designed to capture snapshots of employee sentiment and feedback. These can be conducted quickly and regularly, perhaps weekly or monthly, and can help you assess how employees feel about various aspects of the culture.
Regular surveys mean regular data collection, and this can help you monitor trends that impact company culture and allow you to make minor and easy tweaks to the culture in response to what the pulse checks are telling you.
5. Evaluate communication practices
Because effective communication is the cornerstone of any successful company culture, it’s vital to assess how communication flows through the organization. This can include the level of internal communication, if employees are encouraged to communicate openly (and are happy to do so), remote communication, and how employees are connected to decision-making processes.
Take time to assess the frequency, clarity and tone of communication to see if this aligns with the company culture, or if barriers are hindering the culture from thriving and taking hold.
6. Evaluate the physical work environment
The physical working environment is the most tangible way to assess company culture. To ensure this aligns with values, audit the layout and design of the office or workspace, and see if it aligns with company promises and the expected working styles.
Ask yourself: Are there spaces for communication and socializing? Are there quiet spaces and access to food and drink? Companies that value an employee’s physical comfort will have strong and positive cultures.
7. Conduct focus groups
Focus groups are useful for garnering detailed and qualitative feedback about company culture. Held in person or via video link, focus groups are typically composed of small groups of employees from various divisions and departments, who discuss many aspects of the company culture.
Focus groups are useful because they encourage dialogue and reveal underlying issues that employee surveys might not uncover. They also provide an opportunity for improvements to be discussed, as opposed to just providing feedback.
8. Monitor employee turnover and retention rates
Turnover and retention can provide valuable insights into the health of a company culture. High turnover rates can signal issues in the work environment, management styles or a lack of alignment between employee expectations and the company culture.
By analyzing exit interviews as well as numbers, employers can understand the reasons for people leaving and pinpoint key issues or trends that need to be addressed in order to retain top talent.
9. Observe leadership behavior
The behavior of company leaders is critical in shaping organizational culture. One of the best ways to assess this is by simply observing leaders, in terms of how they interact with employees, communicate in the team and how they set expectations.
Observations must be based on expected organizational behaviors to see if leaders align with this and, basically, if they “walk the talk”. Observers should also monitor consistency and how leaders behave under different working conditions, such as in times of stress as well as times of success.
10. Review onboarding processes
The onboarding process is a critical way that the organizational culture is communicated and aligned to incoming employees. Therefore, it’s important to get this right the first time. By reviewing your onboarding and orientation practices, you can assess how well your culture is being communicated.
Check for signs of inclusivity, clarity and the extent to which the culture is pulled through in induction training and other onboarding interventions. Excelling in these areas will ensure company culture is being instilled from the start.
How to improve company culture
If you’re identifying gaps or opportunities in your organizational culture, the good news is that there are some swift and meaningful ways to address them. Here are 10 tips for improving your company culture.
1. Create clear pathways for career advancement
Employees who can see a way forward and opportunities to grow within your organization are more likely to stay and remain invested in the work they do. Therefore, it’s vital to establish clear career development pathways for all employees, regardless of their level or area of work.
Ensure you regularly discuss career development with your employees and work this into tools such as performance reviews. Also, provide support to employees who wish to study or take on professional qualifications.
2. Create regular opportunities for team building
Taking time out for team building ensures that employees build strong relationships inside and outside of work, strengthening open dialogue and increasing collaboration and teamwork. These activities can take any shape and size; engage with your employees and the ERGs to understand what might work best.
Team building doesn’t need to be formal or expensive; it’s just an opportunity for employees to connect. They have the added benefit of helping employees discover each other’s working styles as well.
3. Encourage employee autonomy
Empowering employees and giving them autonomy can lead to a more productive and positive culture. This is because employees who are trusted to make decisions and take ownership of their tasks will find greater meaning in the work they do and feel more invested in their job.
Cultures that promote this will see job satisfaction and innovation increase; it’s vital to communicate the importance of this to leaders so they can drive this behavior.
