What is workplace culture, and why is it important in modern work life?

Company culture plays a pivotal role in the success of an organisation. It can be a key contributor–or detractor–when it comes to employee wellbeing and experience. A healthy workplace culture can make all the difference not just for employee wellbeing and retention, but also for the bottom line and long-term business success. In this article, we will explain what workplace culture is, why it’s important and how to create a healthy culture.

What is workplace culture? 

Broadly speaking, workplace culture is the official and unofficial rules that define how work at an organisation gets done. While a company’s vision and mission define its goals and aspirations, the culture of the company informs the daily actions, attitudes, and behaviours necessary to realise that vision. Culture is different from the values of the company in that values are usually defined by management and communicated to employees, while culture is what is lived and experienced by all at the company, irrespective of how management would like the culture defined. Another important difference is ease of change. Changing or modifying a company’s values usually requires updating a document (of course, implementing them will take longer), while changing a company culture often requires a lot of time and intention. It is not so easy to change a culture overnight. 

Culture goes beyond statements or commitments written on the website, and rather reflects what happens under the hood, so to speak. This goes beyond broad adjectives like “collaborative” or “innovative” (on the positive end of the spectrum), and delves into specific details like the tools used, how and when team members communicate, how wins are celebrated, how open teams are to feedback, and how setbacks are handled, for instance. The types of behaviours and values that are either rewarded or discouraged provide insights into the prevailing culture. Is openness and transparency rewarded or do employees feel they need to hide mistakes? Likely, secrecy and shame are not cultural descriptors a company would put on their website and talk about during a recruitment process, but these words might accurately reflect the workplace culture.  

It is unrealistic that all aspects of culture can be captured in writing. What is written down and codified is most likely what the company strives for and how it wishes to be perceived. How the culture is actually perceived might greatly change over time. And it likely will differ depending on who is asked. Therefore, it is important to understand this: culture isn’t what a company strives for and what is written in a handbook; it is the lived and experienced reality for employees and those interacting with the company.

Importance of culture in the workplace

While culture remains abstract, it is something that companies need to pay attention to. It is a main contributor to employee attraction and retention and can be a key differentiator in a candidate-driven market. Not every company can compete when it comes to salary and benefits, but a strong culture is something that any company can strive for and can use to market itself to potential candidates.

It can also be a key reason why employees stay or go. In fact, when polled 21% of potential workers cited a better company culture as a top reason for changing jobs, and 47% reported being willing to leave their current jobs due to a negative company culture. If a company’s culture doesn't align with the values of its employees, it will risk losing top talent. 

Getting a feel for a company's culture is often possible before joining, indicating that it extends beyond employee perceptions. Something is driving the culture and it is important to know what those forces are and find ways to steer the ship in the right direction. While the company may not be the sole driver, being intentional about culture is crucial to ensure the safety and well-being of employees.

In tough economic climates, it might be tempting to consider company culture as a nice-to-have that doesn’t require added investment or attention. But this would be a mistake. And it seems that CEOs and CFOs recognise this. 9 out of 10 believe that improving workplace culture would increase their company’s value and nearly 80% ranked culture among the five most important factors driving their company’s valuation. 

Here are three very good reasons to focus on company culture, even during tough economic times: 

• Culture is important to candidates: 77% of job seekers consider the culture of a company before applying. While many companies assess candidates for culture fit, candidates are doing the same. Increasingly, they want to work at a company whose values align with their own and have a culture that they can see themselves thriving in. 56% of candidates report that company culture ranks higher in importance than pay in terms of work satisfaction.

• Employees will leave if the culture is not healthy: Culture plays a big role in whether an employee stays or goes. 73% of workers have left jobs because of a company culture they did not like. And the inverse is true—employees who report a healthy company culture leave at half the rate of their peers. Employees who have a generally positive time at work experience less burnout, are more engaged with their work and are more productive. Turns out, happier people work better (some say harder, we prefer better:). Workers that feel satisfied with their workplace are 12% more productive than the average worker. Considering that retention is the cheapest recruitment tactic, employers should ensure that their culture is not pushing good workers away. 

• Poor culture affects profits: Companies listed on Fortune’s 100 Best Companies to Work For outperform the market by a factor of 3.36. Employees who say their culture is positive are 3.8X more likely to be engaged. About 60% of disengaged employees, compared to 23% of engaged employees, say they would leave their company for a better culture. This shows that a positive workplace culture is a key driver of engagement and retention.

Creating workplace culture - general advice 

Understanding and steering a company's culture is crucial for fostering a positive work environment. While a company will likely struggle to get 100% of employees to describe the culture exactly as they would like, it is important to find ways to close the gap and get it as close as possible. 

The transformation of company culture requires a sustained, long-term strategy and unwavering commitment. Given that culture is not created overnight, any changes to it should not be expected to happen quickly either. To get to where you want to go, you need to first establish a baseline understanding and then implement strategic changes systematically. 

