Imagine a workplace where employees are motivated to do their best, where teamwork thrives, and everyone feels valued and supported. Now, contrast that with an environment filled with disengagement, high turnover, and a lack of trust. How can you create that first environment and avoid the second? It comes down to company culture.
Company culture is not only key to the day-to-day employee experience, but it radiates outwards, influencing how your organisation is seen by job applicants and even customers. It’s a driving force behind employee engagement and overall business success, but it can sometimes be difficult to describe or measure.
To help, we’ve put together this guide covering what company culture means, why it’s important, how to improve it, and ways of measuring it.
What is company culture?
Company culture is the shared values, beliefs, behaviours, and norms that shape a workplace. It includes formal elements such as systems, policies, and processes, and informal elements like unwritten rules and social norms.
For example, a formal element may be that your employees use a tool like Teams or Slack to communicate, while an informal element may be the tone in which colleagues tend to speak to each other. Or it may be that you have a structured performance review process in place (formal), and also an unspoken understanding that your employees can ask their line manager for casual feedback or advice anytime (informal).
All of these things add up to create your company culture and define what it feels like to work at or interact with your business. Every organisation has a distinct culture and it’s something that evolves over time.
Why is company culture important?
A positive company culture isn’t just a nice-to-have; it has a direct impact on business performance. These are a few powerful reasons why you should focus on building and maintaining a good culture:
Employee engagement and retention
Building a culture where employees feel involved, valued, and supported will lead to higher employee engagement. This in turn will make them more likely to stay with the organisation, reducing turnover and the costs associated with it.
Increased productivity
Employees who are engaged and invested in their work are generally more productive and better performing. A culture that promotes teamwork and collaboration can also drive innovation and business growth by fostering creativity and problem-solving. On the other hand, a negative culture can mean more misunderstandings, silos, workplace conflicts, and employee burnout, which can all negatively impact productivity.
Attracting top talent
Developing a strong employer brand and a reputation for having a positive company culture can make it a lot easier to attract top talent and set your business apart from competitors. Jobseekers don’t just look for competitive salaries – they also want to work in an environment that aligns with their values and preferred work style. It’s usually quite easy for them to get a feel for a company’s culture, even before they come for an interview - LinkedIn, Glassdoor reviews, and your website can all provide insights.
Enhanced customer experience
Company culture plays a pivotal role in improving customer experience. Employees who feel happier and more engaged at work are more likely to deliver excellent customer service. When you have a strong culture that aligns with your brand identity and customer values, it also creates a shared understanding among employees around how to treat customers. This means that, chances are, the customer will get a consistent and positive experience regardless of which department or individual they speak to.
How to improve company culture
Developing a strong company culture is about more than just offering perks like free snacks or discounted gym memberships. These things can certainly help, but they’re not foundational to a good culture. It’s about creating an environment where employees are valued, supported, empowered, and unified around a shared purpose.
Here are some steps you can take to improve your company culture:
Define and communicate your values
Your company’s core values act as the guiding principles for employee behaviour and decision-making. Having clearly defined values and communicating them throughout the organisation will positively shape your company’s culture, bringing clarity and helping to foster a sense of identity and purpose among colleagues.
Lead effectively
A great leader inspires and motivates their employees to work together towards a common goal, and they set the tone for the rest of the organisation. By acting with honesty and integrity, communicating openly, and treating employees with respect, leaders can send a clear message about the behaviours that are expected and accepted in the workplace. Read our article on effective leadership for more tips.
Recognise and reward employees
Recognition is one of the most powerful things you can use to boost employee morale and loyalty. Making it an integral part of your business can really transform your culture. Rewards can take several forms, both monetary and non-monetary, including verbal or written praise, bonuses, awards, and promotions. For it to be most meaningful and effective, recognition should be timely (given in the moment or as soon after as possible), specific, and personalised. It’s also a good idea for recognition to come from a range of sources - not just from leaders but from peers too.
Encourage collaboration
Creating an environment that promotes collaboration will go a long way in improving engagement and strengthening your company’s culture. Setting clear business objectives, using collaborative tools, and encouraging cross-departmental projects are just a few ways in which you can help employees to work together more effectively.
Promote work-life balance
Prioritising work-life balance for employees – for example, through offering flexible and remote working arrangements and encouraging breaks - can help to shape a healthy, positive workplace culture. It shows that your business values its people and respects their time and wellbeing, which is vital in building trust, loyalty, and overall employee satisfaction.
Invest in professional development
Providing your employees with opportunities to develop their skills and progress in their careers will make them feel valued, confident, and engaged. To find out more about employee training and its benefits, read our article.
How to measure company culture
So, how do you evaluate your company culture? How do you know whether your efforts to improve it are working? It’s easy to sense company culture but it can be a lot harder to measure. However, there are some indirect metrics and methods you can use to assess it. Here are a few you may want to consider:
- Employee retention rate – a high retention rate often indicates a positive and supportive culture. To calculate your retention rate, divide the number of employees who stayed at your business throughout a set time period by the number of employees who started on day one of that time period, and then multiply by 100. Take a look at our employee retention guide to learn more.
- Employee engagement surveys – these can help you to gauge how motivated, satisfied, and connected colleagues feel.
- Focus groups – organising focus groups with cross-sections of employees is a good way of gaining valuable qualitative information and can allow you to dig deeper into the results of your employee surveys.
- Exit interviews – conducting effective exit interviews will give you actionable insights into the employee experience and how you can create a better working environment.
- Internal promotion rate – this metric can help you to determine whether you have a culture which nurtures employees and provides opportunities for growth.
- Employee referrals – a high employee referral rate suggests an engaged and loyal workforce.
- Customer satisfaction surveys – businesses with great company cultures often have better customer satisfaction. While customer satisfaction is influenced by many factors and so isn’t necessarily a direct reflection of your company culture, it can be a good metric to use in combination with other metrics.
To learn more about employee engagement and retention, and other ways of growing and strengthening your business, take a look at the other articles on our Learning Hub.
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