Your Comprehensive Guide to Company Culture [2023]

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HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, February 1, 2023

Determined to engage and retain your top talent? Make sure you understand company culture and have a clear strategy to make yours the best it can be.

Article 11 Minutes
Your Comprehensive Guide to Company Culture [2023]

Whatever your HR goals might be - whether you want to attract and retain top-tier talent, encourage professional development or raise your standards of employee wellbeing - they'll be connected to company culture in some way or another.

It's never been more important to prioritize this issue as you think about the sort of business you want to be. The Global Culture Research Report 2022 from the Society for Human Resource Management concluded that the COVID-19 pandemic has made employees more aware of what they really want from their life and work.

The study also found that 90% of people who rated their work culture as 'poor' had thought about quitting, compared to 32% of those who described their culture as 'good'.

If you're determined to deliver a strong experience for your existing staff and be an attractive prospect to new recruits, company culture is a concept you can't overlook.

What is company culture?

Company culture is an all-encompassing term for the shared values, goals, attitudes and methods that characterize your organization and make you unique.

The definition of positive company culture will vary from business to business, but in many cases it'll include:

  • A commitment to protecting and improving employee wellbeing (both physical and mental)
  • Details of what you do to recognize and reward your workers
  • Clear opportunities for learning and professional development
  • Strategies to encourage connection and collaboration between colleagues
  • Recognition of the importance of diversity and inclusion

Company culture examples

Some of the most successful and respected businesses in the world are where they are because of the strong cultures they've built. Here are some examples:

1. Bain & Company

One of the 'big three' management consultancies in the US, Bain & Company was ranked among the best places to work in 2022 by Glassdoor. It's one of only three employers to have made this list every year for the past 14 years, along with Google and Apple. Bain says its success is built on a "diverse, dynamic culture" made up of people who "challenge, support and inspire" one another.

2. Southwest Airlines

Southwest Airlines runs a dedicated culture services unit that focuses on incorporating its cultural characteristics into all aspects of the business, with an emphasis on three core elements:

  • Appreciation
  • Recognition
  • Celebration

This has contributed to positive performance on various fronts. J.D. Power's 2022 North America Airline Satisfaction Study ranked the company highest in customer satisfaction in the economy/basic economy segment.

3. Airbnb

Flexibility is a central concept in Airbnb's corporate culture, with the firm recently coming up with a plan to make it possible for employees to "live and work anywhere". It also provides benefits packages designed to help people stay healthy, travel regularly, volunteer for worthy causes and spend time with their families.

4. Patagonia

Patagonia's company culture is a key factor in the success of its brand and the admiration it has earned from customers and fellow businesses alike. As well as donating regularly to environmental causes and land conservation efforts, the outdoor clothing manufacturer is known for its generous benefits packages and its collaborative, employee-centric workplaces.

What words describe the culture of a company?

Using positive, inspirational words as pillars of your organizational culture can help to focus your efforts and encapsulate the principles that drive you forward.

  • Diverse: Full commitment to diversity and inclusion ensures everyone will have a fair chance to thrive in your business.
  • Supportive: Employees need to feel valued and looked after to do their best work.
  • Flexible: Adaptability in working practices shows you trust your employees and helps them improve their work/life balance.
  • Collaborative: The best results are achieved when diverse and talented teams work in harmony.
  • Transparent: Employees should trust and respect their employer, which demands total transparency at all times.

The importance of company culture

There are many reasons why a strong company culture is crucial, but one of the biggest is the amount of change witnessed in the world of work in recent years. COVID-19 accelerated trends that were already evident in many workplaces, most notably the growth in hybrid and remote working.

Hybrid work is "the future for most offices", according to Gallup, and organizations that aren't sufficiently flexible in their arrangements are taking a big risk.

When you have diverse teams working in various locations and at different times, it's important to ensure every employee feels part of a holistic, clearly defined culture. This helps to maximize the benefits available to the business and your workforce.

Higher employee retention

As SHRM's Global Culture Research Report 2022 makes clear, there's a direct link between corporate culture and retention. Nearly two-thirds (64%) of workers who rated their workplace culture as 'poor' had actively looked for a new job in the previous six months, compared to 22% of those who described their culture as 'good'.

Stronger engagement and satisfaction

A compelling company culture gives employees something to engage with and a sense of value and identity in their working lives. Rather than simply turning up and doing the bare minimum in exchange for a paycheck, your staff will gain a genuine sense of commitment to the organization and the things you stand for.

Improved performance

The higher levels of engagement and job satisfaction that come with a positive and strong culture will naturally fuel performance and results in your workforce. Research has shown that happier employees are more productive. When people feel engaged and inspired by your culture, they're more likely to start every day energized, motivated and ready to tackle any challenge that comes their way.

The 5 main types of company culture

1. Hierarchy culture

A more traditional approach, company cultures based on hierarchy have clear management structures in which senior leaders make the big decisions and employees are expected to stick to the remit of their roles. This helps to maintain clarity, organization and efficient decision-making, but may not encourage innovation or dynamism throughout the workforce.

