Creating a great company culture is no longer just an option – it is a necessity.
Company culture refers to the working environment as well as to the vision and philosophy of a company itself.
The term is now in common use, with a myriad of articles talking about various aspects of it, but its precise meaning is still unclear to many business professionals.
Corporate experts say a company’s culture is a composite of both the working atmosphere and the practices that have been put in place. This includes the management of employees, but an important part of this are the values the company expects everyone involved to adhere to.
Understanding the Company Culture
Edgar Schein, one of the leading academic theorists on corporate culture, says corporate culture is the shared set of principles an organization uses for handling problems, productivity, and collaboration.
As Schein has stated in his Organizational Culture and Leadership(2004):
“… the only thing of real importance that leaders do is to create and manage culture; that the unique talent of leaders is their ability to understand and work with culture; and that it is an ultimate act of leadership to destroy culture when it is viewed as dysfunctional.”
Developing a company’s culture begins with a firm grasp of how things get done. Every organization operates in a different way, depending on its industry, mission, and the workforce.
Types of Company Culture
Company culture should both support and flow from the business mission. Some companies will work best by embracing an open atmosphere of innovation and agility, but others might prefer defined team structures and communication channels.
There are two ways in which businesses and employees perceive culture:
- Visible: These are observable elements taking place every day, such as symbols, slogans, dress codes, office décor, acceptable behaviors, and the way the management communicates.
- Invisible: These are aspects of the organization not easily observed but just as real and integral a part of operations. This can involve attitudes, relationships, values, emotions, philosophy, and the feelings that are their direct results, such as loyalty and motivation.
Robert Quinnand Kim Cameron, business professors at the University of Michigan, developed a tool called the Organizational Culture Assessment Instrument (OCAI).
This is a survey helping organizations determine their existing culture and staff/company preferences for future change.
They identify fourgeneral types of culture:
- The Clan or Group Cultureis built around social traits such as cohesion, consensus, mutual support, teamwork, and company traditions. Equitable sharing of success and improvements to morale play key parts.
- The Advocacy or Development Cultureemphasizes actionable behaviors like initiative, innovation, risk, and an entrepreneurial spirit that provides rewards to the team. This forms a dynamic, creative environment.
- The Rational or Market Culturefocuses on productivity, setting and reaching goals, task management, and an atmosphere of competition that rewards personal achievement. Leaders are hard taskmasters and customer satisfaction is important.
- The Hierarchy Cultureis more regulated. It has prescribed rules for communication, responsibility, policies, procedures, and behavior, with the aim of providing a more stable environment and clear courses of action. Rewards are meted out per status in the company hierarchy.
Why Company Culture Matters
Company culture provides everyone on staff a clear sense of their corporate identity and dictates how to carry out processes.
This could be routine activities, special projects, or entertaining clients. The culture that is developed should also help employees understand the distribution of benefits and paths to promotion.
The consistency of cultural expressionwithin a company demonstrates and reinforces its owner’s beliefs and values. Employees have a better understanding of the company’s business objectives, so they can align their efforts with the company’s needs, strengths, and core beliefs.
How things work on a daily basis is what they will accept, and come to expect, of the business environment around them.
Veteran employees come to know which activities are encouraged and they incorporate them into their routines.
Policies that work don’t get questioned.
This is a business environment where new hires can learn and acclimate faster to the existing culture with minimal disruption.
Established and well-defined behavioral patternsplay a big part in normalizing operations. A strong company culture impacts employees at all levels. They know there are rules to be followed and productive attitudes to nurture.
When an employee’s actions and perspective come into sync with company culture, they will engage with their work more and experience greater satisfaction in their roles.
This helps improve output, reduce errors, and build company loyalty. Employees who resist or do not fit with the culture, however, will struggle, experience dissatisfaction, and can even degrade the overall company atmosphere.
How Company Culture Affects the Workplace
Both employees and managers feel the effects of company culture around them.
