Company Culture.

Company Culture: Definition, Benefits and Strategies

What Is Company Culture?

The term company culture is something of a nebulous concept, but most culture professionals can agree on the very basics of a definition. In short, company culture is defined as a shared set of values, goals, attitudes and practices that make up an organization. How an organization goes about crafting its own culture is totally up to them. This guide will give a background on company culture, the benefits of a healthy culture and strategies to implement better culture practices.

Company Culture Definition
Benefits of Company Culture
Building Company Culture
Company Culture For Prospective Employees
Company Culture Definition
company culture
Company culture is the shared characteristics that make up organization's workforce. | Image: Shutterstock

What Is Company Culture?

Company culture can be defined as a set of shared values, goals, attitudes and practices that characterize an organization.

Company Culture Definition

Company culture describes the shared values, goals, attitudes and practices that characterize an organization. Aspects such as working environment, company policies and employee behavior can all contribute to company culture.

Company culture can more simply be described as the shared ethos of an organization. It’s the way people feel about the work they do, the values they believe in, where they see the company going and what they’re doing to get it there. Collectively, these traits represent the personality — or culture — of an organization.  

Research published in the Harvard Business Review notes that the characteristics of a company emerge largely from how employees interact (independence to interdependence) and how employees respond to change (flexibility to stability).

A company’s culture influences results from top to bottom. We’ll dive into some specific numbers that prove this statement in a moment, but first, consider the fact that the average American will spend one-third of their life at work.

The environment in which they spend that time will largely dictate the quality of an employee’s professional life. If they work for a company with a strong culture that aligns with their own beliefs and attitudes, they’ll be more likely to work hard and remain with the company for the long haul. If, on the other hand, the company’s culture does not reflect their own personal feelings, they’re much more likely to leave — or worse, remain with the company but underperform.

Before we go any further, let’s review some common misconceptions about company culture.

Company culture is not solely:

Your core values. Core values are certainly part of your culture, but until you put them into action they’re just words on paper. In fact, core values can negatively impact culture if they aren’t adhered to. Employees will see this as the company paying lip service and failing to live up to its own standards.

Your perks and benefits. Ping pong tables and beer on tap can be great, assuming they represent what your employees really care about, but perks and benefits are not a substitute for strong company culture.

The yardstick by which all candidates should be measured. Hiring for cultural fit has become a hot topic over the past few years, but we’re already seeing companies shift away from this line of thought. Hiring people that align with your culture makes sense on the surface, but too many companies use this metric as a crutch. Many companies have pivoted to a “cultural add” model, wherein they look for candidates that align with the most important elements of their culture, but will also bring their own unique traits to the table.

So, what then is company culture?

A successful company culture is one that is bought into by everyone from the newest intern to the CEO. It’s living and breathing your core values. The job of the company is to make sure that every employee understands the expectations and acts accordingly. A truly great company culture is one that inherently promotes curiosity, respect, teamwork and employee health.

A way to really boost your company’s culture is to put a concerted emphasis on diversity and inclusion. In simplified terms, diversity and inclusion in the workplace is making a group of individuals, with completely different backgrounds and experiences, feel safe and accepted in expressing their uniqueness while at work. Allowing employees to express their differences, learn from each other and feel safe while doing it creates a strong cultural bond that breeds employee happiness and productivity.

 

4 Types of Organizational Culture

Based on a company’s shared values, attitudes and practices, a company culture can be sorted into one of four basic organizational culture categories.

Clan (Collaborative) Culture

A clan culture is a people-focused, highly collaborative work environment where every individual is valued, prioritizing communication. It often values action-orientation and the embrace of change, and it involves breaking down barriers between the executives and employees and encourages mentorship opportunities.

Adhocracy Culture 

Adhocracy culture is an innovative, adaptable work environment which highly seeks to develop the next big industry breakthrough. It often values risk-taking, individuality and creativity. Typically, this type of culture prioritizes converting new ideas to market growth and company success.

Market Culture 

Market culture is a results-oriented work environment where external success is placed above internal satisfaction, prioritizing the bottom line. It often values meeting quotas, reaching targets and getting results. Market culture also commonly involves degrees of separation between the executives and employees.

