Every organization has a culture, however not all company cultures are positive, add value to the individuals and organization, or are thriving. A healthy culture has direct benefits for your employees and customer base which provide indirect benefits for your business by way of prosperity, productivity, and profitability.
There is one point we should clarify at the outset, though. Company culture is not a workplace trend that will fade away over time. Nor should it be viewed as some feel-good sentiment that has no place in a business setting. Every organization has a culture.
The behaviors that are considered the norm at one business may be completely out-of-place at another organization. Those acceptable practices are your company culture and they include everything from communication styles to punctuality, office etiquette to daily routines. Even further, how these often unspoken rules of conduct are shared, enforced, and challenged has a huge impact on an organization's ability to grow, attract and retain talent, and support clientele.
It’s the reason, we created this resource. Company culture should be more than a palpable feeling or subconscious intuition about what is common practice at an organization. Successful organizations have cultures that do more than simply exist, they thrive.
Here’s a preview of the information we’ll be sharing:
- What company culture is and is not, and how it impacts your business
- The connection between brand reputation and corporate culture
- How leadership styles reflect on your culture and impact change
- Steps to build, measure, and recognize a thriving company culture
- Where the value of your corporate culture is most useful
- Who is responsible for maintaining and improving your culture
The Fundamentals of a Thriving Company Culture
What Company Culture Is and Is Not
To kick off this in-depth guide to company culture, we first need to start with a definition. What is company culture? According to the Society for Human Resource Management (SHRM), company culture is the shared set of values and practices that define an organization. Your company culture will define how employees do things internally in the workplace and externally, when working with customers and clients. It can also have a huge impact on your public image.
Many people equate company culture solely with benefits and interesting perks, however, a thriving company culture isn’t created by just offering employees unlimited time off or arcade games in the office. Those things can help to establish your company culture, but they are only parts of the overall personality of your organization. Your company culture should help guide employees on how they should act, think, and feel.
Every company is unique, which means every company's culture is going to be a little different. No two companies will establish their culture in the same way. However, as the labor market ebbs and flows and employee expectations shift, companies will need to consistently evaluate their company culture and make adjustments for improvement. A thriving company culture is built, and reinforced, by a host of stakeholders ranging from individual contributors to executive leadership and everyone in between.
Why the Culture of Your Organization Matters
The importance of company culture in an organization’s success cannot be understated. Company culture shapes how business is conducted and helps employees work toward set goals, all of which promote growth. There is significant value in establishing a strong company culture for employers, as your organization’s culture can have a direct impact on revenue. A 2019 report, Return on Culture, found that organizations with a positive workplace culture are 1.5 times more likely to have revenue growth of 15% or more, over a three-year period.
Your organization’s culture can also have a direct effect on your employees. When employees enjoy their workplace culture, they naturally perform better. In turn, increased performance can lead to several other advantages of positive workplace cultures including improved teamwork, raised morale, increased productivity, heightened retention rates and job satisfaction, better collaboration among employees, and improved work performance.
Beyond employers and employees, company culture can impact job candidates as well. Candidates say a company’s culture is a top priority with considering potential jobs. Your culture will play a huge role in a candidate’s expectations and decisions. New employees don’t simply join your team, they are also entering and interacting with your culture, whether it’s good or bad.
There are several consequences to poor company culture. A toxic environment can leave employees feeling unmotivated and unfulfilled. Negativity thrives when culture is unstable, which can break down organizational communication, increase micromanagement, and encourages competition and gossip among employees — all of which have a major impact on employee experience and satisfaction.
Culture Starts With Brand Reputation
With an understanding of what a thriving company culture is and what it can look like, it’s important to take a step back and look at where it all starts.
Company culture starts with brand reputation, but this can be broken down even further. An organization’s brand is its identity. Brand reputation is how an organization is perceived by job seekers, employees, and the general public. And an organization’s brand reputation is a critical factor in several different aspects of business, it can influence profitability and growth, as well as an organization’s ability to attract fresh talent and retain current talent.
Thanks to the proliferation of social media and the availability of information, it has become standard practice for candidates to research a brand's reputation throughout their job search.
Sixty-eight percent of job candidates research companies before they apply. More surprising is that 69% of candidates say they would reject offers if they discover negative information about a company during the hiring process.
Managing brand reputation can be a significant challenge though because it encompasses the sum of every interaction, experience, and perception the public has of you. This means that your reputation is continuously being defined and redefined by your clientele and employees. Whether or not people are happy working for your company and the length of time they stay employed all contribute to your brand.
On a positive note, this constant refining is exactly why employee referrals are so valuable and influential to prospective job candidates (as well as your customer base).