A productive and pleasant environment will reduce the amount of stress in the workplace. High stress leads to poor performance, lower quality of work, more personal conflicts, and decreased health.
According to the American Psychological Association, in 2017, 63 percent of people reported that work was a source of stress in their lives. Excessive stress has physical symptoms and elevates health risks.
While removing all stress from the workplace is unrealistic, managers and their team members can act to modify and reduce stress levels.
A key factor in this is developing the right company culture for the business.
In a healthy environment, managers understand how to avoid the most stressful situations, while turning job pressures into constructive outlets.
The best way to do this in a company is by assigning tasks based on individual abilities and career goals. Employees can also be encouraged to minimize stress by allowing them to resolve problems in the ways they’re most comfortable with.
Some other tactics for reducing stress include reward systems based on recognition of individual contributions and encouraging a healthy work-life balance.
In sum, a vibrant company culture should express the company’s unique business model and mission yet support employee engagement and productivity.
Next, you’ll discover more benefits to establishing an effective company culture, and why it’s so important to the success of your organization.
The Benefits and Importance of Company Culture
Company culture says a great deal to the company’s employees, associates, and to the world about the organization itself. Developing a strong company cultures takes a lot of thought and requires attention to maintain, but the efforts are worth it.
This chapter outlines the importance of a vibrant company culture and the business benefits it brings.
Company culture is more than just a fruitful work atmosphere, but a strategy that determines the company itself and what its brand represents.
Importance of Company Culture
Company culture is more than just a fruitful work atmosphere, but a strategy that determines the company itself and what its brand represents.
It impacts every aspect of a business, from employee performance to marketing and the customer experience. How workforce interacts with each other and with the company will influence their effect on clients, vendors, and partners.
The character that this demonstrates defines company identity and branding approach. It can drive creativity, inspiration, and a desire for achievement in both long and short-term career goals for everyone on staff.
Company culture will immediately convey to employment prospects what they can expect if hired. This makes a positive, dynamic culture useful for drawing the best talent.
Companies known as great places to work are a favorite target of job seekers, and their managers get a wider pool of applicants to choose from.
An engaging and rewarding environment also helps management to retain top performers. Recruiting talent has become very competitive. But company culture may be more important than salaryfor today’s job seekers.
Building loyalty and positive attitudes in employees can be a significant business advantage over rivals.
This way, companies are differentiated and an emotional attachment to the brand is generated, which can ultimately steer the clients’ choice of a particular company.
They will not base their decision on the product or price but on the values and the philosophy that the company embraces.
Strong vs. Weak Company Culture
The culture within an organization must be a deliberate and continued effort in order to remain beneficial.
It can be either a strong one with a major influence or a weak one that’s ineffective and even fleeting.
Strong company culturesare quickly adopted by newcomers and become standard methodology on a daily basis. It is easy to recognize and has clear advantages for the success of everyone in the organization. Sharing in both the values and practices of the workplace are a positive experience that builds mutual support and motivation.
Weak culturesare generally those where the company has not undertaken any specific investments to promote and reinforce the culture internally. A poor culture is more difficult for employees to identify and to adhere to. Policies and practices are inconsistent, providing a poor foundation on which loyalty and motivation can be built and nurtured.
A weak culture is built around rules rather than people. Employees feel less connected to their jobs and the employer.
Gray areas, crises, or undocumented processes leave too much room for personal interpretations of company values.
The principles to express in a company require a strong culture to become the norm and drive employee motivation. A weaker culture, by comparison, fails to inspire and limits success.
Benefits of Having a Strong Company Culture
A positive culture is an environment where employees can feel both comfortable and engaged. They recognize that their efforts and attitudes have meaning for overall success and value.
A strong company culture empowers employees in a sense that they’re making a greater contribution to the team.
Here are just some of the benefits that developing a vibrant culture can bring to a business:
- Retention and Loyalty: Employees are more satisfied with their jobs. This means that they’re more likely to remain long-term and experience more gratitude and appreciation toward their employer.
