Why company culture is important and how to manage it

Company culture refers to an organisation’s social order, guidelines and values. It’s integral to a business’ everyday life and can make or break a business. 

It encompasses everything from the work environment to the leadership style. Company culture sets the foundations for real business growth and helps organisations identify issues and quickly create resolutions. 

So how is company culture managed? How is it improved? We’ll explore these questions and many more to drill down to the very essentials of company culture.

Why is company culture important?

Company culture is vital for employee engagement, happiness, retention and building a thriving business. A strong company culture provides the following benefits:

1. Identity

Culture contributes to the identity of an organisation. For example, this could be setting and meeting goals. This enables your employees to set and maintain their path within the company.

Without this culture, it may leave employees without any direction, which would be bad for productivity.

2. Employee retention

With a strong company culture, you’ll attract better talent and retain people too. A great company culture creates a sense of belonging, making staff more likely to stick around in the long-term.

As a result, this means lower employee turnover, fewer new hires and better relationships among your team. High employee turnover is one of the most costly mistakes employers can make, with the average cost to recruit a new employee coming in at £30,000. It makes much better business and financial sense to look after your employees and encourage loyalty and longevity.

3. Recognisable brand identity

If you treat your employees well, your customers will see you as a kind, generous brand. Depending on who your audience is, this could be a major component of driving sales. 

There are four main types of organisational culture. Where your company lies within this list depends on your business focus, communication style and ways of working. 

Take a look at the four main types of organisational culture, and see if you can establish where your company sits, below.

What are the different types of workplace culture?

1. Clan culture

This culture values mentorship and teamwork. It’s a people-focused culture where the company feels like one big happy family. Clan culture is a highly collaborative environment where individuals are valued and communication is highly important.

In clan cultures, you’ll often find a horizontal structure that breaks down barriers between the C-suite and employees. Businesses that embrace this culture are action-oriented, welcome change and are highly flexible.

2. Adhocracy culture

Innovation is the core of companies with an adhocracy culture. These companies are at the cutting-edge of their industry and are always looking to create the next big thing before anyone else even begins to think about it.

Companies need to take risks for a successful adhocracy culture while also encouraging employees’ individuality and creative thinking.

3. Market culture

A company with a market culture has a primary focus on competition and growth. These organisations look at everything with the bottom-line in mind.

A market culture’s priority is profitability, so each role is created in line with the organisation’s greater goal. They are results-oriented, so they focus more on business success than individual people’s satisfaction.

4. Hierarchy culture

Two things make up the primary focus of hierarchy cultures - structure and stability.

Hierarchy cultures generally adopt a traditional corporate structure and focus on internal organisation. These organisations have a clear chain of command and management tiers to separate employees and leadership. 

With a tried and tested way of doing things, they’re financially stable and don’t usually take risks. 

This is just a top-level overview of each culture type. To learn more about the various company cultures in more detail, including the pros and cons of each, click here to read the blog.

What makes a bad company culture?

You’ll start to experience problems in a bad company culture, such as tardiness, absenteeism, and poor employee retention. However, by understanding what makes a bad company culture, you can avoid these issues.

For example, if you haven’t defined your company values, you’ll have problems from the get-go. This is because your culture will likely progress without a sense of direction. Core values are the driving force behind a company. Without them, subcultures will form and could undermine the company’s success. 

Another small but significant example of bad company culture is if you see your employees regularly missing their lunch breaks.

You may think this is a sign of commitment to the job - and it can be - but it’s more likely to be because they don’t have enough time to stop working. Ultimately, this is poor for business and employee wellbeing. Plus, it’ll also affect the quality of work productivity and reduce employee retention overall. 

Gossiping is another example of something which regularly happens around offices and contributes to bad company culture. It can lead to cliques that divide the workforce, turn employees against each other and can create a distrusting culture.  

To learn more about bad company cultures - and what you can do to improve yours - read our blog on 10 warning signs of bad company culture and what you can do to improve them.

It's full of actionable tips you can use right away to improve your company culture. You might think it's difficult as most of the world is working from home, but you can still maintain a positive company culture even while remote working, and you should start to make positive changes now as there’s evidence to suggest remote working will be a big feature of the workplace for a long time to come.

Maintaining company culture in a rapidly changing environment

Remote working has long been an area of contention among employers. However, the COVID-19 pandemic catapulted remote working into the norm and is likely to continue well after the pandemic ends. 

During this time, most employees have said their employers have adopted a positive culture, with many saying how their productivity, overall wellbeing, creativity and work-life balance has improved.

Despite this, some remote working elements have negatively impacted employees, with some feeling isolated at home and progression, training and development seeming to have fallen through the cracks.

