Boost engagement and retention by taking your corporate culture from good to great.
Company culture is a top concern for employees today. It should also be a strategic priority for business leaders, but it often gets deprioritized because, well, change is hard. Corporate culture is an invisible force and recognizing and improving it requires a broad rethinking of the organization’s values and dynamics. But organizations that actively work to improve company culture have a lot to gain, including happier, more engaged employees and the foundation to thrive even in uncertain times.
What is corporate culture? Corporate culture is defined as a shared set of values, attitudes, goals, and rules about how to behave at work. The MIT professor who coined the term, Edgar Schein, describes company culture as “a set of basic tacit assumptions about how the world is and ought to be that is shared by a set of people and determines their perceptions, thoughts, feelings and, to some degree, their overt behavior.”
Company culture represents an organization’s personality and identity. It starts with leaders establishing shared values, beliefs, and expectations and communicating them to shape how employees think, feel, and behave in the workplace. A company’s culture is influenced—both consciously and unconsciously—by several factors including:
When evaluating the question “What does company culture mean?,” it’s also important to know what culture is not. Culture in a company is not defined by trendy perks or a fun office layout with pool tables or nap rooms. While perks are great, employees say flexibility, meaningful benefits, and feeling safe and comfortable in their work environment matter most.
As a core part of your company’s identity, corporate culture influences every aspect of an organization. There is no one “right” type of company culture and there are often several cultures and subcultures that exist at one time. What works for one organization won’t meet the needs of another.
A winning strategy combined with top-performing talent still won’t equal success if the culture in a company isn’t strong. “Culture eats strategy for breakfast,” says Peter Drucker, a writer and consultant dubbed the father of modern management.
“There are some very concrete benefits to getting culture right,” says Alethea Varra, PhD, a licensed clinical psychologist and vice president of clinical care for Lyra Health. “When people are healthier, they’re able to be more productive and engaged. It benefits the whole working group when people are more healthy.”
So, why is a company’s corporate culture important? Because it directly impacts key performance metrics. Here are a few specific reasons why company culture is important:
Employees are increasingly dealing with burnout and mental health issues. Since people spend a lot of time at work, company culture can have a profound impact on their mental well-being. When people have work-life balance, are engaged, and feel valued for their contributions, they’re happier and more productive. If they don’t feel cared for and valued as people, they’re more likely to leave—or worse, stay on the job but disengage. Recognizing the high stakes, employers have been steadily increasing their investments in employee well-being programs such as mental health benefits.
A positive company culture makes it easier to attract top talent. Job seekers can tell a lot about your culture during the recruiting process, and about half (46 percent) say the culture of a company is very important when evaluating a career opportunity. It matters even more to millennials and Gen Z workers than older workers. Even if everything else about your job offer is ideal, 35 percent of U.S. workers say they’d pass if your company’s culture doesn’t appeal to them.
In addition to attracting talent, actively managing corporate culture can improve employee retention by as much as 40 percent, according to Deloitte research. A healthy company culture motivates 65 percent of workers to stay in their job. But if that culture deteriorates, 71 percent of employees say they’d look for a job elsewhere. Bad company culture is a leading reason employees quit. In fact, culture at work is 10 times more important to employees than salary.
Good corporate cultures inspire employees to apply their passion and motivation to work.
Better employee engagement and productivity translate into better business performance. In a Deloitte survey, 94 percent of executives said a “distinct workplace culture” is important to company success. Gallup research shows that companies with high engagement enjoy a 22 percent increase in profitability. And according to Gartner, aligning the workforce around your company culture can improve performance by 9 percent.
A good company culture allows employees to feel heard and valued, which builds teams that feel confident and empowered in their work. By contrast, a bad company culture reduces communication and productivity, making it tough for employees to be effective.
Healthy company cultures align people around a common mission and purpose, encouraging them to connect and collaborate. They recognize the unique talents, perspectives, and contributions of people of all backgrounds, which builds a sense of belonging. Feeling like part of a community in turn increases job performance, retention, and productivity. A toxic culture, on the other hand, fuels unhealthy competition, blame, and working in silos.
Organizations that create cultures of psychological safety encourage openness, new ideas, and strategic risk-taking. This type of environment can help foster innovation and peak business performance.
Happy employees often share their positive experiences with others, sometimes very publicly on company review websites. They also share their negative feedback, which can make it harder to attract and retain top talent. But there’s evidence that treating staff well can nurture brand advocates and contribute to a positive business reputation.
