What is company culture and why is it important?

Company culture is responsible for attracting and retaining top talent, enhancing employee satisfaction, and influencing an organisation’s public image. Glassdoor’s Job and Hiring Trends found that company culture is what matters most to employees, more than work-life balance and compensation. Similarly, seven out of ten are willing to ditch their job for a company with a better culture.

These numbers reveal a clear message: investing in organisational culture is more essential than ever.

But what exactly is company culture, and why does it matter so much in the corporate world? Below is an overview.

How to define company culture

Company culture, often called organisational, business or corporate culture, is the unique character of a company, encompassing everything from its mission and values to how employees collaborate, celebrate, and even the decor of the office spaces. It’s the company’s ‘personality’, so to speak.

An organisational culture can be positive or negative, depending on the values, beliefs, and practices upheld by the company. A positive culture fosters collaboration, innovation, and a sense of belonging among team members; a negative one can be where employees feel undervalued, unheard, or stifled in their creativity.

The culture can change over time. It’s affected by leaders’ choices, what’s happening in the market, good or bad events inside the company and how everyone behaves. Hence, it’s crucial for companies to continually evaluate their culture and make sure it creates a healthy, productive environment for all stakeholders.

Why is company culture important?

Cliché as it may seem, company culture can make or break a company. With platforms like social media and work-related forums at everyone’s fingertips, gone are the days when a company’s inner workings remained a mystery. Now, both current and former employees are eager to share their tales, casting light on what happens behind the scenes in a company. Questions like “What’s the atmosphere like at Company X?” typically get many replies if the company is on either extreme of the cultural spectrum—whether incredibly positive or notably negative.

Companies with a strong, positive culture often have employees who are proud to share their experiences. On the other hand, problematic companies find their employees warning potential candidates about the pitfalls of joining.

But more than the online reputation, a positive company culture offers several benefits that can significantly impact an organisation’s success. Here are some:

Increases productivity

When employees like the organisation’s ‘personality’, they are more likely to be productive mainly because

• They feel motivated. Employees who feel valued and recognised are more motivated, leading to greater effort and higher output.
• They can communicate openly. Open and transparent communication ensures everyone is aligned, reducing misunderstandings and streamlining tasks.
• They collaborate. A supportive culture promotes teamwork. Teams collaborating effectively can pool their expertise for faster problem-solving and more efficient task completion.

Improves staff retention

When employees feel valued, supported, and aligned with the company’s mission, their commitment to the organisation strengthens, improving staff retention. Here’s why:

• There is a sense of belonging: Using the idea of Maslow’s hierarchy of needs, a good company culture addresses some of the fundamental human desires for esteem: belonging. When people feel this way, they usually don’t want to leave or look for other jobs because they feel valued right where they are.
• They are satisfied with the job: Employees in a supportive environment often experience higher job satisfaction. They feel their contributions are recognised and have meaningful roles aligning with their personal and professional goals.
• There is trust and transparency: We have an innate human need to be surrounded by trustworthy individuals. Hence a company culture that promotes trust between employees and management creates a sense of security. When confident that they can rely on their peers and leaders, employees are more likely to invest their time, energy, and loyalty into the company.

Maintains the mental health of staff

Australia is experiencing a growing problem with mental illness exacerbated by psychosocial hazards in the workplace. A positive business culture can help to address this. A primary reason for this is that such a culture fosters a nurturing and supportive environment by prioritising the well-being of its employees. Here’s how:

• There is work-life balance: A positive organisational culture understands that employees have lives outside of work. Employees can better manage their mental well-being by respecting personal time, offering flexible hours, and discouraging excessive overtime.
• Employees are recognised and appreciated: Regularly acknowledging and rewarding employees’ efforts can boost their self-esteem and motivation. Feeling valued and appreciated can significantly improve one’s mental state.
• A safe environment is essential: A positive organisational culture ensures everyone is treated nicely. No bullying or mean behaviour is allowed, which makes everyone feel safe and respected.

Attracts top talent

Top talents often do their research before joining a new organisation. They read reviews, ask for recommendations, and look into the company’s awards and recognitions. A company with a stellar reputation for its culture will always stand out. Here’s why:

• Growth opportunities: A positive company culture often means personal and professional development opportunities. Top talents are always looking to grow and evolve and are more likely to be attracted to companies that offer these opportunities.
• Alignment with values: A strong company culture emphasising values like integrity, innovation, and community will attract individuals who resonate with these principles.
• Work environment: The physical and emotional environment plays a significant role. Top talents are drawn to companies that offer a conducive work environment, be it through state-of-the-art facilities, collaborative spaces, or a general atmosphere of positivity and enthusiasm.

