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What is Company Culture?



Prospective employees are increasingly asking the “What’s your culture?” question, and employers increasingly strive to ensure that new hires will be a cultural fit. While most people have a general understanding of what company culture is, arriving at a precise definition can be difficult. The meaning can vary widely from organization to organization, but it can also vary within organizations themselves. One leader may focus on employee satisfaction and well being while another may point to community engagement and external client perceptions. Now, more than ever, understanding how company culture is created is critical.

Culture, at its core, is intertwined with a company’s identity. It is comprised of several elements working in concert to create a cohesive experience and perception that are evident from both within and outside of the organization. Culture defines, in part, how employees and managers interact, but it is also a product of the company’s vision and the values exemplified by the leadership team. In order to fully understand culture, one must examine, not only what is said, but also what is done. Where is the company investing resources? What flexibility do employees have when performing work? What values are being rewarded?

Why culture matters:

Studies have shown that a strong company culture contributes significantly to employee retention, which leads to reduced recruitment and training costs. In fact, some studies rank culture above traditional attractors such as pay and perks. Companies with a strong culture also have employees who are more engaged and, therefore, more productive and more willing to serve as company advocates, which can have a direct impact on an organization’s branding and business development efforts. Companies with strong cultures also experience higher increases in revenue growth and stock price.

Building a strong culture:

While companies tend to understand the benefits of a strong culture, a 2016 Deloitte study found that less than a third of executives understood their own organization’s culture and only 12 percent believed their companies were driving the “right culture.” Here are a few keys to building a strong, cohesive culture.

  • Enlist employees, not only to help assess culture, but to serve as cultural ambassadors. Peer-to-peer communication is a crucial element of building and maintaining a strong culture.
  • Engage in frequent, transparent communication to ensure employees understand what an ideal culture looks like.
  • Publicly celebrate success of the company, but also teams and individuals. Recognition is important to morale and will motivate employees to be more productive.
  • Ensure that leaders are “living” the culture. A company’s culture and values must be championed by leaders at all levels of the organization.
  • Establish feedback loops to measure success. Understand what’s working and, more importantly, what’s not.
  • Evolve accordingly and recruit intelligently. Recognize that as new generations of workers enter the organization, successful company cultures have the ability to adjust while still maintaining core principles. Talent acquisition teams play a key role in identifying candidates who will integrate with a company’s culture.

Few would argue the point that a company’s culture is not built in a day. Building company culture takes intentional steps over a period of time, ensuring everyone buys in.

Our next blog will take a deeper look into employee retention, the impacts of company culture, and the tangible steps leaders can take to keep great employees.