Company culture helps define an employee’s experience. When a worker is unhappy with their work environment, productivity and employee engagement suffer. There are several simple ways for companies to create a positive culture, from promoting employee development and recognizing achievements to training leaders and being clear about expectations. Keep reading to learn more about company culture and how it improves performance.
What is company culture and why does it matter?
Also known as organizational culture, company culture is defined by management or leadership. It is a set of values, practices and behaviors that employees experience and adopt. They might be formal or informal practices and rules. Generally, company culture reflects the organization’s vision and mission. It might include things like recognition and communication processes.
Company culture is important because it helps create and maintain an identity within an organization. This helps unify teams, creating a sense of belonging in the company. A positive culture at work also helps retain employees, particularly top talent and high performers. A strong company culture keeps people excited about work. It also encourages employees to be engaged, which increases productivity.
Impacts of company culture
A study by Lexington Law in 2021 found that 60% of Americans would accept half their income for a job they loved. The same study found Americans were twice as likely to value company culture, personal interests, benefits, and growth opportunities over salary.
Company or organizational culture directly impacts the workplace, including employee performance and engagement. For example, employees that see leadership not put in enough effort or berate colleagues are likely to feel less engaged or motivated. Many professionals, especially younger ones, want to work for an organization that reflects their values.
Company culture and engagement
Employees that are satisfied and happy with their job are generally more engaged. Generally, engaged employees feel a stronger sense of ownership in their work. They genuinely want to contribute to the organization and its success. This feeling means employees are more innovative since they want to see their company excel, including against competitors.
Employee engagement is often low when employees are not happy. For example, they may not feel valued if achievements or contributions are not recognized or rewarded. They might also feel unhappy if communication with colleagues or across teams is restricted or if learning and development programs are limited. Companies with these environments typically face higher turnovers, lower productivity and poor morale.
When employees feel more present and engaged, they are less likely to be looking for another job. If employees are happy with the culture around them, they are less likely to leave. By retaining workers and avoiding large turnovers, companies can avoid the high cost of recruiting new employees.
Company culture and productivity
Research from Gallup in 2020 found that employees who do not feel engaged cost companies 18% of their salary each year. This is a loss of over $60 million annually in large companies with 10,000 employees earning an average of $50,000. Another Gallup study, this time from 2017, found that highly engaged employees are 17% more productive.
Employees that feel engaged are usually more passionate and committed. This drives innovation and service quality, which can help improve sales and profits. More productive and engaged employees also mean clients and customers are more likely to have positive interactions, contributing to improved customer retention.
Improving company culture
Improving company culture is about changing behaviours. Although companies often need to take a tailored approach to improve culture in the workplace, there are some proven ways to create a more positive environment within an organisation. These include:
- Analyze employee engagement using surveys, focus groups and other processes to identify any issues with company culture and ways to address problems (and also build on what works).
- Promote dialogue at work, allowing employees to engage and talk with each other to make relationships sincere and natural.
- Prioritize work-life balance to avoid stress and burnout, including by offering flexible work arrangements or hybrid working.
- Invest in learning and development so employees feel like you are committed to their growth while also improving skills within your teams.
- Incorporate leadership or management development including through Diversity and inclusion training.
- Share successes and ensure employees involved in those successes are rewarded, for example with bonuses.
- Review your rewards and recognition processes to ensure employees are instantly and genuinely recognized for their achievements.
- Remain committed to creating a positive company culture, but be flexible to make changes if improvements are needed.
Tips for improving company culture
It is important to be clear about what work and company culture means. This includes defining your goals and objectives and communicating these within the organization. Being transparent ensures employees know what is expected. This includes providing ongoing feedback and recognizing contributions.
To create a strong culture within a company, time and resources need to be invested. This includes analyzing and reviewing culture, including employee engagement and performance. Ensure that reward and recognition processes and learning and development programs are comparable to other companies in your industry.
Feedback is also essential – not just annually or quarterly. This should be part of every day and in every direction, from employees to management and from management to employees. This allows everyone to feel involved in contributing to a better culture in the workplace. Encourage employees to be open and honest, but also demonstrate how feedback has informed changes.
High-performing workplaces and company culture
Engagement and performance are closely tied to company culture. A workplace’s culture is the foundation of any organization and should not be overlooked. It helps determine success and, conversely, contributes to failure. A company culture that is clear, organized and flexible will contribute to improved employee engagement and performance.