Hierarchy Culture 

Hierarchy culture is a traditional, risk-averse work environment where there exists little room for adaptability and change, prioritizing clear direction. It often values well-defined processes, stability and uniformity. Plus it often involves a set chain of command and multiple degrees of separation between the executives and employees.

Benefits of Company Culture
employees puzzling together an arrow
Building a strong company culture should be at the forefront of every company agenda. | Image: Shutterstock

Importance of Company Culture

The importance of company culture goes far beyond the vibe of your office. From recruitment to retention to performance, company culture impacts every facet of your business.

But how can this be? Surely competitive salaries and great benefits are what job seekers and employees really care about, right?

Well, not necessarily.

Importance of Company Culture

Company culture increases employee retention, engagement and performance; decreases turnover; is a priority for prospective employees; sets expectations for how employees should behave.

Let’s take a look at a few stats that highlight the importance of company culture. 

Forty percent of job seekers view colleagues and culture as a top priority when considering career opportunities and LinkedIn posts by companies mentioning culture receive a 67 percent engagement boost. Looking to recruit top talent? Your company culture had better be a priority.

Companies that actively manage their culture boast 40 percent higher employee retention. Culture is about more than attracting talent. It also plays a huge role in retaining your top performers.

Only 28 percent of executives say they understand their organization’s culture. Candidates care about culture. Employees care about culture. Executives who properly understand their company culture can utilize it for the benefit of both their workforce and business.

Employees who view their company culture as positive are 3.8 times more likely to be engaged at work. Company culture influences employee engagement, which has a direct impact on performance.

Highly engaged teams outperform their peers by 10 percent in customer ratings, 17 percent in productivity and 21 percent in profitability. Simply put, engaged workers are productive workers, and productive workers are profitable workers.

Only 36 percent of employees identify as being engaged with their work. It turns out that very few companies are benefiting from all of those perks associated with a highly engaged workforce.

These numbers are not set in stone, but provide a general illustration of the important relationship between culture and performance.

Building Company Culture
employees working together
There are a number of strategies companies can take to build a better company culture. | Image: Shutterstock

Building a Successful Company Culture

Creating a positive work culture is no small feat, but it’s something that any organization can accomplish.

Building Company Culture

  • Establish company core values.
  • Set company culture goals.
  • Involve your entire team.
  • Follow company culture best practices.

First, let’s take another look at our definition of company culture:

Company culture can be defined as a set of shared values, goals, attitudes and practices that characterize an organization.

It’s important to note that company culture is a naturally occurring phenomenon — your team will develop a culture whether intentionally or not. Because of this, start by figuring out which of the four types of organizational culture your company follows. From there, you can segment the task of building company culture into two categories: the big picture stuff and the day-to-day stuff. Let's start by breaking down the big picture stuff.

 

Establish Company Core Values

We said this before, but it bears repeating: core values are just words on paper until they’re put into action. The best candidates will do plenty of research on your company before applying, and they’ll be able to find out if you walk the walk when it comes to your core values. So how do you embody your core values? 

Let’s take a look at a few examples:

  • “Move Fast.” This is the first of Meta’s six stated core values, and it’s easy to see it in everything the company does. Meta enjoys staying on the cutting edge of trends, not being afraid to tackle new ambitious projects and push the limits. While this value can be precarious, it certainly helps the company attract and retain like minded people.
  • “Be the customer.” Squarespace has no problem living up to its proclaimed customer-centricity. Squarespace is built on its own platform, so the company has a vested interest in developing the best product possible.
  • “Do the right thing. Period.” In 2019, a very public leadership shakeup led to new corporate values for rideshare giant Uber, and this is perhaps the most interesting of them. The very act of parting with its former CEO, not to mention several other key executives, proved the company’s willingness to stick to its principles.

When practiced, core values become more than words. They become the cornerstone of a healthy company culture.

 

Set Company Culture Goals

Every business has a goal, and no, we’re not talking about your quarterly KPIs. We’re talking about the fundamental idea behind your company. The reason it was founded in the first place. How you communicate that goal has a big impact on company culture. 

