what is corporate culture essay

Company Culture .

Company culture: definition, benefits and strategies, what is company culture.

Company culture is the shared set of values, beliefs and attitudes that make up an organization. It’s reflected in the way you treat both customers and employees. While a company’s culture can take many different forms, a positive culture is often based on respect, support, honesty and alignment with core values.

Company culture describes the shared values, goals, attitudes and initiatives that characterize an organization. It sets the tone for how managers lead employees and shapes the overall ethos of the workplace.

Company culture is a naturally occurring phenomenon, so an organization will develop one whether intentionally or not. Aspects such as the workplace environment, company policies and employee behavior can all contribute to company culture. This leads to company culture manifesting in various different ways depending on each company.

A successful company culture is one that is bought into by everyone from the newest intern to the CEO. It’s living and breathing your core values, and allows characteristics like curiosity, respect, teamwork and employee health to flourish.

Company Culture Definition

Company culture refers to the shared values and practices that shape the ethos or the ‘personality’ of an organization. It’s the way people feel about the work they do, the values they believe in, where they see the company going and what they’re doing to get it there.

Why Is Company Culture Important?

The importance of company culture goes far beyond the vibe of your office, and influences every aspect of an organization. Company culture largely affects how employees approach their work, interact with coworkers and present themselves to partners outside the company.

Impacts Employee Retention

A positive company culture incentivizes employees to stay with an organization for the long-term. According to a 2022 FlexJobs survey , toxic company culture was cited by employees as the number one reason for leaving a job. In turn, Gallup found that employees who feel strongly connected to their organization’s culture were 3.7 times more likely to be engaged at work, and 55 percent less likely to actively look for another job.

Drives Employee Engagement

A positive company culture can boost employee engagement, enthusiasm and dedication to their jobs. For example, employees who view their company culture as positive are 3.8 times more likely to be engaged at work . Plus, highly engaged teams outperform their peers by 10 percent in customer ratings, 17 percent in productivity and 21 percent in profitability.

Attracts Top Talent

Company culture is a major consideration for prospective employees on whether or not to join an organization. Job seekers often look for companies that prioritize employee well-being, empathy and meaningful work, so a company culture that reflects these values can be the key to bring in the best talent. Forty percent of job seekers view colleagues and culture as a top priority when considering career opportunities. 

Leads to Innovation

Company culture can be created to foster increased collaboration, creativity and risk-taking initiatives, ultimately leading to innovation. Adhocracy culture for example, a type of company culture focused on adaptability and sharing new ideas, encourages employees to innovate and develop the next big product or service. Companies that build a strong innovation culture are 60 percent more likely to become innovation leaders, according to Boston Consulting Group.

Types of Organizational Culture

Based on a company’s shared values, attitudes and practices, a company culture can be sorted into one of four basic organizational culture categories .

Clan (Collaborative) Culture

A clan culture is a people-focused, highly collaborative work environment where every individual is valued, prioritizing communication. It often values action-orientation and the embrace of change, and it involves breaking down barriers between the executives and employees and encourages mentorship opportunities.

Adhocracy Culture 

Adhocracy culture is an innovative, adaptable work environment which highly seeks to develop the next big industry breakthrough. It often values risk-taking, individuality and creativity. Typically, this type of culture prioritizes converting new ideas to market growth and company success.

Market Culture 

Market culture is a results-oriented work environment where external success is placed above internal satisfaction, prioritizing the bottom line. It often values meeting quotas, reaching targets and getting results. Market culture also commonly involves degrees of separation between the executives and employees.

Hierarchy Culture 

Hierarchy culture is a traditional, risk-averse work environment where there exists little room for adaptability and change, prioritizing clear direction. It often values well-defined processes, stability and uniformity. Plus it often involves a set chain of command and multiple degrees of separation between the executives and employees.

What Does a Good Company Culture Look Like?

To gauge the company culture at your own organization, it can be helpful to know what a good or positive work culture looks like. These are just a few elements that make up a good company culture. 

1. Respect Among Employees

A good company culture is one where employees are treated with mutual respect and are encouraged to practice it in return. Respect can take the form of regularly asking for employee input and feedback, recognizing employee accomplishments , being empathetic toward peers or showing appreciation for another coworker’s time and effort.

2. Diverse, Inclusive and Belonging Work Environment 

A work environment that is diverse, inclusive and belonging at its core signals to all employees that their voices and perspectives matter. Promoting various viewpoints, ideas and skills at work can also pave the way for increased creativity and innovation.

3. Clear Mission and Values 

Having a clear company mission and set of company values help guide all employees in what they do and how to treat others everyday on the job. These aspects set direct expectations and align everyone in a company toward shared goals, empowering employees to hit the ground running and work together to accomplish these goals from day one.

4. Effective Leadership  

Leaders are the role models of a company and crucial to the success of a team. An effective leader will be able to motivate, uplift and build strong relationships with their employees, leading to a higher likelihood of collaboration, employee satisfaction and performance in the workplace.

5. Professional Development Opportunities  

Providing professional development opportunities enables employees to improve their skills and knowledge in the workplace, and propel them further in their career. Helping an employee grow can be done by offering leadership training, continuing education stipends to complete relevant courses or chances to take on new projects and responsibilities.

6. Transparency 

Transparency and honesty are the first steps to building trust with employees. Being a company that prioritizes transparency in conversations can prompt employees to be transparent as well, fostering open communication and accountability on all sides.

7. Employee Well-Being 

People are at the core of making a company succeed, so an organization that invests in employees’ well-being is a solid indicator of a good company culture. This can look like a company providing comprehensive healthcare benefits, paid time off and sick leave, flexible working hours or employer-sponsored wellness programs.

8. Low Employee Turnover 

If employees are sticking around and turnover is low at an organization, this is a sure sign of good company culture at play. This signifies that employees are likely engaged, fulfilled and satisfied at work, incentivizing them to remain with a company for longer.

How to Develop Company Culture

When it comes time to implement your company culture ideas and build a company culture , make sure you do so deliberately. Like attitudes, a company’s practices are where the cultural rubber meets the road. Creating a positive work culture is no small feat, but it’s something that any organization can accomplish .

Define Your Mission, Vision and Core Values

A mission , vision and core values are the guiding principles of a company, and establish what employees should be working towards everyday. Mission statements and company visions outline the ultimate goal and purpose of an organization, while core values define an organization's beliefs that employees should strive to follow. These elements overall reflect a company’s character , providing reasoning for why employees are completing the work they do and how it should be accomplished. They also align employees at all levels into one shared, unified direction.

Set Company Culture Goals

Every business has a goal, and no, we’re not talking about your quarterly KPIs. We’re talking about the fundamental idea behind your company. The reason it was founded in the first place. How you communicate that goal has a big impact on company culture.

They aren’t literal recitations of what the company does, but rather aspirational messages that define what the company is working toward. When a company’s goals align with those of its employees, great things happen.

Create a Culture Committee

A culture committee is a dedicated team of people within an organization who help to promote and maintain a positive company culture. This committee is made up of employees from different departments or parts of the company, bringing multiple perspectives together to brainstorm culture initiatives. Culture committees can work to create company-wide events, conduct employee culture surveys and determine what parts of a company’s culture are most effective or need change.

Show Appreciation

With the hustle and bustle of work, it can be easy to overlook the small things, but a little appreciation goes a long way. Taking the time to show appreciation makes employees feel their work is valued, and motivates them to continue operating at their best. Appreciation can be shown by saying ‘thank you’ to coworkers or through acts of employee recognition . 

Provide Motivation

Find out what motivates your employees and provide them with the opportunities they’re looking for. Providing your team with opportunities to pursue what motivates them can keep employees engaged and attitudes healthy.

Offer Genuine Support

Even the best employees need help from time to time, so make sure you offer plenty of support. Whether it’s professional or personal, proving that you’re there for your team when they need you is one of the most important things a leader can do.

Align Your Words and Actions

Start by setting an example . Simply put, the easiest way to ensure your employees’ practices align with expectations is to ensure they see their leaders embody those practices every day.

Reinforce the Behavior You Want to See

Reinforce the type of behavior you want to see. We’re not talking financial rewards here, either. Simply recognizing employees that live up to the company’s culture can have a huge impact on behavior (and culture).