Since corporate culture impacts productivity, satisfaction, and creativity, it can even influence the quality of products and services you offer. Happier employees care deeply about their jobs and clients, enabling them to also provide better customer service. Interestingly, a 1-point increase in company rating correlates to a 1.3-point increase in customer satisfaction on average.
Although there is no “right” company culture, companies with great cultures often share a few core qualities. For example, a good company culture unites people, so they work productively as a team toward a shared purpose with a clear understanding of how their individual contributions help the company succeed. These cultures promote teamwork, respect, physical and mental health, and curiosity.
A bad company culture neglects employees’ needs in favor of company-centric policies and practices. Employees don’t feel they’re part of a team and may not have a clear sense of the company’s mission, values, or expectations. They may work long hours to prove their value, often with little or no recognition. As a result of poor work-life balance, toxic company cultures can contribute to turnover, burnout, and poor mental health. Check out these good and bad company culture examples:
There are endless varieties of company cultures. However, experts have identified four main types:
people-focused, welcoming of change, and highly collaborative
values risk-taking, creativity, and innovation
results-oriented with an emphasis on the bottom line
values stability and process over adaptability, risk, and change
So, which companies have the best company culture? The answer is subjective but every year, Comparably publishes a list of companies with the best work culture. Here are a few of the leading company culture examples from recent years:
A growth mindset is the foundation of Microsoft’s great company culture. It prizes learning, curiosity, risk-taking, and change and encourages employees to be part of things that make them happy outside of work. Other core elements of Microsoft’s good corporate culture include:
The technology company IBM has a strong company culture that embraces the following values:
Google has received top honors by Comparably and Glassdoor for its great company culture. In addition to offering perks like free food, video game stations, and nap pods, Google has built a corporate culture grounded in:
HubSpot, a developer of sales and marketing software products, formally codified its culture goals and published them in a 128-page culture code, so the public could understand its values and roadmap. HubSpot employees live by a few essential tenets including:
Employees say they love working for Elsevier, a global company that helps researchers and health care professionals advance science and improve health outcomes, because of its:
Zoom’s motto is “Delivering happiness.” Its Happiness Crew runs programs such as employee awards, book clubs, parties, and volunteer days to nurture a culture of happiness. Zoom is also setting the standard in benefits with generous parental leave, a rich vacation policy, and comprehensive health benefits, including Lyra Health. Zoomies work together in an inclusive environment to help the world stay connected.
No list of great company culture examples would be complete without Meta, a leading technology company that emphasizes employees being themselves, making an impact, and tackling big challenges. Employees appreciate the company’s flexible work options, commitment to diversity, and holistic benefits, which include Lyra for mental health support. Meta’s values include:
Part of building company culture is taking a close look at corporate culture examples like these and choosing the values that resonate with your leadership and your people.
Culture develops whether you consciously create it or not, but leading organizations thoughtfully architect the process of creating company culture. While employees can play a role in building company culture by communicating their needs and practicing healthy self-care, employers define company culture and have control over most of the factors that influence it. Here are a few tips on how to build company culture:
Defining company values that reflect your core beliefs and philosophies helps people understand if they’re a good fit for your organization. Your values should be grounded in your beliefs and actions—not just ideals—so you can stand behind them. In fact, establishing values that don’t align with your behavior can undermine your efforts toward building company culture. To understand your values, ask questions like:
Once you’ve established your values, promote them regularly during team meetings and events, so they become part of your organization’s identity and are at the forefront of people’s minds. Then live them in every interaction, which builds trust with your employees. This should start during recruiting and onboarding: Ask questions that relate to your values during interviews, accurately describe your company’s culture to candidates, and integrate your values into onboarding programs to help set up new hires for success.
Positive company cultures are built on a foundation of psychological safety—the confidence to share thoughts, take risks, and make mistakes without fearing repercussions. Do your employees feel safe to acknowledge when they’re struggling? Will they ask for help or offer feedback or dissenting opinions without fear of retribution?
“The hard part is you can’t just tell people they’re safe,” says Dr. Varra. “It’s something you demonstrate over time through tiny behaviors, comments, and moments. When you have psychological safety and people know they have your support, it creates a completely different reality—and it’s worth it in the end.”
Your benefits are part of the fabric of your corporate culture. Rather than introducing trendy perks, choose benefits your employees really care about and that impact their quality of life and ability to stay engaged at work.
