What is company culture?
Shared values, goals, ethics, expectations, and beliefs all add up to company culture – and drive how decisions are made, what actions are taken, and the business results that follow. Typically, culture originates with an organization’s founders or leaders and trickles down to employees.
When you search for a definition of ‘company culture’, it’s likely that you’ll come across something like that. But how do these manifest themselves when a new hire walks through a company’s door? Most explanations seem nebulous at best, and there really is no standard definition of what company culture is.
The closest definition probably comes from Frances Frei and Anne Morriss in the Harvard Business Review:
Culture guides discretionary behavior and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which is of course most of the time.
Whether a company consists of one employee or one thousand, organizational culture dictates the workplace environment – even when that workplace is remote.
Free eBook: How 3 leading companies get culture right
What’s the ROI of having a great company culture?
Workplace culture plays an integral role in employees’ overall job satisfaction and success. When people feel their personal values and needs fit with their organization’s culture, they’re more likely to enjoy going to work, get on well with their colleagues, and be more productive. And there are even more benefits to a strong culture:
Higher employee engagement
Employees who enjoy every aspect of their job are more engaged, and 88% of employees believe a distinct workplace culture is important to a business being successful. Conversely, disengaged employees cost U.S. companies up to $550 billion a year, according to a study conducted by The Engagement Institute.
Generally, employees enjoy their work when their values align with those of their company’s mission.
Work-related stress and mental illness caused by a toxic workplace culture costs US businesses more than $300 billion a year in health costs, absenteeism, and poor performance:
A healthy company culture should alleviate stress, not cause it.
Increased employee satisfaction and wellbeing
The American Psychological Association reports that 89% of employees will recommend their company as a good place to work if the company supports wellbeing initiatives.
Increased employee retention
When employees chime with the company’s culture, they tend to stay – increasing retention rates and lowering costs associated with hiring.
When employees are aligned with the company’s culture and engaged with their work, businesses see higher levels of productivity. For example, if your company is team-oriented, hiring people who thrive in a collaborative environment will help drive productivity.
Engaged employees help drive business results and company growth. According to a Gallup report, highly engaged teams show 21% greater profitability than those who are not.
A strong company culture is important for prospective employees when they evaluate potential employers. 46% of job seekers said a company’s culture was one of their deciding factors when applying for a job. A stellar organizational culture attracts top talent, whereas those businesses that need to improve company culture risk 15% of job seekers declining a job.
Types of corporate culture
When you look around your friends, chances are some will wear suits to work while others get away with slouchware; some will have a loose approach to keeping office hours, and others seem to socialize almost exclusively with work colleagues. All these behaviors reflect the cultures of the companies they work for. Not all of them lead to employee happiness, though.
Here are some categories of company culture you’ll find in the business world:
1. Hierarchy culture
This is a traditional company with strict guidelines governing roles, dress code, and departments that don’t tend to interact. This risk-averse culture tends to focus on numbers, and is bottom-line driven, sometimes putting profit over customer experience. It’s the CEO who makes the decisions, leaving little room for input from employees further down the line, who may feel frustrated or ‘just a cog in a machine.’
2. Team first culture
A more enlightened company, that has employee engagement as its top priority, just above customer experience. Departments intermingle socially inside and outside work, good work-life balance is standard, people take pride in their environment, and feedback is solicited often and responded to thoughtfully.
3. Elite culture
An intense place to work, elite companies aim to take risks, and disrupt and change the world. They hire the best from many highly-qualified applicants, expect them to make work a priority and put in long hours, promote them rapidly, and take notice when their people question things or suggest improvements. It can be a high-pressured environment, which requires superior perks and wellbeing programs to balance out the intensity.
4. Horizontal culture
When the CEO makes you a coffee and asks the intern what they think of a new project proposal, the company is probably horizontal. Common in new startups, the culture is collaborative, flexes with the market, feedback, and employee suggestions, everyone mucks in and gets their hands dirty, and the customer is king and queen.
