Company Culture: What It Is, Why It Matters, And How You Can Build Yours

September 05, 2023

Company culture is the oil of your org’s engine. When it's flowing, your team’s efforts are smooth and frictionless. Remove it, and suddenly the gears are grinding. Let’s explore why it’s so vital.

Ever walked into an office where everyone's in sync, collaboration is second nature, and innovation is woven into the walls? That's the essence of company culture.

Building a powerhouse company culture goes way beyond office aesthetics or casual Fridays. And listen to this: 50% of job seekers steer clear of companies with a bad rep. So, what's at stake? Well, everything.

Ready to dive deep?

Let’s explore the benefits of company culture, different types, and actionable next steps you can take to build culture at your organization.

What is Company Culture?

Company culture is the is the unique blend of attitudes, values, behaviors, and traditions that shape how your team operates and interacts — it’s the soul of your workplace.

Think of company culture as the unwritten rulebook that guides everything from how deadlines are met to how Friday afternoons feel. It sets the tone for how work gets done, how people collaborate, and how the company tackles challenges.

Alright, let's put this into real-life mode. Meet Alex and Jordan, two friends who share a house and work at different marketing firms in the city.

Alex hustles at Company A, where the corporate culture feels stifling. Micromanagement rules the roost, with bosses ever-present and independence nowhere in sight. It's like an ego-driven battleground, with everyone is in it for themselves. Teamwork? That might as well be a foreign language. During meetings, Alex's voice often falls on deaf ears.

On the flip side, there's Jordan at Company B. The organizational culture is all about autonomy and positivity. Team members design their schedules, and managers function as mentors, not taskmasters. Jordan's ideas are met with high-fives, and discussions are candid exchanges of thoughts. The employee experience? It's off the charts. Jordan revels in a dynamic team that listens, collaborates, and propels each other toward sharing success.

So, where would you rather clock in your hours if you had to choose? In a place where control is tight? Or a place where flexibility rules and the culture is all about teamwork, growth, and a dash of excitement?

The answer seems pretty clear, doesn't it?

Why is Company Culture Important?

Now that you're getting the hang of what the culture of a company is all about, let's zoom in on why it's not just some buzzword — it's a legit game-changer that can reshape your business landscape.

Get ready for a dose of insight backed up by some eye-popping stats, shedding light on the undeniable perks:

  • Happy and Engaged Employees: When your team feels like they're not just fitting in but truly flourishing within your organization’s culture, it transforms your workplace into a bustling hub of happiness. Quantum's research found that 66% of employees say their organization’s culture positively influences their work and behavior. Plus, employees who consider their culture positive are 3.8 times more likely to be engaged, igniting a cycle of positivity and productivity.
  • Productivity Boost: Productivity gets a serious rev-up when you've got a crew of satisfied employees and a positive business culture. In an Alternative Board survey, 86% of entrepreneurs indicated they believed company culture improves productivity. On the flip side, organizations with a cutthroat culture and disengaged employees saw 18% lower productivity.
  • Employee Retention: When your employees feel valued, they stick around for the long haul. It's not just about flashy perks. It's about creating an environment where employees truly belong. Three in four (78%) employees are actively seeking a more supportive workplace culture to keep them motivated and engaged in their current roles.
  • Attracting the A-Team: Want to find the crème de la crème of talent and set your business up for greatness? You're not alone. 58% of companies were hiring for new role in the first half of 2023, but job openings outnumbered candidates by two to one. In this wild world of talent competition, a strong company culture attracts strong talent – rockstar candidates want to work for a company that supports them.

Company Culture Examples: Frameworks for Inspiration

Here are just a few of the many captivating culture blueprints that can truly transform your workplace.

Adhocracy Culture

This type of workplace is where innovation reigns supreme, and risks are embraced as exciting opportunities. How does this translate into action, you wonder?

Well, in an adhocracy culture, teams resemble a band of trailblazers. They thrive on challenging the status quo. They’re constantly devising fresh ways to elevate, innovate, and introduce new services and offerings.