- Brand Advocates: Workers who feel a positive emotional connection to a company are more likely to become its advocates, both during and after work hours. They will speak highly of it to friends and family or on important platforms such as social media.
- Heightened Productivity: Employees that are more engaged with their jobs are less likely to experience stress, which leads to more energy, better health, and longer attention spans. This helps to reduce errors and improve communications for increased output.
- Improved Reputation and Image: Happier, motivated, and more dedicated employees will make a huge difference in the experiences of customers, vendors, and associates. They are more likely to come away with a positive experience that will improve any feedback and encourage future business.
- Better Quality: No matter what product or service a company offers, dedicated employees are more capable of keeping to the desired standards. Expectations in quality control, documentation, reporting, and customer satisfaction can be set higher.
- More Profit: The preceding factors all combine to enhance a company’s profitability. A strong culture with more engaged and motivated employees will help to lower costs, support marketing efforts, and develop greater productivity.
Building a strong company culture has many advantages for a business. It can become a more pleasant and more profitable organization for everyone involved.
Next, we will share a few tips on how to build, implement and change to a strong company culture in your own organization.
How to Create a Company Culture
Considering the many benefits that a healthy company culture can bring to a business, every entrepreneur should make the effort to develop one.
It’s not a simpletask, but it’s important to implement ways to sustain it.
From the start, company culture should fit the values and mission already established for the organization. It should also reflect the unique personality of the owner and must support their vision of the company’s future.
Successful strategy planning will dictate everything that forms the culture. HR policies, customer satisfaction, and organizational structure all should stem from and support the company’s business goals. If owners feel their personal values are crucial to their management style, they should also have a place in their company culture.
By establishing a strong culture and adhering to it through every stage of growth, you’ll evolve an identity that helps you stand apart from the competition.
As the culture starts showing positive results, employees should be trained to align their activities with it.
Industry trendswill also affect company culture. An insurance company, for instance, may have a very different culture from a clothing retailer. Each company culture should be unique but have the flexibility to adapt to new techniques and technologies.
A strong company culture will follow the values laid out by the company founder and adopt practices and preferences that work within those values, but without resisting industry demands.
How to Maintain Company Culture
1. ASA: Attraction, Selection, Attrition
Attraction:Talent will be drawn to an organization if they see it as a company they’d like to work for. Competitive individuals gravitate toward a culture that rewards personal achievement, while those comfortable in group efforts prefer team-oriented companies.
Selection:There will be a range of qualities the owners look for in applicants, and they will choose those that seem like a good fit. But even after careful vetting, they’ll find that some hires just don’t fit in.
Attrition:Employees that don’t fit in must be filtered out through impartial, natural processes. Some experts view companies as living entities that need mechanisms to guard against internal disruption. It strengthens the organization if the individual character stays consistent among workers.
2. Onboarding Practices
Retaining talent will become easier with effective onboarding. Each new hire must learn the correct behaviors, procedures, and information. Only then will they function smoothly and efficiently within the organization.
The goal of an onboarding process is to make newcomers productive through a systemic process. They must learn to implement the culture’s values and vision in their daily tasks. The best hires will be those who actively share in these cultural attributes.
The sooner they become acclimated, the sooner new hires can feel comfortable and begin contributing. They’ll be more confident and more satisfied with their jobs. These positive factors work for the benefit of both the employee and the company.
New team members who fit in well with their peers will more easily form good working relationships. Those who struggle at this may be obliged to depart or be terminated.
Onboarding process should be formalized through orientation presentations, introductions, meetings, tours, and other approaches that enrich the experience.
Veteran employees can also play a critical role by acting as mentors. Owners can try encouraging these relationships naturally, or specifically pairing trainees with those who can teach the right skills.
During the entire onboarding process, it’s important to collect feedback from both parties to ensure that mentorship is going smoothly, and the desired knowledge is being communicated.
3. Leadership by Example
Company’s culture is intimately connected to the manager’s style of leadership. People may be motivated through speeches, slogans, or incentives, to name a few tactics. But a genuinely enjoyable and supportive culture comes from inspiration.
