What is company culture?
If delivering a product or service is what your business does, how the business does it is your company culture. Your company culture is the shared values, attitudes, behaviors, and standards that make up your work environment. It is the personality of your organisation, and it is what sets you apart from your competitors.
The right culture can have a range of positive effects, helping you to attract and retain top talent, improve employee engagement and productivity, boost morale and job satisfaction, and promote innovation and creativity.
Why is company culture important?
Here are some of the specific benefits of a strong company culture:
Attract and retain top talent: Companies with strong cultures are more likely to attract and retain top talent. Employees want to work for companies that share their values and offer them a positive work experience.
Improve employee engagement and productivity: Employees who are engaged and satisfied with their jobs are more productive. A strong company culture can help to create an environment where employees feel valued and motivated to do their best work.
Boost morale and job satisfaction: Employees who feel valued and respected are more likely to have high morale and job satisfaction. A strong company culture can help to create a positive and supportive work environment.
Promote innovation and creativity: A strong company culture can foster innovation and creativity. Employees who are encouraged to think outside the box and to share their ideas are more likely to come up with more inspired solutions.
What are the different types of company culture?
There are many different types of company culture, each with its own unique set of values and behaviors. Here are five of the most common types of company culture:
1. Clan Culture
Clan culture is characterised by a strong sense of community and camaraderie. Employees in a clan culture feel like they are part of a family, and they are often supported and encouraged to develop close relationships with their colleagues. A small, family-owned business is likely to have a clan culture.
2. Adhocracy Culture
Adhocracy culture is characterised by a focus on innovation and creativity. Employees in an adhocracy culture are encouraged to be independent and to think outside the box. They are also given the freedom to take risks and to experiment with new ideas. A startup company is likely to have an adhocracy culture.
3. Hierarchy Culture
Hierarchy culture is characterized by a clear chain of command and a focus on efficiency. Employees in a hierarchy culture are expected to follow the rules and to respect authority. They are also typically rewarded for their individual performance. A large corporation is likely to have a hierarchy culture.
4. Market Culture
Market culture is characterized by a focus on competition and results. Employees in a market culture are expected to be competitive and to perform at a high level. They are also typically rewarded for their contributions to the company’s bottom line. A sales organisation is likely to have a market culture.
5. Purpose Culture
Purpose culture is characterised by a strong sense of mission and purpose. Employees in a purpose culture are united by a common goal and are committed to making a difference in the world. They are also typically rewarded for their contributions to the company’s mission. A non-profit organisation is likely to have a purpose culture.
It is important to note that no company culture is purely one type or another. Most companies have a mix of different types of culture. However, the dominant type of culture will have a significant impact on the way the company operates and the way employees experience work.
How can you evaluate your company culture?
Before you can create the ultimate company culture for your business, you need to understand your culture in its current state. We know what you’re thinking – culture is a difficult thing to measure and examine. However, there are ways you can build an understanding of what it’s like to be a part of your organisation.
1. Ask leaders to describe the company culture: What are the company’s core values? What is the company’s mission and vision? What are the company’s goals for the future? How do these things shape the company’s culture?
2. Ask employees to describe their experience working at the company: What do employees like and dislike about the company culture? What are their thoughts on the company’s values, mission, vision, and goals? How do they feel about the company’s leadership and management style?
3. Look for alignment between leadership’s explanation and employees’ description: If there is a significant disconnect between what leaders say about the company culture and what employees experience, it may be a sign that the company’s culture is not as strong as it could be.
4. Look for examples of the company’s values in the day-to-day workflow: How do employees interact with each other? How do they make decisions? How do they handle conflict? How do they celebrate success? Do the company’s values show up in the way that employees work?
5. Read through employee surveys and exit interviews: Employee surveys and exit interviews can provide valuable insights into the company culture. Look for common themes in the feedback. What are the things that employees love about the company culture? What are the things that employees would like to see improved?