Provide Feedback Regularly

Make sure to provide plenty of feedback. You can’t expect employees to modify their behavior if they aren’t aware there’s an issue. Giving honest feedback can be uncomfortable, but it’s key to a healthy culture.

Continuously Evaluate the Company Culture

Developing a company culture is an ongoing effort and requires continuous evaluation to make sure its impact aligns with company goals. Companies can change over time, so making sure the company’s culture changes with it and accurately reflects its current values is key to keeping it effective.

How to Assess a Company’s Culture

As a job seeker, one of the most important things to consider is a company’s culture — and how well you might fit into it. Here are some tips for determining whether a company’s culture matches your personal values and career goals :

Look at the Company’s Online ‘About Us’ Page

A quality “about us” page should have company values, employee testimonials and even photos and contact info of leadership readily available. This shows that the company has absolutely nothing to hide when it comes to promoting a successful culture. 

Look at a Company’s Social Media Pages

What a company posts on its LinkedIn, X and Instagram can all give an insight into company culture and behavior. Take note of what the company publicly shares and celebrates regarding its values, working environment and employees. Compare your findings to your own values and possibly other sources such as first-hand employee reviews.

Read Reviews and Salary Info

Before your interview, make sure to check out other sites to read interviewee and employee reviews. Make sure to also check out salary data to see if the company is paying their employees fairly. You can also ask your network about anything they know regarding culture.

Ask Company Culture Questions During Interview

Avoid simply asking, “Tell me about your company culture.” Instead, you should have a list of questions beforehand regarding specific culture subjects that are important to you. Maybe you want to know more about how the teams operate. Maybe you want to know if there are any employee resource groups that you could join. Maybe you just want to be assured that you have the proper work-life balance. Whatever culture questions you may have, don’t be afraid to bring them up in the interview.

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What Is Corporate Culture?

• How It Works
• Characteristics
• Development

The Bottom Line

• Business Essentials

Corporate Culture Definition, Characteristics, and Importance

Corporate culture refers to the values, beliefs, and behaviors that are common or understood at a company. These determine how a company's employees and management interact, perform, and handle business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people that the company hires.

A company's culture will be reflected in elements such as its dress code, business hours, office setup, employee benefits , turnover, hiring decisions, treatment of employees and clients, client satisfaction, and every other aspect of operations .

Key Takeaways

• Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management should interact and perform.
• It can affect employee hiring and retention, performance and productivity, business results, and company longevity.
• Corporate culture is influenced by national cultures and traditions, economic trends, international trade, company size, and products.
• Corporate culture represents the core values of a company’s ideology and practice.
• Four common types of corporate culture are clan culture, adhocracy culture, market culture, and hierarchy culture.

Investopedia / Paige McLaughlin

Understanding Corporate Culture

Awareness of corporate or organizational culture in businesses and other organizations such as universities emerged in the 1960s. The term "corporate culture" developed in the early 1980s and became widely known by the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to describe the character of a company.

Corporate culture develops from generalized beliefs and behaviors, company-wide value systems, management strategies, employee communications and relations, work environment, and attitude. As it became a more widely understood and embraced concept, it also came to include company origin stories put forth by charismatic chief executive officers (CEOs), as well as visual symbols such as logos and trademarks.

Corporate culture is created by the founders, management, and employees of a company, influencing how they act and who they hire. It then trickles down to the employees, both as characteristics of people the management team hires and as a set of unspoken expectations that employees learn to hire. Corporate culture can also be influenced by national cultures and traditions, economic trends, international trade, company size, and products.

There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake of globalization and the increased international interaction of today's business environment.

• Cross-culture  refers to people from different backgrounds interacting in the business environment.
• Culture shock  refers to the confusion or anxiety people experience when conducting business in a society other than their own.
• Reverse culture shock is often experienced by people who spend lengthy time abroad for business and have difficulty readjusting upon their return.

Companies often devote substantial resources and effort to create positive cross-culture experiences and to facilitate a more cohesive and productive corporate culture for employees.

Importance of Corporate Culture

A carefully considered, even innovative, corporate culture can elevate companies above their competitors, support long-term growth, and underpin a company's longevity. Benefits of a positive corporate culture that contribute to business success include:

• Building a positive workplace environment
• Creating an engaged, enthusiastic, and motivated workforce
• Attracting high-value employees
• Improving employee morale
• Improving performance quality and productivity
• Building favorable business results

When employees feel encouraged and motivated by a positive company culture, this can reduce burnout and provide a strategic competitive advantage by reducing turnover and increasing productivity. A positive corporate culture can clarify a company's goals at all levels and provide a strategic competitive advantage. A company with a corporate culture that is attractive to a variety of employees can also benefit from workforce diversification.

The awareness and importance of corporate culture is more acute now than ever. Big Four accounting firm Deloitte found that 94% of executives believed that a distinct corporate culture is important for business success.

Corporate culture is not an inherently positive phenomenon, however. If managers or executives never take time off, for example, employees will follow their example, creating a culture of overwork. This can lead to demoralized employees who experience high levels of burnout, increasing turnover and decreasing overall company productivity.

Types of Corporate Culture

Clan culture.

Clan cultures are about teamwork and collaboration. In such a culture, those in management function as enthusiastic mentors who provide guidance to subordinates. Good relationships, encouragement, trust, and participation are key aspects. The contribution potential of every employee is a component of a clan culture. Clan culture can easily adapt to change and implement needed action quickly.

• Pros : Strong sense of belonging among employees; encourages career growth through mentorship
• Cons : Can feel hostile or exclusionary to new employees or those who aren't selected for mentoring

Adhocracy Culture

Adhocracy culture creates an entrepreneurial workplace in which executives and employees function as innovators and risk-takers. Employees are encouraged to pursue their aspirational ideas and take action to achieve results that can advance company goals. New and unconventional products and services are the main outcome of the adhocracy culture.

• Pros : Creates a flexible environment that rewards agile thinking; strong sense of innovation
• Cons : Risk of expensive projects that never become profitable; may encourage innovation for the sake of innovation, rather than tuning into actual customer needs

Market Culture

Market culture is focused on meeting specific targets and bottom-line goals. This culture creates a working environment that's competitive and demanding. Management is most interested in business results. Employees are encouraged to work hard and "get the job done" to enhance a company's market presence, profits, and stock price. While employees may feel stressed in such a workplace, they can also feel enthusiastic and excited about their work.

• Pros : Encourages goal-oriented teamwork; strong productivity ethos
• Cons : Can create competition between employees, rather than cooperation; risk of overwork or burnout

Hierarchy Culture

A hierarchy culture is a traditional corporate culture that functions according to a company's executive, management, and staff organizational structure. There is a carefully followed chain of command from top down, where executives oversee employees and their work efforts to meet specific goals. The hierarchy culture prizes stability and conventional methods of operation. Employees may feel a sense of security because of the more conservative approach to running a company.

• Pros : Clear roles, responsibilities, and objectives at all levels; stable paths of advancement
• Cons : More rigid than other work environments; difficulty resolving conflict with managers

Examples of Contemporary Corporate Cultures

Just as national cultures can influence and shape corporate culture, so can a company’s management strategy. These different cultures can seem more or less appealing to employees depending on current events and industry trends, particularly changes in hiring trends.

For example, many 21st-century tech companies, such as Meta, formerly Facebook, and Alphabet, the parent company of Google, have prioritized a culture of less traditional management strategies. These companies defined themselves as employee-friendly by offering perks such as telecommuting and free employee lunches. Alphabet's corporate headquarters in Mountain View, California offers on-site services such as oil changes, car washes, and a hairstylist.

In return, employees were expected to be highly dedicated to their employer and willing to work long hours to achieve results. This culture was intended to foster creativity, collective problem-solving, and greater employee freedom to pursue long-shot innovations. Many tech companies maintained a start-up mentality of rapidly trying new things that were not necessarily sustainable, profitable, or successful—often characterized as " move fast and break things "—long after they were public companies and no longer startups.

