What Is Company Culture?

A company culture is how things get done in the workplace. Company culture can more be described as core values or operating principles used to set the tone for the company’s overall operations and success.

Author: Brad Nakase, Attorney

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What Is the Meaning of Company Culture? Company culture is how you do what you do in the workplace. Company culture is the shared attitudes, behaviors, values, and standard that makes up a work environment.

Company culture encapsulates a workplace’s formal and informal systems, as well as its values and behaviors, all of which form the experience enjoyed by both employees and customers. In essence, company culture is how work is completed around the office, warehouse, or wherever work gets done. The ‘how’ in that sentence refers to both the informal and formal systems and behaviors that make up the environment.

For instance, perhaps a company uses instant messaging software to communicate during the day. This would qualify as a system. At the same company, it is acceptable to holler across the office at a coworker. This would be a behavior. These systems and behaviors give employees a roadmap for how to interact with their colleagues and superiors.

In fact, company culture can even be something that an outsider senses, or feels. Consider walking into a store were all the employees smile and greet you, offering to answer any questions or politely chatting about the weather. Now consider walking into the same store and the employees ignoring you to text on their phone or argue with their manager. There is a clear difference in company culture.

In this article, our Los Angeles business attorney discusses company culture as follows:

What Is a Company’s Organizational Culture?

Organizational culture is generally understood as a company’s beliefs, attitudes and values and how these factors influence employees’ behavior. An organization’s culture defines the proper way for management and employees to behave within the organization. Organizational culture comprises the collective values, expectations, and practices that guide and inform all workers’ actions and performances.  Organizational culture includes an organization’s philosophy, experiences, expectations, and values that guide member behavior and is expressed in workers’ self-image, internal interaction, and interactions with customers and vendors.

  • Employees communicate with one another
  • Decisions get made
  • People are hired, promoted, and fired
  • Employees are recognized and rewarded
  • Employees champion their work and one another

Why Is Company Culture Important?

Company culture reflects workers in positions of power and drives employee engagement and satisfaction. A positive company culture is one that is built on meaningful work, open communication, and core values. A strong company culture that fosters teamwork, community and inclusivity increases engagement exponentially. A strong company culture attracts better talent and, more importantly, retains that talent.

Company culture directly impacts company performance, and can affect important metrics including employee retention, finances, innovation, and customer service.

  1. Financial Return – Research done by Great Place to Work and FTSE Russell report that annual returns for the 100 Best Companies have experienced a total return of 1,709% over the past 25 years. This is compared to a 526% return according to the Russell 3000 Index over the same period of time.
  2. Employee Retention – A diverse and inclusive workplace that is beneficial and equitable for all employees is more likely to keep those employees long term. Millennials have been reported to be 11 times more likely to leave their company if they feel lacking in a sense of purpose at work.
  3. Innovation – Employees who experience inclusive leadership systems and behaviors are more likely to share their opinions and be willing to adapt. This is known as a culture of innovation.
  4. Customer Service – Studies have shown that employee happiness means greater efficiency, productivity, and creativity. This happiness also has a positive effect on customers.

Tips on How to Build a Positive Company Culture

In order to build a positive culture, employers need to start by encouraging positivity in the workplace. Here are ways to promote a positive workplace culture at your company:

  1. Talk to Employees

Regardless of how large his or her company is, a business owner can get started building a company culture by talking to their employees about what makes their workplace unique. Employees can provide insight into what makes the culture, as well as what the company’s values are.

  1. Set the Boundaries

A great company culture will not happen overnight. A business owner will need to think about what sort of experience he or she would like their employees to have. What should customers be saying about the company? What behavior should be encouraged and what behavior should be discouraged?

  1. Provide a Model

As a leader, a business owner must be prepared to model the actions and values they wish to see in their employees. If the owner values integrity, then he or she should be sure to demonstrate integrity in all that they do. The same goes for transparency; a business owner should always be upfront and honest with those he works with.

  1. Track Progress

When building a company culture, a business owner should always receive regular feedback. By involving employees in the process, they will be more willing to offer their ideas on how to improve the business.

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