What Is Company Culture? Definition, Basic Components & Tips

One of the key factors to a company’s success and longevity is its company culture. Company culture is the collective attitudes, beliefs, and behaviors of a company and its employees and how they relate to the actions of the business. It impacts company operations, strategic planning, and ultimately the overall performance of your business.

Basics of Company Culture

Company culture drives how employees feel about working for your business once their basic needs of compensation and safety are ensured. Elements that help shape your culture include (but are not limited to) physical work location, company policies, management style, and core values.

Work Location

An employee may work remotely, in the office, at a client site, or in a hybrid situation. If employees work in the office, the layout (open-office, cubicle, or closed-office) plays a role in the company’s work environment. The employee’s circumstances and personality may determine which environment they like best and which allows them to be more effective.

For example, an entry-level, extraverted employee may be better suited to work in the office, while an employee who works in a non-client facing role and lives further away may work better at a home office.

Work location affects company culture at an employee level as well as the company level. Where the majority of your employees work has a significant impact on a company’s culture, particularly its communication needs and style.

Company Policies

Company culture is also influenced by the rules, policies, and procedures you establish as a business owner. Policies around paid time off, feedback, and employee recognition, among many others, significantly contribute to the overall culture. More basic rules like work hours, dress code, and use of personal devices can help shape whether a culture is more formal or relaxed.

Management & Work Style

How your managers direct and oversee the work and workers in your company plays a major role in shaping a company’s culture. Managers can be very hands-on or take a laid-back approach to monitoring the work of their subordinates. They can also provide decision-making freedom or expect subordinates to adhere to strict guidelines related to the work product or service.

Core Values

Similar to company policies, the ideas espoused in the company’s core values set the tone for the company’s culture. Some of the most popular core values include honesty, accountability, passion, fun, diversity, and leadership.

Typically speaking, executives will push for these values to be discussed and prominently displayed around the office, in company documents, and on the company’s website. Discussing and promoting these values, however, does not in and of itself impact culture; that happens when companies and employees demonstrate and live the values in their day-to-day interactions.

Other Key Components of a Great Company Culture

• Mutual respect: At the end of the day, if there is no respect among staff, team members will never believe their culture is one worth contributing to. Although conflict occurs in a healthy workplace, mutual respect is essential to allowing a culture to grow and thrive.
• Individual and team trust: Trust is an attribute that flows throughout the entire organization. When it is strong and healthy, there is no limit to your company’s potential. When trust is waning, your chances at establishing a great company culture decreases a little every day.
• Communication: Good communication is essential within an organization. The definition of strong organizational communication needs to come from your employees, not your leadership team.
• Decision-making: Allowing some decision-making channels to run through non-leadership committees is a great indicator that the management team trusts the capability and expertise of the teams. This practice promotes team ownership and directly feeds into a cultural building exercise employees deeply appreciate.
• Goals/strategies: Allowing team members into the strategic planning process, at least at the goal-setting level of planning, sends the message that you value their input.
• Adaptability: This includes handling revolving markets, competition, and other business-threatening demands in addition to quickly pivoting to meet changing employee needs.
• Results-orientation: Nothing is more powerful than completing large projects as a team. When a results-driven mindset fuels the company, it promotes organizational processes and programs that matter.
• Teamwork: It is difficult to imagine a great company culture that does not promote inclusive teamwork. Your organization should avoid placing people in silos and prioritize an inclusive atmosphere where all departments and employees work together.
• Employee engagement: To promote engagement, you have to focus on motivating and inspiring your team members (your greatest asset) to be part of your organization. Learning what makes them tick is essential.
• Learning opportunities: Cost-effective growth opportunities are essential to maintain to be considered an employer who truly engages a multigenerational workforce.
• Meaning/purpose: Beyond the employee’s paycheck, healthcare benefits, and vacation time, the attribute that your employees desire more than anything is purpose. They want to know that the role they play in your organization matters significantly.
• Safety: Physical safety, like for construction companies, and job security are important to employees. It’s your job to convince your team members that they are safe, valued, and cared for.
• Leadership team approachability: Nothing says “we are in this together” more than when the newest team member can walk into an executive team member’s office and speak their mind respectfully.

Tips for Building a Good Company Culture

Understanding company culture is one aspect of being a successful employer; building it is another. To build a solid company culture, you must take a holistic and integrated approach.

1. Live Your Mission & Vision

Mission and vision statements are key components to any business. They help set a goal of what you want to be and where you want to go. If you need help creating your vision and mission, see our articles with great examples of vision statements and mission statements.

To build a strong company culture, you have to live out of your vision and mission. For example, a company focusing on improving healthcare options might have a very generous time off policy while a company that wants to be innovative may have work spaces that include items such as games and whiteboards to stimulate play and creativity.

2. Listen to Your Employees & Vet New Employees

Asking employees about the company’s strengths and weaknesses and if it is doing a good job acting on its core values will go a long way in developing a positive culture. You should also be intentional about asking a diverse group of employees in your company. A diverse group of employees will help you build an inclusive culture that will attract a large, diverse set of customers. Lastly, these types of conversations will also help you to know what questions to ask new applicants to see if they would be a good cultural fit.

3. Re-Evaluate & Be Flexible

Based on your employees’ responses and customers’ feedback, you may decide you need to change some aspects of your culture. That may mean changing core values, adding new policies, loosening some restrictions, or even revising your vision or mission statement. Being agile enough to change with the times will allow your culture to grow (and grow with) your businesses.

Bottom Line

One common management slogan is that “Culture beats Strategy.” Understanding what defines your company’s culture and how you can develop and nurture that culture will help you to build a great place to work and a growing and thriving business.