Progressive policies such as comprehensive employee benefits and alternatives to hierarchical leadership (even doing away with closed offices and cubicles) were trends that reflected a more tech-conscious, modern, and agile generation of corporate culture.

When tech jobs were plentiful, this culture of non-traditional management, plentiful perks, long hours, and startup mentality was seen as a benefit of tech jobs. However, beginning in August 2022, a variety of factors such as pandemic-era overhiring, rising interest rates on corporate loans, and investor demand for profitability led to the start of massive layoffs.

In 2023, more than 260,000 tech jobs were eliminated, and in the first four weeks of 2024, more than 25,000 employees were fired from 100 tech companies, including Meta, Amazon, Microsoft, and Alphabet. Many employee perks, such as on-site fitness classes or restaurants, were reduced or eliminated as workforces were cut and remaining employees worked from home more often.

As these industry trends began to change, the innovative start-up culture of tech companies began to seem less desirable to some employees than stable, traditional jobs that prioritized employee retention and balanced hours over lifestyle perks.

Characteristics of Successful Corporate Cultures

Corporate cultures, whether shaped intentionally or grown organically, express the core of a company’s ideology and practice. They affect every aspect of a business, from each employee and customer to a company's public image.

The Harvard Business Revie w has identified six important characteristics of successful corporate cultures.  All of these aspects are interconnected, shaping both internal workings and external perceptions of the company.

Whether communicated via a simple mission statement or a corporate manifesto, a company’s vision can be a powerful tool. This sets the tone of its private workings, letting employees know what the long-term goals and mission of the company are. Vision also shapes marketing and brand building, which define a company's public image in the eyes of consumers.

Values, while a broad concept, can embody the thinking and perspectives necessary to achieve a company’s vision. They can serve as a beacon for behavior necessary to progress toward all manner of success. Examples of values include fairness, trustworthiness, integrity, performance excellence, teamwork, and a high-quality customer experience. For example, Google’s famous slogan “Don’t Be Evil” is an expression of values.

Less successful corporate cultures may take elements of these characteristics and either fail to define them or, depending on leadership, embrace negative aspects of them. A company value of "profits before all," for example, can lead to the exploitation of both employees and the communities in which the company is based.

Practices are the tangible methods, guided by ethics , by which a company implements its values. For example, a company that emphasizes the importance of hiring expert, high-achieving employees would offer salaries at the top of their market range, rather than starting with low entry-level salaries and implementing an earn-your-way-to-the-top philosophy.

People come next, with companies employing and recruiting in a way that reflects and enhances their overall culture. The people hired by a company are key to bringing corporate culture to life and obtaining the high-value performances that can lead to favorable business outcomes.

For example, when an organization sets a goal of being multicultural , executives will promote managers from diverse backgrounds. These managers will in turn be more likely to hire employees from diverse backgrounds to work in every department, which can lead to a greater variety of perspectives and innovation within the business.

Narrative and Place

Lastly, narrative and place are perhaps the most modern characteristics of corporate culture. Having a powerful narrative or origin story is important for growth and public image. For example, a company that produces organic baby products might share a narrative about how the founder's struggle to find similar products for their own children led directly to the creation of the products the company now sells.

Since many companies can now be headquartered anywhere in the world, a choice of location can communicate information about the lifestyle and values that employees can expect, as well as provide branding clues to consumers.

Office design and architecture can also communicate aspects of corporate culture. An open-plan office with industrial furniture, for example, communicates to employees that the company prioritizes modern innovation and collaboration between departments. An office space with executive offices and cubicles, on the other hand, signals a more hierarchical and traditional workplace culture.

A company that prioritizes teamwork will encourage a culture of training employees to work together toward common goals. This can include concrete actions, such as managers assigning work to teams of employees rather than individuals or creating mentorship programs. It can also include non-work activities that build trust and comeraderie, such as scheduling shared lunch breaks or volunteer activities that a whole division participates in.

Employees should be encouraged and trained to work together with camaraderie and trust toward common goals. The benefits of teamwork, such as problem-solving, the development of innovative ideas, and improved productivity, should be demonstrated to the workforce.

Training and Education

A company that requires entry-level employees to already have a master's degree has already limited its workforce and demonstrated that it doesn't prioritize training its employees. One that provides the means to improve their skills while on the job, however, demonstrates that it prioritizes a culture of education and advancement for its employees. This allows the vision and goals of the company can be more reliably reached.

A culture of training and education doesn't just improve the functioning of systems within the company. It can also provide employees with a concrete path to new opportunities, allowing them to advance their careers within the companies. This can motivate individuals to learn and do more, as well as improve employee retention.

Innovation is exciting and can underscore the spirit of a company's vision. It can instill pride, confidence, and loyalty in the workforce.

There are multiple levels at which a company can prioritize a culture of innovation. There can be innovation within the products and services it produces, which encourages a culture in which employees listen to and value customer feedback on existing offerings. There can also be innovation of internal company systems, such as embracing new data management techniques or marketing platforms. These types of innovations signal a culture that responds to employee feedback and needs.

Some industries encourage a culture of innovation that embraces the "next thing" as a way of creating, rather than responding to, customer needs. This kind of innovation can be costly, leading to steep losses, investor panic, and loss of employees. For example, Meta Inc. attempted to build and brand its "metaverse" project as the next tech innovation. But consumer demand for the metaverse wasn't present, and the company lost more than $45 billion from 2020 to 2024. Facebook had overhired during that time, in part to build up its metaverse division, and had to begin laying off thousands of employees from 2022 to 2024.

Leadership is one of the most important aspects of corporate culture because leadership sets the tone for the entire company's practices and values. A company's management, including C-suite executives, should be accessible and open to providing assistance that supports all employees.

A company may say that it prioritizes mentorship and advancement, for example. But if none of its executives make time to mentor their direct reports, that aspect of corporate culture doesn't exist in practice.

If, however, executives make mentoring managers a regular and visible practice, this will encourage managers to mentor their direct reports in turn. This not only helps employees feel encouraged and valued, but it also creates a pipeline of employees who are trained and ready to rise into new management positions.

How to Develop a Corporate Culture

There is no single strategy for building a corporate culture because of the inherent differences between companies, industries, and people. However, the basic steps below may help you envision a corporate culture that spells success for your employees, clients, and company.

• Define a company's vision, values, and behaviors.
• Gather feedback from employees about your company's values, ideas, and work methods to improve the workplace environment and performance.
• Use small discussion groups, surveys, brown bag lunch meetings , or town hall-type meetings to engage your employees and give them a voice.
• Establish methods, such as training at regular intervals, to communicate company values/behaviors and determine how well they are understood.
• Employ high-quality internal communications about company goals, the working environment, and employees' roles in the company's success.
• Establish guidelines that reinforce company values, e.g., a rule that employees should not be disturbed by work phone calls, emails, or texts during vacations or other types of time off.
• Recognize employees in a positive and public manner as a reward for their contributions to corporate success.
• Ensure that management maintains a consistent behavioral approach to operations rather than cutting corners when convenient.
• Prioritize approachable leadership so that all employees may address their concerns and feel connected and valued.
• Foster teamwork rather than silos and isolation.
• Set goals for diversity and inclusion; celebrate the differences among people as you encourage consistent behavior from all.

What's Meant By "Corporate Culture"?

"Corporate culture” refers to the values, beliefs, and practices associated with a particular corporation. Corporate culture might be reflected in the way a corporation hires and promotes employees or in its corporate mission statement. For example, a company may seek to associate itself with a specific set of values, such as by defining itself as an innovative or environmentally-conscious organization.

What Are Some Examples of Corporate Culture?

There are many examples of companies with well-defined corporate cultures. Alphabet Inc., for example, is known for its employee-centric culture and its emphasis on working in a creative and flexible environment, whereas Amazon is known for its relentless pursuit of customer service and operational efficiencies. Often, national cultures will play a role in determining the kind of corporate culture that is prevalent in society. For example, Japanese corporations are known for having corporate cultures that emphasize structured hierarchies and long hours, which are markedly different from those of American or European companies.

Why Is Corporate Culture Important?