6. Look at employee engagement and retention metrics: High employee engagement and retention rates are often signs of a strong company culture. However, it is important to note that these metrics can be influenced by other factors, such as compensation and benefits.
Here are some additional tips for evaluating company culture:
Pay attention to the company’s onboarding process. How does the company introduce new employees to its culture?
Observe how employees interact with each other during team meetings and social events.
Look for opportunities to talk to employees one-on-one. Ask them about their experience working at the company and what they think about the company culture.
Be mindful of your own biases. It is important to be objective when evaluating company culture.
How to create your own company culture: steps & ideas
There are a number of things that business owners and employers can do to develop a strong company culture. Here are a few simple steps any company can follow:
Define your core values: What are the most important things to your organisation? Diversity and inclusion? Originality and innovation? Once you know your core values, you can start to communicate them to employees and build a culture around them.
Hire for culture fit: When you are hiring new employees, look for people who share your company’s values and who will be a good fit for your culture.
Set clear expectations: Employees need to know what is expected of them in terms of their work performance and their behavior. Make sure that everyone in the company is aware of your company’s values and expectations.
Communicate your company values clearly and regularly: Make sure that all employees understand what your company stands for and what is important to you. You can do this through employee meetings, company newsletters, and other communication channels.
Lead by example: As a business owner or employer, you set the tone for the company culture. Make sure that you are role modeling the behaviors that you want to see in your employees.
Recognise and reward employees: When employees demonstrate the company’s values and expectations, be sure to recognise and reward them. This shows employees that their hard work and dedication is appreciated.
Encourage communication and feedback: Encourage employees to communicate with each other and to give each other feedback. This helps to create a more open and collaborative work environment.
Provide opportunities for growth and development: Employees want to feel like they are growing and developing in their careers. Provide employees with opportunities to learn new skills and take on new challenges.
Offer flexible work arrangements: Giving staff control over their hours and where they work helps to reduce stress and improve work-life balance. Crucially, it sends out the message that you trust your employees, and that you value them as people, not just as workers.
Allow employees to connect and socialise: This could include team-building activities, social events, and employee resource groups. If any of your staff work remotely, you’ll have to make a special effort to ensure they remain socially connected.
Celebrate successes: When the company achieves a goal, be sure to celebrate the success with your employees. This helps to build morale and create a sense of community.
Want to get the best out of your staff?
If you want to maximise the performance of your staff and take productivity to new heights, read our Ultimate Employer Guide to Performance Management.
Challenges to developing a strong company culture
There are a number of common challenges that business owners and employers face when developing a strong company culture. Here are a few tips for overcoming these challenges:
Challenge: Lack of clarity about the company’s core values and expectations.
Solution: Define your company’s core values and expectations in writing. Communicate these values and expectations to employees regularly.
Challenge: Difficulty hiring for culture fit.
Solution: In the interview process, ask questions that will help you to assess the candidate’s values and cultural fit. Conduct reference checks to get feedback on the candidate’s previous work experience and behavior.
Challenge: Lack of employee recognition and rewards.
Solution: Create a formal employee recognition program. Recognize and reward employees for demonstrating the company’s values and expectations.
Challenge: Lack of communication and feedback.
Solution: Encourage employees to communicate with each other and to give each other feedback. Create opportunities for employees to share their ideas and feedback with management.
Challenge: Lack of opportunities for growth and development.
Solution: Provide employees with opportunities to learn new skills and take on new challenges. Offer tuition reimbursement or other financial assistance to employees who are pursuing further education.
Challenge: Difficulty celebrating successes.
Solution: Set clear goals for the company and for individual employees. When goals are achieved, celebrate the success with the team.
What does a healthy company culture look like?
