Company culture is the shared set of values, beliefs and attitudes that make up an organization. It’s reflected in the way you treat both customers and employees. While a company’s culture can take many different forms, a positive culture is often based on respect, support, honesty and alignment with core values.
Company Culture Definition
Company culture refers to the shared values and practices that shape the ethos or the ‘personality’ 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.
What Is Company Culture?
Company culture describes the shared values, goals, attitudes and initiatives that characterize an organization. It sets the tone for how managers lead employees and shapes the overall ethos of the workplace.
Company culture is a naturally occurring phenomenon, so an organization will develop one whether intentionally or not. Aspects such as the workplace environment, company policies and employee behavior can all contribute to company culture. This leads to company culture manifesting in various different ways depending on each company.
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, and allows characteristics like curiosity, respect, teamwork and employee health to flourish.
Why Is Company Culture Important?
The importance of company culture goes far beyond the vibe of your office, and influences every aspect of an organization. Company culture largely affects how employees approach their work, interact with coworkers and present themselves to partners outside the company.
Impacts Employee Retention
A positive company culture incentivizes employees to stay with an organization for the long-term. According to a 2022 FlexJobs survey, toxic company culture was cited by employees as the number one reason for leaving a job. In turn, Gallup found that employees who feel strongly connected to their organization’s culture were 3.7 times more likely to be engaged at work, and 55 percent less likely to actively look for another job.
Drives Employee Engagement
A positive company culture can boost employee engagement, enthusiasm and dedication to their jobs. For example, employees who view their company culture as positive are 3.8 times more likely to be engaged at work. Plus, highly engaged teams outperform their peers by 10 percent in customer ratings, 17 percent in productivity and 21 percent in profitability.
Attracts Top Talent
Company culture is a major consideration for prospective employees on whether or not to join an organization. Job seekers often look for companies that prioritize employee well-being, empathy and meaningful work, so a company culture that reflects these values can be the key to bring in the best talent. Forty percent of job seekers view colleagues and culture as a top priority when considering career opportunities.
Leads to Innovation
Company culture can be created to foster increased collaboration, creativity and risk-taking initiatives, ultimately leading to innovation. Adhocracy culture for example, a type of company culture focused on adaptability and sharing new ideas, encourages employees to innovate and develop the next big product or service. Companies that build a strong innovation culture are 60 percent more likely to become innovation leaders, according to Boston Consulting Group.
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.
What Does a Good Company Culture Look Like?
To gauge the company culture at your own organization, it can be helpful to know what a good or positive work culture looks like. These are just a few elements that make up a good company culture.
1. Respect Among Employees
A good company culture is one where employees are treated with mutual respect and are encouraged to practice it in return. Respect can take the form of regularly asking for employee input and feedback, recognizing employee accomplishments, being empathetic toward peers or showing appreciation for another coworker’s time and effort.
2. Diverse, Inclusive and Belonging Work Environment
A work environment that is diverse, inclusive and belonging at its core signals to all employees that their voices and perspectives matter. Promoting various viewpoints, ideas and skills at work can also pave the way for increased creativity and innovation.
3. Clear Mission and Values
Having a clear company mission and set of company values help guide all employees in what they do and how to treat others everyday on the job. These aspects set direct expectations and align everyone in a company toward shared goals, empowering employees to hit the ground running and work together to accomplish these goals from day one.
4. Effective Leadership
Leaders are the role models of a company and crucial to the success of a team. An effective leader will be able to motivate, uplift and build strong relationships with their employees, leading to a higher likelihood of collaboration, employee satisfaction and performance in the workplace.
5. Professional Development Opportunities
Providing professional development opportunities enables employees to improve their skills and knowledge in the workplace, and propel them further in their career. Helping an employee grow can be done by offering leadership training, continuing education stipends to complete relevant courses or chances to take on new projects and responsibilities.
6. Transparency
Transparency and honesty are the first steps to building trust with employees. Being a company that prioritizes transparency in conversations can prompt employees to be transparent as well, fostering open communication and accountability on all sides.
7. Employee Well-Being
People are at the core of making a company succeed, so an organization that invests in employees’ well-being is a solid indicator of a good company culture. This can look like a company providing comprehensive healthcare benefits, paid time off and sick leave, flexible working hours or employer-sponsored wellness programs.
8. Low Employee Turnover
If employees are sticking around and turnover is low at an organization, this is a sure sign of good company culture at play. This signifies that employees are likely engaged, fulfilled and satisfied at work, incentivizing them to remain with a company for longer.
How to Develop Company Culture
When it comes time to implement your company culture ideas and build a company culture, make sure you do so deliberately. Like attitudes, a company’s practices are where the cultural rubber meets the road. Creating a positive work culture is no small feat, but it’s something that any organization can accomplish.
Define Your Mission, Vision and Core Values
A mission, vision and core values are the guiding principles of a company, and establish what employees should be working towards everyday. Mission statements and company visions outline the ultimate goal and purpose of an organization, while core values define an organization's beliefs that employees should strive to follow. These elements overall reflect a company’s character, providing reasoning for why employees are completing the work they do and how it should be accomplished. They also align employees at all levels into one shared, unified direction.
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.
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.
Create a Culture Committee
A culture committee is a dedicated team of people within an organization who help to promote and maintain a positive company culture. This committee is made up of employees from different departments or parts of the company, bringing multiple perspectives together to brainstorm culture initiatives. Culture committees can work to create company-wide events, conduct employee culture surveys and determine what parts of a company’s culture are most effective or need change.
Show Appreciation
With the hustle and bustle of work, it can be easy to overlook the small things, but a little appreciation goes a long way. Taking the time to show appreciation makes employees feel their work is valued, and motivates them to continue operating at their best. Appreciation can be shown by saying ‘thank you’ to coworkers or through acts of employee recognition.
Provide Motivation
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.
Offer Genuine Support
Even the best employees need help from time to time, so make sure you offer 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.
Align Your Words and Actions
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 Behavior You Want to See
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).
Provide Feedback Regularly
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.
Continuously Evaluate the Company Culture
Developing a company culture is an ongoing effort and requires continuous evaluation to make sure its impact aligns with company goals. Companies can change over time, so making sure the company’s culture changes with it and accurately reflects its current values is key to keeping it effective.
How to Assess a Company’s Culture
As a job seeker, one of the most important things to consider is a company’s culture — and how well you might fit into it. Here are some tips for determining whether a company’s culture matches your personal values and career goals:
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, X 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
Avoid simply asking, “Tell me about your company culture.” Instead, you should have a list of questions beforehand regarding specific 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.