Corporate culture is important because it can support important business objectives. Employees, for example, might be attracted to companies whose cultures they identify with, which in turn can drive employee retention and new talent acquisition. Fostering a culture of innovation can be critical to maintaining a competitive edge with respect to patents or other forms of intellectual property. Similarly, corporate culture can also play a role in marketing the company to customers and to society at large, thereby doubling as a form of public relations.

Corporate culture has become a vital, even essential, ingredient in the ongoing success of a business. It represents the values, beliefs, and goals of a company, as well as the consistent behavior expected from all employees, from top to bottom.

Corporate culture is an important key to attracting and retaining employees. It can also support high-quality employee performance, ongoing achievement, and the longevity of a company.

Inc. " Corporate Culture ."

ET HR World. " Organisational Culture: Which Type Best Defines Your Company? "

Deloitte. " Core Beliefs and Culture Chairman's Survey Findings ."

NPR. " Nearly 25,000 Tech Workers Were Laid Off In the First Weeks of 2024. Why Is That? "

San Francisco Examiner. " We've Baked Too Many Muffins On a Monday": Google Cuts Back Employee Perks ."

Harvard Business Review. " Six Components of a Great Corporate Culture ."

CNBC. " Meta Loses $200 Billion in Value As Zuckerberg Focuses Earnings Call On All the Ways Company Bleeds Cash ."

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Organizational Culture: Definition, Importance, and Development

by Kellie Wong

Updated on June 28, 2023

Create a culture that means business™

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A great organizational culture is the key to developing the traits necessary for business success. And you’ll see its effects in your bottom line : companies with healthy cultures are 1.5 times more likely to experience revenue growth of 15 percent or more over three years and 2.5 times more likely to experience significant stock growth over the same period. Despite this, only 31 percent of HR leaders believe their organizations have the culture they need to drive future business, and getting there is no easy task — 85 percent of organizations fail in transforming their cultures.

This is a comprehensive guide to making culture a major strength of your organization, from what culture is and why it’s important to a roadmap you can follow to create a culture that delivers results time after time.

• What is organizational culture?

Organizational culture is the set of values, beliefs, attitudes, systems, and rules that outline and influence employee behavior within an organization. The culture reflects how employees, customers, vendors, and stakeholders experience the organization and its brand.

Don’t confuse culture with organizational goals or a mission statement, although both can help define it. Culture is created through consistent and authentic behaviors, not press releases or policy documents. You can watch company culture in action when you see how a CEO responds to a crisis, how a team adapts to new customer demands, or how a manager corrects an employee who makes a mistake.

• What is the importance of culture to your company?
• Improve recruitment efforts – 77% of workers consider a company’s culture before applying
• Improve employee retention – culture is one of the main reasons that 65% of employees stay in their job
• Improve brand identity – 38% of employees report wanting to change their job due to poor company culture
• Improve engagement – companies with a positive culture have up to 72% higher employee engagement rate

Organizational culture affects all aspects of your business, from punctuality and tone to contract terms and employee benefits. When workplace culture aligns with your employees, they’re more likely to feel more comfortable, supported, and valued. Companies that prioritize culture can also weather difficult times and changes in the business environment and come out stronger.

Culture is a key advantage when it comes to attracting talent and outperforming the competition. 77 percent of workers consider a company’s culture before applying, and almost half of employees would leave their current job for a lower-paying opportunity at an organization with a better culture. The culture of an organization is also one of the top indicators of employee satisfaction and one of the main reasons that almost two-thirds (65%) of employees stay in their job.

Consider Microsoft and Salesforce. Both technology-based companies are world-class performers and admired brands, and both owe this in part to prioritizing culture. Microsoft, known for its cut-throat competitiveness under Steve Balmer, has been positively transformed by Satya Nadella, who took over as CEO of the company in 2014. He embarked on a program to refine the company culture, a process that upended competitiveness in favor of continuous learning. Instead of proving themselves , employees were encouraged to improve themselves . Today Microsoft’s market cap flirts with $1 trillion and it is again competing with Apple and Amazon as one of the most valuable companies in the world.

Salesforce puts corporate culture front and center and has experienced incredible growth throughout its history . Marc Benioff, Salesforce’s founder and CEO, established philanthropic cultural norms that have guided the company over the past two decades. All new Salesforce employees spend part of their first day volunteering and receive 56 hours of paid time to volunteer a year. This focus on meaning and mission has made Salesforce one of the best places to work in America according to Fortune , and it hasn’t compromised profits either: Salesforce’s stock price has surged year after year at an average of over 26% annually to date.

Read about how organizations can create a culture of belonging at work.

How do you improve organizational culture?

Key ways to improve organizational culture include:

• Connect employee work to a purpose
• Create positive employee experiences
• Be transparent and authentic
• Schedule regular and meaningful 1:1s
• Encourage frequent employee recognition

• Qualities of a great organizational culture

Every organization’s culture is different, and it’s important to retain what makes your company unique. However, the cultures of high-performing organizations consistently reflect certain qualities that you should seek to cultivate:

•  Alignment comes when the company’s objectives and its employees’ motivations are all pulling in the same direction. Exceptional organizations work to build continuous alignment to their vision, purpose, and goals.

•  Appreciation can take many forms: a public kudos, a note of thanks, or a promotion. A culture of appreciation is one in which all team members frequently provide recognition and thanks for the contributions of others.

•  Trust is vital to an organization. With a culture of trust , team members can express themselves and rely on others to have their back when they try something new.

•  Performance is key, as great companies create a culture that means business . In these companies, talented employees motivate each other to excel, and, as shown above, greater profitability and productivity are the results.

•  Resilience is a key quality in highly dynamic environments where change is continuous. A resilient culture will teach leaders to watch for and respond to change with ease.

•  Teamwork encompasses collaboration, communication, and respect between team members. When everyone on the team supports each other, employees will get more done and feel happier while doing it.

•  Integrity , like trust, is vital to all teams when they rely on each other to make decisions, interpret results, and form partnerships. Honesty and transparency are critical components of this aspect of culture.

•  Innovation leads organizations to get the most out of available technologies, resources, and markets. A culture of innovation means that you apply creative thinking to all aspects of your business, even your own cultural initiatives .

•  Psychological safety provides the support employees need to take risks and provide honest feedback. Remember that psychological safety starts at the team level, not the individual level, so managers need to take the lead in creating a safe environment where everyone feels comfortable contributing. Now that you know what a great culture looks like, let’s tackle how to build one in your organization.

• 8 steps to building a high-performing organizational culture

Creating a great organizational culture requires developing and executing a plan with clear objectives that you can work towards and measure. The 8 steps below should serve as a roadmap for building a culture of continuity that will deliver long-term benefits across your company.

1. Excel in recognition

Recognizing the contributions of all team members has a far-reaching, positive effect on organizational culture. Experts agree that when an organization makes appreciating employees part of its culture, important metrics like employee engagement, retention, and productivity improve.

Making recognition part of your culture means it should be frequent, not something saved for milestones or work anniversaries. Companies who invest in consistent social recognition see a remarkable business impact : they are four times more likely to increase stock prices, twice more likely to improve NPS scores, and twice more likely to improve individual performances.

Monetary recognition is valuable as well. Consider a points-based recognition program that will allow employees to easily build up point balances that can be redeemed for a reward that’s meaningful to them.

To nurture organizational culture, recognition should be clearly tied to company values and specific actions and supported by leadership. After all, 92 percent of employees agree when they’re recognized for a specific action, they’re more likely to take that action again in the future.

Last but not least, leadership needs to take center stage in your recognition efforts, as they’re the cultural trendsetters for your entire company. Incorporate a recognition talk track into your leadership training and share top tips with managers on how to recognize others and why it matters.

2. Enable employee voice

Creating a culture that values feedback and encourages employee voice is essential. Failing to do so can lead to lost revenue and demotivated employees .

First, collect feedback using listening tools that make it easy for employees to express what they’re feeling in the moment, like pulse surveys and workplace chatbots . Then, analyze the results and take action while the findings are relevant. This strengthens your culture and leads to benefits like higher employee fulfillment and greater profitability. According to a Clutch survey, 68 percent of employees who receive regular feedback feel fulfilled in their jobs, and Gallup found that organizations with managers who received feedback on their strengths showed 8.9 percent greater profitability. And watch for more subtle expressions of feedback, like body language. Managers should treat all conversations with employees as opportunities to gather and respond to feedback and act as a trusted coach.