Companies are increasingly offering mental health benefits to help workers get the care they need and drive business success. Employers can also support mental health by:
Scheduling 1:1 conversations so managers can check in on how employees are feeling
Encouraging employees to practice self-care, such as taking a walk or using company-provided stress management resources
Leading by example by taking breaks, not sending emails during evenings or weekends, and “leaving loudly” for PTO so employees know they can take time off and set boundaries too
Proactively working to destigmatize mental health at work so people can talk openly about it and receive the training and resources they need to make their mental health a priority
Work is an important part of people’s lives, but there’s much more to us. Companies with good company culture recognize their employees have loved ones, passions, and hobbies they care about and show concern for them as people.
“It’s great to say you care about your people, but do your actions follow through? Do your benefits reflect these priorities? Do you offer employees opportunities to invest in their life and time to be a person outside of work?” Dr. Varra asks.
Here are a few ways to acknowledge employees’ lives outside of work:
You can also invite employees to share what’s going on in their lives, but recognize that not everyone will want to share. Dr. Varra recommends sharing the “process rather than the content.” She explains, “We don’t have to know all the detail of what’s happening in someone’s life to know that it’s important for them to have space for that—whatever it is.”
Another aspect of recognizing the whole person is prioritizing diversity, equity, inclusion, and belonging (DEIB), so employees feel safe bringing their authentic selves to work. When people feel comfortable and accepted for their unique personalities, beliefs, experiences, and skills, they can achieve their full potential at work. Research has shown that more diverse companies outperform less diverse ones.
In strong company cultures, employees can renegotiate their workload when accepting a project would mean staying late or missing other deadlines. Here are a few essentials for designing work in a way that builds positive company cultures:
Only about one-third of HR leaders believe their organizations have a corporate culture that drives performance. If your company’s culture isn’t keeping employees engaged and satisfied, it’s time to take a closer look at who your organization is and what it’s all about. Culture is always evolving, which means you can intervene and turn it around at any time. Here are a few suggestions for how to improve company culture:
The first step in changing corporate culture is measuring where you stand today. Start by conducting regular confidential microsurveys and asking employees for feedback. Next, report back transparently about your plans for how to improve company culture. For example, you may announce plans to reinvigorate your recruiting program or update your company values. If your teams are hybrid or working remotely, you may consider ways to better integrate them into your culture at work, such as regular check-ins or setting up onsite and virtual activities.
Managers play an important role in building trust, opening lines of communication, and changing company culture. In a Gallup survey, only two in 10 employees strongly agreed that they’re managed in a way that motivates them to do outstanding work. If you give managers effective training and support, they’re well-positioned to design employees’ job activities, responsibilities, resources, environment, and overall experience in a way that promotes well-being and contributes to positive company culture.
Recognition and rewards help employees see how their work is contributing to the broader mission and feel valued. Without this, workers are twice as likely to quit in the next year. Be sure to praise efforts and contributions on an ongoing basis, not just after completing a major project or goal. Even small gestures of gratitude, such as a sincere thank you via phone or email, can invigorate your people and create a culture of appreciation.
Also consider developing a performance management system, which gives employees feedback on how they’re doing and creates opportunities to identify training needs, promote top performers, and inspire team members to do their best work. While giving honest feedback can be uncomfortable at times, it’s central to creating a company culture that helps people thrive.
Connection is an essential human need, yet 40 percent of employees say they feel isolated at work. This hurts workers as well as companies through higher turnover, more sick days, and poor performance. Social activities, ERGs, and instant messaging channels dedicated to specific groups and interests can be great ways to build community at work.
People have a natural desire to learn and grow in their jobs. In fact, having limited opportunities for advancement is a leading cause of employee turnover. Many of the best company cultures make ongoing learning a priority at every level of the company, often through continuing education and training, mentoring, or internal promotion.
When considering how to change company culture, it’s important to remember that culture is always shifting. This means you’ll need to reassess how you’re doing periodically and address new risks as they emerge through ongoing learning and training.
Identifying blind spots and changing company culture can be difficult without support. While HR has been traditionally viewed as the steward of company culture, true culture change requires involvement at every level of the organization, along with consultation and support from experts. Lyra provides organizational development tools including workplace risk assessments to help identify and respond to behaviors that undermine corporate culture, manager training, and learning and development resources.
Building company culture is critical to every organization’s success. Since great company cultures rarely develop by chance, this needs to be a priority not only for HR leaders but also boards of directors, senior leadership, and middle managers. While there’s no quick solution, assessing your workforce, developing a plan, and taking incremental steps to improve company culture can help ensure your culture evolves along with your company to serve your goals.