There’s no ‘one size fits all’ when it comes to nurturing a healthy company culture. However, it’s wise to implement as many of the following as possible:
✔ An environment that supports teamwork and collaboration
✔ Recognition and rewards for employee accomplishments, successes, and contributions
✔ Alignment between company language, values, and actions
✔ Opportunities for professional growth and development
✔ Strong compensation and employee benefits packages
✔ A sense of trust, transparency, and accountability between staff and the leadership team
✔ Workplace flexibility
✔ A healthy work-life balance for employees
✔ Compassion and respect for employees
✔ Psychological safety
✔ A diverse and inclusive workforce
Examples of businesses with strong company culture
If you’re looking for inspiration in your business, here are some big companies with even bigger reputations for delivering first-class company culture:
Airbnb: Airbnb is known for its collaborative and inclusive culture. Employees are encouraged to work together and share their ideas. Airbnb also has a strong focus on diversity and inclusion. The company’s mission is to “create a world where anyone can belong anywhere”. That mission starts with Airbnb’s company culture, which puts the welcome mat out for employees from all kinds of backgrounds.
Patagonia: Patagonia is known for its commitment to environmental sustainability. The company’s mission is to “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Patagonia’s company culture is a green machine of activism that encourages employees to get involved in environmental causes and gives them extra paid leave to do so.
Google: Google is known for a creative culture that’s as innovative and forward-thinking as its software. Google offers a variety of perks and benefits to employees, such as free organic meals, on-site gyms, and daycare for staff with children. If that’s not enough, Google’s US headquarters has a resident artist who creates murals and other artwork to brighten up the office walls.
Atlassian: Aussie tech unicorn Atlassian offers its employees an award-winning culture, recognised by Glassdoor, Fortune, and Great Place to Work. The company lives and breathes innovation, with the annual ‘ShipIt Day’ giving all employees the chance to work on any project they choose. The company has been named one of the best places to work in the world for several years in a row, and its Sydney headquarters regularly polls as Australia’s top workplace.
A simple tip – remember your people are your culture
Take a moment to imagine your company culture. Now imagine that same culture without any people. Doesn’t leave you with much, right?! In many ways, your people are your company culture. Any strong company culture is the sum of the individual personalities, values, and behaviors of the people who work there.
Why? Here are some specific reasons why people are by far the most influential component in a company’s culture:
People create the company’s values: The company’s values are the guiding principles that inform all aspects of the business. The values are created and upheld by the people who work at the company.
People embody the company’s culture: Your company culture is not something that is abstract or theoretical. It is something that is lived and breathed by the people who work with you. The people embody the company culture through their words, actions, and behaviors.
People shape the company’s culture: The company culture is not static. It is constantly evolving as new people join the company and as existing employees grow and change. The people shape the company culture by contributing their ideas and feedback.
Remember – all this means your employees are the people who are most impacted by company culture. It’s important they have a say in planning what it will look like in the future.
Final thoughts on company culture
Company culture is the foundation of a successful business. It is the glue that holds employees together and motivates them to work towards a common goal.
In this guide, we have discussed the importance of company culture and how to build a strong and positive culture. Here are a few final thoughts for you to keep in mind as you undergo your cultural rebuild:
Company culture is not something that happens overnight. It takes time and effort to create and maintain a strong culture.
Company culture should be authentic and genuine. Employees can spot a fake culture from a mile away, and it will only lead to distrust and disengagement.
Company culture should be constantly evolving. As your company grows and changes, so should your culture.
Company culture is everyone’s responsibility. Every employee has a role to play in creating and maintaining a positive culture.
Building a strong company culture is an ongoing process but is well worth the effort. A strong culture can help you to attract and retain top talent, boost morale, and improve employee performance.
Crucially, company culture is not just a nice-to-have, it is a must-have for any business that wants to succeed in the long term.
How can Employsure help?
Employsure is committed to building better Australian businesses. We simplify employer relations and workplace health & safety legislation so you can focus on what you do best – running a successful company.
If you have any issues with your business, call our FREE 24/7 Advice Line on 1300 651 415 to get all your questions answered.