How workforce is inspired to excel is a determining factor. If individuals are rewarded according to their level of performance, each person is inspired to perform better. When managers mete out rewards on a team basis, they encourage collaboration.
An essential aspect of strong leadership is to practice the values you expect of others.
Managers demonstrate by their actions what is or is not acceptable. These are the cues that people tend to follow, and any deviation from the written rules will only lead to confusion and distrust.
Values must be consistentfor everyone at every level of the organization. Management’s response to issues like harassment, theft, violence, and other ethical transgressions must be impartial and predictable in order to clarify and reinforce proper behavior.
4. Reward Systems
The system of reward may differ by job description or be dependent on profitability. Bonuses, promotions, and raises may also vary based on factors like seniority, employment history, or documented mistakes.
It should be communicated to all employees whether behaviors, achievements or both will be rewarded. Also, it should be defined which actions or performance levels will incur disciplinary action.
Actionable Steps to Create a Thriving Company Culture
- Build Enthusiasm: Look for ways to get employees enthusiastic about being parts of a culture, such as recognition, fun team building exercises, social activities, and more.
- Be Respectful: Ensure that mutual respect and professional conduct are observed to reduce conflict.
- Be Tolerant: Different ages, genders, faiths, races, and cultures will be represented in the company. Make teams understand that everyone is valued and that fresh perspectives mean fresh ideas.
- Gather Feedback: Be willing to listen to feedback so employees won’t feel marginalized and improvements can be made.
- Be Inclusive: Remind team members that they play an important part in the company vision.
As the culture takes shape, it’s important to stay focused on the business objectives and promote the relationships and attitudes it takes to accomplish them.
In summary, a strong culture must be not just planned, but lived, every day and throughout the company. Company culture must motivate the team before owners can reap the benefits.
There are also some critical mistakes to be avoided in building company culture. You’ll learn about these in the following chapter.
Preventing Costly Mistakes
Most issues that undermine company culture come from untidy, badly planned or illicit practices.
The most common areas where issues affecting the culture arise are employee complaints, new hires, finances, reactions to whistleblowers, and keeping up with regulatory compliance.
Minimizing the Risk of Complaints
Complaints can destroy employee morale or lead to litigation.
Every business has to find ways to minimize grievances and the right way to handle any that do occur to keep company culture strong. Grievances arise when employees at any level fail to align with approved behaviors.
Most often these involve:
- Discriminationdue to gender, race, faith, age, or disability.
- Harassmentof a sexual nature, bullying, or victimizing another employee in any way.
- Favoritismthrough an unfair assignment of resources, wages, workloads, opportunities, or discipline.
It’s important that there is a clear set of rules that also clarify consequences for infractions. These policies should be communicated and reinforced through employee handbooks, recurring training sessions, and online resources.
Another crucial element is a system of communicationensuring that any complaints are promptly dealt with. Ignoring complaints or tolerating bad behavior is an obstacle to a healthy culture.
The biggest mistake a company can do is to belittle grievances. Instead, it should offer incentives to withdraw complaints, and enforce any decisions that could be deemed unfair, unethical, or illegal.
Hiring and Onboarding Process Mistakes to Avoid
Hiring and onboarding cost time, money and resources. Any mistake during these processes can result in costly expenses – for the employer and employee alike.
To prevent issues, companies and individuals have to avoid:
- Making Snap Decisions: All hiring decisions should be based on information, not feelings. It’s a mistake to hire anyone without a solid analysis of qualifications, history, and character. It’s also mistaken to accept a new position without detailed research of the company and their policies.
- Looking for Generalists: A person with a wide range of training or experiences may suggest the potential to contribute in numerous ways. But the prime criteria is whether they’ll be effective in the position they’re applying for. When applying, candidates should focus on listing only those criteria that are relevant to the position.