4. Encourage recognition and appreciation
Company cultures that celebrate the big wins as well as the small ones will maintain high levels of achievement, motivation and morale.
Regularly tweak your recognition program to keep things exciting, varied and meaningful, providing employees and managers with many opportunities and resources to recognize each other and celebrate personal milestones as well as professional accomplishments.
5. Enhance cross-departmental collaboration
Enhancing cross-functional collaboration can break down silos and create a cohesive and positive company culture. This can be achieved through establishing collaboration programs or regular meetings where various departments can update people on what they are doing and reach out to other teams for support or advice.
This also enables employees to learn new skills (especially if they can cross-train in other areas) and it fosters DEI efforts too.
6. Foster a culture of transparency
Transparency at work can make employees feel more connected and valued to what is going on in the workplace and with the company. Ensure that you regularly update employees on organizational news and information, for example, in town hall meetings or in daily briefs.
Be upfront about challenges and solicit ways forward from employees. Take time to address questions and concerns, as this will help employees feel more informed as well as minimize the damage of office gossip.
7. Leverage strong internal communication tools
Effective internal communication is vital to company culture, and if you’re looking for ways to improve yours, this can be an effective and quick fix.
Invest in communication tools such as Teams or Slack to facilitate communication, and ensure they’re used to promote knowledge sharing and feedback. Create feedback loops that promote healthy discourse, minimizing misunderstandings.
8. Promote DEI
Cultures that celebrate DEI will not only be able to attract great talent from many different backgrounds but also enhance creativity and innovation, and drive teamwork and collaboration.
Establish employee resource groups that provide platforms for underrepresented groups and support these in terms of their setup and the resources they require to create meaningful change. Ensure DEI is evidenced through every area of the organization, from recruitment and selection to leadership and in the provision of training opportunities too.
9. Provide flexible work options
Cultures that value flexibility at work demonstrate trust in their employees and attract talent from diverse backgrounds. If you have assessed your company culture and realized that adding flexible working options is the way to go, ensure you investigate all avenues to make this happen.
There are many ways to implement flexible working that can demonstrate a win–win, benefiting the employee and ensuring work still gets done. Ensure you provide the necessary tools and technology so employees can work flexibly with ease.
10. Support employee wellbeing
Wellbeing is creeping further up the HR agenda, and companies that have a culture that emphasizes the importance of physical, mental, social and financial wellbeing are more likely to improve workplace satisfaction.
There are many ways to do this, such as offering subsidized gym memberships, mental health support, employee assistance programs or flexible working arrangements. Engage with your employees to understand what they need and want, and take things from there.
How to maintain company culture
Company culture is at its most powerful when it’s sustained and nurtured. Here are some great tips to help you maintain your company culture when it’s at its most effective:
1. Adapt culture to growth or change
Organizations never stop growing, and the same can be said for their operational contexts and the wider business environment. A business that is growing might need to adapt its culture to suit a larger or busier working environment or a shift into new markets.
To maintain cultural norms, it’s crucial to identify areas that can remain the same, as well as areas that can be adjusted. This ensures the culture remains true to how it was on day one while being agile enough to support the company as it changes.
2. Celebrate milestones and cultural wins
Ensure you regularly celebrate cultural wins and milestones that reflect the organization as well as the employees. These can include celebrating team successes, company anniversaries and the completion of key projects that embody the company culture.
Publicly recognizing these wins helps reinforce the importance of culture and values, and ensures that the nice stuff is celebrated as much as critical business achievements.
3. Consistency in leadership practices
Leaders are vital to sustaining company culture. To maintain the desired culture, leaders need to be transparent and open in how they communicate and act as role models by embodying workplace behaviors.
Maintain these areas through careful leadership recruitment, training your existing leaders regularly, and ensuring that feedback on the leaders is listened to and acted upon.
4. Encourage employee involvement in culture-building activities
Getting employees involved in maintaining the company culture strengthens the culture and promotes a sense of belonging. It can also be incorporated into DEI interventions.