2. Clan culture

Clan culture is driven by a sense of togetherness and a collective commitment to achieving shared goals. Businesses that operate in this way are more likely to have a relatively flat structure, with decisions made collaboratively and more experienced employees acting as mentors to new joiners. This approach drives engagement and productivity, but can also have some drawbacks, such as a lack of ownership and authority when difficult decisions have to be made.

3. Adhocracy culture

Prevalent in tech and other industries driven by innovation, adhocracy culture is all about constantly looking forward and questioning accepted ways of doing things. Employees are encouraged to think creatively and to focus on the development of new ideas and opportunities for growth.

4. Customer-first culture

As the name suggests, this type of culture places an emphasis on delivering the best possible service and results to customers at all times. While this helps to drive brand loyalty and advocacy, it needs to be managed carefully so employees don't feel that customer needs are being prioritized at the expense of their own wellbeing and job satisfaction.

5. Market culture

High performance, competitiveness and clear results are the driving forces behind market culture, the aim of which is to constantly drive the business forward to reach a dominant position within your sector. It often relies on bonuses and monetary incentives to motivate employees.

How does culture influence business and individual success?

Incorporating concepts like fair rewards and recognition, employee wellbeing and professional growth into your company culture shows your commitment to protecting your staff and giving them opportunities to progress in their careers.

When people feel looked after in this way, they'll be more motivated to work hard and raise their performance levels. As well as supporting their own development and success, this feeds directly into business results through higher productivity.

According to research by Quantum Workplace, 67% of employees believe the culture at their organization is very positive, while 66% say this has a beneficial impact on their work and behavior every day. The findings also showed that people who view their workplace culture as positive are nearly four times more likely to be engaged.

These advantages can spread to various areas of your business to unlock a range of commercial advantages, including a stronger employer brand. This aids both retention and recruitment, reducing the amount of time and money you have to spend on acquiring new talent.

5 steps to build a positive and futureproof company culture

1. Define your values

Your company culture should reflect the values and qualities that define you. But first, you need to be clear about what these principles are and the sort of business you want to be. Work with leadership, long-term employees, HR decision-makers and other stakeholders to answer questions such as:

  • What is your overriding mission and purpose?
  • What do you want to be known for?
  • How should these priorities be reflected in employee behavior and performance?

2. Get leaders on board

Regardless of your business structure and the type of culture you want to build, leadership figures - whether they're executives or long-term employees acting as mentors - will have a vital part to play.

Make sure your most influential people are involved in the process and aware of their role in it from the very start. Junior staff and new joiners should be able to look to their senior counterparts for direction and inspiration.

3. Focus on clear communication

All the hard work involved in defining your company values and the culture you want to build could be for nothing if these ideas aren't effectively communicated to your workforce.

Give yourself time to think about the processes you can put in place to support effective communication of your cultural priorities. This could include bringing teams together for special events exploring the topic, or creating dedicated channels in workplace collaboration software to encourage conversation about your culture.

4. Incorporate culture into recruitment

It's the people in your organization who embody, champion and maintain your culture. It's vital, therefore, to put this concept at the heart of your recruitment activities.

Whenever you create and post a new job advertisement, for example, ask whether it gives an accurate reflection of your cultural identity. Hiring decisions should also take cultural fit into account.

5. Stay agile

If the events of recent years have proven anything, it's that the world of work - and people's expectations of their jobs and employers - can change quickly.

By making flexibility and agility defining aspects of your company culture, you can keep up with broader trends and ensure you're delivering relevant, rewarding experiences for your employees.

How to improve company culture

Focus on work/life balance and wellbeing

When it comes to concepts that define a rewarding employment experience, few are more important than work/life balance and wellbeing. Gallup research has shown that 61% of employees see these as key factors in their next job decision, up from 53% in 2015.

Be flexible

Equally important to many modern employees is flexibility, particularly in a post-COVID world, with large swathes of the workforce having experienced the benefits of remote and hybrid working during the pandemic. Giving people more control over how, where and when they work shows trust and helps employees gain a sense of autonomy in their jobs.

Embrace diversity

A growing proportion of the workforce are looking for jobs with companies that are diverse and inclusive of all types of people. Incorporating these principles into your culture shows a dedication to providing equal opportunities for all, so anyone with the right skills, experience and attitude can thrive in your enterprise.

Collect and act on feedback

In your ongoing mission to constantly improve the culture of your organization, the workforce will be one of your most valuable sources of guidance. Run regular employee surveys and encourage constant feedback to stay in tune with how people feel and the positive changes they want to see.

Final thoughts

No-one can predict with absolute certainty what the future holds for businesses and their employees.

However, it's safe to say that every organization has something to gain from building a culture on core values such as:

  • Fair recognition and rewards
  • Employee wellbeing
  • Professional development
  • Flexibility
  • Diversity

When positive values such as these are ingrained in how your business manages its workforce and treats its employees, the entire organization will benefit.

Whatever challenges and opportunities might come your way, a strong company culture will help you turn them to your advantage.

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