- Withholding Information: Top talent is often head-hunted by other companies and will have expectations regarding salary, benefits, and opportunities, as well as a pleasant work environment. Misleading candidates in any way will ultimately backfire. Checking with other employees and researching the company online can easily reveal any withheld information.
- Failing to Monitor the Process: Even the most promising talent can still be a bad fit. A mentoring relationship can help in such situations because it facilitates feedback from both sides at every stage of the transition.
How the Most Common Financial Mistakes Can Spell Doom
Companies tend to lose sight of the fact that their culture is a business investment like any other. Elements such as reward systems, perks, pleasant surroundings, and social activities cost money, and they can create cash flow problems.
The most common errors here include:
- Not Adjusting Forecasts: Business conditions change. Popular products or services may slump in sales, or vendors increase their pricing. Making a financial plan and blindly following it is a common mistake that companies make. Financial plans should be re-evaluated often and every time expenses or income change significantly.
- Knowing the Industry: Companies and individuals should assess current trends so they don’t find themselves burdened with obsolete systems that frustrate employees and disappoint customers.
- Over-Expansion: Expanding too fast or too much can lead to nonproductive assets. It’s important to know the difference between sustainable growth and temporary spikes in demand.
Effects of Whistleblowing on a Business
A whistleblower is anybody within an organization that tips off authorities or other outsiders when regulatory violations occur. This could be any aspect of a business, such as taxes, financing, pollution, and many more.
When this occurs, companies could suffer fines, criminal charges, lawsuits, and inevitably forfeiture of the goodwill of their employees.
Since whistleblowers in many cases are protected by law, protecting them is important in keeping company operations transparent and legitimate. Reactions such as concealing reports, ignoring the problem, and intimidating or retaliating against an employee will likely lead to further complications.
Whistleblowing can and often works to company benefit by helping identify and mitigate theft, unhealthy conditions, or any unlawful acts that damage the company’s reputation and future.
Companies can avoid issues here with proper preparation:
- Documentation:Whistleblower policies should be part of the codes of conduct, including what, how, and where illicit actions should be reported.
- Management Training: Key personnel training allows them to support an honest, retaliation-free reporting culture. These individuals can also act as confidential liaisons with the whistleblower. Legal advisors should be included in the process.
- Encouraging Whistleblowers: This reduces the risks that a whistleblower will first contact outside attorneys or authorities. Some companies even offer rewards for those contributing to correcting a serious infraction or problem.
How to Make a Business 100 % Compliant
Depending on the nature of a business, there are a number of different regulatory statutes that should be followed. Failure to observe any of them could incur fines, legal action, or the loss of business license.
It is certainly not good for a company culture if employees and partners feel they’re working for a lawbreaker.
- Taxes:Companies and business owners should understand how their legal structure (sole proprietorship, partnership, and corporation) affects taxes and what requirements need to be met to satisfy that tax status.
- Employees:Companies must comply with all labor, hiring, and wage laws, as well as the OSHA standards for safety in the workplace. They might also need to consider Workman’s Compand unemployment insurance.
- Documentation: If a company gets audited by any regulatory bodies or subjected to a lawsuit, they may need to account for every decision and every dollar. A clear paper trail for the modern business also requires cybersecurity and regular file backups.
When Should a Company Culture Change
Re-evaluating the company culture may be necessary if it seems out of sync with industry trends or performance expectations are not being met. But many cultures are resistant to new methodologies.
This can also be changed with:
- Communication:Companies should be open about what needs to change and why. Employees are more likely to enact the changes they consider important.
- Organizational Changes:Key players may lose sight of the company mission. Transitioning more motivated people into leadership roles can make a big difference.
- Training and Rewards:If roles need redefining, companies should opt for additional training and incentives to prepare employees for new functions and responsibilities.
- New Stories:At times there is a need for changes to the business vision. Helping the workforce acclimate through slogans, symbols, and narratives that reflect the new culture will make the transition easier.
A strong company culture is the most reliable way to get the best from employees and to offer them a workplace where they are respected.
Company culture protects them and company interests too.
If the values are misaligned, it’s time to change it.