Company culture is a term used often when discussing how employers can recruit, engage and retain employees. Experts agree that it is necessary, even essential, to maintaining a productive workforce. But it is still a broad-based term that needs some explanation to show why it matters to your company.
What is Company Culture?
Company culture, otherwise known as organizational culture or corporate culture, is the environment in which your employees work and how the company operates. It includes your mission, goals, core values and policies. A company’s culture is created through activities like a mentorship program, team-wide service projects, career coaching, parental leave, student loan repayment and performance-based compensation programs.
How Does Company Culture Work?
Just like businesses, company culture comes in all shapes and sizes. It may be developed through a concentrated effort or simply evolve over time. Companies with a strong company culture have employees that understand expectations, behaviors and actions, according to The Balance Careers. A company’s culture should spell out its values, goals and core competencies. According to HR Daily Advisor, there are four distinct types of company culture.
- Clan Culture: Similar to a large family, clan cultures are collaborative cultures in which the people have a lot in common. Companies with clan culture have strong bonds of loyalty, tradition and commonality. Examples of companies with clan culture include Google, Zappos and Tom’s of Maine.
- Adhocracy Culture: Companies with an adhocracy culture have employees who are willing to take chances and leaders who are inspirational, eager to challenge assumptions and take risks. Core values reflect a willingness to adapt. Examples of companies with adhocracy culture include Facebook and some other tech companies.
- Market Culture: A market company culture is focused on the business, its work and profitability. The working environment is competitive because the company wants to capture as much market share as possible. Examples of companies with market culture are Amazon and Apple.
- Hierarchy Culture: A more traditional company culture, leaders emphasize processes and procedures and make sure they’re followed. These rules and guidelines keep costs low and have likely steered the business for years. Examples of companies with a hierarchy culture are government organizations, healthcare and aviation.
Benefits of Company Culture
A strong company culture helps sync the actions of employees and management. Everyone is on the same page and working towards fulfilling the company’s goals. When looking at a business case for company culture, SHRM states it must improve the organization’s overall performance, provide a strategic competitive advantage, and establish beliefs and values that are shared across the organization. Company culture also helps with workforce retention and attraction of new candidates to your company.
Company Culture Improves Productivity and Performance
Employees who know what’s expected of them, who work together as a team and whose decisions are supported by management, are happier. Happy employees are productive employees. U.S. research shows that happy employees perform better than unhappy ones. It may seem simple, but that fact shouldn’t be ignored. Company culture affects employees’ daily working lives, from the time they arrive at work to when they clock out. An employee who looks forward to coming to work will work harder, have a great attitude, work well with their co-workers and be more creative.
Company Culture Improves Employee Retention
Company culture is a major factor in turnover. One in five employees leave due to company culture, or lack thereof. Companies can’t effectively compete if they are constantly hiring new workers. It can take up to a month to hire a new employee, and each new hire costs your company. According to SHRM, over the last five years, turnover due to workplace culture cost companies $223 billion. A strong company culture keeps your employees invested and loyal.
Company Culture Improves Recruiting
Company culture may just be the deciding factor for a candidate choosing between a position you’re offering and one offered by the competition. According to a study by Glassdoor, 56% of workers in the United States say a strong workplace culture is more important than salary, and three in four workers say they’d consider a company’s culture before applying for a job. Showcasing your company culture in your recruiting materials, on your social media platforms and on your website will help draw the right candidates to your business.
What Shapes Organizational Culture
Company culture starts from the top down. According to SHRM, company leaders play an instrumental role in shaping and sustaining organizational culture. A manager or executive that doesn’t fit into or adhere to the company’s culture, won’t inspire employees to fit in, either. Your executive team helps shape and reinforce the commonly shared values that determine your company’s culture.
As mentioned above, the four types of company culture are shaped by the values of your organization. If your organization values teamwork and collaboration, your culture will likely include an open dialogue with employees. If innovation is valued, you’ll likely encourage employees to continuously better themselves. Organizations that strive to compete in the marketplace will compensate employees for meeting performance goals. And those that are focused on procedures will have a culture shaped by rules and guidelines.
