Company culture 101
As a “culture first” company, Culture Amp understands how important company culture is to all facets of a business – from operations to employee experience to the bottom line. That’s why we, along with tens of thousands of others in our Culture First community, choose to put our people, values, and culture first.
As Culture Amp’s CEO, Didier Elzinga, explains:
“A culture first company is one that builds trust through vulnerability and actively seeks out employee feedback. We foster diversity and inclusion because it’s reflective of the world we want to live in. When making decisions, a Culture First company always considers the impact on people and culture. Rather than seeking perfection, we place value on continuous improvement of both the culture and the individual.”
We define a “culture first company” as a company that puts culture first. But what exactly do we mean by “company culture?”
In this article, we explore the definition of company culture, explain why strong company culture matters, and dive into the six key elements that set “culture first” companies apart.
What is company culture?
Company culture is a set of values and behaviors that define how a company does things internally – in the workplace – and externally – when working with customers and clients. Every company has different goals, expectations, and norms, and these elements combine to constitute a company’s specific culture. The elements of company culture include:
- Mission. The mission defines the goal or outcome your company is committed to achieving. For example, our mission at Culture Amp is to build a better world of work, and we create products and services that will help us achieve this mission.
- Company values. A company’s values define how the company and its people are expected to act and behave. Values represent the core of who you are as a company. Culture Amp’s founders distilled our values into four simple statements. These values are the foundation of our company culture.
- Management structure. Some considerations include: how many levels of hierarchy are there? How do workplace initiatives get implemented (top-to-bottom vs. bottom-up)?
- Work environment. What level of professionalism is expected? How formal or informal are employees expected to be in their interactions with each other and customers? In other words, how are your people expected to present themselves in the workplace?
- Business operations. These are the processes that keep things running in your organization. They include everything from recruiting and onboarding to how you conduct your meetings to your approach to PTO and company holidays.
- Compensation model and promotion structure. A culturally-aligned compensation structure ensures that employees are receiving a consistent message about what’s expected of them. For instance, if your company is trying to foster a collaborative workplace culture, avoid giving end-of-year bonuses to high performers, as this can create a strong sense of competition.
- Diversity, equity & inclusion. The extent to which your company invests in and prioritizes DEI has implications for every aspect of your business. DEI impacts key business decisions and policies, such as hiring (e.g., focusing on increasing diversity in leadership) and compensation (e.g., choosing to pay ERG leaders), which in turn can impact the sense of belonging and diversity of perspectives.
The above list is just the beginning. Many other elements help to shape a given company’s culture, such as the company’s communication style, learning and development opportunities, recognition, and wellbeing.
It’s important to note that company culture is more than free massages, snacks, or ping-pong tables. Be careful not to confuse or conflate these employee perks and benefits with company culture.
Why company culture matters
A positive, engaging, and aligned company culture makes a difference – and not just to employees. Here are some of the benefits of having a strong company culture:
- Higher stock prices. Culture Amp data shows that investing in culture is positively associated with higher company stock prices.
- Lower turnover. A Columbia University study found that the likelihood of turnover at organizations where employees feel high satisfaction with company culture is 13.9%, compared to 48.4% at companies with low satisfaction.
- Better business performance. A Deloitte survey found a “correlation between clearly articulated and lived culture and strong business performance.”
- Higher levels of employee engagement. When employees understand and feel in sync with the company’s beliefs and priorities, they are more engaged. Employee engagement surveys are a valuable tool for measuring the success of your cultural practices.
With these benefits in mind, let’s see which elements are key to creating a great company culture.
The six main elements of a great company culture
In our experience working with over 2,000 companies, Culture Amp has identified six key elements that the most successful culture first companies have in common.
Transparency around company processes, operations, and decisions is critical for building trust and instilling confidence in the organization. Transparency can look like sharing employee engagement survey results with the whole company or implementing transparent performance processes that outline standards for success. You can cultivate a more open and honest work environment by making transparency a crucial part of your company culture.
2) Open communication
Employees want to know that their workplace is a safe place to voice their concerns, ask for and provide feedback, and communicate with their peers, colleagues, and managers. Whether or not employees feel comfortable sharing their thoughts and ideas has vast implications on innovation, collaboration, and employee engagement levels. It’s an essential part of building a healthy company culture.
A great company culture is an inclusive one where all employees of the organization feel a sense of belonging. Employees can’t and won’t feel optimistic about organizational culture if they are alienated or excluded, especially if they feel othered on the basis of their race, ethnicity, religion, sexuality, or other aspects of their identity.
Successful culture-first companies also demonstrate accountability. When employees and leaders take responsibility for their actions, it has a significant impact on their organization’s ability to achieve its goals. Accountability enables individuals and teams to celebrate their successes and recognize where there is room for improvement. Workplace cultures that emphasize accountability experience greater trust, a stronger sense of individual ownership and autonomy, and increased productivity.
5) Values-based decision-making
A company’s mission, vision, and values aren’t just words on paper – they’re guidelines on how an organization should make decisions. Culture-first companies prove to their employees on an ongoing basis that company values genuinely guide internal and external decisions.
6) Leading by example
Company culture is a living thing that grows and evolves alongside the people who work there. This isn’t always a good thing. The company culture can deteriorate if the people – especially managers and executives – aren’t living up to the company’s stated values. Employees generally follow the lead of their managers and senior leadership, so it’s up to company leaders to set an example that reinforces the relevance and integrity of the company's culture.
Every company culture is unique
The six elements listed above can help any company improve its culture, but each company will take a different approach because no two company cultures are the same. To develop and strengthen your company culture, start by clearly defining the company’s vision and values and commit to making those values part of everything you do.
Every company culture changes over time – this is even more true in today’s ever-accelerating world. That’s why our People Scientists crunched the numbers from over 4,500 companies to identify critical trends throughout the company lifecycle to help you maintain company culture as your company grows.