What is Company culture? refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. It is the unwritten norms and behaviors exhibited by teams within a workplace.
A company’s culture has tangible impacts on nearly all aspects of performance and operations:
- Recruitment and Retention Having a positive and inclusive culture serves as a competitive advantage in attracting and retaining top talent. One survey found that 58% of job seekers consider company culture more important than salary or job responsibilities when weighing offers. A poor cultural fit is also one of the most cited reasons employees choose to leave an organization.
- Employee Satisfaction When employees feel respected, engaged, and aligned with organizational values, job satisfaction increases. 79% of employees at companies that prioritize culture report feeling happy at work vs. just 35% at those lacking cultural emphasis.
Respectful relationships, constructive communication norms, and clarity regarding roles/responsibilities have proven to increase workplace productivity levels by 21% on average. Negative dynamics like internal politics and confusion around expectations can directly cause output quality and efficiency to suffer.
- Innovation Organizations seeking to spur innovation benefit from shaping a creative, risk-encouraging cultural atmosphere. Employees generate over 50% more ideas and insights at tech companies with such cultures compared to more rigid bureaucratic environments.
When did you last REALLY take time to consider your company’s culture? ProfileTree had a chance to hear more about this vital business topic from our guest Cathy Doherty.
What does great company culture look like? What types of company culture are there? And what works best for a modern business?
Cathy, owner of Practical People Solutions Ltd, explores all this, and more, in our ProfileTree video interview.
Table of Contents
What is Company culture?
She began by defining company culture for ProfileTree with this superb outline: “It’s a term that’s bounded around a lot, and I don’t think people necessarily understand what it is when it’s working well…they understand when things go wrong.
“You’ll have heard headlines around – say – Volkswagen and the culture of messing around with various things. Also corporate scandals and that type of thing.
“What, in essence, is company culture? It’s the personality of your business, it’s how people talk about your business and how your people get on with the day to day when you’re not around.”
Cathy suggested a simple but incredibly useful approach to bringing company culture into focus: “I’ll often ask a business to pause and think about their business’s personality. Really think about its components, and then think: would you introduce that business personality to your mum? Would you bring home that personality with pride and say ‘mum look!’.
“If you wouldn’t, and whether it is a definite no as there’s work to be done or whether there’s a bit of a pause, then there’s still something to do. Very few businesses would say ‘yes, I’m really happy with where my business is’ as there’s always something to do”.
This applies to every company, from the smallest SME to huge organisations: “Your company will have a culture, whether you influence or not. If you don’t influence the culture, one will build and establish itself. The more people you bring in, the more that will evolve.
“As a business owner, you want to be the one directing how that grows. It’s your business after all! It’s your reputation, and you want your people to feel that it is part of who they are.
“You’ll have your leadership, and leadership isn’t necessary the people in the most senior positions as you could have someone in a reception area who leads a team and isn’t a Director who has leadership skills.
“You’ll ideally want to have a culture where people feel they can innovate and make mistakes, and there isn’t a blame culture but one where people learn from their mistakes. You don’t innovate by doing the same things over and over again.
“As a business owner you can’t do it all yourself, if you have ambitions to grow you need strong people around you. You need people who are great at the things you’re not, and even better than you at what you are good at. Because as your business grows you’ll need that strong team around you who can then take this on board and you become more the captain of the ship, where you are providing direction.”
To learn more about company culture, and other HR/ leadership/ essentials, see the full ProfileTree video. — What is Company Culture? The importance of Company Values with Cathy Doherty – Business Culture
The key components that comprise an organization’s culture include:
Workplace Attitudes This encompasses the prevailing mindsets and perspectives that employees adopt regarding their work:
- Collaboration vs Competition: Does information flow freely across silos or is a protective, territorial mentality more common? Are teams pitted against each other or incentivized to work together?
- Comfort with Vulnerability: Do people feel safe admitting mistakes and weaknesses or is maintaining an image of perfection the priority? Can leaders reveal their self-doubt? Psychological safety directly impacts innovation potential.
- Orientation Toward Innovation vs Risk Avoidance: Is bold experimentation encouraged or is rigorously avoiding mistakes the focus? Cultures positioned on opposite ends of this spectrum approach growth differently.
Communication Norms How information flows within an organization also shapes cultural realities:
- Direct vs Indirect: Does dialogue tend toward blunt/transparent or nuanced/cryptic?
- Formal vs Casual: Are interactions ruled by hierarchy or relatively informal regardless of seniority distinctions? Does attire reflect rigidity or comfort/flexibility?
- Openness & Transparency: Are goals/metrics broadly shared? Do leaders take live Q&As or maintain distance?
Trust is also built through daily communications patterns and information sharing norms.
Diversity and Inclusion The breadth of perspectives included and how represented groups feel shapes culture:
- Demographic Diversity: Gender parity, ethnicity, age, socioeconomic background, etc represented proportionately at all seniority levels?
- Belongingness: Do folks across demographic groups feel valued, welcomed and included? Do underrepresented groups have support communities?