3. Make your leaders culture advocates

Building a strong workplace culture is in the hands of team leaders and managers. If your workplace culture prioritizes certain values and your leadership team doesn’t exemplify them — or displays behaviors that go against them — it undermines the effort. Team members will recognize the dissonance between stated values and lived behaviors. They may even start to emulate negative behaviors, believing they are rewarded by management.

Your leadership team can help build the right culture by prioritizing it in every aspect of their work lives . This includes openly discussing the organization’s culture and values and incorporating employee feedback into their cultural advocacy efforts. While 76 percent of executives believe their organization has a well-communicated value system, only 31 percent of employees agree. When employees see leaders living your culture, they’ll follow suit.

4. Live by your company values

Your company’s values are the foundation of its culture. While crafting a mission statement is a great start, living by company values means weaving them into every aspect of your business. This includes support terms, HR policies, benefits programs, and even out-of-office initiatives like volunteering. Your employees, partners, and customers will recognize and appreciate that your organization puts its values into practice every day. You can also recognize employees for actions that exemplify your values to show that they’re more than just words and incentivize employees to build the value-based culture you want to see.

5. Forge connections between team members

Building a workplace culture that can handle adversity requires establishing strong connections between team members, but with increasingly remote and terse communication, creating those bonds can be challenging. Encouraging collaboration and engaging in team building activities — even when working remote — are two effective ways to bring your team together and promote communication.

Look for and encourage shared personal interests between team members as well, especially among those from different generations that might otherwise have a difficult time relating to each other. This can create new pathways for understanding and empathy that are vital to improving communication, creativity, and even conflict resolution.

6. Focus on learning and development

Great workplace cultures are formed by employees who are continually learning and companies that invest in staff development. Training initiatives , coaching, and providing employees with new responsibilities are all great ways to show your team that you’re invested in their success.

Workplace Coaching: What is it and how is it effective?

A culture of learning has a significant business impact. Find Courses’ most recent benchmark study found that companies with highly engaged employees were 1.5 times more likely to prioritize soft skills development. It also found that companies that had experienced revenue growth in the previous financial year were twice more likely to use innovative learning technologies and three times more likely to increase their learning and development budgets.

7. Keep culture in mind from day one

When an employee’s perspective doesn’t match your company culture, internal discord is likely to be the result. Organizations should hire for culture and reinforce it during the onboarding process and beyond. Practices and procedures must be taught, and values should be shared.

When hiring, ask questions focused on cultural fit , like what matters to the interviewee and why they’re attracted to working at your company. But these questions shouldn’t be the sole determining factor when evaluating a candidate, as the best organizations keep an open mind to diverse perspectives that can help keep their culture fresh.

You should also prioritize building social relationships during the onboarding process so that employees have the insight necessary to understand your company’s culture and values. These relationships will last throughout the employee’s time at the company, so that cultural values are mutually reinforced on a continuous basis.

8. Personalize the employee experience

As modern consumers, your employees expect personalized experiences , so you need to focus on ways to help each team member identify with your culture. Tools like pulse surveys and employee-journey mapping are great ways to discover what your employees value and what their ideal corporate culture looks like. Take what you learn and tailor your actions to personalize the employee experience for your team. Once you start treating your employees with the same care you treat your customers , a culture that motivates each individual at your organization is sure to follow.

Developing culture made easy

Organizational culture will develop even without your input, but in the absence of that guidance, it may not be healthy or productive. Keep these three basic techniques in mind when developing your company culture: communication, recognition, and action. By following the steps in this guide, you can improve communication with employees, start creating a culture of recognition, and ensure that all members of your team put your culture into action.

Your company can start practicing all three techniques with Achievers Recognize and Achievers Listen . With Achievers Recognize, your organization can leverage points-based and social recognition and create a fun and easy user experience for employees. With Achievers Listen, employees can give you valuable feedback through check-ins and pulse surveys, so you can see what aspects of your culture are working and what needs tweaking.

To learn more culture insights and techniques, access our webinar with Achievers’ Chief Workforce Scientist, Dr. Natalie Baumgartner. She shares how an aligned, thoughtful culture connects the workforce, motivates employees, and provides a cause to rally behind.

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The Great Recognition: How to Build a Thriving Culture to Win in the Future of Work

Organizational Culture FAQ

What are examples of organizational culture.

An organization’s culture is reflected in their actions and processes. Examples include:

• Interview process: Whether a company focuses on technical skills or puts more weight on a culture fit is reflective of their organizational culture.
• Commitment to DE&I: If an organization outlines its policies and practices around DE&I publicly, you can expect that to be a strong element of its culture.
• Wellness incentives: Companies who care about their employees’ mental and physical well-being often offer perks like: subsidized gym memberships, tuition reimbursement, paid sabbaticals, and subsidized transportation.

Why is changing organizational culture important?

Changing an organization’s culture is important because it can help a business stay competitive, attract top talent, innovative new products or services, and create a positive workplace that promotes collaboration.

Can an organization change its culture?

Yes, an organization can change its culture, but it takes time. Doing so requires support from leadership and a human-centric approach that is reflected in all organizational systems and practices and is reinforced through recognition and rewards programs.

How does changing organizational culture affect employees?

Changing an organization’s culture is often challenging, but when it’s achieved, employees will adopt new behaviors, attitudes, and work ethics that align with the goals and values desired by the organization.

How does leadership influence organizational culture?

Leaders influence organizational culture by creating and reinforcing organizational culture and workplace norms. They do this through their actions and reactions, which set an example for employees to follow.

Why do different organizations have different cultures?

What are the 4 main types of organizational culture.

Understanding an organization’s culture helps you identify what makes it unique. The four types of organizational culture are:

• Clan Culture : Cross-teams collaboration with a horizontal structure.
• Adhocracy Culture : Individuals share ideas and encourage the company to take risks.
• Market Culture : Focuses on financial success and how each employee contributes.
• Hierarchy Culture : Emphasis on career paths and clear managerial processes.

In this article:

• Organizational culture FAQ

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The Importance of Organizational Culture Essay

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What is organizational culture and why is it essential for a healthy and strong organization that works efficiently? The organizational culture essay below answers these questions. It focuses on the characteristics and benefits of the issue.

Introduction

Organizational culture is an important aspect of achieving organizational success. Every manager should strive to develop an organizational culture that will facilitate easy transformation of the organization through change embracement y employees. However, managers face challenges such as change resistance by employees.

Resistance to change is caused by fear of learning new skills, fear of new and additional responsibilities, fear of power shift, leadership, or management, and fear of stress that results from change (Hirschhorn ,2002). Organizational culture and change is most valuable to an aspiring manager because it they form the basis of organizational success.

They determine employees’ job satisfaction, motivation, and commitment towards achievement of organizational goals and objectives. Developing an appropriate organizational culture that guarantees success is difficult. However, aspiring managers should strive towards developing it because without it, organizational success remains a mirage.

Why Is Organizational Culture Important?

Managers should work towards introducing change in the organization to hasten achievement of organizational goals (Hirschhorn, 2002). Resistance to change by employees is the main challenge encountered by managers during the process of introducing change. However, with an appropriate strategy, managers can introduce change effectively and efficiently without causing chaos.

According to Hirschhorn (2002), change can be successfully introduced using three different campaign strategies. These include political, marketing, and military campaigns. The three campaigns combine different strategies to facilitate introduction of change in an organization.

Political campaign facilitates development of change initiatives through formation of a coalition that supports and guides change initiative (Hirschhorn, 2002).

A marketing campaign focuses on employee’s feelings and attitudes towards change by explicating potential benefits of embracing and executing change. On the other hand, a military campaign facilitates channeling of management’s attention and time to the change initiative (Hirschhorn, 2002).

Organizational culture determines level of employee job satisfaction, which is an ingredient of organizational success. Organizational culture affects employees’ attitudes, behaviors, and performance at the workplace. One of the characteristics of an efficient organizational culture is a satisfying workplace. A satisfying workplace is one of the strategies implemented by managers to improve job satisfaction.