Building Company Culture
While company culture can develop organically, it can also be deliberately cultivated. SHRM notes that strong cultures often stem from a process called “values blueprinting.” It begins with leaders talking about the values the company should emphasize.
Establishing Company Core Values
Whether it is through a committee or developing a strategic plan, a company must decide what it values most. There are several common values a company can embrace:
- Outcome orientation: Emphasizing achievements and results.
- People orientation: Insisting on fairness, tolerance and respect for the individual.
- Team orientation: Emphasizing and rewarding collaboration.
- Attention to detail: Valuing precision and approaching situations and problems analytically.
- Stability: Providing security and following a predictable course.
- Innovation: Encouraging experimentation and risk-taking.
- Aggressiveness: Stimulating a fiercely competitive spirit.
Once your values are established, you can begin to develop a plan on how to enact them and what role employees will play.
Set Company Culture Goals
Clear goals help define strong company culture. Goal setting can force disruption, getting your company off the path it is currently on. Disruption promotes innovation, technology and growing a market base. If your culture doesn’t align with your core values, goal setting can get you back on track.
When setting goals, make sure they are challenging, rewarding, enthusiastic and daring. An effective goal setting technique is using SMART goals. SMART goals (Specific, Measurable, Achievable, Results-based and Time-bound) are:
- Specific: Include dates, resources and/or dollar amounts you’ll need to accomplish them. The benefits a company offers is an integral part of its culture. Going beyond 401(k), medical and dental will help your company stand out from the competition. Goals to add extra perks can easily be broken down into needed resources and dollar amounts. For example, you may decide to install recharging stations, offer a free catered breakfast and lunch or redecorate the office for a homier feel. These are specific goals that can improve company culture.
- Measurable: Identify appropriate metrics so you can track progress and measure success. If having a diverse workforce is part of your desired company culture, it can easily be measured by hiring data. Other options to promote a diverse culture include offering speakers and workshops that celebrate diversity. You could make the results measurable by polling employees on attitudes before and after.
- Achievable: Make goals challenging but attainable. Employees who are encouraged to give back are 74% more likely to recommend the company to others and 71% are more likely to stay. If you want community service part of your company culture, set a goal to get more employees to volunteer. You may not get every employee to participate, but it will open the door for future opportunities.
- Results-based: Align with company strategy by relating to something that is necessary, of value, and supports the company’s vision. If your company’s vision includes innovation or gaining market share, you may want to make employee development part of your culture. For example, HubSpot embraces development by offering Master Classes where employees learn from each other in a classroom setting. It has an extensive library of business and professional books, written by experts, that employees can borrow at any time. It encourages continued learning by reimbursing classes from Java to Japanese, up to $5,000 per year.
- Time-bound: Determine an end date, time-frame or schedule of completion for the goal. If you have a goal of improving collaboration, set a date for team building activities. Team building days give employees the opportunity to connect and feel like part of the company culture. Choose days ahead of time so employees can clear their schedules to focus on learning and friendly competition.
Involve Your Entire Team
Building a company culture needs to be a team effort. When you get your employees on board, they’ll not only stick around but refer their friends to join them.
Ask for regular feedback and listen to what your employees have to say. Good company culture requires open communication. An old-fashioned solution is a simple feedback tool such as a survey,or you could bring in a third party to consult and facilitate anonymous conversations. Follow through on suggestions whenever possible to help your employees feel heard.
Encourage employees to better themselves. Having a culture of training shows your employees you’re invested not only in them but also in the company itself. Educational opportunities help to build a more skilled workforce, which will draw in new talent who also know the value of gaining new skills.
Don’t forget appreciation. A company that’s focused on recognition will automatically have a robust culture. Recognition can include a simple “thank you” or something more substantial like compensation. This includes:
- Cash Bonus
- Gift Card
- Paid Time Off
- Nice Lunch with the Boss
By building a strong company culture, your employees won’t only want to stay, but they will want to spread the word of how great it is to work for your company, thus bringing you the very best talent.