5. Adhocracy culture
An authentic adhocracy culture is one that is sufficiently agile to adapt rapidly to change. Adhocracies encourage individual initiative, empower employees to get on with the job, and allow flexibility. Leadership is less clearly defined than the other organizational cultures, which can lead to both chaos and creativity.
6. Clan culture
This is a company with a friendly, family atmosphere where employees have similar interests and are heavily involved in the business. Often a feature of small companies and startups, there are fewer management levels, high employee engagement, and an emphasis on teamwork and collaboration. The C-suites are less monsters, and more mentors.
7. Toxic culture (unfortunately)
A toxic organizational culture is the main reason employees quit, and turnover is one of the biggest drains on a company. When employees are terrified of making a mistake, people’s roles and responsibilities are unclear and confusing, workers feel they are disrespected, and there’s bias and inequality, these are red flags of toxic company culture. Other signs are:
How to build and sustain a great company culture
Your C-suite and HR play important roles in shaping your company’s culture. If you’re not sure what your culture is, or think you need some help reshaping outdated norms, company values and behaviors, here are some things to think about:
Introduce and demonstrate your core values
Revisit your mission statement, through HR programs, such as your careers webpage, orientation, training, and performance management.
Have a killer employer value proposition (EVP)
An EVP is the offering to current employees and potential job applicants that makes you a desirable employer. As your company’s mission, it has to be uniquely good, true and representative to encourage top talent to choose you over your competitors, or elect to stay with you.
Since the pandemic had a huge impact on the relationship between people and work, focusing more on feelings and work life balance, prospective employers’ EVPs need to keep up with the current thinking about work environment and practices.
According to Gartner, post pandemic EVPs now need to target culture, and offer:
- Deeper connections: by understanding employees not just through work relationships, but with their family and community connections too
- Radical flexibility: by empowering employees to be autonomous and flexible in all aspects of their job, not just location and timing
- Personal growth: by helping employees to grow as authentic people, more than just their job role, and to feel valued.
- Holistic well-being: by doing more than simply making holistic well-being initiatives available, actively encouraging employees to use them, and make employees feel cared for.
- Shared purpose: by making employees feel invested by getting involved with the local community, and taking a stance on societal and cultural issues.
Hire for culture contribution, not fit
Progressive companies recruit new employees for culture contribution, rather than just those who fit the corporate mold, to bring unique perspectives and help grow the business. That means hiring employees who not only align to your company’s values, but also bring diverse experiences and backgrounds to the table. Diversity is good for business. Look for people who are doers, historically getting stuff done, and remember that your employees are representatives of your company, even outside work where people talk freely.
Give meaningful workplace benefits
Installing a ping-pong table or a coffee machine won’t inspire your employees to make your startup a unicorn. But an on-site gym, free canteen, unlimited holidays, life coaching, travel allowances, or bringing your dog to work are perks that make a real difference to people. 57% of people say decent perks are a top consideration when choosing to join a company.
It’s no longer enough to see profit as the sole reason for your company to exist – it’s Planet, People and Profit now, and about giving something back. Whether it’s donating money to charity, sharing skills with local non-profits, pro bono work, paid volunteering days or going green, companies whose employees give back report fewer sick days on average, making the company more productive.
Reward and recognize
From Employee of the Year, to a quick message saying ‘thanks for a great job’, appreciating your employees is pivotal for good company culture. Get HR to make sure that appropriate awards go to employees who best demonstrate a good grasp company values.
Take wellbeing seriously
According to a report In 2021, 86% of employers consider wellbeing a top priority, but nearly half (49%) of respondents said they hadn’t yet formalized a strategy. Be in that 51% that takes wellbeing seriously.
- For physical wellbeing, consider healthy snacks, exercise sessions, walking meetings, screen breaks
- For mental wellbeing, social events, ‘venting’ channels for managing stress, team activities and creating a clean, pleasant environment
How to assess your company’s culture
Give all employees a chance to voice their opinions
Set up inclusive discussions around culture to reshape cultural norms and behaviors. Include focus groups. one on one meetings, and…
Use surveys to assess your company’s culture
Leaders may agree on organizational culture, but that doesn’t mean all employees see it in the same light. By collecting employee experience data you’ll be able to develop strategies that support your business’s objectives and goals. Our suite of survey tools can help you capture what your employees feel about your company’s culture.