To improve job satisfaction, management reform is necessary (Yang and Kasssekert, 2009). Examples of such reforms include Titl5 Exemption, contracting out, and managing for results. Under Title 5 exemption, managers should strive towards increasing managerial prudence in improving efficiency of human resource management (Yang and Kasssekert, 2009).

They should include performance rewards, introduction of simple hiring procedures, and workforce restructuring. On the other hand, contracting out is important because it reduces costs, improves quality of service delivery, increases efficiency, and increase job satisfaction (Yang and Kasssekert, 2009).

In addition, mangers should create an environment that encourages employees to trust in the leadership of the organization. Performance appraisal should strive towards improving employees’ performance and not victimizing them.

According to Kegan and Lahey (2001), it is important for managers to understand why employees resist change in order to introduce it without causing chaos. They argue that change to resistance is because of a phenomenon referred to as competing commitment. Effective management strives towards assisting employees subdue limitations that prevent them from embracing change.

This includes involving employees in diagnosing causes of immunity to change (Kegan and Lahey, 2001). Competing commitments are both a problem to employees and managers. Eradicating resistance to changes starts with uncovering employees’ competing commitments.

One aspect of competing commitments is assumptions. Employees need to realize that assumptions determine their reality and should strive to question them (Kegan and Lahey, 2001).

Employee empowerment is another factor that contributes to a strong organizational culture. However, without an effective work environment and good leadership, employee empowerment is impossible. Empowered employees are committed to achieving organizational goals by improving performance and embracing innovation (Fernandez and Moldogaziez, 2012).

Benefits of employee empowerment include quick retraction from errors, learning from mistakes, and development of innovative ways of service delivery (Fernandez and Moldogaziez, 2012). Empowered employees work harder and smarter thus improving performance. They thus exhibit flexibility in task execution.

Change is also important in enhancing employee performance because of the uncertainty of the modern business environment. Therefore, change is an important aspect of ensuing organizational adaptability to change. Employees must be able to adapt to change to enhance organizational survival and sustainability (Fernandez and Moldogaziez, 2012).

Change encourages innovation because it introduces new ways and procedures of doing things. It is imperative for managers to introduce change in the organization to encourage innovation and achievement of organizational goals.

Organizational culture and change are important aspects of achieving organizational success. They are valuable to aspiring managers in the public sector because of several reasons. They encourage innovation, improve employee performance, and enhance the efficiency of an organization. A strong organizational culture enhances job satisfaction among employees.

On the other hand, change encourages innovation, which helps an organization survive in the highly uncertain modern business environment. Employee empowerment and job satisfaction are core factors that determine level of organizational success. Any aspiring manager should focus managerial efforts towards creating a strong organizational culture and introducing change in the organization.

Fernandez, S., and Moldogaziev, T. (2012). Using Employee Empowerment to Encourage Innovative Behavior in the Public Sector. Journal of Public Administration and Theory , 13, 1-33.

Hirschhorn, L. (2001). Campaigning for Change. Harvard Business Review , 12(4), 98- 104.

Kegan, R., and Lahey, L. (2001). Real Reason People Won’t Change. Harvard Business Review , 4(3), 84-92.

Yang, K., and Kasssekert, A. (2009). Linking Management Reform with Employee Job Satisfaction: Evidence from Federal Agencies. Journal of Public Administration and Research Theory , 20, 413-436.

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Workplace Dynamics

What is organizational culture and why is it important, here's how to transform your workplace culture to skyrocket performance..

Posted December 9, 2023 | Reviewed by Ray Parker

• Organizational culture is the collective mindsets and behaviors of a company.
• A positive workplace culture increases employee engagement, motivation, and retention.
• The seven strategies for creating a positive culture include celebrating achievements to boost morale.

Organizational culture is like the personality of an organization. It's about how everyone, from leaders to the newest hires, thinks and acts. It shapes how work gets done and how people treat each other.

Organizational culture includes the unwritten rules and shared beliefs that guide people's behavior. For instance, a company that values open communication might have meetings where everyone is encouraged to speak their mind, leading to better ideas and stronger performance.

Alternatively, if an organization has a culture where only the most senior employees' ideas are welcomed in meetings, it might lead to frustration and apathy for everyone else because others may feel their voice doesn't matter.

Culture: The Unique DNA of Every Organization

Culture is the underlying DNA of every organization—it's what makes employees feel connected and invested in their jobs. When a company has a strong, positive culture, it can foster greater engagement, which means people care more about their work and go the extra mile. Positive cultures boost motivation , leading people to do their best and be happier in their jobs. Such feelings of connection and satisfaction can lead them to stay longer with the company, reducing turnover and building a strong, experienced team.

When a culture encourages new ideas and open-mindedness, employees are more likely to come up with the kind of breakthroughs that can change the game for a business. In such an environment, teams work better together, share more ideas, and push each other to be the best they can be, which often leads to greater success for the whole organization.

Seven Strategies for Creating Positive Organizational Cultures

There are many ways to foster a positive business culture. Managers and leaders can focus on the following:

Vision and Mission Clarity : A compelling vision and mission statement act as the psychological contract with employees, offering a clear narrative about what the company stands for and its aspirations. When a company like Google pledges to "organize the world's information," it sends a powerful message about its purpose, aligning the workforce towards a common goal. Leaders can facilitate workshops and discussions to ensure these statements resonate deeply with every team member, thereby internalizing these guiding principles.

Values in Action: Core values are the psychological pillars of an organization's culture. When the online retailer Zappos emphasizes "delivering WOW through service," it's not just a statement but a call to action that employees live by so they deliver exceptional service. Leaders can make these values tangible by embedding them into performance reviews, hiring criteria, and daily operations, ensuring they're not just words on a wall but principles that drive decision-making and behavior. It's also important that leaders themselves act in a way that's consistent with the values they want to see enacted more broadly.

Habitual Practices: The power of culture is often expressed in the small, repeated actions that become habitual. For example, Pixar's practice of holding candid "braintrust" meetings where creative ideas are dissected and debated creates an environment where innovation is routine. Leaders can create rituals or regular meetings that reinforce openness and collaboration , turning them into powerful symbols that reinforce the organization's culture.

Learning and Development: Cultures that prioritize learning communicate to employees that growth is both expected and supported. Amazon's " Career Choice" program is a testament to its investment in employee development, covering tuition for in-demand fields. Leaders can foster a culture of learning by actively investing in employee development and creating clear pathways for career advancement.

Psychological Safety: At the heart of a thriving culture is the sense of psychological safety, a term coined by Harvard University professor Amy Edmondson, which describes an environment where individuals feel comfortable expressing themselves without fear of retribution. Google, for example, found that its teams with high psychological safety were more successful than those with lower psychological safety. Leaders can cultivate this by modeling vulnerability, encouraging open dialogue, and celebrating learning from failures.

Recognition and Rewards: A culture that celebrates achievements—both big and small—can significantly boost morale and productivity . Salesforce, through its "Ohana Culture," has created a sense of community and belonging where recognition is part of the everyday experience. Leaders can implement recognition programs that allow peers to acknowledge each other's contributions, making recognition a regular part of the organizational rhythm.

Agility and Resilience : The most adaptable cultures are those that embrace change. Leaders can promote agility by encouraging a mindset of continuous learning and by designing systems that are flexible and responsive to feedback, ensuring the organization can navigate and thrive amidst disruptive change.

Creating a High-Performance Culture

Creating a culture that promotes high performance requires a deep psychological understanding of human behavior within a business context. By carefully crafting and nurturing the elements that constitute culture, leaders can foster an environment that not only drives innovation and high performance but also leads to a sense of purpose and belonging among its members. Building a cohesive community focused on achieving purposeful goals is a critical imperative for making organizations and the world a better place.

https://www.nytimes.com/2016/02/28/magazine/what-google-learned-from-it…

Edmondson, Amy and Lei, Zhike (2014). Psychological Safety: The History, Renaissance, and Future of an Interpersonal Construct, Annual Review of Organizational Psychology and Organizational Behavior, Vol. 1:23-43.

Kaplan, S. (2017). The invisible advantage: How to create a culture of innovation . Greenleaf Book Group Press.