When employees are brought into culture-building activities, they can provide actionable and relevant insights into what is needed to ensure the culture remains positive and relevant for all. Using ERGs or other employee committee groups can create a collaborative approach to this exercise.
5. Foster open feedback channels
Sustaining a great company culture requires you to adapt and seek continuous improvement. Ensure you establish comprehensive open feedback channels where employees feel comfortable sharing their thoughts and opinions on your company’s culture.
Actively listening to this feedback will help address employee concerns early and proactively, and demonstrate how your culture is open and responsive to suggestions.
6. Integrate culture into recruitment
To maintain company culture, you must continuously find great people who will come into the organization and align themselves with the great work that is being done.
During the hiring process, prioritize cultural fit and cultural add alongside searching for the right skills and experience. This can be done through behavioral interviews, assessments and situational questions. Invite current employees into the recruitment process so they can offer their feedback on candidates as well.
7. Maintain consistent communication across all levels
For a company culture to remain strong, communication must remain consistent across all levels of the organization. This applies to all kinds of communication, from email style to team huddles or departmental meetings.
Doing so ensures that key cultural messages are communicated and reinforced. Ensure that communication is open and accessible to every employee and that company focuses are clearly communicated and understood at every level.
8. Provide ongoing training opportunities
One of the best ways to keep company culture thriving is to provide ongoing and accessible learning opportunities for every employee.
Ensure that cultural training refreshers are regularly conducted and that learning options are designed to support talent management so employees grow with the organization and they remain there, strengthening cultural bonds and supporting other business measures such as retention and engagement as well.
9. Recognize cultural champions
If you have people in your organization who are especially adept at championing the company culture and bring a lot to ensure it remains positive, it’s crucial to recognize them and promote their efforts to the wider workforce. Doing so will motivate other employees to make similar efforts.
Ensure these employees are recognized publicly and in a way that is aligned with the company culture itself. Furthermore, establish a cultural committee where these employees can work with others to drive the culture forward.
10. Reinforce culture during onboarding
During your onboarding processes, ensure your new hires clearly understand the power and impact of your company culture. Provide them with real-world examples of how the culture manifests in daily activities, and communicate with them about company norms, communication processes and expectations.
This ensures new hires understand clearly what to expect, and they will be immersed in a positive culture from day one. This will transform them from great starters to great employees!
Frequently asked questions
If you’re wondering where to get started with your company culture, here are a few frequently asked questions that you might be thinking about.
Q: Can company culture be changed over time?
Yes, company culture can evolve, though it requires plenty of effort and patience. Leadership is critical in driving cultural change, whether this involves adapting to new business or operational norms, improving DEI, or enhancing collaboration. Culture changes should be gradual and involve employee input to soften the blow and ensure the new direction lands well.
Q: How can company culture be measured effectively?
Though it’s rarely a tangible thing, culture can be effectively managed through a variety of channels. These include employee surveys, business measures such as retention rates, exit interview feedback, and simple observation. This mix of qualitative and quantitative information helps identify cultural strengths as well as areas for improvement.
Q: What role does company culture play in employee performance?
A strong company culture is linked to employee performance by fostering trust, collaboration and motivation. A strong culture will increase the likelihood of employees putting in discretionary effort, ie: going the extra mile for their employer.
Key takeaways
Company culture is the “secret sauce” that can turn good organizations into great ones. Establishing a strong company culture is not easy, but the importance of doing so cannot be underestimated.
Here are some key points to consider:
- Company culture permeates all levels of the organization and will have an impact long after employees and leaders move on — it’s the DNA of the business.
- Strong and positive company cultures benefit businesses directly through many different operational measures and key performance indicators.
- All employees have a part to play in building a strong company culture, from line employees to leaders who walk the talk.
- Company culture takes time and care to build and must be continuously measured and analyzed to ensure it’s still relevant and fit for purpose.
Strong company cultures translate into powerful brands that customers want to use, and candidates want to work for. The best companies in the world all have strong cultures, so follow in their footsteps and cultivate your company culture today.
Got a question? Let us know in the comments section below.
This article is a complete update of an earlier version originally published in 2016.