Company culture: Everything HR needs to know

Company culture is central to the employee experience and a critical driver of organizational success – yet it often falls through the cracks as companies focus on their day-to-day business operations. Adding even more complexity is the fact that company culture is often ambiguous, making it difficult to measure and improve.

Read this comprehensive guide to better understand company culture, why it matters, and how to improve it. It digs into the what, why, and how of culture building to provide the clarity you need.

What is company culture?

Company culture is the shared set of values, attitudes, and practices that characterizes how your organization operates. Think of it as the “personality” of your company.

Every organization has different goals, expectations, and norms – and culture describes how the company sets and achieves these. For example, does your internal culture prioritize collaboration over competition? Do you emphasize rapid experimentation over strict procedures?

People use different terms to refer to company culture, and we’ll use them interchangeably in this guide. Company culture is often also referred to as workplace culture, corporate culture, or business culture. They all mean the same thing: the values and behaviors that guide how work gets done.

Elements of a great workplace culture

Figuring out how to build culture at work takes time and focused effort. It’s shaped by the habits, practices, and values that determine how people work together day in and day out. Key elements include:

• Company mission: A clear mission gives employees a sense of purpose and helps everyone understand how their work contributes to a larger purpose.
• Company values: Shared values guide behavior and decision-making, fostering more consistency and better alignment.
• Compensation: Money matters. Fair and transparent pay practices signal that your organization values its people and encourages trust and loyalty.
• Communication style: Open, honest, and frequent communication supports collaboration, reduces misunderstandings, and builds psychological safety.
• Hiring and retention practices: Recruiting and retaining people who share a passion for your values (note that this does not mean building a homogenous team) or can contribute to your culture will strengthen your identity.
• Leadership: Leaders set the tone for culture through their actions, decisions, and the behaviors they reward.
• Learning and development opportunities: Investing in employee growth and development demonstrates a commitment to your people and helps maintain engagement and innovation.
• Management structure: Clear roles, responsibilities, and reporting lines provide stability, improve collaboration, and increase accountability.
• Performance management practices: How your organization measures and gives feedback on performance has a direct impact on motivation, growth, and perceptions of fairness at work.
• Recognition: Regularly acknowledging contributions reinforces positive behaviors and strengthens morale.
• Work environment: Your physical or virtual environment affects employee wellbeing, productivity, and overall satisfaction.

A strong company culture involves a lot more than trendy employee perks. While those can contribute to your workplace culture and the wider employee experience, they aren’t the crux of it.

Why is company culture important?

There’s a good reason why company culture is a major point of focus for organizations: Data shows that a positive culture leads to many positive business outcomes.

• Better business performance: A FTSE Russell study found that companies that make the Fortune 100 Best Companies to Work For® list outperform the market by a factor of 3.68.
• Higher stock prices: Culture Amp’s people scientists have found that investing in culture is positively associated with higher company stock prices.
• Lower turnover: SHRM reports that workers in positive work environments are almost four times more likely to stay with their current employer. Additionally, a toxic culture was the leading reason employees left a job in 2024, cited by 32.4% of workers.
• Improved employee engagement: Employee engagement is higher when employees understand and feel in sync with the company’s beliefs, behaviors, and priorities. Workers who feel more connected to their organization’s culture are 4.3 times more likely to be engaged at work.

These benefits are precisely why Culture Amp believes in the importance of putting culture first. Companies that share this belief (we call these Culture First companies) recognize that if you take care of your people and your culture, the customer experience and profits will take care of themselves.

What is the relationship between culture and engagement?

While the words “culture” and “engagement” are often used interchangeably to describe a company’s overall environment, there are essential differences between them.

Culture is qualitative; employee engagement is quantitative. While culture describes the practices, behaviors, and priorities that unite and motivate employees, engagement measures the health and effectiveness of a company’s culture.

You may find it helpful to think of engagement, which is usually represented by an employee engagement score, as a report card of your culture – it measures the strengths and areas of opportunity created by your company’s current culture.

What is a “good” company culture?

When people say they want to build a “good” or “positive” business culture, they typically mean they want to foster a healthy culture (as opposed to a toxic one).