Action the issues highlighted by your surveys
When you have collected your employee feedback survey data, make sure you act on it. People will feel respected and listened to. And where issues cannot be actioned, acknowledge this and be transparent about what is, and isn’t, possible.
Examples of companies with great cultures
Zoom Video Communications
“We have a 100+ volunteer force of employees called The Happy Crew, tasked with organizing activities around moments that matter to our people. From bringing employees together to welcome new Zoomies, to planning company-wide events and intersecting with our community at large, The Happy Crew is an important driver of employee experience at Zoom. To keep things organized, they even have their own leadership team (including a captain!) and various sub-crews.
The Happy Crew played a huge part in Zoom being recognized by Comparably as the work culture with the happiest employees.”
– Lynne Oldham, Chief People Officer
“You hired people you trust, so trust them to do the work you hired them for. Leaders should also normalize the need for breaks during working hours. Just last week, a senior leader here at GitLab shared in a public Slack channel that he’d be offline for a few hours to help with child care.”
– Dave Gilbert, VP of Talent
“Patagonia is a cause disguised as a company.
If you get arrested protesting in support of the environment, we pay for bail. For a nursing mom, we’ll pay for the mom and the nanny and the baby to travel. Those are not difficult decisions for Patagonia. They’re just in line with the culture.
With a cause so intense, we have to make sure our programs, policies, and procedures align with the culture. Anything we propose in HR that’s not aligned gets rejected immediately.”
– Dean Carter, Chief Human Resources Officer
“A pulse survey uncovered the biggest challenges facing Telefónica employees globally, and how the company could act in the right way. That feedback led Telefónica to take a number of actions, all of which have contributed to a higher eNPS.
Our Employee NPS is higher today [in 2020] than it was in 2019, which is a testament to how we’ve supported customers and society in this unprecedented time, and our people’s sense of belonging. At the outset of the COVID-19 crisis, we sprung into action by building and launching a pulse survey with Qualtrics.
Longer workdays and working at home dealing with family responsibilities were our two biggest concerns globally. When we looked at what people wanted, over a quarter wanted more guidance on organizing their day. Nearly half were after more information balancing work and life.”
– Sergio De La Calle Asensio, Head of Engagement
“Through our employee experience survey, we learned that our front line employees — for example, people in our retail and call center employees — felt like their voices weren’t heard as much as our corporate employees. So ‘Voice of the Front Line’ was born.
One key initiative within the ‘Voice of the Frontline’ is a quarterly call out for ideas directly to our frontline employees on how to improve the employee and customer experience. These ideas are visible to everyone, and can be voted up by employees. The creators of the top five voted ideas have the opportunity to present the idea to a panel of directors with the top three being presented to the VPs who then choose a winning idea for the company to focus on. It’s doubly beneficial — our leaders get great ideas about improving our customer experience directly from our front line and employees also feel heard and valued.”
– Geoff Ho, PhD, Director of Organization Development Research
“Zillow quickly moved as one of the first organizations to give employees the option to work from home for the remainder of 2020 to eliminate some of the uncertainty around returning to the office.
At Zillow, we give people the power to unlock life’s next chapter. Due to COVID-19, we’ve seen a real surge in people rethinking where they live and, ultimately, deciding it’s time to move – whether it’s moving closer to the family for a support network or out of a densely-populated area. This shift is partly why we want to support our employees to continue working remotely, so they, too, can be in a space where they feel happy, comfortable, and safe.”
– Dan Spaulding, Chief People Officer
“Our employee engagement survey is a super valuable tool. It makes people feel heard and it also gives us insight. We follow up with focus groups, and we do store visits. We ask questions like, “If you were talking to the big boss, what’s one thing you would ask to change as a company?”
– Karalyn Smith, former Chief People Officer