What is organizational culture and why is it important to your business?

A shared company culture and mission that reflects employee values has become a major differentiator for enterprise companies

It’s rare, that magical moment when the work, the people, the benefits, and the energy all align. It’s rare, but it’s possible. When people feel comfortable in a space, when they feel valuable, when everyone feels like the work actually matters, that balance is never an accident. Someone (usually lots of people) worked to build that extraordinary workplace culture, otherwise known as organizational culture. 

What is organizational culture? 

Organizational culture is a term used to describe the way people define the values, goals, and overall vibe of their office. Founders and HR leaders usually develop and evangelize the culture, but it’s a constantly changing, employee-powered concept. Organizational culture is both how organizations get things done, and why. It’s what makes the difference between a team of hardworking, happy employees and a group of grumpy strangers. 

Why culture matters to your employees

The odds are stacked against a healthy culture: 85 percent of employees are actively disengaged from work and one-third of employees plan to quit in the next year. A recent study found employee loyalty has dropped across 20 industries, and people cited weak company culture as the culprit. 

Lack of engagement means folks aren’t really working—or aren’t working to the best of their ability. Wavering loyalty means employees don’t find value in the organization’s goals, or they don’t trust leadership; this leads to lots of turnover. And if you don’t like your job and don’t trust leadership, you’re definitely not persuading anyone to join the team, which makes it harder and harder for HR to find new employees.

A positive organizational culture can improve talent acquisition  

Balancing a healthy culture is tough but not impossible, and lots of organizations have cracked the code. In a surprising leap to the top, Hilton was first on Fortune’s list of 100 best companies to work for in 2019. Last year they came in 33rd, and a focus on diversity and inclusion, a free GED program, and updated worker lounges were cited as agents of change. In other words, Hilton gave their employees a reason to be proud (improved diversity and inclusion); access to real benefits (education); and a comfortable, welcoming working environment (employee lounges). 

Data shows some good news, too. A recent study said 81 percent of millennials want companies to be good corporate citizens, and 62 percent of them would take a pay cut to work at a socially responsible organization. That study saying one-third of employees were planning to quit this year? Turns out the majority of those folks are looking to work for companies with a mission that matches their passion

Sometimes culture changes over time, and sometimes culture changes in two years: Salesforce has been on Fortune’s best places to work list for several years running. Their big move? Spending $6 million over the course of two years to fix the gender- and race-based pay gap at all levels of the company. 

How to develop an organizational culture 

A multifaceted concept like organizational culture doesn’t lend itself to easy fix-its. There will never be a Band-Aid for bad culture, but there are certainly places to focus—places where change really happens.

Start with a mission

Sometimes that mission is simply to provide something, like sheets, to customers. But when that mission becomes “deliver simple, beautiful home essentials at a fair price, with a personal touch” (thanks, Brooklinen), suddenly the people who work for your company aren’t just selling sheets—they’re selling quality, simplicity, beauty, and honesty. And so are you. If everyone embraces that mission, your company reflects it. 

Both leadership and the workforce should carry the torch

Lots of emphasis is placed on leadership when it comes to setting the terms of company culture, and without a doubt, you can’t have a healthy culture without leaders who live it. But there are plenty of companies who survive leadership changes or mergers without sacrificing their culture, and that’s because employees carry the torch. A balance between employees and leadership is required to maintain a healthy culture. Employees will often point in the direction of change, sometimes loudly, and it’s up to leadership to listen and act. 

HR must reinforce and oversee culture

In the best-case scenario, human resources is a bastion of healthy culture and the link between employees and leadership. Think of HR as the stewards of culture. They’re also responsible for hiring, the single most important way to build and change culture: with people. If your new hires are excited to work and believe in the mission, you’re more than halfway there.

Invest in a space that matches your culture

It’s the first thing visitors notice and the quickest way potential candidates read the culture at your company: the office. We all know location matters, but so do colors (they have the power to change moods and boost productivity)—even the width of the stairs matters. According to WeWork’s architecture discipline lead Michael Caton, the Chelsea HQ stairs are “designed to be as narrow as they can be by New York City building code [so that] you can’t absentmindedly walk by other people—you have to engage with them, acknowledge their presence.” 

Your space can even play a role in shaping your company culture. When GE Healthcare Korea was looking to cut real estate costs, they also saw an opportunity to inspire more flexibility and collaboration among employees. They designed a bright, new office with open seating and various collaboration areas. The result: “We achieved a cost-saving project for GE while achieving cultural transformation to collaborate better together,” says Francis Van Parys, president and CEO of GE Healthcare Korea.

That’s the power of space to build connections and a sense of belonging, one of the fundamental aspects of a healthy organizational culture. 

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