It's a vibe often found in the realm of startups and tech titans like Google, Facebook, and Apple — the true pioneers who continuously stretch the limits to maintain their leading edge.

  • Pros: Adhocracies cultivate an environment of perpetual innovation, setting your company apart from the ordinary.
  • Cons: The whirlwind of constant change and lightning-fast pace might feel like a thrilling roller coaster ride, but it isn't everyone's cup of tea.

Clan Culture

In this type of culture, your workplace feels like a close-knit family where employees bond like kindred spirits. This is where hierarchies take a back seat, and a sense of unity and support takes center stage.

Open and informal communication flows freely, and each member is regarded as an essential contributor, regardless of their position. Clan cultures often thrive in smaller, family-owned businesses.

  • Pros: Clan cultures promote candid communication, nurture stronger bonds among coworkers, and foster an atmosphere of mutual respect and collaboration.
  • Cons: This comfortable and relaxed atmosphere can sometimes blur the lines between professional and informal, impacting the sense of urgency and business focus.

Customer-Focused Culture

A customer-focused organization is a place where going the extra mile for customers is the norm, and their satisfaction is the ultimate reward.

Picture employees who are driven by the mission of delivering unparalleled service and guaranteeing that every interaction leaves a positive impact. Companies with this culture prioritize understanding and fulfilling customer needs above all else.

  • Pros: Customer-focused cultures create a loyal customer base, strengthen brand reputation, and drive sustainable growth through exceptional service.
  • Cons: While focusing on customers, employees' own well-being and satisfaction might sometimes take a back seat, leading to potential burnout.

Hierarchy Culture

A hierarchy culture is like walking into a building where everything has its assigned spot, and everyone knows their role. Here, you'll find a clear pecking order, and each team member has a specific lane to stay in.

Decision-making? It's like a well-choreographed dance, with each move carefully planned and executed. Industries like finance, healthcare, government, and other highly regulated sectors often bust out the hierarchy moves. They groove to the rhythm of established norms and regulations, ensuring everything is in line and on point.

  • Pros: Hierarchy cultures are the champs of consistency, keeping things steady and ensuring tasks get ticked off the list like clockwork.
  • Cons: All that structure can sometimes make it feel like a creativity party pooper, slowing down the groove when trying out fresh ideas. There's not a lot of room for flexibility here. Some of your employees (yup, we're talking Gen Z's especially) may feel that this is extremely old-fashioned and a little stodgy.

Purpose-Driven Culture

Here, the mission isn't just a statement on the wall — it's a guiding force behind every decision. Imagine a workplace where giving back to the community and making a positive impact are top priorities. It's a workplace culture that values more than just the bottom line.

Instead, it's about leaving a mark that lasts. Companies like REI, TOMS Shoes, and Thrive Market are the superstars of the purpose-driven culture stage. They're the ones who walk the talk, putting their values into action and positively impacting their communities.

  • Pros: Purpose-driven cultures are the champions of making a difference, attracting employees who are motivated by a higher calling.
  • Cons: All that focus on purpose can sometimes mean a tighter budget, as resources are directed toward meaningful, but unprofitable initiatives.

How to Build Company Culture: Nine Things Your Business Can Do

While each organization will have its own unique culture, there are some tried and true tactics that can get you started.

1. Craft Your Core Identity

Set the stage by defining your company's mission and values. Think of it as your manifesto that guides every move your team makes.

If you're going for that clan culture, where your workplace feels like a cozy family gathering, your values might be all about unity, support, and camaraderie.

On the other hand, if you're more of a purpose-driven culture, where a profound cause fuels your company's very existence, your values resonate with impact, sustainability, inclusivity, and positive change.

2. Lead by Example

As leaders, you need to take center stage and shine the spotlight on the business culture you want to create. Your actions speak louder than words.

If you're preaching collaboration and growth, then actively foster an environment where these principles thrive. Or, if you want everyone to be innovative and forward-thinking, show off your willingness to embrace new ideas and explore uncharted territories.

3. Open Communication Channels

Break down those communication barriers and let the conversation flow freely. Set up feedback jam sessions, regular check-ins, and virtual suggestion boxes to keep the dialogue rocking.

