The Importance of Company Culture: 8 Ways Corporate Culture Influences Success
There are few certainties in the business world. But a good culture leading to success is one of them. In fact, 94%Opens in a new tab of business executives believe maintaining good company culture is critical for success.
So let's take a closer look at the importance of company culture. How does it impact your employees and your business as a whole?
3 reasons company culture is more important than ever
In recent years, the need for a strong organizational culture in business has become highly significant, and many workplaces are actively changing their organizational culture to keep up. Here's why.
1. The influence of COVID-19 on corporate culture
The pandemic had one of the biggest and fastest impacts on recent changes in workplace culture.
As countries locked down and travel slowed around the world, millions of people started working from home. As a result, many things that would've been done using conventional methods became impossible.
This tested the "way we do things around here" mentality, as workplaces needed to put new plans in place for communication and to keep the culture of the business intact.
According to PwC's recent report, "It's time to reimagine where and how work will get done,Opens in a new tab" most companies are ready to adopt a hybrid work model where employees split time between working remotely and in the office.
Hybrid and remote work has increased the effort and attention required to ensure that your culture remains strong and connected no matter how your employees are working.
2. The Great Resignation
Another aspect that had a great impact on organizational culture as we know it, even from before the pandemicOpens in a new tab, is the ongoing Great Resignation.
According to a report by CNBC, over 40%Opens in a new tab of employees in the workforce considered leaving their jobs in 2022 alone.
More people than ever are looking for and seem ready for a new job. Workplaces with a strong company culture showed higher retention than others.
3. It's better for business
A strong company culture is made up of strong connections between all employees. It's a more collaborative and more productive workplace so it stands to reason that it would be a more successful one, too.
According to a report by Glassdoor, since 2009, companies with the best company cultures consistently outperformed competitors and their average market by up to 115.6%Opens in a new tab.
How your organization's culture impacts business success
Here's a breakdown of the influence company culture has on employees and the broader organization.
1. Culture shapes your company's identity
Ultimately, your company should value employees above all because it is people that define your culture. And that chorus of employee voices helps create the identity of your company. It influences how you conduct business and how you react to issues. It influences how the world sees you. That sounds like a lot because it is. And it all gets back to a strong company culture.
2. Culture improves your employees' retention rates
Companies with positive company cultures have maintained the stability of their workforce at a relatively higher rate when compared to competitors with weak company cultures. That is especially important as nearly 40% of workers are looking for a new role.
For instance, one of the core elements of organizational culture is to clearly explain the roles and responsibilities of every employee in your team.
See also: 9 different types of organizational cultures you can model for success
3. Culture reduces turnover rates
There are many reasons employees may decide to quit their job, and a poor organizational culture in the workplace is one of them.
Employees are 16% more likely to quit their job if they don't feel comfortable sharing their feedback, which is a form of poor company culture.
The same report also found that employees who feel that they're not appreciated for their achievements are 21.5% more likely to leave their jobs.
4. Culture improves the employee experience
The company culture shapes employee motivation and can greatly impact their performance and willingness to give their best.
In fact, keeping your employees engaged is found to increase their performance and productivity by up to 12%Opens in a new tab, especially if they feel appreciated at work. Luckily, such an essential metric is easily maintained using third-party tools.
Tools like Service Milestones® and Community Celebrations® can help you keep track of all your employees' significant contributions and celebrate their achievements to keep them engaged and willing to innovate.
5. Culture helps attract talent to your workforce
If you're looking to bring new talent into your workplace, an appealing company culture can be extremely attractive to prospective employees. In fact, more than half of workers won't even consider a workplace if it doesn't reflect their values.
Around 32%Opens in a new tab of job seekers might consider a job with lower pay if the employer had positive company culture elements, such as flexibility and a nontoxic work environment.
6. Culture helps your company stay true to its core values
A solid company culture is built on a strong foundation of core values.
When you're able to foster a workforce that is aligned with your mission and goals, it keeps employees motivated and engaged. They're also more likely to find meaning in their work.
Up to 40%Opens in a new tab of participating workers said that they're ready to leave their company if the company has a negative culture or doesn't share their values.
7. Culture improves the onboarding process and its success rates
Hiring new talent isn't the end of the line when it comes to recruitment. Your new hires will need to go through an onboarding process to incorporate themselves into your company culture.
According to research by Brandon Hall Group, a good hiring process increases the retention rate in a workplace by up to 82%Opens in a new tab and saves you the extra costs of scouting for new hires.
8. Culture allows you to maintain an inclusive work environment
The future of work, among many things, is inclusive. A company culture that embraces all the unique differences of their employees and opens up paths for everyone to participate will create strong relationships, more psychological safety, and, yes, a stronger company culture.
Inclusivity, along with diversity and equity, is paramount to workplace culture. If it isn't already, it should be a company value and goal to create an inclusive workplace. It's not just the right thing to do, it's what employees want you to do.
According to a report by Deloitte, up to 72%Opens in a new tab of employees are open to leaving their current employer if they don't foster an inclusive work environment.
FAQs
Does a better company culture impact profits?
A strong company culture helps lead to more engaged, more productive, and more collaborative employees together those qualities are more likely to lead to successful business outcomesOpens in a new tab like revenue and profit.
What are the key metrics of company culture?
There are various metrics and methods to quantify and measure your company's culture. The most popular metrics include:
- Referrals and the rate at which current employees recommend working in the company
- Retention rates and turnover rates
- Engagement and collaboration among team members
- Innovation and productivity rates
- Employees' well-being and satisfaction scores
Conclusion
Company culture is critical to keeping employees engaged and happy. It leads to more collaboration and thus more productivity. It shapes your company's identity and has a direct impact on hiring. In short, it's everything.
As a leader, it's important to understand the state of your company culture from time to time. Surveying your employees is one of the best ways to measure it.
About the author
Ryan Stoltz
Ryan is a search marketing manager and content strategist at Workhuman where he writes on the next evolution of the workplace. Outside of the workplace, he's a diehard 49ers fan, comedy junkie, and has trouble avoiding sweets on a nightly basis.