Organizational Culture: What It Is, Why It’s Important, and How to Shape It

Organizational Culture: What It Is, Why It’s Important, and How to Shape It
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Workhuman Editorial Team |   April 25, 2023 |    16 min
what is organizational culture

Organizational culture is the omnipresent drumbeat of a company. It is its beliefs and values, the philosophy of its leaders, and the experiences of its employees. It is a general feeling of the environment. You could even think of it as “the vibe” of the company.

At its best, an organization’s culture should be indicative of the company’s mission and values and help the company’s employees succeed.

That is a very general definition, but as we will see, organizational culture comes in all shapes and sizes. No matter what kind of organizational culture you have, improving it won’t be done by accident or only with time.

You can only cultivate a culture of inclusion, empathy, and connection with purpose. And in this guide, we’re going to learn how to do it.

What is organizational culture?

Organizational culture is the culmination of the beliefs, core values, and attitudes of a company and the way these influence employee behavior and performance.

Organizational culture is also a key factor in defining how different stakeholders experience the organization.

Elements of organizational culture

Despite its importance, companies often fail to explicitly define their culture as it is an elusive concept, hard to observe, and can change definitions with perspective.

Therefore, although the top executives of Fortune 1000 companies consider corporate culture one of the top variables influencing the core values of the company, there is no cohesive approach to understanding and assessing organizational culture.

Considering all of the nuances we’ve just discussed, defining organizational culture can feel daunting. One of the best ways to understand your own workplace culture is to understand the different types of organizational culture.

Once you understand those, you can match the characteristics to your own organization to see where it fits in.

So, what are the types of organizational culture?

The easy answer is that there are infinite types of organizational cultures. Every company will have its own, and no two cultures will look exactly alike. But broadly, many organizational cultures fall into a few categories.

Robert E. Quinn and Kim S. Cameron from the University of Michigan researched the types of company cultures that emerged when organizational culture became a serious area of focus in the early ’80s.

The four organizational cultures Cameron and Quinn identified are:

1. Clan cultures

The people-oriented, friendly, collaborative culture. Clan cultures emphasize development and put a premium on building relationships and morale.

In a clan culture, leaders are considered mentors, and teamwork and participation are vital to success.

2. Hierarchy culture

The process-oriented, structured control culture. A hierarchical culture is formalized and structured. Frictionless efficiency and strong communication are two important aspects.

Reliability, planning, and an eye on stability and results drive success in this type of environment.

3. Market culture

The results-oriented, complete culture. Competition is the name of the game in this type of organization. Success is determined by competitive pricing, market share, and market leadership.

Measurable targets and goals aren’t unique to this type of culture, but they are a way of life here.

4. Adhocracy culture

The dynamic, entrepreneurial, creative culture. Perhaps the most fluid, adhocracy culture is dynamic and creative. It promotes initiative and freedom.

Employees are encouraged to take risks, think boldly and seek to be pioneers in their field. Releasing new products or services and setting new trends define success in the adhocracy culture.

Now that we are aware of the four main types of culture, it’s time to look at common internal and external factors that can impact any organizational culture, despite its specific structure.

The major factors influencing an organization’s culture are:

  • Leadership styles
  • The mission, vision, and shared values of the organization
  • The people working at the organization
  • The physical work environment
  • The nature of the industry
  • External stakeholders like customers and vendors
  • The political and regulatory environment
  • The market culture and trends
  • The economic environment
  • Company’s social image/brand

Understanding these factors can help you better comprehend the specific elements of organizational culture for your company.

From there, you can build a company culture that promotes motivation, productivity, and efficiency among your team.

Why is an organization’s culture important?

Company culture has been an important factor for prospective employees for years.

In the aftermath of COVID-19, especially, with more frank discussions about race, biases, and equity taking place and millennials and Gen Z beginning to overtake the workforce, you can be certain that sentiment isn’t going anywhere.

If you want to lead a company that people want to work for, a strong organizational culture is table stakes.


Organizational culture will reach every aspect of your business. It will influence employee engagement and productivity and will also have a massive bearing on retention and turnover. These are both top of mind for employers as in just the last year alone, 40% of employees considered leaving their jobs, according to CNBC.


Organizational culture impacts motivation as well. A good company culture that emphasizes employee achievements, appreciates their hard work, and makes them feel supported will motivate them to perform.

A study by Officevibe found that up to 69% of employees have higher motivation if their efforts are recognized at work.

Having a great organizational culture is essential if you want to instill confidence in your employees; it gives them purpose and allows them to perform at their best.

As a company, that is about as much as you can hope for.

Financial success

One of the main reasons businesses should care is because company culture impacts their bottom line.

A report by Glassdoor found that companies with the best company cultures consistently outperformed competitors and their market average by up to 115.6%.

Brand identity

The collective effect of company culture is equally powerful. Your organizational culture can strengthen your brand identity. For new hires, it will be one of the first and most important impressions they get.

If you have a strong organizational culture, employees are more likely to begin their tenure on the right foot, easing what can be a sometimes stressful transition.

Qualities and characteristics of great culture

What makes a company’s culture unique and desirable? The ten quintessential qualities and characteristics of a great organizational culture are:

1. Belongingness

A culture that supports its employees, even through their personal challenges, is a culture that ensures that employees have a sense of belonging, thrive, and are loyal even when the going gets tough.

2. Employee wellbeing

An extension of the first point, if employees know that the organization cares about them and wants to support them as people, they can focus on their physical and mental wellbeing.

As a result, it can help build a sense of community and a positive working environment.

3. Inclusivity

An inclusive company culture must be beneficial to all, irrespective of their personal background, place within the hierarchy, or professional attributes.