Soren Kaplan, Ph.D. , is an author, keynote speaker, leadership development consultant, and affiliate at the Center for Effective Organizations at the University of Southern California.

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10 Things Your Corporate Culture Needs to Get Right

Knowing what elements of culture matter most to employees can help leaders foster engagement as they transition to a new reality that will include more remote and hybrid work..

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In April 2021, nearly 4 million Americans quit their jobs — the highest monthly number ever recorded by the Bureau of Labor Statistics. 1 Employee retention is on the mind of every chief human resources officer, but culture is on the minds of the employees that companies are trying to retain. In a recent study, nearly two-thirds of employees listed corporate culture among the most important reasons they stay with their current employer — or start looking for another job. 2 Another study found culture is the single best predictor of employee satisfaction, ahead of compensation and work-life balance. 3

Our multiyear research into corporate culture using Glassdoor data reveals that cultures vary widely in quality in the eyes of their employees. When people create a review on Glassdoor, they rate their employer’s culture and values on a scale of 1 to 5. We analyzed the average culture score for companies in the Culture 500 — a sample of large organizations, mostly based in the United States. The typical company has an average culture rating of 3.6, but scores ranged widely — from 2.1 to 4.8 on a 5-point scale.

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What distinguishes a good corporate culture from a bad one in the eyes of employees? This is a trickier question than it might appear at first glance. Most leaders agree in principle that culture matters but have widely divergent views about which elements of culture are most important. In an earlier study , we identified more than 60 distinct values that companies listed among their official “core values.” 4 Most often, an organization’s official core values signal top executives’ cultural aspirations, rather than reflecting the elements of corporate culture that matter most to employees.

Which elements of corporate life shape how employees rate culture? To address this question, we analyzed the language workers used to describe their employers. When they complete a Glassdoor review, employees not only rate corporate culture on a 5-point scale, but also describe — in their own words — the pros and cons of working at their organization. The topics they choose to write about reveal which factors are most salient to them, and sentiment analysis reveals how positively (or negatively) they feel about each topic. (Glassdoor reviews are remarkably balanced between positive and negative observations.) By analyzing the relationship between their descriptions and rating of culture, we can start to understand what employees are talking about when they talk about culture.

We analyzed a total of 1.4 million employee reviews using the Natural Employee Language Understanding platform developed at CultureX, a company we cofounded. This natural language processing tool is optimized for a single task: understanding employee feedback. Specialization enables us to classify free text with more than 90% accuracy into over 150 topics while picking up business jargon, idioms, acronyms, and slang.

To identify which factors were most important in predicting a company’s overall culture score, we calculated the SHAP (Shapley additive explanations) value for each topic. SHAP values are based on a game-theoretic model developed by Nobel laureate Lloyd Shapley. This approach analyzes all possible combinations of features in a predictive model to estimate the marginal impact that each feature has on the outcome — in our case, which cultural elements have the biggest impact in predicting a company’s overall culture rating. 5

Before reading on, you may want to pause and consider which aspects of culture you would expect to predict a company’s culture score. The actual results may surprise you. Topics that you might expect to matter, such as friendly colleagues, flexible schedules, and manageable workloads, were commonly discussed but had little or no impact on a company’s overall culture score. (See “The 10 Elements of Culture That Matter Most to Employees.”)

The following chart summarizes the factors that best predict whether employees love (or loathe) their companies. The bars represent each topic’s relative importance in predicting a company’s culture rating. 6 Whether employees feel respected, for example, is 18 times more powerful as a predictor of a company’s culture rating compared with the average topic. We’ve grouped related factors to tease out broader themes that emerge from our analysis.

1. Employees feel respected. The single best predictor of a company’s culture score is whether employees feel respected at work. Respect is not only the most important factor, it stands head and shoulders above other cultural elements in terms of its importance. Respect is nearly 18 times as important as the typical feature in our model in predicting a company’s overall culture rating, and almost twice as important as the second most predictive factor.

The strong and varied language employees use to describe disrespect suggests how deeply it affects them. Employees describe being demeaned and degraded; viewed as disposable cogs in a wheel or robots; or treated like children, second-class citizens, crap, garbage, dirt, trash, scum, idiots, or cattle.

Respect for employees varied by industry. (See “How Employees Talk About Respect in Their Companies by Industry.”) In sectors with a high percentage of professional and technical workers — such as management consulting, enterprise software, and semiconductors — employees were less likely to mention respect compared with all industries (horizontal axis) — and when they did discuss respect, the sentiment was more positive (vertical axis). In industries with a large number of front-line employees — including casual restaurants, grocery stores, and specialty retailers — workers were more likely to mention respect and talk about it in negative terms than were employees in other industries.

Industry is not destiny, however, when it comes to a culture of respect. Even in low-scoring sectors like grocery stores, some companies, including Wegmans, Trader Joe’s, and HEB, stand out for their high levels of employee respect and overall strong cultural ratings. In future research in this series, we will explore which elements of culture distinguish companies that create a healthy culture for their front-line employees.

Nearly half of employees mention management in their reviews, and their collective assessment of the top leadership team is a particularly strong predictor of a company’s culture rating — four times more important than the average topic and twice as important as discussions of an employee’s immediate boss. When it comes to corporate culture, it seems, employees assign more of the credit (or blame) to the C-suite than to their direct boss. And this makes sense. The C-suite is responsible for several of the factors that matter most to employees’ assessment of culture — including benefits, learning and development opportunities, job security, and reorganizations.

Our platform categorizes employee feedback into more than 50 distinct ways leaders are described, including whether they are empowering, organized, emotionally stable, or friendly. Among all of these leadership traits, a few stood out as the best predictors of a company’s culture rating.

2. Supportive leaders. Of all the ways employees describe their managers, the most important predictor of a company’s culture score is whether managers support their employees. Employees describe supportive leaders as helping them do their work, being responsive to requests, accommodating employees’ individual needs, offering encouragement, and having their backs. Leaders, of course, influence all aspects of culture, but being a source of support for employees is especially critical and is the leadership trait most closely associated with a highly rated culture.

3. Leaders live core values. In an earlier article , we found no correlation, on average, between a company’s official culture and how well core values are practiced on a day-to-day basis. 7 Employees are generally (and rightly) cynical about their employer’s core value statements and don’t expect leaders to live these values. When employees complain that “managers pay lip service to core values“ or “a wide gap exists between cultural rhetoric and reality,” their negative sentiment doesn’t ding the company’s culture score much. When employees praise leaders who “walk the talk” or “practice what they preach,” in contrast, their positive assessment provides a big boost to a company’s culture score. Employees don’t expect leaders to live the core values, but they appreciate it when they do.

4. Toxic managers. At the other end of the spectrum from supportive leaders who live the core values are managers whom employees describe as “horrible,” “poisonous,” or “toxic,” among other extremely negative terms. Toxic leadership can take many forms, but employees who describe managers as toxic are also more likely to say they are abusive, disrespectful, noninclusive, or unethical.

5. Unethical behavior. This is a particularly dangerous form of toxic management. Integrity is the cornerstone of most organizations’ official culture — nearly two-thirds of all companies list integrity or ethics among their official core values. 8 Integrity also matters to employees — ethical behavior is more than twice as predictive of a company’s culture rating than the average topic. Pockets of unethical behavior, unfortunately, remain a reality in many organizations. A recent study of managers in brokerage firms found that nearly 10% of them had been involved in financial misconduct, and unethical managers increased the odds that their subordinates would cheat as well. 9

Identifying toxic leaders, digging deeper to understand the context of their behavior , coaching them, or removing them from leadership positions are tangible actions organizations can take to root out people who are undermining corporate culture and potentially exposing the company to reputational or legal risk.

Compensation and Benefits

6. Benefits. When it comes to predicting a company’s culture score, benefits are more than twice as important as compensation. Benefits are important for all employees, but which benefits matter most depend on an employee’s job. Health insurance and benefits are a better predictor of culture rating for front-line workers, while retirement benefits such as 401(k) plans and pensions matter more for white-collar employees.

