Why your company culture matters and how to improve it

Why do some companies rise to the top of their industries while others struggle to keep up? The answer may lie in the type of culture that exists within those companies. But what do HR experts mean when they talk about company culture? Is it really a crucial factor for success, as many analysts claim? And how can companies take a targeted approach to improving their culture and enabling their business to grow?

What is company culture?

Every company is made up of people. And any time people come together to form a group, eventually a system of shared behavior, language and attitudes will form. According to the consulting firm McKinsey, culture is “the common set of behaviors and underlying mindsets and beliefs that shape how people work and interact day to day.”

A company’s culture tells a lot about what it’s like to work there. Do people feel free to speak their mind, share ideas and provide feedback? Or is the culture so competitive that people keep good ideas to themselves? Is there a strict hierarchy, with lots of authority concentrated in the management? Or is it more of an open-floor plan? And what about mistakes? Are people terrified to admit when they’ve done something wrong? Or do they own up to mistakes and learn from them?

As you can imagine, cultural topics like these have a big influence the way people feel about their work. That’s why more and more HR departments are making the link between company culture and important success factors, like employee satisfaction, employee retention and sustainable business growth.

Why does company culture matter?

If we talk about it purely in business terms, company culture matters because it helps companies become more successful. An influential study by Harvard Business School professors John Kotter and James Heskett found that companies that invest in key aspects of their culture experienced a 682% revenue increase over a ten-year timespan, while other companies grew revenue by 166% in the same period.

In addition to revenue growth, company culture is directly related to employee engagement. This is an increasingly important factor, as more Generation Z employees enter the workforce. According to Deloitte, Gen-Z employees are even more concerned with cultural factors like work-life balance, mental health and inclusivity than employees from previous generations. This means companies must offer a healthy, attractive workplace culture if they want to maintain a strong employer brand in today’s highly competitive talent market.

How can you ensure the right kind of culture?

Ready to start improving your company’s culture? Here are 5 tips to get you started:

  1. Identify areas for improvement: Use surveys or a formal company culture scan to gain an overview of your company’s existing culture and spot areas that need improving. If you’re not sure where to start, this free culture assessment template from QuestionPro can give you some inspiration.
  2. Encourage mentoring leadership: Train management in coaching and mentoring, so they create the kind of atmosphere where a healthy, trust-based culture can thrive.
  3. Establish meaningful feedback loops: Create formal and informal channels where employees and management can exchange honest, constructive feedback. This includes regular 1-to-1 meetings and team stand-ups. It’s important to give employees a chance to give feedback in addition to receiving it.
  4. Reward good behavior: Show your appreciation for a job well done by offering financial and social incentives. Gamification techniques, like scoreboards or prizes for high performers, create excitement and make employees feel more engaged.
  5. Adjust recruitment and hiring practices: Clearly define the types of candidates who will match your company’s culture and help improve it. Aim for inclusivity and creating a diverse, welcoming environment.


Putting people first

Understanding and improving your company’s culture helps you create an optimal employee experience. In the past, companies could take simple measures like installing a ping-pong table or hosting a summer barbecue. Today’s employees are spending less and less time in the office though.

This means that HR technology will play an increasing role in enhancing corporate culture going forward, from recruitment to engagement and retention. The companies that succeed will be the ones that find the right tools to cater to their company’s unique culture and make everyone feel at home.

Company culture - what is it

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