Inclusivity is even more significant in today’s globalized business environment and international workplaces, which is why it is necessary to fix these issues on every level.

4. Personal connection

Building on inclusivity, personal connection is about inspiring everyone to work together in a team. And with shared values and goals, a personal connection can help employees work toward a greater shared goal.

This is especially important when it comes to remote and hybrid workplaces, where employees can feel disconnected from their teams.

Collaborating team members

5. Transparency between employees

Without transparency, you have a toxic organizational culture. A transparent culture fosters the core values of honesty and open communication to help employees build feelings of respect, inclusion, trust, and integrity throughout the ranks.

6. Mutual respect

Healthy corporate cultures are built on mutual trust and respect, which are often difficult to achieve in traditional hierarchy cultures.

If people are not belittled constantly, you can boost overall employee morale and offer them intrinsic motivation to work collaboratively with the team.

7. Trust

Building on the characteristics described above, inclusivity, transparency, and respect build a trusting relationship between teams, making everyone feel safe to share ideas and find creative ways to work together.

8. Growth and development focus

Neither companies nor employees want to be stagnant in today’s fast-paced environment.

A workplace culture that focuses on the growth and development of employees can motivate employees to expand their skill sets, keep up with the latest industry trends, and push each other to achieve their full potential in a healthy competitive culture.

9. Willingness to change and evolve

The modern business environment is constantly changing. And if you, as a company and a team, are open to change and evolve with the evolving market culture, you can be agile as you grow while still maintaining a positive workplace culture.

10. Consistency

Your efforts to build a positive organizational culture cannot succeed if you are not consistent.

Consistency and cohesion in values and beliefs need to be modeled by company leadership to truly build a desirable and great corporate culture.

Steps to building a strong organizational culture

Building a strong organizational culture takes comprehensive planning with clear organizational objectives that you can monitor and measure.

But when it comes to building a strong company culture, you have two options: Either work on improving the existing company culture or build a culture of continuity for long-term benefits across the board.

How do you improve company culture?

Improving company culture is an endless task. Every company can always stand to get better. If you’re a company in the thick of your own Great Resignation, maybe you’re looking to get back to square one.

Or maybe you just want a refresher on the fundamentals to see where you could improve.

In essence, it all comes down to communication. Ask yourself these questions: Are you being transparent when you communicate with your employees? Are you listening to the concerns and ideas they are communicating to you? Are you communicating feedback respectfully and constructively? Are you consistent in this communication?

It’s not enough to chalk up the entirety of organizational culture to a handful of questions, but when you ask yourself these questions over and over, they will help push company decisions, policies and, yes, the entire organizational culture in a more productive direction.

How do you build a great organizational culture?

The eight steps below can help you build a high-performing organizational culture that can deliver long-term benefits across the board.

1. Employee recognition

Focusing on recognizing contributions from all team members is the foundation of building a high-performing positive organizational culture.

In the new Workhuman® report, The Evolution of Work, we found employees who work at organizations with recognition programs were more likely to use positive words when describing their culture than employees without a program.

2. Enable employee voice

Open communication and feedback from employees can be the key difference between success and failure.

Enabling employees to voice their opinions can help you build an open and communicative culture that motivates the employees to give their 100%.

3. Lead by example

Leadership is the key to building the workplace culture you want.

Make your leaders the culture advocates and adopt a top-down approach where leaders model the workplace environment and culture you want to foster.

4. Live and breathe by shared values

Don’t just draft and forget your mission statement and company values. Incorporate them in everyday operations to embody them and build a values-based culture.

5. Foster connections between employees

building team connections

A connection between team members is integral to success in the face of adversity.

Focus on fostering personal connections between teams by encouraging discussions about shared interests or knowledge-sharing sessions.

6. Prioritize learning and development

A strong workplace culture cannot persevere without employees who are consistently learning and a company that supports these efforts.

Training initiatives, making learning resources available, or allowing employees to learn by taking on new responsibilities are some of the great ways to prioritize learning and development.

7. Start building the culture now

Building company culture takes time. You cannot decide one day to build a strong culture and have it done the next.

Because this is a long-term process, now is the best time to start defining or re-defining your organizational culture in order to reap the benefits.

8. Personalize employee experience

Understand how each team member identifies with your ideal workplace culture and support them to create a personalized employee experience.

Give your employees the same individual care and attention that you expect them to give to your customers.

Organizational culture transformation

A culture transformation is a change that can take place either across the entire company or an individual department, with the focus being on transforming teams, standard operating procedures, and skill sets to support the desired change.

You may choose to transform your organizational culture for numerous reasons, including:

  • Low performance
  • Market conditions and global economy
  • Mergers and acquisitions
  • Leadership changes
  • Adopting new technology
  • Evolving employee demographics

No matter the reason, if you want to transform the company culture, you need to:

  • Set a vision
  • Build a facilitator team
  • Plan for and decide on a budget and a timeline
  • Use digital platforms and tools
  • Display leadership
  • Engage your workforce in every step
  • Diagnose the issues that require you to change
  • Create a plan
  • Implement the changes
  • Follow through

And when looking to achieve organizational culture transformation, the key thing you need to do is to choose the right culture to build for your company.

You need to look at factors that can influence organizational culture, like core values, the need for organizational change, the nature of your business, and the expectations of your stakeholders and your company leaders.

With these things in mind, you can set clear objectives for organizational culture transformation and plan accordingly.

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Building a strong organizational culture is essential to succeed in today’s fast-paced environment as it directs employee behavior, sets up expectations, and allows you to work collaboratively toward achieving a shared goal.

If you are struggling to build a high-performing organizational culture or need help with culture transformation, Workhuman can be a great asset and partner for you to build a culture that promotes a sense of belonging, engages your employees, and improves your performance.