GLOSSARY | Culture and engagement | 5 MIN READ

What is company culture?

Company culture is an organization’s expression of its core values and identity into social customs and norms, business practices, and vibe. Organizations, like religious or ethnic groups, naturally develop their own work cultures, workforce management strategies, and distinct characteristics.

A healthy work culture includes these essential components:

<< Need inspiration for building a great company culture? >>

Types of company culture

There are as many types of company culture as there are companies. That is to say, company culture is complex and defies simple taxonomies. However, it is possible to describe trends in modern companies’ cultures. Some examples of different ways to define company culture include:

  • Clan culture: Also called a collaborative culture, the clan culture is highly collaborative and communicative, with a focus on people and an effort to break down barriers between executives and individual contributors. 
  • Adhocracy culture: Adhocracy culture (from “ad hoc”) prioritizes agility, innovation, and adaptability, rewarding risk-taking and creativity. 
  • Market culture: Market culture is all about results, emphasizing meeting goals, reaching targets, and getting results. Often separating executives and individual contributors, the top priority is the bottom line. 
  • Hierarchy culture: A more traditional culture, hierarchy culture loves stability, uniformity, and well-defined processes. There is a clear chain of command and often little room for change.

Why is company culture important?

 A healthy culture drives success and can directly promote:

As guardians of the work culture, HR leaders play a crucial role in influencing people and managers and shaping the company culture. In a HiBob survey, 77 percent of respondents said that culture was an essential aspect to consider when looking for a new job. Similarly, in an SHRM report, 20 percent of people reported leaving their jobs due to dissatisfaction with the culture.

How can you create a company culture?

The unique thing about company culture is that—whether or not an organization is proactively trying to—it is constantly changing, day in and day out. Leaders build company culture through various attitudes, actions, and values. Everything from a leader’s tone of voice to what they choose to reward contributes to the culture in the workplace. 

This is why it is essential to be aware of and learn how to create a company culture. HR leaders must take their organization’s pulse, understand the existing culture, determine whether or not it’s positive and effective, and mold it accordingly.

How can you improve company culture?

HR leaders can nurture their company culture and navigate it in a positive direction. Incorporating these elements of how to change a company’s culture can help HR keep the culture on track:

  • Give people a voice. HR leaders can foster an environment where management and leadership value people and encourage them to feel comfortable. When people feel valued, they are more motivated to perform high-quality work and achieve goals. HR leaders can facilitate a method for receiving, evaluating, and implementing relevant employee feedback.  
  • Strengthen the good vibes. Positive energy is contagious. HR leaders can cultivate a happier workplace by recognizing people’s achievements, directly thanking individuals for specific contributions, and demonstrating empathy towards colleagues.    
  • Align culture with company identity. HR leaders can collaborate with executives to identify the ethos they want to convey and the type of culture they want to thrive. If, for instance, an organization seeks to promote employee autonomy, it can offer flexible work hours, implement employee-manager collaboration for establishing goals, and include employee feedback in processes and decision-making. HR leaders can further increase employee autonomy by surveying people to discover how they’d like to take greater ownership of their work.

How can you measure company culture?

Each organization may define its desired culture differently. But, when HR leaders implement essential programs, they can enhance the culture and guide it in the desired direction. By tracking the progress and success of the following systems, it is possible to measure company culture. 

Core processes and systems can create a unified, stable, community, and growing culture, which directly nurtures employee engagement, retention, and motivation.

Recommended For Further Reading

What are some examples of company culture?

To help illustrate how HR leaders can build a company culture using various intentional processes and systems, let’s take a look at Google, whose company culture has received multiple awards over the years.

Google’s culture emphasizes many factors, from a fun work environment to encouraging innovation to allowing open communication with a flat organizational structure. In addition to great compensation and perks, the company gives people mobility, robust financial support, and flexible work arrangements. 

Google also makes it a point to communicate its values through its “ten things we know to be true” manifesto. The manifesto promotes the company’s core belief that “you can make money without doing evil.” 

This example shows that Google’s culture is highly intentional, prioritizing employee happiness alongside a set of clear values. The company’s deliberate effort to build a purposeful culture helps it attract top talent and consistently receives awards for providing a great employee experience.

Why should company culture be a part of modern HR strategy?

Once you understand why company culture is important and the reality that—purposeful or not—every organization has one, building a positive culture emerges as a top priority for HR professionals. By being intentional with your company culture and putting in the effort to develop a culture that reflects your goals, values, and beliefs, HR can improve everything from hiring to retention to productivity.