A good company culture creates waves of goodwill, camaraderie, teamwork, and collaboration. Positive company cultures shape how well employees work, boost customer engagement, and provide organizations with a competitive advantage.
A good workplace culture draws on the organization’s core values to develop an environment that helps top talent thrive. In the best companies, team members have a work-life balance while following the company’s mission.
- Define company culture
- Explain strong company culture is essential
- Identify elements of a positive company culture
- Offer recommendations on how to build strong company culture
What is company culture?
Company culture is the ethos present within an organization. It’s the work environment that shapes the employee experience every day.
Your organizational culture reflects the company’s values, initiatives, ideals, leadership, communication, and behaviors that permeate the work environment.
A Harvard Business Review article describes company culture as an organization’s “tacit social order.” It is often not a fully defined, tangible thing, but instead, something that develops over time. The organic development of the culture is shaped by multiple factors, from hiring decisions to dress codes.
Why is a good company culture important?
Good company culture has a profound impact on the entire organization. Among the core benefits of a strong company culture are:
- Increased employee retention Employees are more likely to stay with their employer when the workplace culture is positive. Higher employee retention rates mean fewer recruiting, hiring, and training costs. In addition, when an organization is experiencing high employee turnover, more employees may be inclined to look elsewhere.
- More productivity With employees who feel good at work and about work, the organization will see gains in productivity. When employees are aligned with the organization’s culture and values, they are more apt to work to achieve positive results.
- More engaged employees Employee engagement measures how connected employees are to the organization and each other. Engaged employees have a more positive outlook on work and their teammates. With better employee engagement, customer relations, collaborative approaches to work, and quality improves.
- Less employee stress When employees feel supported, valued, and part of something important, less work-related stress will occur. Lower stress levels mean more productive employees and lower absentee rates. Good company culture means investing in employees’ well-being.
- More revenue When employees work together effectively and efficiently, the organization will likely see better products and services. That means less rework and higher quality, leading to better customer experiences and more revenue.
- Better employer brand Every employer today has a reputation. Job reviews and message boards allow candidates to do more research about potential employers. With a positive culture, employees will talk more positively, and candidates will be more inclined to see themselves as a cultural fit and apply to your company.
Elements of a good company culture
What comprises a great company culture? It depends on the organization and its shared values. It’s also influenced by the organization’s mission, vision, and leadership.
Here is a look at some of the main elements of good company culture.
Open communication
When communication is encouraged and valued, employees feel heard. Communication should not be one-way, however, with missives sent out by leadership to employees. Instead, consider communications structures that allow for two-way communication, allowing employees to express their opinions and provide insights.
Open communication structures allow people to share what they see, what is working, and what could be improved.
Mutual trust
A culture of mutual trust is one where everyone believes that others in the organization will support them and their work. It is a crucial aftereffect of alignment between employee values with company values.
Trust develops on three levels.
- At the company level, trust—or the lack of it—is built into the culture
- Trust among teams builds on relationships among team members
- Interpersonal trust occurs at a deeper level between two coworkers
Mutual trust does not occur overnight; it can grow when organizations build it into their planning and procedures. To develop it, however, organizations need to work on it intentionally.
One approach to building trust is through supervisory relationships. Managers can build trust by practicing active listening, supporting employees, and consistently applying policies and communicating. Managers also need to hold themselves and others accountable and practice the values they seek in their employees.
Work-life balance
Employees today, especially after living through the COVID-19 pandemic, are seeking a work culture that values work-life balance. Organizations with good company culture infuse work-life balance into their core values.
Organizations can provide a healthy work-life balance in many ways. It’s about offering and respecting ample paid time off (PTO) for vacation, sick time, and holidays. That means not expecting employees to respond to emails at night, on weekends, or while on vacation.
Fair compensation
A good company culture depends in large part on how employees are compensated for their work. Salaries and wages need to be competitive within the industry and region where they live. A company that undervalues its employees by paying them less will have employees who feel undervalued.
Compensation is not just about pay. Benefits, employee perks, and incentives are a part of the total compensation calculation. Robust benefits, including essentials such as health insurance and PTO, go far toward a positive culture. Investment in employees’ professional development is another benefit that can encourage high performance.
A sense of belonging
Do employees of all backgrounds and levels feel like they belong? Developing a sense of belonging is a multi-faceted effort. It involves making every employee feel welcome, heard, supported, and included.
Belonging is critical today, given the interest and importance of diversity, equity, and inclusion initiatives. When employees from different experiences and backgrounds are hired, additional support may be needed to create that belonging.