The good news is that most organizations now understand the value and influence of a positive brand reputation. Unfortunately, those who actually monitor and manage it are much less. Companies with a strong brand reputation can differentiate themselves in the job market. The strongest, most-qualified job candidates are looking for more than just salary and benefits. They’re looking at your brand’s reputation from all angles to determine if they would be a good fit and whether or not they can trust and rely on your organization. That means that a bad brand reputation can cost a company a great candidate and may impact your ability to retain the talent you already have.
Essential Leadership Skills for a Thriving Culture
Good leaders are vital to positive workplace cultures. For this reason, it is incumbent upon leadership to constantly (and consistently) promote core values, serving as role models for the rest of the organization. However, just talking about your desired culture is not enough.
Leaders need to fully embrace a positive workplace culture in their actions too. Further, leadership (at both manager and senior levels) should seek opportunities to engage with employees, inspire passion, and ensure employees know they are valued. Employees that don’t feel valued will quickly lose trust in your leadership and the organization, leading to lower job satisfaction and higher turnover rates. All of which is detrimental to workplace culture.
Traits that Support a Healthy Culture
Organizations that desire a thriving company culture will foster and encourage leadership styles that are inclusive and empathic. Let’s break this down.
Inclusive leaders convey characteristics of being open and inviting. They seek to gain as much input and varying thoughts from the widest possible and practical sources as possible.
Empathic leaders actively seek to understand the feelings of others. Don’t confuse this trait with being sympathetic though, which is the ability to express emotions for someone else. Empathy is sharing feelings with someone, sympathy is having feelings for someone or their situation.
The ideal outcome is to build a company culture that develops receptive and welcoming leaders who are committed to and involved with their teams. It’s no small task considering that no leader can be involved in every situation or available at all times. By nature, their roles require them to hold a longer and wider perspective so they can better anticipate, forecast, and plan.
Yet, it’s not impossible. It means being intentional, transparent, communicative, and clear. Leaders who are inclusive and empathic will:
- Approach times of crisis and change with calm clarity and a collaborative spirit that communicates to all employees the significance of their role on the team
- Reinforce connections that engage with employees and enhance their commitment to the organization
- Accept input from a variety of sources, with balanced consideration given to each one
- Seek out talent that will enable an organization to reach its set goals rather than focusing on the status quo for their particular industry or available role
Skills to Navigate Transitions
Few situations create more polarized reactions than changes do. The reason for our positive or negative responses is largely dependent on the impact the situation has on our daily lives and our understanding of change. Maybe a better way to frame this is to ask if you are facing a change or a transition.
A change describes a replacement. There is a near-equal exchange of what was to what is. A positive or negative reaction is based solely on the perceived equality of the exchange.
A transition, however, describes a process. A progression is involved from one perspective or situation to another. Mergers, acquisitions, sold companies, and reorganizations are all examples of a transition. Transitions like these can also have a profound effect on company culture because they require a reorientation in thinking.
Transitions can be difficult, especially if they’re disruptive or carry too many unknowns. They can instigate high levels of anxiety, and it is in periods of transition that inclusive and empathic leadership is most valuable. Your employees need to know you understand, care, and are fully present to help them navigate what lies ahead. These traits are also essential to maintain the integrity of your company culture.
Transitions can be incredibly disruptive on multiple fronts so it is important to understand the nature and sentiment of any transition before proceeding.
Are personnel changes happening because of a retirement or business acquisition?
Are proposed transitions relatively positive and welcomed by employees, or are they perceived as negative changes and therefore resented?
Understanding the situation will help you define the progression, pace, and level of planning that is needed. Organizations with a thriving culture and effective leadership will consider the following:
- Who will be impacted by the transition and how?
- How will the process be communicated? Make sure you consider both frequency and method. It is hard to over-communicate during a transition.
- What are the sources of possible delays and setbacks? When are they most likely to happen?
- What are the possible risks and rewards in this situation? It is up to leadership to articulate why a transition is happening. Clarity around a situation will guide your team to adoption and acceptance. Lingering confusion results in resentment and resistance.
Above all, help your employees navigate shifts in culture, process, or structure so that your organization, and your team, can become stronger and more successful in the long run.
How to Build, Measure, & Recognize a Healthy Company Culture
Brand reputation and effective leadership will establish a baseline but where do you go next? How do you build and develop a company culture that reaches a point of thriving? And which areas of your organization will be involved in the process?
Understand that building a healthy, thriving company culture is not a task or project that your organization does once and then it’s permanently set. Rather, it’s a reiterative process that you are continually defining, supporting, evaluating, and investing in.
The Path to Building Your Best Culture
The path to building the best version of your company culture happens through a process of three integral steps:
First, set expectations and standards. What are your organizational values? Before you can begin building a thriving company culture, you need to determine what is important to your organization and how your employees will participate in and with the company.