It’s important to remember that there are as many cultures as there are organizations – the differences may be subtle, but every organization’s culture is unique. Therefore, there’s no clear-cut way to define “good” company culture.

That being said, in our experience working with over 6,500 companies globally, we have found six key elements that successful Culture First companies have in common. The six elements that we associate with a good company culture are:

1. Transparency: Being transparent helps cultivate an open and honest work environment where employees trust and have confidence in each other and leadership.
2. Open communication: This is a key part of any healthy company culture – innovation and collaboration require that employees feel psychologically safe enough to voice their concerns, ask for and give honest feedback, and resolve conflict through conversation.
3. Inclusivity: Most companies with great cultures ensure that every employee feels equitably supported and has a sense of belonging. These companies prioritize and take action on diversity, equity, and inclusion, proving to their employees that the organization won’t tolerate biased, unfair, or inequitable treatment of any employee.
4. Accountability: Companies that embrace and model accountability experience greater trust, a stronger sense of individual autonomy, and increased productivity. When accountability is a part of the organization or team’s culture, people take responsibility for their actions – celebrating their own and others’ successes while also honestly acknowledging areas of improvement.
5. Values-based decision-making: Successful Culture First companies use their company values to guide internal and external decisions, demonstrating to employees that the values behind the company’s culture aren’t just words on paper.
6. Leading by example: Company culture can deteriorate if people – especially those in leadership roles – don’t live up to the organization’s professed values. In a “good” company culture, leaders model behaviors that reinforce the relevance and integrity of the company culture, setting an example for the wider workforce.

What can turn a workplace culture toxic?

As you learn about company culture, it’s equally helpful to understand what makes a culture toxic, because even companies with good intentions can slip into toxic patterns. Here are several common factors that could erode your corporate culture:

• Silencing employees: Discouraging people from speaking up, sharing ideas, or raising concerns.
• Playing favorites: Rewarding or promoting certain employees while overlooking others’ contributions.
• Unclear communication: Withholding information, giving conflicting messages, or failing to set expectations.
• Micromanaging work: Limiting autonomy and signaling distrust in employees’ abilities.
• Acting against company values: Acting in ways that conflict with the company’s professed values, undermining trust and alignment.
• Tolerating bullying or harassment: Allowing aggressive, disrespectful, or manipulative behavior to continue unchecked.
• Prioritizing results over people: Pushing output without supporting wellbeing, leading to burnout and resentment.
• Avoiding accountability: Failing to acknowledge mistakes, give feedback, or follow through on commitments.
• Neglecting development: Leaving employees without guidance, growth opportunities, or career paths.
• Disconnected leadership: When managers are inaccessible, inconsistent, or disengaged from employees’ day-to-day work.

When you’re figuring out how to create a company culture where employees can thrive, it's crucial to recognize these behaviors and take swift action to address them.

What the best company cultures do differently

Workplace culture can be a tough concept to grasp. Even if you recognize that your culture needs improvement, you may not know where to start. Seeing how other organizations have intentionally shaped their culture provides concrete examples and practical takeaways.

Here’s how three companies have successfully improved their cultures and reaped the rewards.

1. NASCAR

After merging two distinct organizations, NASCAR faced the challenge of unifying its workforce and improving engagement. The HR team used Culture Amp to gather employee feedback through accessible engagement surveys and then transparently shared the results with all teams.

The company used the insights it gathered to guide initiatives in learning and development, leadership involvement, and employee recognition. This approach not only increased survey participation by 7% but also boosted leadership buy-in by over 10%, creating a more connected, engaged, and cohesive culture.

2. Pampered Chef

To enhance employee recognition and reinforce a culture of appreciation, Pampered Chef implemented Culture Amp's Shoutouts feature. They integrated this peer-to-peer recognition tool into their Slack channels, allowing employees to acknowledge each other's contributions in real time and easily tie them to the organization’s newly established culture pillars using company-specific emojis.

Within three months, the company saw a 276% increase in recognition tool adoption and 188 shoutouts submitted, compared to just 50 in the previous three months. Additionally, the culture pillars have become more ingrained in employees’ everyday behaviors, as they’re mentioned on a more frequent basis.