Community
A positive sense of community begets a positive corporate culture. This element does not need to mean “employees and coworkers are family.” What it does mean is that employees feel a sense of shared success, celebrate accomplishments, and have supportive leadership in challenging times.
Fairness
When every employee believes they and every colleague are treated fairly, a healthy workplace culture can exist. Fairness does relate to compensation, as noted above, but it’s also about how leaders treat employees. It’s about how they are evaluated, formally and informally, and recognized for their work.
Implementing elements for a good company culture
Follow best practices
A fully committed approach to evolving the company culture is an important initiative. It will take resources in the planning and, especially, the implementation. The commitment needs to start at the top, with leaders who understand why creating a great culture is vital to the company’s overall success.
Changing the culture means accountability at every level. Managers need to commit to the work necessary to facilitate change. Here are a few of the ways the organization can prepare for and facilitate an effective assessment and change process:
- Set an example As company culture evolves, there will be new expectations around behaviors and practices. Those changes need to start with leaders and managers who adapt their work and management to respond to needed change. Employees will see whether their leaders are working to change and exemplify the new norms.
- Reinforce change Managers and supervisors need to recognize when employees are taking the steps necessary to change the culture. Sometimes, these acts require brave, bold, and singular work. Employees who do so should be praised, as the resulting impact on other staff will be noticeable.
- Provide feedback As organizations work to change the culture, there will be many attempts and failures, both of which are normal. Leaders should provide feedback and help employees with the necessary changes, especially if new behaviors differ from the norm. Patience and focus on learning from experiences will go a long way toward changing the culture.
- Measure the impact There are multiple ways to measure the company culture, including retention and turnover rates, employee engagement, employee satisfaction, and responses to communication. Establishing metrics about your company culture and comparing them lets you evaluate new initiatives and make adjustments as necessary.
Create solid company values
Building a well-defined, clear, and compelling set of company values is a powerful exercise. Creating or refining your mission statement is an opportunity to dig deep and reflect on what your shared beliefs are. The power of company values comes in not just creating them, but communicating them to employees, customers, partners, and the public.
How can you create a valuable set of company values? Consider the following:
- Align your values If the culture is already positive, consider including the best elements in your mission statement.
- Involve the whole team A values statement should not be crafted in the C-suite. Representatives from the entire organization should be involved in building the values. Such a process ensures that perspectives from all areas and levels of the organization are included.
- Use ‘real’ values Think about your company values as you would your personal values. That means considering terms like honesty, integrity, and curiosity when creating your company values
- Keep it memorable You do not need 20 company values. Keep the number concise. Ten or fewer is a good benchmark to follow and makes it easier for everyone to remember them.
Gather feedback from your employees
Your employees live and breathe the existing company culture every day. They should be your primary resource for understanding what the culture is and what needs to change. Engaging employees in the process helps them feel included, heard, and valued.
There are many ways to gain feedback on company culture. Anonymous surveys provide an opportunity to collect feedback on many elements related to company culture. Surveys create a chance to solicit broad input and quantify the information gathered.
Focus groups with a small number of employees can help understand specific issues related to company culture. When employees feel safe and know that their feedback will be used, focus groups are a great tool. They can provide anecdotes, examples, and specifics that can put a face on the quantitative data.
Evaluate pay and benefits
To ensure that your employees feel valued, it’s important to review your pay and benefits packages regularly. Comparing your compensation against industry standards is one important exercise to complete. Pay rates may be affected by geographical differences.
Consider your benefits packages at the same time. Again, surveying employees can help to understand which benefits are most valuable. So, too, is an analysis of the usage of existing benefits.
Today, employees may want different types of benefits than even a decade ago. Items like caregiver support, access to wellness programs, mental health support, and pet insurance are all growing in importance.
Partnering with an experienced benefits partner can help to accelerate the analysis and identify valued benefits providers.
Examine recruitment and onboarding
Your recruitment and onboarding processes are powerful opportunities to discuss your company culture. As the culture becomes more positive, it can become a compelling selling point for potential employees.
A Glassdoor survey indicated that 77 percent of respondents will consider company culture before applying for a job. More than half (56 percent) of the respondents said company culture was more important than salary for job satisfaction.
Once new employees are hired, the onboarding process is a great way to communicate the company culture. It can also be used to showcase programs that support a positive company culture and how the new hires can contribute.
A positive company culture plays a vital role in generating success for organizations and employees alike. Company culture helps keep employees aligned with the organization and its company values. It’s a powerful opportunity to strengthen every component of corporate life and business outcomes.
