4 Reasons Why Positive Company Culture is Crucial to Employee Retention


HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, October 20, 2021

Retaining the company's most valuable employees should be a top priority for the HR department, and company culture can help you do it.

Article 4 Minutes
4 Reasons Why Positive Company Culture is Crucial to Employee Retention

There are many reasons why a high rate of employee retention is a huge benefit for any business, including:

  • Less money and time spent on recruiting to fill vacancies
  • Consistency and stability in the workforce
  • Long-serving, experienced staff can pass their skills and knowledge on to junior colleagues
  • Frequent departures damage morale among remaining staff and affect your reputation as an employer

So it's crucial to think about what measures and policies you can implement to keep hold of your most valuable workers.

There are various ways to approach this challenge, but one of the most important concepts to focus on is your company culture and how it relates to retention.

1. A sense of belonging

Having a strong, well-defined and consistent company culture creates a sense of identity for your organization, which helps employees make an emotional connection with the business and creates the feeling that they belong to something bigger than themselves.

Rather than simply turning up and working their contracted hours for a paycheck - something they can do at any employer - people employed by firms with a strong culture and identity come to work every day feeling engaged and motivated.

Your culture should reflect the ideas and principles that define your organization, the goals you want to achieve and the changes you hope to see in the world. Employees who share these values and are on board with your mission are more likely to stay with you for the long haul.

2. Valuing your employees

Michael O'Malley and Bill Baker, co-authors of Organizations for People, spent three years researching companies that are thought to be among the best places to work in the US, including:

  • Patagonia
  • The Motley Fool
  • Edmunds.com

They found these employers often display qualities that revolve around showing how much they value their staff, including:

  • Putting people first (for example, by supporting a good work/life balance and offering generous benefits packages)
  • Helping workers find and pursue their passions
  • Bringing people together and fostering personal relationships
  • Empowering employees to 'own' their work
  • Giving staff the freedom to be themselves

Building and constantly refining your company culture to celebrate and reward your employees will show them how crucial they are to the business. Workers who feel valued and important will repay your faith by staying with you and striving for high standards in their work.

3. Financial stability

Company culture matters to employees and internal stakeholders, but it's also important to your customers and external partners. When deciding whether or not they should work with you or buy from you, outside parties are likely to take your culture into account, potentially looking at indicators like your workforce diversity and corporate social responsibility.

If they're impressed by what they see, prospective clients and partners will be more willing to start a relationship with you, which will strengthen your business.

From an HR perspective, stronger commercial performance and financial stability means job security, which reduces the risk of people worrying about layoffs and looking for opportunities elsewhere.

4. Keeping millennials and Gen Z happy

If you're looking to the future and thinking about how you can maintain good rates of employee retention over the long term, you should consider the needs and expectations of two crucial cohorts: millennials and Gen Z.

A study by Gallup showed these groups now make up nearly half (46%) of the US workforce. They’re the future leaders, strategists and decision-makers who will dictate how business and the world of work evolve in the years to come.

The company also examined what Gen Z and millennials look for in employers, and the results showed a high level of consistency across the generations.

Key considerations for these workers include:

  • Employers caring about their workers' wellbeing
  • Ethical leadership
  • Diversity and inclusion
  • Openness and transparency at senior management level
"To develop the next generation of organizational leaders, every employer needs to be asking: What do our younger workers want from the workplace?" - Gallup

If you're able to engage with millennials and Gen Z employees and build strong relationships with them - based on the values and benefits they really care about - you're in a good position to retain key workers who can lead the business into the future.

Access the latest business knowledge in HR

Get Access

HR Insights for Professionals

The latest thought leadership for HR pros

Insights for Professionals provide free access to the latest thought leadership from global brands. We deliver subscriber value by creating and gathering specialist content for senior professionals.


Join the conversation...