Your Company Culture: What It Is and Why It Matters

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Culture is About People

Company culture is a vague term that everyone seems to intuitively understand, but few define concretely. At the most basic level culture cannot exist without people. So the foundation of any culture is how a company chooses and retains its people.

Hiring the right people is about much more than just getting a skill set. It’s about getting an employee who is the right fit from a company culture perspective. To get the right person, though, you have to be clear on what kind of culture your company has, and why it’s important to you. Until you know what your company wants, needs, values, and stands for, you can struggle to hire people who fit in and will be assets to your organization.

No matter how good a company is, not hiring the right people leads to turnover, which is expensive. The disconnect between a new hire’s values and the culture of the organization can cause problems, even if the employee does a great job based on the skills they have. In fact, employees who are a poor culture fit for their company are twice as likely to turnover in comparison to an employee with a strong culture fit. In fact, replacing an employee who makes $50,000 per year costs 20% of that person’s annual salary. Avoiding that expense and frustration can help keep a company moving forward.

Choosing employees to work for your organization isn’t the only issue, either. Keeping the employees you have already hired and trained also matters. Strong company cultures encourage the best employees to stay in the organization and move up through the company. Research has demonstrated that employees who share the core values of their company are more committed to their jobs and perform better over the long-term.

While many companies only focus on the skills of the people they employ, they can and should pay much more attention to the culture. But what is a company’s culture, really? Those are the questions that have to be answered for any company that wants to hire, retain, and promote the right people. The questions are also important because how well a company moves forward, whether it’s bottom line is strong, and whether it must make changes to continue to be successful can all be affected by the company culture it presents.

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What is Your Company’s Culture?

According to Forbes Contributor William Craig, President of WebpageFX, company culture is the “vision, values, norms, systems, symbols, language, assumptions, beliefs, and habits” that belong to a particular company or organization. The culture of a company isn’t something that people bring in with them as they are hired into the company. Instead, the culture is pre-existing within the company, and will not be easily changed by a new person who comes in or who is promoted to a new position. Company culture can be very ingrained.

To be clear on the kind of people you need to hire and retain, you have to know not just what company culture is, but what your company’s culture is. How do you discover that? You take a deep, serious look at what your employees are doing and what matters to them.

For example, consider how employees act while they’re working, and if there are common patterns of behaviors (either good or bad) that are seen throughout your organization. These patterns can give you insight into how employees see your company’s culture, and what they feel they need to do in order to be successful in your business.

Also consider whether having a job with your company means something to your employees. Do they value their job and your company? Would they leave and seek a job elsewhere if it was available to them? Do they have any investment in your company?

The answers to those questions are all symptoms of the culture of your company, and can help show you whether your business has a culture that is working well or one that needs adjustment for employees to be comfortable and happy working for you. If employees would quickly leave your company if they had other options, finding out why that’s the case could be a first step toward defining your company’s culture and determining what changes need to be made.

There are several main areas where your company’s culture will come through, which can help you see what kinds of employees fit and what kinds don’t, and can also help you determine if you need to make changes to the culture to attract and keep the kinds of people you really want working for you. These important cultural areas include:

  • A company purpose that is clearly defined.
  • Employee engagement that helps every worker feels valued.
  • A trusted environment where employees feel safe.
  • Learning opportunities to help employees advance their skills.

When you examine all of these areas and understand what employees perceive as their core values, then you can look at the culture your company has cultivated and make a determination as to whether it’s the culture you want to have at your company.

Making changes could mean growth and development, which may be well worth the effort those changes would take. Each company will need to individually decide whether its culture is the right one, or whether making changes is the right way to go in order to attract more talent and keep the best employees.

Why Does Company Culture Matter?

Company culture matters, because it permeates everything the company does and everything the company is. By providing such a powerful influence, company culture has a significant effect on everyone who works for that company, from the CEO all the way down to lower-level employees.

The Harvard Business Review has addressed the issue of company culture, stating that people who work for a particular company are up to 30% more likely to have similar ways of learning, deducing, engaging, and envisioning than people who do the same job but work for different companies.

At Berkeley, organizational culture has also been researched for over 30 years. Research demonstrated that cultures that are very good at aligning an organization’s objectives and the behavior of employees work the best when measuring employee engagement, performance, and turnover. The company is getting its objectives met, and employees aren’t being asked to significantly change their behaviors to meet those objectives. Newer research is beginning to show that specific core values may benefit specific types of companies. For example, one study showed that technology companies with cultures strongly centered around adaptability and innovation outperformed those that were centered on other values or those with weaker culture.

For companies that have strong cultures, the key is being adaptable. Without a high level of adaptability, companies don’t grow and change the way they should. When companies adapt and have a strong culture, though, they tend to grow more over time and accomplish more throughout their lifecycle than other companies where culture isn’t as strong or important. For any company that is serious about advancement and doing business, along with hiring and retaining the best employees, the company’s culture may be the most important area that should be considered.

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