We are not, of course, arguing that compensation doesn’t matter. Leaders may want to raise compensation, particularly for front-line employees, because it’s the right thing to do — a 2019 study found that 44% of U.S. families did not earn enough to cover their living expenses. 10 Recent research shows that compensation is at least as important as culture in retaining employees, particularly among younger workers. 11 Compensation matters, but it won’t fix a broken culture.

7. Perks. Employees mention nearly 450 different types of perks in their reviews, ranging from arcades to Zumba classes. Among amenities mentioned by more than 50 employees, however, coffee truly is the central perk, with discounted coffee rated positively over 97% of the time. (If you consider less common perks, unlimited meals, onsite breakfast, and free wine have a 100% positive sentiment among employees.)

Employees don’t necessarily expect perks, but they do appreciate them when they’re offered. If a small percentage of employees mention perks, a company’s culture score does not suffer much. When more workers talk about perks, in contrast, companies see a big jump in their culture rating.

Among perks, company-organized social events are a particularly strong predictor of a high culture score. Even when you control for how employees talk about perks in general, social events like team-building exercises, happy hours, and picnics emerge as a reliable predictor of a high culture score. Organizing social events is a promising and relatively low-cost way executives can reinforce corporate culture as employees return to the office.

8. Learning and development. Nearly one-third of all employees mention opportunities for education or personal development in their reviews, making this the third most frequently discussed topic (after management and compensation). Employees in Culture 500 companies are extremely positive about programs to match or reimburse college tuition and opportunities for exposure to senior executives, particularly early in their careers. The analysis also shows that learning and development benefits are relatively more important to white-collar workers than front-line employees.

Job Security and Reorganizations

9. Job security. Managers don’t typically think of job security as part of corporate culture — in our earlier study of how companies describe their core values, not one listed job security. Job insecurity, however, weighs heavily on employees’ minds when they assess corporate culture. The larger the percentage of employees who talked about layoffs, outsourcing, or the possibility of getting fired, the lower the company ranked on culture.

Related Articles

10. Reorganizations. Virtually no one has any good things to say about reorganizations. In the Culture 500 sample, employees talked about reorganizations in negative terms 97% of the time. The fewer people who mention reorganizations, the higher a company’s culture score. While you might associate the mention of reorganizations with layoffs and job instability (and there is moderate correlation here), the data reveals that employee concerns on this issue speak to wider strategic issues for companies. When employees mention reorgs, they are much more likely to also discuss the pace of organizational change as too fast, inconsistency in strategy over time, and a lack of clarity about the company’s evolving strategy.

Leaders face a series of challenges while navigating the post-COVID-19 return to work. They must retain star employees, attract new recruits, and maintain a healthy culture as the workforce adjusts to a new reality that will include more remote and hybrid work. Understanding the elements of culture that matter most to employees can help leaders maintain employee engagement and a vibrant culture as they transition to the new normal.

About the Authors

Donald Sull ( @culturexinsight ) is a senior lecturer at the MIT Sloan School of Management and cofounder of CultureX. Charles Sull is a cofounder of CultureX.

1. I. Ivanova, “People Are Quitting Their Jobs at Record Rates. That’s a Good Thing for the Economy.” CBS News, June 21, 2021, www.cbsnews.com.

2. “Mission & Culture Survey Supplement, 2019,” PDF file (Mill Valley, California: Glassdoor, 2019), www.glassdoor.com. The online survey was conducted by the Harris Poll in June 2019 and completed by over 5,000 adults in the U.S., U.K., France, and Germany.

3. A. Stansell, “ Which Workplace Factors Drive Employee Satisfaction Around the World? ” Glassdoor Economic Research, July 11, 2019, www.glassdoor.com.

4. D. Sull, S. Turconi, and C. Sull, “ When It Comes to Culture, Does Your Company Walk the Talk? ” MIT Sloan Management Review, July 21, 2020, https://sloanreview.mit.edu. We reviewed the websites and annual reports of 689 large, mainly U.S. organizations and found 562 that listed official value statements and identified 62 distinct values listed by at least five companies in our sample.

5. We used an XGBoost model to predict the average culture score for the 599 organizations in our sample. Each model included 158 cultural topics. We split each topic into two features and incidence-measured the percentage of total company reviews that mentioned a specific topic. We sentiment-measured the percentage of reviews mentioning a topic that was positive. If fewer than 15 reviews mentioned a topic in a company, we excluded that topic’s sentiment score from our analysis. Imposing a threshold count to calculate topic-level sentiment resulted in missing values for less-frequently discussed topics, and we chose an XGBoost model because it handles missing values well. The model performed well, with an adjusted R2 of 0.81 in the testing set. We used SHAP values to estimate each topic’s relative importance in predicting average culture scores. SHAP values quantify the marginal contribution that each feature makes to reducing the model’s error, averaged across all possible combinations of features, to provide an estimate of each feature’s importance in predicting culture scores. For an accessible discussion of SHAP models, see S. M. Lundberg, G. Erion, H. Chen, et al., “ From Local Explanations to Global Understanding With Explainable AI for Trees ,” Nature Machine Intelligence 2, no. 1 (January 2020): 56-67.

6. Relative importance is calculated by dividing each topic’s SHAP value by the average SHAP value of all 158 topics included as features in our model.

7. Sull, et al., “When It Comes to Culture, Does Your Company Walk the Talk?”

9. Z.T. Kowaleski, A.G. Sutherland, and F.W. Vetter, “ Supervisor Influence on Employee Financial Misconduct ,” SSRN, July 20, 2020 (revised May 21, 2021), https://ssrn.com.

10. S. Liu and J. Parilla, “How Family-Sustaining Jobs Can Power an Inclusive Recovery in America’s Regional Economies,” PDF file (Washington, D.C.: Brookings Metropolitan Policy Program, February 2021), www.brookings.edu.

11. M. Smart and A. Chamberlain, “Why Do Workers Quit? The Factors That Predict Employee Turnover,” PDF file (Mill Valley, California: Glassdoor, February 2017), www.glassdoor.com; and B. Zweig and D. Zhao, “Looking for Greener Pastures: What Workplace Factors Drive Attrition?” PDF file (Mill Valley, California: Glassdoor, 2021), www.glassdoor.com.

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Mohammed robel, david white, kannan raghavan, louise lambert, stuart roehrl.

Corporate Culture: A Review and Directions for Future Research

31 Pages Posted: 3 May 2022

Jillian Grennan

Emory University

University of British Columbia (UBC) - Sauder School of Business; Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR); European Corporate Governance Institute (ECGI); Canadian Sustainable Finance Network (CSFN)

Date Written: April 28, 2022

We define corporate culture as an informal institution typified by patterns of behavior and reinforced by people, systems, and events. Corporate culture is manifest in many elements, but brings unity to employees’ perspectives through the expectations they have for how they need to behave to fit in and succeed in their firm. Advanced measurement techniques that make use of computational linguistics and granular data on companies are allowing researchers to study the dynamics of corporate culture at a level and scale previously impossible. These developments coupled with advances in the conceptualization and theory of corporate culture portend a rich research agenda moving forward. Corporate culture features elements of purposeful design and changes faster than societal culture; as such, one of the first steps in this research agenda is isolating the effects of people, systems, and events that serve as catalysts for cultural change. A richer understanding of the drivers of cultural change both in the short and long run can then serve as a foundation for testing and refuting cultural explanations for business outcomes and economic phenomena. This chapter summarizes this important research agenda and its achievements thus far, and outlines directions for future research.

Keywords: Corporate culture, informal institution, social norms, organizational economics, computational linguistics, intangible assets

JEL Classification: G30, G40, C10

Suggested Citation: Suggested Citation

Emory University ( email )

Rich Memorial Building 1602 Fishburne Dr Atlanta, GA 30307 United States

Kai Li (Contact Author)

University of british columbia (ubc) - sauder school of business ( email ).

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HOME PAGE: http://https://sites.google.com/view/kaili/home

Asian Bureau of Finance and Economic Research (ABFER) ( email )

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China Academy of Financial Research (CAFR) ( email )

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Canadian Sustainable Finance Network (CSFN) ( email )

Queens University Kingston, ON Canada

HOME PAGE: http://https://smith.queensu.ca/centres/isf/research/network.php

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