The Importance of Company Culture in Business

There’s no doubt that the culture within a company is essential for good business, but what is the importance of company culture within your organisation and how can you improve it?   

There are several reasons why building and creating an open and positive company culture is vital for every business.  

One example is that one of the first things job applicants ask about when looking for a new job, is the organisational culture of the company they want to apply to. How many people are in the organisation and how open are their communication lines? How does the company treat its team members? How do managers support employees? 

Company culture is also considered when organisations are looking for partners or investors. For example, what is the reputation of the company? How long do employees stay? Are the people in management easy to reach and communicate with? All these are questions that arise when thinking about an organisation’s ‘company culture’. 

As your business grows, it’s essential to create a great company culture for employees and customers, potential investors and new business. 

What is company culture? 

First, let’s define company culture. According to the balance, ‘company culture is the sum of an organisation’s attitudes, ideals, and attributes.’ Company culture can also be called organisational culture, workplace culture, or business culture. 

Company culture is demonstrated in how people, both internally and externally, interact and communicate with each other.  It can seen in a company’s values, and through the organisation’s business decisions. 

There are a number of factors that make up company culture. These factors include, the organisation’s mission and vision, their values, leadership style, goals and expectations. It can be seen in how management interacts with employees, how employees interact with each other, and how the business interacts with its customers and clients.  

Look back at your own experience with various organisations. Whether it’s a company you’ve worked for, worked with, or simply encountered, we’re sure you’ll recognise that some company cultures are better than others. You might describe one as ‘toxic’ and another as ‘open.’ Whichever it is, company culture plays a significant role in people’s perceptions of an organisation. 

Why is company culture important? 

There are a few reasons that illustrate the importance of company culture: 

1. It exemplifies an organisation’s internal and external identity 

Company culture shows employees, clients, partners, and the general public what your company is all about. Workplace culture helps form people’s ideas about the company and its corporate identity.  

For example, Google is known to emphasise its ‘flat’ organisational infrastructure, which is rare for a company of its size. This flatness means employees can easily communicate with senior management without going through secretaries or assistants. The flat structure creates an environment where everyone feels they have a voice and their opinions are valued. 

2. It can turn employees into promoters or detractors 

One of the reasons why company culture is something you should always consider is that it can turn employees into your company’s strongest promoters or harshest detractors. Employees want to feel seen, heard, and valued. Most people want more than just a paycheque from their job. They want to feel that what they do matters and has value. 

Employees contribute to company culture, and they also promote the company culture to others outside the organisation. They can praise the company or talk badly about it, depending on their experience. We’re sure you’ve heard negative stories about various organisations from disgruntled employees or positive stories from happy workers. What an employee thinks about an organisation, highly depends on the kind of company culture it promotes. 

3. It can help attract and retain employees and team members 

Similar to above, the importance of company culture comes out when recruiting and retaining employees. When employees are happy with a company’s workplace culture, they are more likely to stay and be productive. When they feel the work they do is valued and they are part of an inclusive and caring community, employees will want to continue working for the organisation.  

An open and positive company culture is a big factor in keeping top performers in the company. We’re sure you’ve heard this from people; ‘I love the people I work with,’ and ‘I love my company’s culture and management style.’ Employees can tell when an organisation values company culture, making them want to do well for the company. 

According to Business News Daily, good company culture is a top priority for job seekers. It strongly appeals to applicants when they hear current employees talk positively about a company and its culture. 

How can you improve company culture? 

Now that you understand the importance of company culture, how can you improve culture within your business or organisation? 

Remember that company culture can always be cultivated and improved. A positive company culture does not appear magically. Management and leadership teams have a big role to play in creating an open and engaging culture. 

1. Conduct regular performance reviews 

Performance assessments must be done regularly to give your employees constructive criticism and praise when necessary. They can help a team and organisation grow when planned carefully. Reviewing an employee’s progress and performance improves relationships between management and the workers. It also increases productivity. When employee feedback is welcomed openly, assessments enhance a company culture that supports employees and encourages their growth. 

2. Offer employees opportunities for advancement 

A culture that offers employees the opportunity for professional growth and career advancement, helps to retain employees. A study by Pew Research shows that one of the most common reasons employees leave a job, is if there are no opportunities for career advancement.  

Mentorship programs, clear promotional paths and career growth plans, help create a culture that offers support and encourages employees to stay longer and be more productive. These also help hold management accountable for how their team is doing and who is up for promotion. 

3. Give employees the option for flexible work schedules 

According to a Forbes article, giving employees flexible work options, helps to improve productivity for 43% of employees, while 30% of employees report that less time or no time commuting to the office helped boost their productivity.  

Aside from boosting productivity, offering flexible schedules can also be a perk businesses offer if they can’t provide a salary or monetary increase. Company cultures that offer flexible schedules are more likely to be appealing to job applicants.  

4. Celebrate individual and company wins 

Recognising individual and team wins are a great way to improve company culture. Employees become invested in how the company is doing when they are included in celebrating the company’s success. When they are included in the bigger picture, they become more engaged in the company’s performance.  

5. Emphasise company transparency 

Employees appreciate a company culture that puts importance on transparency. A positive culture happens when employees can trust management. Employees appreciate when they know what’s happening within the organisation. This can be done through company-wide emails and regular meetings. Whether good news or bad, employees will want to know how the company is doing.  

An open-door policy between management and employees will also encourage transparency. A transparent company culture offers regular office hours and encourages teams to schedule group discussions.  

6. Conduct employee satisfaction surveys 

Like customer feedback, an organisation should ask employees for feedback through employee surveys. This will encourage active participation and engagement. It will demonstrate to employees that their thoughts and ideas are valued. Management will also gain new perspectives about the company and solicit employee suggestions.  

To sum up, we cannot emphasise the importance of company culture enough. It has a huge impact on employee satisfaction, external image, and even on overall company performance. For example, suppose the organisational culture involves a lot of red tape and too many communication layers between management and employees. In that case, management might miss out on vital information from employees.  

Let’s say an employee dealt with an angry customer, but before management could hear about it due to a highly-hierarchical organisational structure, the customer had already posted their experience all over social media. This gives the company a bad image, puts the employee in a negative light, makes management feel like the employee didn’t do their job, and so on. 

This type of mishap can be avoided if the company or workplace culture is open and there are direct lines of communication, horizontally and vertically. Again, company culture is crucial in how a business is perceived both by external customers and its employees. 

If you feel like your company culture has room for improvement, don’t worry! Building an open, engaging and positive company culture takes time. You must first sit down and think about your current company culture. What areas need improvement? What can you implement in the short term and the long term to help make it better? 

Follow some of our tips above, and you’ll begin to see your company culture evolve positively. 

If you want to learn more tips and advice on how you can improve your business, Click here to visit our website. 


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