Consider the following examples:

  • “Create a world where anyone can belong anywhere” (Airbnb).
  • “Build for everyone” (Google).
  • “Live and deliver WOW” (Zappos).

These goals may sound grandiose, but they were designed to speak to people on a deeper level. They aren’t literal recitations of what the company does, but rather aspirational messages that define what the company is working toward. When a company’s goals align with those of its employees, great things happen.

 

Involve Your Entire Team

The general attitude of an organization’s workforce is one of the primary drivers of company culture. Getting the big picture stuff right goes a long way toward fostering a positive attitude, but never assume it’s enough. A few proactive steps can help to ensure attitudes — and productivity — remain high:

  • Make sure to demonstrate appreciation for everything your team does. Everyone is busy, and it can be easy to overlook the small things, but a little appreciation goes a long way.
  • Find out what motivates your employees and provide them with the opportunities they’re looking for. Providing your team with opportunities to pursue what motivates them can keep employees engaged and attitudes healthy.
  • Even the best employees need help from time to time, so make sure you’re offering plenty of support. Whether it’s professional or personal, proving that you’re there for your team when they need you is one of the most important things a leader can do.

 

Follow Company Culture Best Practices

When it comes time to implement your company culture ideas and initiatives, make sure you do so deliberately. Like attitudes, a company’s practices are where the cultural rubber meets the road. An environment that permits people to get away with behavior not in alignment with the company’s culture will breed subpar performance among weaker employees and discontent among stronger employees. Fortunately, there are plenty of steps you can take to avoid this problem:

  • Start by setting an example. Simply put, the easiest way to ensure your employees’ practices align with expectations is to ensure they see their leaders embody those practices every day.
  • Reinforce the type of behavior you want to see. We’re not talking financial rewards here, either. Simply recognizing employees that live up to the company’s culture can have a huge impact on behavior (and culture).
  • Make sure to provide plenty of feedback. You can’t expect employees to modify their behavior if they aren’t aware there’s an issue. Giving honest feedback can be uncomfortable, but it’s key to a healthy culture.

Of course, building a strong company culture takes time and a lot of hard work, but as we’ve seen, the benefits are more than worth it. If you’re not in love with the culture you’ve created, there are always ways to turn it around.

Company Culture For Prospective Employees
employees holding gears
Company culture can be hard to perceive from a simple interview. Make sure to do your homework and ask the right questions. | Image: Shutterstock

Assessing Company Culture as a Prospective Employee 

As a prospective employee, it’s important to ask yourself if a company’s culture will align to your personal career goals and values.

The interview process is already nerve-wracking and it can be hard to tell if the interviewer is being honest or hyperbolic when it comes to the “can you tell me about your company culture?” question. What are the best ways for a candidate to find out about a company’s culture?

Finding the Right Company Culture for You

  • View the company’s “About Us” page.
  • View the company’s social media pages.
  • Read reviews and salary info about the company.
  • Ask questions about company culture in the interview.

Here are some tips for determining whether a company’s culture matches your personal values or not:

 

Look at the Company’s Online “About Us” Page

A quality “about us” page should have company values, employee testimonials and even photos and contact info of leadership readily available. This shows that the company has absolutely nothing to hide when it comes to promoting a successful culture.

 

Look at a Company’s Social Media Pages

What a company posts on its LinkedIn, Twitter and Instagram can all give an insight into company culture and behavior. Take note of what the company publicly shares and celebrates regarding its values, working environment and employees. Compare your findings to your own values and possibly other sources such as first-hand employee reviews.

 

Read Reviews and Salary Info

Before your interview, make sure to check out other sites to read interviewee and employee reviews. Make sure to also check out salary data to see if the company is paying their employees fairly. You can also ask your network about anything they know regarding culture.

 

Ask Company Culture Questions During Interview

You should have a list of questions beforehand regarding culture subjects that are important to you. Maybe you want to know more about how the teams operate. Maybe you want to know if there are any employee resource groups that you could join. Maybe you just want to be assured that you have the proper work-life balance. Whatever culture questions you may have, don’t be afraid to bring them up in the interview.

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