Company culture: Why it’s important, and how to create it

Capturing market share and remaining profitable requires an all-hands-on-deck effort. To stay relevant, your business needs a superior product or service, effective marketing, and an appealing workplace to glue it all together. Creating and maintaining a solid company culture is a neverending quest. And you’re probably here because it’s at the top of your to-do list.

The question is, how do you create and improve company culture?

That’s a lot easier said than done in today’s workplace environment. Henry Ford shocked many when he announced the 8-hour, 5-day work week in 1926. Then, we fast forward almost a century to the information age, and we’re stuck with the global pandemic, which ushered in the work-from-home movement.

What’s our point?

There aren’t many magic levers left you can pull to revolutionize how we do company culture while also launching your company into the stratosphere. The book on what makes a strong company culture in 2023 is complete. It’s just up to your organization to do the hard work to claim those benefits.

This article will fully explain company culture, including answering the common questions.

• What is company culture?
• Why is company culture important?
• What are the types of company culture?
• What are the company culture stats telling us?
• How do you build a strong company culture?
• How do you evaluate company culture?

What is company culture?

We have to begin with a thorough review of what company culture is. On the surface, company culture defines the environment in which employees work. At the deepest level, company culture is an organizational understanding of how to work and interact individually and collectively toward a common goal. This culture will consist of shared beliefs, values, behaviors, and patterns.

At the human level, company culture will define five things:

• What behaviors are rewarded and punished
• The emotions people are encouraged to express or repress
• The KPIs the business values the most
• The organization’s relationship with its employees and customers
• Your hiring, firing, and promotion criteria

Although plenty of academic and business research around company culture exists, it’s far too nebulous of a concept to nail down a definition.

If there are two things you need to know about company culture, it’s this:

• There isn’t a one-size-fits-all culture template that you can install in your organization because every company is different.
• Every organization has a culture, whether it was built intentionally or not.

What company culture is NOT

Company culture is NOT a few added benefits, a swanky office, or annual tickets to Lolapalooza. One could even go as far as to say that a flexible work policy really isn’t company culture anymore. Early in the “21st-century workplace revolution”, organizations could score cheap wins by offering the perks mentioned above. Now, they’re expected by employees anywhere they work. 

Although they may play a small part in workplace culture, they are by no means defining characteristics. Excuse us for sounding slightly nihilistic, but a job is a job, and business is business. So when we define company culture, we don’t look at “Bring Your Dog To Work Day” or count the lunchroom conversations. 

Instead, you only need to examine the organization's decisions regarding revenue, hiring, firing, and promotion.

Importance of company culture

As an executive or business owner with employees, you’re fighting a battle on two fronts. You need to guide your company through sound strategy and vision. On the second front, you must hire the right talent to get you there and keep them happy and productive.

We’d gamble to say that hiring and retaining top talent has never been more challenging. Job seekers can access thousands of job opportunities with just a few clicks. If company loyalty was already a sinking ship, corporate raiders of the 90s and the massive tech layoffs in 2000 and 2008 put the ship down for good.

The result is that your average employee will no longer accept a less-than-stellar workplace experience, even if the compensation is adequate.

Increased productivity

A strong company culture means that every part of your business is in rhythm. There are fewer disagreements, and decisions are made efficiently. Everyone operates with a high level of trust and cooperation, allowing for both autonomy and collaboration. Team members feel their work is valuable, motivating them to go the extra mile and strive to be their best. The result of this is a productive workplace that maximizes your payroll spend.

Improved employee engagement

Employee engagement is an employee's emotional commitment to an organization and its goals. A strong company culture encourages employees to engage deeply in their work and with their coworkers.

Improved employee retention

There’s no question that productive and engaged employees stay at their jobs longer. A rewarding work culture is just as essential as compensation. And when almost any relevant job can meet an employee’s financial needs, they’ll look at factors like culture to determine if they’ll stay or go. MIT Sloan research discovered that a toxic work environment is the #1 reason behind employee turnover.

Easier hiring

Word will spread when your workplace becomes known as a place where people can grow professionally as a part of a cohesive culture. Business success relies heavily on your ability to hire talent effectively. Delays can cost you money in both productivity and hiring expenses. If your company can’t compete in a salary contest, establishing a strong culture can plug the gap that money cannot.

Consistent growth

The bottom line is that a strong culture should improve the organization’s overall performance and provide a measurable competitive advantage. Consistent growth usually follows when you can rely on your core team to stick together and improve with age.

Remember, company culture isn’t how “fun” your workplace is. It’s defined by the beliefs, behaviors, and metrics you value the most. This means you can turn consistent growth into a core value and a part of your company culture.