HR Specific Tactics to Develop Culture
Company culture doesn’t need to completely rest on HR’s shoulders, but HR is certainly a great place to start.
Hiring for Company Culture
Hiring the right employees, from the executive team on down, is what can make or break your company culture. HR is the gatekeeper for selecting those candidates who will fit in with your company’s culture.
- Put your culture on display. According to a Robert Half study, 35% of Americans wouldn’t accept a job at a company that had a bad culture, even if the position were a perfect fit. Make sure your culture stands out candidates by:
- Using your website to talk about supporting a value that’s central to your mission, sustainability, training or promoting from within
- Showing personality beyond regular business on social media channels
- Making sure digital reviews on job board sites are good and/or any negative reviews are responded to appropriately by your company
- Writing job postings with a friendly tone and including news mentions, awards your company has won or particularly popular benefits, such as great work-life balance, paid maternity/paternity leave or superior health benefits
- Training hiring managers to know exactly what to say at job fairs or networking events when people ask about what it’s like to work for you
- Focus on soft skills. Hard skills, like technical skills, can be taught but soft skills are what make candidates great employees and leaders. Soft skills include communication, creativity, critical thinking and collaboration.
- Assess personality. Some employers choose to incorporate personality assessments or quizzes to determine how or if a candidate will fit in with the rest of the company. According to SHRM, organizations that use personality assessments claim the results can help reduce turnover because they let companies know which employees will be able to handle the job long term or which ones are in over their heads. One popular assessment is the Enneagram of Personality Types. Based on nine personality types, the system brings these types together and describes both the strengths and the challenges of each. This type of assessment is being used by corporations for leadership development and team building to help co-workers understand each other’s motivations, needs, concerns and style of work.
- Stay true to your culture. Don’t offer a candidate something you can’t deliver. SHRM notes the biggest mistake an organization can make is to paint an inaccurate picture of itself as it tries to attract candidates. If new hires discover they’ve been deceived, they won’t stick around. Even worse, they may write negative reviews of the company, and morale with decline.
Show Culture Through Onboarding
Onboarding introduces your new employee to your company. It teaches your company’s mission, values and sets expectations for behavior and performance. A great onboarding process will:
- Involve the entire team. Making onboarding a team effort helps new employees become acclimated and comfortable in their new environment. Set up times for your employee to sit with members of your team to introduce them and allow them to learn how they’ll work with each person.
- Onboarding should be ongoing—not a one-time event. Setting up an ongoing onboarding process ensures an employee is clear on their expectations. Ideal onboarding lasts between 90 days and one year.
- Be well-planned. Orientation is the first impression your new employee gets of your organization and you want it to be positive. Plan ahead what Day One will look like for your new employee. This will provide your new hire with the confidence to succeed and shows them you’re organized.
Use Development to Promote Culture
Developing employees includes managing their performance and training them to improve or excel. Both promote a culture of communication and learning.
Performance management is a direct link to your employees’ thoughts and feelings about your company. Regular performance reviews give managers and HR essential feedback. As a key element of employer-employee communication, reviews have significant impacts on the engagement levels of your team and their performance.
- Create a culture of performance management from Day One. During onboarding, make sure employees understand that performance reviews are a core part of the job. Explain how they are an opportunity for employees to ask questions and provide feedback.
Continued learning is part of following up on performance reviews. When it is a priority and part of your organizational culture, you tell employees:
- We believe in building employees up
- We believe in investing in our employees
- We want our employees to be the best versions of themselves
- We want employees who like a challenge
Arcoro’s focus is providing companies with HR solutions that allow them to hire, manage and grow their employees. From cloud-based ATS and Onboarding software and performance and learning management systems, Acoro’s solutions provide HR departments the tools they need to promote company culture in every step of the talent management process and beyond. Contact our team to see how they work or ask questions about Arcoro can be your bridge to better HR.