Steps to assess your workplace culture: 

1. Audit your current culture: It is hard to know how to improve if you do not understand your starting point. To understand the current culture at your organisation, collect information from key stakeholders.
   
   
   1. Internal Stakeholders: Conduct surveys among employees using a mix of closed and open-ended questions to gauge perceptions and identify areas for improvement. Encourage employees to suggest solutions.
      
      
   2. External Stakeholders: Gather feedback from external parties such as customers, partners, and vendors. Use surveys, social listening tools, and online reviews to understand external perceptions. External viewpoints may provide insights that complement or differ from internal perspectives, and might give added perspective to your culture. 
2. Set goals and targets: Now that you have a general picture of how internal and external stakeholders perceive your culture, it is time to define where you want to go and what changes you want to make. Use your feedback from surveys to define the improvement areas. Once you know your goals and targets, be specific about the actions required to achieve these goals. Develop a strategy that includes measurable indicators to track progress over time.
   
   
3. Regularly assess culture: After establishing your baseline and defining your goals and targets, periodically do health checks to see if your culture is moving in the right direction. Return to your surveys and other tools to gauge perceptions. If needed, adjust strategies or targets based on assessment results. Regularly check in on your stakeholders to understand perceptions and intervene if there are signs that the culture is declining.
   
   
4. Communicate openly and celebrate success: Talk openly about the desired culture, being clear about what you want to see and what you want to avoid. Communicate clearly about the actions and behaviours that promote a healthy culture, and think about how those actions are recognised and appreciated. 

While trying to make changes to your culture, it is important to remember that culture is dynamic. It can change with the people who enter and leave your organisation, and it can also be influenced by global trends and events. The COVID-19 pandemic is an example of an external event that impacted company culture. Or, it did for those companies that were agile and able to adjust to the changing demands and expectations of employees during and after a global seismic event. Employees started expecting work flexibility, wanted to know their work had purpose, and craved greater work-life balance. Companies that wanted to attract and retain in a post-pandemic world had to make adjustments to their culture to meet candidate and employee expectations. 

If you want to develop a healthy and sustainable company culture, agility is key. There are certain aspects of culture that attract candidates, drive engagement and cultivate business success. Here are some critical aspects that can create an engaging and healthy workplace culture: 

• Leadership: Leaders significantly shape workplace culture. They play a crucial role in setting expectations and acknowledging positive contributions. Ensure that your leaders are aware of the culture you are trying to drive, the actions that can reinforce it, and how they are acknowledging behaviour on their team that contributes to a healthy culture, and discourage behaviour that detracts from it.
  
  
• Employee wellbeing: The overall wellbeing of employees reflects the health of the organisational culture. Ensure employees report a healthy work-life balance and feel supported in their roles. This includes having the necessary tools, proper training, and sufficient learning and development opportunities. Post-pandemic employees want greater flexibility. This is not just flexibility about where the work gets done, but how it gets done and when. 
  
  
• Transparency: Company culture can be enhanced with greater transparency. Keep employees informed of the changes that are happening at the company, set realistic expectations, and explain the reasons behind major changes. Whenever feasible, involve employees in decision-making processes, ensuring that their opinions are considered even if not every decision is collectively made.
  
  
• Inclusion and diversity: Create an inclusive environment where everyone feels welcomed and empowered to bring their authentic selves. Beyond hiring diverse talent, organisations must take responsibility for ensuring inclusion across various dimensions, including gender, neurodiversity, ethnicity, age, ability, language, and more. Cultivating an inclusive culture fosters innovation and a sense of belonging.
  
  
• Purpose and meaning: People increasingly seek meaning in their work. A job is no longer just a source of income but a place to develop a career that contributes positively to the world. Studies show that a majority of workers would even take less pay for more meaningful work. Create a company culture that is informed by your mission and the meaningfulness that your employees crave.

Summary

In conclusion, workplace culture requires ongoing attention and can be a key contributor in attracting candidates and retaining employees. Recognising that culture is dynamic and changes with people and circumstances, companies need to be agile and keep a pulse on how their culture is developing over time. Leaders play an important role in creating a healthy culture by setting the tone, reinforcing positive behaviours, and discouraging negative behaviours. Employee wellbeing, transparency, inclusion, diversity, and a sense of purpose critical aspects that contribute to an engaging and resilient culture. By focusing on these areas, companies can actively shape a workplace culture that meets the evolving needs of their workforce and contributes positively to the overall success of the organisation. 

Key takeaways:

• Culture is dynamic and can change with people, time, and circumstance
• To change company culture, you first need to understand and measure it
• Audit your culture continuously to check culture performance and gauge progress 
• A healthy company culture contributes to employee wellbeing and business results
• Focus on the areas of company culture most important to employees