Types of company cultures

Below is a list of common company cultures. Know that a company can adopt multiple cultures as they’re just loose frameworks. 

• Results-oriented: Emphasizes achievement, measurable results, and ROI. (finance, tech)
• People-oriented: Emphasizes fairness, tolerance, and creativity. (creative agencies, entertainment)
• Slow-and-steady: Prevers slow and predictable growth, securing long-term security. (older industries)
• Community-oriented: Service-driven and motivated by their impact on the community. (non-profits, co-ops)
• Innovative: Encourages “rule-breaking”, risk-taking, and forward-thinking over the status quo (tech)
• Urgent: Encourages a fast, competitive workplace, often because of the demands to stay competitive in their industry. (marketing agencies, SAAS)
• Structured: Emphasizes traditional hierarchy, structure, and chain of command to pursue normalcy (Fortune 500, Military)
• Fluid: Encourages collaboration and employees with loosely defined jobs. (Startups)

Company culture stats

• According to Deloitte, 85% of professionals want to hear “thank you” in day-to-day interactions.
• According to Glassdoor, 77% of workers in the United States, UK, France, and Germany would “consider a company’s culture” before seeking a job there.
• 56% of millennials believe an employee should stay at the same company for over 20 years.
• Employees who give their managers a low rating are four times more likely to be interviewing for other jobs than their peers
• 90% of managers in the US say a candidate's fit with the organizational culture is equal to or more important than their skills and experience.

Building a strong company culture

Fix broken culture

If your company has a toxic culture, the first thing to understand is that the culture exists because it worked well for your organization in the past. That culture no longer serves a purpose, so it’s time to go. According to David Burkus, you can fix a broken culture in three steps.

1. The first place to start is with “who.” He goes further to say that without a clear identity of who the direct beneficiary of the organization’s purpose is, the mission statement will be nothing more than a plaque on the wall.
2. The second step is to create role clarity. A big source of conflict within an organization is a lack of clarity about roles and responsibilities. A lack of clarity can cause important tasks to slip away with nobody to take responsibility.
3. The third step is to build psychological safety. Your team feels free to express themselves, take risks, and fail in front of others. A high-trust workplace and mutual respect mark a psychological safety net. Toxic workplaces will experience high turnover due to burnout and reactive firing.

Establish core values

David Burkus says to start with “who,” while Simon Sinek says to start with “why.” In other words, people won’t care how much you know until they know how much you care. Establishing core values lets you show employees and customers what you care about and why. People want to work with companies when they can believe in the who and why. Core values are the heart of your organization’s shared beliefs supported by your strategy and objective.

Give your employees purpose

Like David Burkus said, employees need role clarity. A common theme among strong workplace cultures is that they’re purpose-driven. This isn’t a platitude but a reality. From the interns up to the C-suite, the work has a high level of purpose and meaning. Job satisfaction drops significantly without it because self-actualization and meaning are basic human needs.

Manage mental health and wellness

Research from the American Institute of Stress concluded that 83% of US workers suffer from work-related stress, with 25% saying their job is the number one stressor in their lives. Stress from deadlines, confusing roles, and management expectations creates stress that can impact employee experience. You'll struggle to build a strong culture if your employees are physically and mentally unhealthy. A house without a foundation is still a house, but it’s at constant risk.

Setup a feedback and reward system

The continuous objective of improving employee productivity usually starts and ends with performance reviews. Unfortunately, many organizations push performance reviews to a quarterly activity for managers to check off. Instead, focus on creating trackable performance metrics that employees and managers can reference in real-time.

Second, create a rewards system that rewards employees that align with your core values. For example, if collaboration is a core value, your bonus structure should reflect how you reward collaborative efforts.

Third, share your company milestones with your employees.

Lead by example

Company culture starts at the top and trickles down. As employees look to management for directives on what values to exude, an organization’s leadership must set the standard early and often. Successful leaders live their culture and core values every day and go out of their way to communicate the organization’s cultural identity to employees.

Hire the right people

Once your company has a set culture, effective hiring practices can help organizations grow that culture. This starts with recruiting applicants who share your organization’s beliefs so they can thrive in your culture. Once you hire a new employee, the work isn’t done. Implementing orientation and training management programs ensures that new hires are included in your culture and way of life.

Elevate your business with a strong company culture

In today’s climate, building a solid company culture is mandatory to hire top talent, retain employees, and achieve consistent growth. Whether fixing a broken culture, starting a company, or making a few cultural tweaks, this article can help you.