Company Culture.

Company Culture: Definition, Benefits and Strategies

Understanding Company Culture

Ask 20 different people to define company culture and you’ll probably receive 20 different answers. While company culture is something of a nebulous topic, the benefits of a strong culture can’t be denied.

What is company culture?
The Importance of Company Culture
Building Company Culture
What is company culture?

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

Of course, that’s a little cold, so let’s warm it up with some context.

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.  

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 following stat:

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:

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.

The 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, no.

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

66% of job seekers consider a company’s culture and values the most important factor when considering career opportunities (source). Looking to recruit top talent? Your company culture had better be a priority.

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

Only 28% of executives say they understand their organization’s culture (source). Candidates care about culture. Employees care about culture. Isn’t it time your executives get serious about the topic?

Organizations with strong cultures boast 72% higher employee engagement rates than those with weak cultures (source). Company culture influences employee engagement, which has a direct impact on performance.

Highly engaged teams outperform their peers by 10% in customer ratings, 21% in productivity and 22% in profitability (source). Simply put, engaged workers are productive workers, and productive workers are profitable workers.

Unfortunately, only 13% of employees identify as being engaged with their work (source). It turns out that very few companies are benefiting from all of those perks associated with a highly engaged workforce.

These numbers illustrate the relationship between culture and performance. Ignore the importance of company culture at your own peril.

Building Company Culture

Building a strong company culture is no small feat, but it’s something that any organization can accomplish.

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.

From this we can break the task of building company culture into two categories: the big picture stuff and the day-to-day stuff.

The Big Picture Stuff

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:

  • “Be bold.” - This is the first of Facebook’s five stated core values, and it’s easy to see it in everything the company does. Facebook is not afraid to tackle big projects and push the limits, and while this sometimes backfires, it certainly helps the company attract and retain like minded people.
  • “Be your own 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.
  • “We do the right thing. Period.” - 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.

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:

  • Airbnb - “Create a world that inspires human connection”
  • Google - “Build for everyone”
  • Zappos - “Live to deliver wow”

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.

The Day-to-Day Stuff

Attitudes - 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.

Practices - 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.

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