3. Rapido Solutions Group

Amid rapid growth from 30 to over 600 employees, Rapido Solutions Group sought to strengthen its company culture. By partnering with Culture Amp, the organization relaunched employee engagement surveys with increased transparency, allowing employees to see questions in advance and reassuring them of anonymity.

This approach led to an 87% participation rate in the first survey, up from 60% previously. Additionally, implementing structured biweekly 1-on-1 meetings equipped managers with data-informed check-in questions, resulting in a 13% increase in positive responses to statements like "I am happy here and rarely think about looking for a job at another company."

These initiatives fostered a culture of trust and open communication, contributing to improved employee engagement and satisfaction.

How to improve company culture

Improving or changing your organizational culture won’t happen overnight, but there are many ways to take action – and Culture Amp recommends starting with employee surveys.

Culture varies widely from workplace to workplace, which is why we consider surveys the first and most important step for any company to take when considering how to improve company culture. Surveys highlight where to focus to improve your unique culture. Moreover, by holding these surveys over time, you can assess whether the changes you’re making to your culture are positively impacting the employee experience.

If you’re already conducting employee surveys and taking action on your results, you’re set up to start making more significant improvements to your culture. Let’s explore how certain initiatives and practices can move you in the right direction.

Below are five ideas to improve your team, department, or company culture.

1. Define the culture you want to see

What do you visualize when you imagine your ideal company culture? Brainstorm widely and put your ideas in writing.

By creating a concrete definition of the culture you want to see, you can better focus your efforts and provide a clear and compelling vision across the organization. With broader buy-in, strengthening your company culture becomes a more uniform process.

Consider the following questions:

• Why does your company exist? What is your core mission?
• What are the core values of your company?
• What are your strategic priorities? Where’s the focus currently?

Once you’ve created a broad cultural definition, the what and how of improving culture will be easier to recognize.

2. Don’t focus too much on culture fit

Culture fit is a technique commonly used in recruiting, in which companies screen potential candidates based on “how well they fit the company’s culture.” This approach is based on the belief that hiring employees whose personalities and values match the organization’s culture leads to more engaged employees who feel more motivated and committed to their jobs, but hiring for culture fit also has flaws.

Overprioritizing culture fit can lead to a homogeneous workplace that lacks diversity and inclusion – key qualities of a strong, healthy company culture. That’s why we recommend interviewing for “culture add,” as well. With this approach, you consider how a given person’s identity, background, and experiences can “add” or “contribute” to your current culture.

This doesn’t mean that you shouldn’t interview for culture fit – as long as you’re intentional in your approach, you can still incorporate culture fit screenings into your interview process. Just be aware of your biases, as you might think someone doesn’t “fit the mold” of your culture when really they’re just underrepresented at your company.

3. Show your employees you recognize and appreciate them

Companies with a great culture embed recognition and appreciation into the day-to-day. This is because working at a company without adequate recognition practices can make employees feel like their hard work isn’t valued – or even noticed.

When you foster a culture of appreciation and fair recognition, your employees will feel more connected and engaged in their work and more likely to perform at a high level. Interestingly, Culture Amp research found that the need for recognition is particularly strong among high-performing employees.

Just make sure you consistently reward people for the right things (e.g., acting according to company values) and that you make it clear why and when certain types of recognition are given.

4. Focus on employee development

Culture First companies prioritize growing their people. Culture Amp data shows that employees who don’t have access to meaningful learning and development opportunities are two times more likely to leave an organization within a year, and development is one of the most influential drivers of engagement.

This checks out. Employees want to feel like they’re making progress toward their personal goals. A company culture that doesn’t embrace employees’ personal and professional development is one that most people will eventually tire of. On the other hand, a company culture that prioritizes employee development motivates employees to go above and beyond, and equips managers to support direct reports in their career journeys.

The most successful companies help their employees set employee development goals that:

• Motivate employees by playing to their strengths and their personal aspirations
• Help employees understand what the business is trying to achieve and how their individual growth fits into the picture
• Meet the company’s business needs

By thoughtfully integrating employee development into your company culture, you will set both your people and the wider business up for success.