This is why employers need to strike a balance to ensure essential areas don’t fall off the agenda.

As organisations gear up for the future, many factors should be high up on the agenda for shaping their workplace culture. A diverse workforce is essential for most employees’ happiness at work. Many call for their employers to do more and call for a bigger focus on recruiting people from more diverse backgrounds while providing diversity and inclusion training.

Remote working has positively impacted employees’ wellbeing for the most part and is an approach employers should consider as they plan for the future. Employers should ensure they have systems and tools in place to empower employees to remain productive, creative and innovative - even while they’re working from home. 

Even while remote working, bullying and harassment are still prevalent in many workplaces and employers need to do more to tackle the problem.

Many employees are calling for their employers to put a platform in place where individuals can provide anonymous feedback or report any instances of bullying and harassment, which shouldn't be taken lightly and is an avenue organisations should explore.

But that's one aspect of it. It's also your job to make relevant changes to encourage speak-up culture in the first place. A happy workplace culture is integral to employee retention and the overall success of a company. 

Along with implementing anonymous reporting software, you can do more to create a speak-up culture - ensuring people can report unacceptable behaviour and that you'll take action to make sure it doesn't happen again. Some ideas include:

  • Get rid of zero-tolerance policies
  • Prevent retaliation
  • Gather data about reporting
  • Be transparent

We've taken a deeper look at ways you can encourage speak-up culture in your organisation. To get more in-depth explanations and tips, read this blog.

We asked 1,000 employees who are currently working from home a series of questions around their workplace culture, environments, general levels of wellbeing in the current climate, and the factors that are important to them when it comes to the future of the workplace.

To learn more about this, download our report.

How to improve company culture

If you’re finding divides within your team, low motivation or low morale, your issue could be your company culture. The good news is company culture can always be worked on and improved.

Here’s how:

1. Define your values

If you haven’t done so already, define your values. Create a list of core values that truly matter to you and your team. Then, once approved by executives, show these values to the rest of your team and go over them in detail. By doing this, it will create a feeling of togetherness within the company. 

You should also refer to this list when hiring new team members to make sure you’re recruiting more people who believe in your core values. If you sense they don't, then they probably aren't the right culture add and you'll avoid hiring somebody who could negatively impact your culture down the line.

2. Employees feel unable to speak up about harassment 

Unfortunately, there’s still a stigma surrounding speaking up about harassment. This is sometimes because victims fear nobody will believe them, the person they're reporting may retaliate or they may have a close working relationship with the accused person.

To tackle any form of unacceptable behaviour in your company, you need to know the truth about what's taking place. You can achieve this with anonymous reporting software.

The biggest advantage of using anonymous reporting software is more employees will come forward following an experience of harassment. This is because employees will feel less vulnerable and more confident when their name won’t be attached to the incident. 

If an organisation doesn’t have anonymous reporting, employees may go to the media or police instead, which would be bad for the business. With anonymous reporting, issues can be dealt with internally, so businesses can nip problems in the bud, protect their reputation, culture and employees. 

4. Find the root of the problem if you have a high turnover rate

A high turnover rate is nearly always a sign of a bad company culture. This will drive employees away and deter job seekers from joining your organisation.

So, if you’re finding employees are regularly leaving - they’re probably looking for a better company culture.

To fix this, you’ll need to get to the root of the problem. You can do this by holding exit interviews with employees to understand their reasons for leaving. It’s the ideal opportunity to take the time to understand what it is about your company culture that has made them unhappy as well as which parts of the culture they like.

You should also talk to your current employees to find out what they like about working at your organisation, as well as any areas they think needs improving.

There are many more ways you can improve company culture in your organisation. Along with the tips above, you should also:

  • Be more transparent with your employees
  • Share team successes and challenges with them to achieve buy-in
  • Advocate employee autonomy
  • Regularly recognise and reward your employees
  • Encourage peer recognition
  • Reiterate there's no 'I' in team

Every culture is unique and that’s the beauty of it. There’s no one-size-fits-all solution, but there are some easy, actionable steps you can take to improve your company culture today.

For more insight on actionable ways you can improve your company culture, visit this blog.

Company culture plays an enormous role in an organisation’s success, so to keep yours in line with your values, it’s best to conduct a culture audit.

As a company grows, the culture evolves with it. This isn’t always a positive outcome and can affect overall happiness and employee performance. To know how to improve your company culture, it’s first important to understand where it's at already. 

That's where our culture quiz can help.

Improve your company culture

Our culture audit quiz will help you identify what culture your company currently has and the pros and cons of that specific culture. Click the button below to start the quiz.

Take our culture audit here

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