Also, consider what behaviors and characteristics will support them as well as areas that might distract or harm the culture you are working to build. Your values must be communicated consistently and regularly. This will become the standard that behaviors are measured against, job performance is compared to, and expectations for accountability are set.
Second, reinforce and model desired behaviors. Creating and maintaining a thriving workplace community starts with the people who are a part of it. To achieve an organization where promoting from within and professional growth are important, continuous training and professional development are required. If team cohesiveness is important, provide opportunities to connect, share, and celebrate.
Keep in mind that employees will listen more closely to the actions you display than the words you convey. Developing a culture that prioritizes a healthy work-life balance means leadership needs to ensure they are logging off or leaving the office at reasonable hours and are using allocated vacation time.
Finally, measure, evaluate, and adapt. Pay close attention to what is working and what is not. Ask for and listen to feedback from employees. Then make incremental adjustments and changes as needed. This is a vital point to implement. It is not enough to just measure performance against an ideal or to solicit input on your progress.
A thriving company culture is not a static situation but an environment that is continually evolving and improving. Not responding to input from your employees will do more than merely delay efforts toward a thriving company culture, it will effectively crush it.
Clear Signals Your Efforts are Working
How will you know if and when your company culture is moving in a positive direction? Better, yet, when can you feel confident it is thriving? While it’s hard to measure culture, it can be tracked. There are several telling signs of a thriving company culture.
- The prevalence and quality of behaviors that align with your core values
- The ease and effectiveness of team communication and collaboration
- Employee engagement metrics such as job satisfaction ratings, employee referrals, participation levels, and turnover
- Some business metrics can also be helpful like customer satisfaction ratings, online reviews, client referrals, and job application levels
- You should also be able to note improvements in productivity and profitability
When your company culture thrives, your employees are happier and your business is more successful.
Ways to Leverage the Value of a Thriving Culture
Sentiment toward work, and specifically our jobs, is continually evolving. The metaphor of a pendulum in motion is often used to describe the balance of controlling influence between employer and employee. However, this perspective excludes an important third party in this relationship – that of the organization. Company culture is the point where all three meet.
When the value of a thriving culture is applied to and used by the organization, everyone benefits. Here’s how.
Attract Top Talent
When the labor market is tight, competition among growing organizations is high. The ability to demonstrate a thriving company culture is a critical component to attracting the talent companies need. Look critically at your company culture to determine whether it aligns with the priority of the workforce and high-quality candidates.
The priorities of many job seekers have shifted to an increased emphasis on culture and how individuals feel about working for companies. A culture that isn’t thriving stands out. Increased burnout, poor employee morale and behavior, low wages, lack of quality benefits, and poor work-life balance can all indicate that an organization’s culture is declining and isn’t going to keep top talent.
However, company culture is equally important in a slack labor market. In a slack (or loose) labor market there is a surplus of talent relative to the number of available job opportunities (often coupled with periods of high unemployment levels). Employers may not need the strength of their culture to woo job candidates but it is important for employee morale and productivity.
When using your culture to attract and retain talent, there are some things you should be doing to leverage such an important asset in the best way, including:
- Be flexible. Whether that’s through alternative work environments or hybrid working schedules, allowing your employees to do their best work in the way that makes the most sense for them fosters a positive culture that is highly attractive to incoming job seekers.
- Offer better benefits. Your culture is the perfect way to help you determine what kind of benefits your employees and job candidates prefer and ways in which you can meet those expectations. Employees are looking to dedicate themselves to companies that care for them and all the different aspects of them, even outside of work.
- Be transparent. Your best efforts to create a desirable place to work with meaningful value and an intentional focus on morale can fall flat if transparency isn’t included. Transparency in business enhances company culture, increases employee engagement, attracts top talent, and improves communication — all critical elements for building a strong business team. Current and prospective employees want transparency in business to be reflected in honesty about the organization, open communication from leadership, and clarity around their future.
- Accurately reflect the culture you have. Highlight your most unique benefits and the place you’ve fostered, without painting an inaccurate picture of your organization. A thriving company culture, in many ways, will speak for itself — especially if you’ve done the work to create a place where people want to work, enjoy what they do, and appreciate the people they do it with.
Ultimately attracting and retaining talent hinges on whether your organization can foster meaningful employee engagement. This means your company culture must include things that prospective employees will desire, and then delivers on those promises.
Provide Meaningful Value to Candidates & Employees
It’s easy to fall into an either-or mindset when the alternatives seem to be quite contrasting. Organizations have long struggled with whether incentives based on compensation or company culture had more perceived value to job candidates and employees. Not long ago, companies with clearly articulated purpose-based cultural missions were highly attractive. Post-pandemic compensation packages soared as organizations raced to rebuild their workforce while retaining the talent they already had.
Yet, does a thriving company culture create a compelling offer and allure to job candidates? Is a healthy and supportive workplace enough to counter alternative job opportunities for current employees?