5. Use meetings to reinforce the culture you want to build

Don’t underestimate the way that meetings do (or don’t) affect the integrity of your culture. As Bob Pothier, Director of Partners in Leadership and a former GE executive, says, “The strongest message about how you want your culture to perform is embedded in how you conduct your meetings.”

This is because meetings take up a disproportionately large amount of time and energy in the workplace. Research shows that employees spend up to 20% of their workweek in meetings – and that number increases to 35% for senior leaders.

As you work to improve company culture, consider the following questions:

• What do our meetings say about our current company culture?
• What values do we want our meetings to reflect?
• Are our meetings consistent with the above values?

Remember, meetings are a space to generate ideas and insights, build relationships, and make decisions. Use these shared moments to reinforce the culture you want to see.

How to create a high-performance culture

Creating a high-performance culture isn’t just about hiring top talent – it’s about designing systems, behaviors, and conditions that help your employees and teams do their best work.

Culture Amp research shows that high-performing cultures are defined less by individual effort and more by the workplace culture that supports sustained success. Here are five strategies you can put into play:

1. Set employees up for success from day one

Strong onboarding matters. Employees who feel aligned with their role during onboarding are 48% more likely to perform at a high level, while those who feel neutral or misaligned are 33% less likely. Early alignment helps employees understand expectations, build confidence, and start contributing quickly.

2. Align goals and encourage peer feedback

Employees who become high performers create and align their goals to company objectives more often than their lower-performing peers by 21% and 26% respectively. They also provide 36% more feedback, which reinforces a culture of transparency and continuous improvement. Make company-wide goals clear and accessible to increase motivation and meaning.

3. Provide regular, high-quality feedback

Employees who receive effective feedback are more likely to improve over time. In high-performing organizations, 83% of top performers report satisfaction with manager feedback – compared to just 71% for others. Guide your managers to provide feedback that is timely, specific, and focused on growth, not just evaluation.

4. Invest in team behaviors, not just individual talent

Research shows that 69-76% of differences between low- and high-performing teams are explained by team behaviors and cultural conditions. Foster collaboration, shared accountability, and trust to help teams consistently deliver results, rather than regularly relying on a few top performers.

5. Recognize that performance cycles are normal

Employees naturally cycle in and out of peak performance. High-performance cultures normalize this and avoid framing temporary dips as failure, which helps prevent burnout and sustain engagement over the long term.

How to measure workplace culture

Although you can’t directly measure culture, company culture surveys (meaning, surveys that touch on aspects of your culture) can help you understand whether your cultural practices are successful or not. One particularly useful employee survey for this is an employee engagement survey.

By asking the right employee engagement survey questions, you can assess whether or not:

• Employees are united by a common set of priorities and beliefs
• Individual goals are aligned with organizational goals
• Employees feel like they can collectively work towards achieving those goals

If scores around these areas are low, then you know that aspects of your culture need improvement. Meanwhile, high scores mean that employees feel unified and that you likely have a solid, cohesive culture.

Engagement surveys can also help you understand which areas of your culture need work. For example, low leadership or employee development scores can provide concrete, data-backed direction on improving company culture. Use open-ended survey questions and employee survey comments to surface more detailed insights.

Other ways to measure or understand company culture include:

• Focus groups, which allow you to dive deeper into employees’ thoughts on the company’s culture, including where it excels and where it falls short.
• Exit interviews, which enable you to understand exiting employees’ reasons for leaving the company, and whether something about your company’s culture contributed to their decision to leave. Exit interviews can also reveal what parts of your current culture employees appreciated.

Create a company culture that inspires

Your company culture is the foundation of engagement, retention, and high performance. When employees feel connected, supported, and aligned with your organization’s values, they’re more likely to collaborate, innovate, and do their best work – even in times of change.

Building a resilient, high-performing culture takes intentional effort, but the benefits are clear: Employees are more engaged, productive, and committed to achieving shared goals.

Measure, understand, and strengthen your culture with Culture Amp.