- Bias Mitigation Efforts: Presence and participation levels across groups tracked? Implicit bias training conducted? Promotion rates equitable?
Compensation and Recognition The approaches used to evaluate, reward, and incentivize people also reveals cultural beliefs about incentives and meritocracy:
- Performance Evaluation Methods: Are assessments fair? Based on cronyism or friendships? Outcomes or activities focused?
- Reward Philosophy: Is pay secrecy embraced or transparent? Frontline workers included in profit sharing?
Effectively measuring and monitoring company culture requires leveraging both quantitative data and qualitative insights around the employee experience. Key methods include:
Employee Engagement Surveys: The most common approach is annual, anonymous surveys gathering employee perspectives around morale, alignment with values, relationship with managers, and more. Tracking engagement metrics over time reveals cultural trajectories.
Retention and Turnover Rates:
Analyzing retention patterns within tenure segments (0-2 years, 3-5 years, etc) indicates the ability to retain employees long-term. Comparing turnover rates to industry benchmarks also clarifies cultural health. Risk of unwanted attrition presents culture problems.
Productivity Measures: Culture directly impacts productivity – whether average project throughput, utilization rates, or output quality. Metrics around productivity can point toward areas of misalignment within teams or broader dynamics hampering optimal workflows.
Recruiting Yield Metrics: Looking at offer acceptance rates, timeline to fill open roles, and costs per hire provides useful signals. Cultures that entice top talent have an easier and more cost effective recruiting processes. If positions stay vacant for long despite active interviewing, it may point to culture issues discovered by candidates during the process.
Additionally, periodically soliciting qualitative insights around the lived employee experience can contextually enrich quantitative data. Roundtables, small group discussions, anonymous forums and open-ended survey questions can shed light on complex interpersonal cultural dynamics not easily measured numerically. Holistic culture evaluation requires both metrics and narrative.
Improving company culture:
When seeking to improve an organization’s culture intentionally, leaders have several proven levers to activate:
Solving for Mission Critical Problems
Pinpointing processes that routinely frustrate employees and undermine effectiveness provides an opportunity to fix foundational issues. Common examples include problems around interdepartmental coordination, access to knowledge repositories, bureaucratic policies, and communication blockers. Investing in corrective measures can yield exponential culture improvements by eliminating major pain points.
Enhancing Diversity, Equity and Inclusion
Examining diversity metrics, compensation equity across gender/ethnicity lines, and promotion rates is imperative. Subsequently, establishing employee resource groups, recruiting initiatives focused on pipeline development, requiring implicit bias training, and promoting underrepresented groups into leadership roles catalyzes positive change. Progress depends on intentionality.
Launching New Employee Resource Groups
Standing up forums for affiliation and support based on shared identities, backgrounds, or values/interests fosters community. Examples include working parents groups, veterans networks, pride groups, wellness champions, and sustainability taskforces. Such gatherings often organically spread cultural attributes like inclusion, engagement, and retention.
Adding Team Building Experiences
Taking groups beyond day-to-day tasks to relax, bond, and have fun together strengthens interpersonal ties that enable collaboration back on the job. Outdoor adventures, volunteer events, creative workshops, athletic teams, trivia, happy hours, and celebrations enliven culture. The tone at the top shapes participation enthusiasm.
In summary, culture transformation requires investment across policies, programming, behaviors, and environments – with leaders modeling desired changes. By tackling obstacles, ensuring equity, providing affirming spaces of belonging, and facilitating human connections, healthy cultures emerge.
Company Culture Frequently Asked Questions
Q: How long does it take to change company culture?
A: While small shifts can occur quickly, experts recommend giving significant culture change efforts 2-3 years before expecting robust impact and sustainability. Transforming ingrained behaviors and social patterns requires patience.
Q: Can you measure return on investment from culture initiatives?
A: Yes – improved retention, recruiting performance, innovation upticks, and employee productivity gains can all be quantified financially after culture interventions. Culture ROI is estimated at 3-4 dollars for every dollar invested.
Q: Does culture building require designated budgets?
A: Annual investments into culture building are ideal for securing buy-in and continuity. However, general operating budgets can be strategically aligned as well. What matters most is policies entrenching activities that nourish culture.
Q: What happens if leaders don’t model desired culture?
A: Hypocrisy at the top fractures culture transformation efforts. If executives pressure teams to change but proceed unchanged themselves, cynicism and resentment arise. Leadership modeling authenticity is the #1 enabler of success.
Company Culture Conclusion
In closing, company culture undeniably represents a central ingredient enabling business success – touching everything from attraction and retention of talent to employee satisfaction, innovation, productivity, profitability metrics and beyond.
Yet too many leaders fail to recognize the competitive advantage cultivating an intentional culture focused on meaning and purpose presents in the modern marketplace. Additionally, undertaking episodic, superficial culture efforts often yields minimal impact compared to investing resources into ethical, principle-based, and sustainable cultural transformation.
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