Can help to promote the business via LinkedIn

As a professional networking platform, LinkedIn offers a unique opportunity to showcase a business culture to a broad audience. Companies with a positive culture can organically promote their organisation because of

• Positive PR: Happy employees often share their positive experiences on social media, in interviews, or through word of mouth. This organic promotion is invaluable and can significantly boost a company’s image. 
• Company events: Photos, videos, and updates from company events, team-building activities, and workshops provide insight into the company’s work environment and how it values its employees.
• Contents: Articles, blogs, and posts that reflect the company’s values, mission, and vision not only position the company as a thought leader but also give an insight into what the company stands for.

Enhances creativity and innovation

A positive organisational culture creates an environment where employees feel supported, valued, and inspired, all of which are essential for fostering creativity and innovation. Here’s a closer look:

• Safe environment for ideas: A positive culture fosters an environment where employees feel safe to express their ideas without fear of ridicule or rejection. Employees who believe their thoughts are valued are more likely to share innovative solutions.
• Encouragement of risk-taking: Companies with a positive culture often encourage calculated risk-taking. This means employees are allowed to experiment with new ideas, even if they might fail, knowing that failure is seen as a learning opportunity.
• Continuous learning: Positive company cultures often invest in training and development. When employees are inspired to learn new knowledge and skills, they can apply fresh perspectives to their work, leading to innovative outcomes.

Organically fosters a culture of teamwork and support

The initial push for a culture of teamwork and support might come from leadership or a strategic decision. But over time, the tangible benefits it brings to both employees and the company as a whole make it an organic and self-sustaining aspect of company culture for several reasons:

• Innate social tendencies: Humans have an inherent desire to connect and collaborate. Companies that tap into this natural inclination can effortlessly promote teamwork.
• Knowledge sharing: Companies recognise that knowledge is not just held at the top. A positive organisational culture shares this knowledge more freely across all levels, leading to better teamwork.
• Feedback loop: A positive culture often comes with open communication and feedback. This continuous feedback loop can lead to continuous improvement in processes and, thereby, teamwork.

Fosters employee and individual growth within the company

Employees in an environment that promotes personal and professional development are more inclined to stay with the company and contribute to its success. Here’s how a positive company culture fosters growth:

• Encourages continuous learning: Companies with a growth-oriented culture often provide opportunities for training, workshops, and courses, allowing employees to expand their skill sets and knowledge base.
• Provides constructive feedback: Regular feedback sessions help employees identify their strengths and areas for improvement. This continuous loop of feedback and improvement ensures that employees constantly evolve in their roles.
• Promotes internal mobility: A positive culture often emphasises career progression within the company. Employees are encouraged to take on new roles, responsibilities, and challenges, leading to holistic growth.

Helps ensure business longevity

A robust and positive company culture is instrumental in guaranteeing a business’s long-term survival and success. Here’s why:

• Employee retention: A nurturing company culture reduces turnover rates. Employees who feel aligned with the company’s values and see growth opportunities are more likely to stay. Retaining experienced talent reduces recruitment costs and ensures continuity in operations.
• Customer loyalty: Customers are more inclined to engage with companies known for their ethical practices and positive work environments. Good company culture often translates to better customer service, leading to repeat business and referrals.
• Stakeholder trust: Investors, partners, and other stakeholders are likelier to trust and invest in a company known for its positive culture. Such a reputation can lead to better business opportunities and collaborations.

So how can you measure and improve your company culture?

How do you know if your culture aligns with your strategy, vision and goals? How do you create a culture that supports your employees’ well-being and happiness?

That’s where Insync can help. Insync is a leading provider of organisational culture survey tools that help you assess, understand and enhance your company culture. With Insync, you can:

• Get a comprehensive and objective view of your current culture and its strengths and weaknesses
• Compare your culture with best practices and benchmarks from other organisations
• Identify the gaps and opportunities for improvement in your culture
• Develop and implement action plans to close the gaps and achieve your desired culture
• Monitor and track the progress and impact of your culture initiatives