Organizations need to provide competitive compensation but there is a tipping point where increased salaries result in negative returns and hampered profitability. Similar to retailers who compete on price alone, hiring organizations that compete for talent based solely on compensation create new business challenges to overcome.
First, inflated compensation packages for new hires create an internal risk of wage compression for existing employees. (Wage compression refers to the shrinking variance in compensation between new and tenured employees.) Second, competing on compensation alone ignores other factors that talent continues to value and ask for: purpose in their work, progression in their career, and alignment with personal values.
Compensation is important and maintaining a competitive range is essential. However, it can’t replace a positive and thriving company culture.
- A thriving company culture explains why current employees remain with you. High employee turnover acts as a large warning sign for skilled talent to stay far away.
- Positive cultures promote from within, signaling to candidates a focus on growth and development. Among current employees, it confirms they are valuable with prioritized consideration.
- Productivity and profitability increase in workplaces with a thriving culture. Employees perform better and are more engaged when they have a desirable place and employer to work for.
Build and Retain a Strong Team
Have you ever attempted to fill a container that is simultaneously releasing the same content in another area? While this can provide amusement and entertainment while vacationing at the beach, the feelings are much different if this is happening in your business.
You cannot build and develop a strong team nor can you create a thriving company culture if you cannot retain talent. Some turnover is natural, but high levels of turnover can limit an organization’s ability to focus on growth, negatively impact brand image, and reduce employee productivity. To build a strong business team and foster a thriving company culture, organizations need to retain their talent.
Talent retention is based on organizations that provide:
- Transparency into business operations
- Consistent communication and processes
- Intentional support and encouragement
- Integrity and honesty
- Genuine appreciation
- Trust and belief in their employees
The characteristics that create a thriving culture are the same ones that retain talent. And the traits that employees desire are the same characteristics that will help you attract new talent. When you have consistency in your workforce, it’s much easier to build a robust team.
Your company culture is one of the most important tools in your talent retention toolbox and building a strong business team will always require a culture check. Regardless of labor market conditions or who seemingly has the upper hand, you need to ensure that your brand reputation is solid and your culture is thriving to attract and retain top talent.
Who’s Responsible for Your Culture
Hopefully, it has been impressed upon by this point that an organization’s culture is more than just a set of behaviors. It also encompasses the influences and ideals of those participating in the collective environment. So, how is this collection of accepted behaviors shaped, influenced, and monitored? Who’s in charge of your company culture?
Let’s go back to how company culture is defined. Culture is the shared attitudes, beliefs, and accepted norms. This means everyone in your organization has some degree of sway and effect on your culture.
You’ve likely heard stories of a new employee or addition to a team changing the dynamics of how the group interacted and connected – in both good and bad ways. The ideal cultural environment for your organization may be initiated from a top-down approach but it is implemented from a bottom-up and inside-out direction. Done right, a thriving company culture is a continuous loop of open communication, adopted values, and accepted expectations.
Yet, there are specific functions that various segments of your organization are responsible for.
- Leadership defines and guides your culture. This is why we dedicated an entire section to the skills and traits they need.
- Management is responsible for sharing your culture and modeling what it should look like.
- Human Resources is essential for reinforcing and encouraging desired behavioral norms.
- Employees too, have an essential part. This is the group that leads the adoption of your culture while also providing critical feedback to help refine and evolve your culture.
A thriving company culture is a living force that everyone within the organization draws from and contributes to. This mutual connectedness is what allows a company to weather the seasonal storms of economic pressures and internal disturbances. It’s also what distinguishes a healthy culture from those that are toxic.
For a company culture to thrive, it has to be everyone’s responsibility. A company’s culture is the result of everyone’s behavior. Employees and leadership alike — among various levels and roles — are responsible for fostering a positive workplace culture and should contribute in some way. Gaining company-wide buy-in and involvement in fostering a positive culture drives interest and excitement, improves employee retention, reinforces the established values, and establishes accountability.
Your culture will exist either by design or default. It is the combination of assumptions and behaviors that defines the collective attitude. This is why a company’s culture has to be everyone’s responsibility.
Your Thriving Company Culture
A positive workplace culture builds over time with compounding, cumulative effects. Organizations that foster positive workplace cultures grow and strengthen employees' relationships, talent, and inventiveness. In turn, this leads to productive work environments that help increase organizational success, including business performance, client satisfaction, and efficiency.
These tips can help lay the foundation for a positive workplace culture, but it is not limited to just this list. Every organization will build its culture differently because every workplace is made of unique employees with different needs and wants. However, it should be expected that each member of your organization will need to do their part in the continued success of a healthy, positive work environment.
Do you have more questions about building and maintaining a thriving company culture for your organization? We’re here to help. Connect with us to learn more about our process and consultative services to support your business growth.