Social collaboration software is an invaluable asset for improving communications, especially if your workforce spans multiple locations or time zones. Make sure your HR suite has a centralized communication platform for broadcasting announcements, connecting teams, sharing files, and more.

4. Recognition and Rewards

Give your team a standing ovation for their hard work. Employee incentive programs, like spotlighting top performers or offering stellar rewards, can turn up motivation and keep the applause going.

Earlier, we recommended defining your core identity. You can take those values and key traits and turn them into awards. Highlight your employees that demonstrate those values. Your employees will appreciate the recognition and it goes a long way towards reinforcing the culture you want to create.

This shouldn’t be a leaders-only endeavor. Invest in peer recognition software that allows employees to award each other and build a culture of celebration.

5. Invest in Employee Development

Tune into growth by offering a repertoire of professional development opportunities. This might be workshops for fine-tune skills or easily accessible microlearning courses. Giving your team members the chance to enhance their talents is like providing them with an all-access pass to success.

When your employees feel like they're constantly expanding their skills and knowledge. they'll not only be headlining your company's success story but also contributing to a culture of continuous learning and advancement.

Double down on your commitment to employee development with a learning management system (LMS). An LMS can come preloaded with a library of coursework so you can hit the ground running with your professional development program.

They’re also equipped to handle any other training material you create in-house. The best LMS will also be available from any device, so your employees can engage in learning on-demand and on-the-go.

Learn More: Top Five Talent Development Strategies

6. Embrace Flexibility

Mix in some workplace flexibility to keep your team grooving to their beat. Embrace employee-friendly work arrangements that work well with their lifestyles, whether it's offering flexible shift swapping or the option to work remotely.

By tuning into the needs of your team and providing them with the freedom to balance work and life in a way that suits them, you'll create a workplace that boosts their productivity and makes them happier.

This flexible approach sends a powerful message that you value their well-being and trust them to hit all the right notes, regardless of where or when they're working.

7. Build a Diverse and Inclusive Culture

Create a real sense of community in the workplace by making diversity and inclusivity a central part of your business culture.

Get those conversations flowing and make sure everyone's voice gets a chance to be heard and appreciated. By embracing different perspectives and building a tight-knit community that values individual viewpoints, you're setting the stage for some seriously awesome innovation and creativity to take center stage.

8. Prioritize Wellness

Lead the charge in prioritizing well-being within your company. Lead by example and introduce wellness programs that resonate with your team's needs — whether it's yoga and meditation sessions, mental health resources, or ergonomic workspaces.

Your commitment to your employees physical and emotional wellness sends a clear message that you're invested in their long-term professional and personal harmony.

9. Continuous Improvement

Keep fine-tuning your cultural masterpiece based on feedback and outcomes. Listen to feedback from your team and pay attention to the outcomes. You can send out regular employee surveys to find out what’s working and where you need to grow.

This ongoing evolution ensures that your company's culture remains fresh, vibrant, and ready to deliver a performance that wows everyone.

Learn More: How to Improve Company Culture

HR Tech: An Essential Part of Your Culture Building Toolbox

Building organizational culture doesn’t happen overnight. And once it’s built, it needs to be maintained. HR technology is an invaluable ally in this effort.

Paylocity’s Community tool is a social media-like hub for work that helps HR pros create the connection and communication required for a strong organizational culture.

Community streamlines communication, improves collaboration, and fosters a culture of engagement. It eliminates the need for antiquated intranets and emails, providing a single hub for all company-wide communication.

But, don't just take our word for it — Community has the award to prove it: the "Best Culture Building Solution" HR Tech Award!

Want to see Community in action? Request a demo of Paylocity today.


Reach Your Workforce Wherever They Are

We all want to get more done with less email and fewer meetings – yet reaching a workforce, whether they're remote, on-site, or hybrid, can be tricky. Improve communication, enable engagement, and connect all your employees with Community. This modern social collaboration tool allows your workforce to access newsletters, policies, and emergency updates, while also giving a central hub for your employees to come together.

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