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What is company culture?

Company culture, corporate culture, organizational culture, and workplace culture all refer to the same thing–the essence of the company you work for. Company culture is the heart and soul of your organization. It’s the social operating system that influences how people work and how the organization interacts with its employees, customers, and community.

Company culture is reflected in many areas of your organization: your corporate values, your organization’s purpose, the work environment, and employee experience. It incorporates the history, story, vision, beliefs, norms, and expectations held by your company. While company culture is often intangible, it’s felt by everyone who interacts with your company: your employees, clients, vendors, stakeholders, and the public.

It’s often interesting to hear from employees how they would describe company culture. In a recent study, we asked employees to describe their current company culture in a word or two and found the most common term to describe their workplace culture is “stress”:

A word cluster describing employees current company culture. Words include "respect, great, friendly, happy, team"

While culture may not be something you see and touch, it is something that your people feel and affects all parts of their employee experience at work.

“Our culture is the bedrock on which our brand and our company is built.
“Our FedEx culture is our ultimate differentiator.”

- Raj Subramaniam, President and CEO, FedEx Corp.

 


What role does company culture play in an organization?

Company culture defines an organization. Think of your culture as the central nervous system of your organization. It connects all the people in your organization and influences the experience of your employees, your customers, and the community in which your organization operates.

Culture can make or break an organization. Companies with great workplace cultures have incredible advantages: they attract and retain talent, mobilize innovation, develop strong leaders, and become the organization’s muscle memory for ongoing success. People want to work for, and do business with, companies that have great workplace cultures.

Culture is critical in all aspects of an employee’s experience with the organization. Every part of your employee experience is influenced by your company culture. Companies with great workplace cultures have employees who thrive and do amazing things. Companies with poor workplace cultures have employees who struggle, get frustrated and, ultimately, leave. Culture is responsible for inspiring great work and helping companies find business success.

“Culture eats strategy for breakfast.”

– Peter Drucker

 

The term “organizational culture” first showed up in Elliott Jacques’ book The Changing Culture of a Factory back in 1951. Jacques was investigating the culture of factories and how employees could work together and share similar visions and goals. In the 1980’s the term “corporate culture” emerged, with companies telling heroic stories of their founders and logos through the 90’s. Culture became increasingly important with the globalization of organizations, when companies had to figure how to merge or extend workplace culture to various locations. Google, Southwest Airlines, Zappos, Apple, and other companies began dominating the culture conversation with their over-the-top perks, open customer service policies, and extravagant workplace culture stories. Over the years numerous books have been written and research conducted on corporate culture, but not much has changed in regards to the most important, fundamental elements of organizational culture. 

To see how your workplace culture is stacking up, use our Culture Checklist.


Why is company culture important?

If you want your business to thrive, your employees need to thrive first. Your company culture plays a pivotal role in the employee experience and the success of your organization.

The stats say it all, companies with great workplace cultures are:

• 4X more likely to have highly engaged employees
• 4X more likely to have employees that are promoters on the Net Promoter Scale
• 7X more likely to have employees innovating and performing great work
• 11X less likely to have experienced layoffs in the past year

Research also shows that companies with great cultures outperform companies without great cultures:

• 4 to 1 in revenue growth
• 12 X higher stock price growth
• 755% higher net income growth.

Workplace culture has a huge impact on company success – retention and turnover, innovation and productivity, employee engagement, and the employee experience. All of this translates to a better bottom line.

For more data on the business impact of great workplace cultures, read our Global Culture Report.


How do you build company culture?

Want to improve your company culture? The best place to start is from the ground up with your employees. Employees say there are six essential elements of a great workplace culture that help them thrive at work:

• Purpose
• Opportunity
• Success
• Appreciation
• Wellbeing
• Leadership

We call them the talent magnets because they attract and connect people to your organization and draw out your people’s inherent desire to do meaningful work. By focusing on these six areas and doing them well, companies can build a company culture where employees thrive.

While culture may have originated with founders of an organization, it’s now the leaders of the company who carry on the culture. Leaders model the behavior and expectations that are important to an organization. They communicate and demonstrate the messages that reflect (and influence) workplace culture.

Culture is built through the actions, not words, of an organization. It’s shaped by who you hire, promote, and keep. It’s instilled in your people from their first interaction with your organization and extends past the onboarding process. Culture works hand-in-hand with your employee experience. Every conversation, email sent, poster seen, and interaction employees have with your organization reflects, and reinforces, your company culture.

What defines your company’s culture? It’s not just what you write on your website, posters, or strategy map. It’s how you treat employees. How you take care of customers. How you interact with vendors and partners. It’s the things you do, not say, and it goes beyond your recruitment and marketing materials.

You’ll need to start by envisioning the culture you want to create and then work toward making sure every aspect of your employee experience reflects that culture. What your people see, feel, and do will then be communicated out to your customers and the community.

See how employee experience is more than just engagement.


How do I improve or change my company culture?

Many companies struggle with their corporate culture. Luckily, no culture is static. It morphs, improves, or suffers from inside and outside forces. To improve or change workplace culture, companies must be willing to take active steps to improve it, starting from the CEO to every leader and employee.

Changing company culture is no small task. To improve your company culture, take the following steps:

1)    Assess your current culture and identify areas for improvement.

2)    Define the culture change—make it measurable.

3)    Connect the change to company strategy and purpose.

4)    Identify champions to build a grassroots movement around the change.

5)    Communicate and train to see the new behaviors and attitudes needed for the change.

6)    Measure and improve.

7)    Begin today!

Start with assessing your current culture. You can partner with someone to do a full culture assessment. Or you can try and measure culture on your own by looking at the 6 key areas of company culture.

Either way, you’ll get a good baseline of where your culture is and the specific areas where you need to improve.

Once you know what needs to change, you can start looking at how. There are many vendors out there who can help you with improving company culture, but we recommend finding a partner who has proven expertise and solutions to help you in multiple areas. You’ll also need to ensure your executives and leaders are on board, as they will be the catalyst for true culture change. This can’t be an HR initiative; it must be a company strategy.

Changing mindsets and culture will not be easy. Nor will it be quick. It may take years to undo the challenges of a toxic company culture. But even tiny improvements can have great impact. Have tools and resources available, train leaders, communicate, be consistent, and show employees you are dedicated to creating a great company culture. Actions speak louder than words.

Learn how to fix 5 of the most common culture challenges.

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