What Makes an Outstanding Company Culture?

Most CEOs agree that a strong organizational culture benefits companies and their staff. They often check that box by highlighting core values, initiating perks they believe will appeal to their staff, or generating policies that cover issues like diversity, equity, and inclusion. Many leaders assign this area to human resources and consider it addressed.

However well-intentioned, these cursory efforts usually don’t have much impact on workplace culture. Leaders must take a much more thoughtful and intentional approach to creating an environment that will empower and support their employees and elevate their company. Like other important business initiatives, building a great culture requires long-range planning and commitment.

The High Cost of Neglecting Culture-Building

Leaders who detect problems with their companies often don’t realize they stem from a dysfunctional culture. If they don’t see evidence of a truly toxic culture, many attribute issues to various other business conditions, like the economy, market trends, or additional competition. However, Gallup lists the following concerns as telltale signs of hidden cultural problems:

• Eroding identity in the marketplace and within the organization
• Declining customer engagement feedback
• The inability to attract great talent
• Difficulty driving organic growth based on customer/employee interactions
• Leadership initiatives stalling out

A confused culture, or one not strategically planned, can generate conflicting messages and behaviors. This misalignment can lead to any or all of these problems and slowly drain profitability. Left unaddressed, they can cause customers to lose faith in the company brand and create an employee retention problem.

The Components of a Powerful Company Culture

The most successful companies are grounded in a cohesive culture that prevents patterns of destructive dysfunction. These organizations are resilient because their leaders understand the value of investing in culture-building and commit to investing the time and focus to do it effectively.

In an article for Forbes, Ricoh North America CEO Carsten Bruhn discussed the perspective leaders should adopt when considering investing in their culture.

“Investing in culture is not about spending millions of dollars. While there may be financial costs, money alone will not build an organization equipped for long-term success. Building an inclusive, sustainable company for the next generation requires leaders to set the example by investing their time and energy and moving beyond talking points to living the culture in all that they do, every day.”

Bruhn points out that employees often see a disconnect between what their company says about its culture and how they experience it. The key is to develop an authentic culture that builds staff trust, buy-in, and loyalty. The residual benefits are improved recruitment, employee engagement, alignment, and productivity, which lead to customer satisfaction and profitability.  

Company culture impacts every aspect of a business and comprises multiple components. Great Place to Work (GPTW) executive Claire Hastwell outlines eight elements that highly successful organizations focus on:

• Credibility
• Respect
• Fairness
• Pride
• Belonging
• Effective leadership
• Values
• Innovation

CREDIBILITY

A vibrant, healthy company culture is grounded in trust. Hastwell cites GPTW research showing 83 percent of employees at the 100 Best Companies believe their leadership team’s actions match its words. This is almost double the percentage of workers at average workplaces.

Credibility is based on leadership teams demonstrating ethical behavior, transparency, and consistency. They should lay the foundation for trust by setting a good example in these areas. After establishing themselves as role models, they can better coach team members to also reflect these qualities.

RESPECT

In a culture of respect, employees are treated as human beings, not assets. Their leaders regularly acknowledge their contributions, listen to and value their opinions, and ensure a healthy work-life balance that provides flexibility.

These leaders also help and encourage their staff to develop and grow to perform to the best of their ability. With the right balance of management and responsibility, they set their team members up for success, modeling and instilling a sense of personal accountability.

FAIRNESS

In addition to equitable pay, a culture prioritizing fairness ensures a level playing field for all employees, regardless of ethnicity, background, education, tenure, gender, sexual orientation, or age.

GPTW research shows that companies where employees feel like everyone is consistently treated fairly report more positive employee experiences. It also reveals that when fairness is a pillar of a company’s culture, there are fewer issues of favoritism and politicking. Workers score these organizations between 37 and 42 points higher on GPTW surveys than the national average.

PRIDE

Hastwell notes three areas of workplace pride in her article:

• Pride in your job and the work
• Pride in the team
• Pride in the company and its reputation

Leaders can help employees develop a sense of pride in each area by modeling and coaching specific behaviors. These include:

• Striving for excellence and making quality a personal priority
• Collaboration and teamwork
• Acting with integrity

People who are proud of what they do on the job and where they work enjoy greater job satisfaction. According to GPTW data, they are two times more likely to want to remain with their organization for a long time and six times more likely to endorse their workplace to others.

BELONGING

Ensuring employees feel like they belong goes beyond demonstrating respect and fairness. In addition to showing appreciation for what employees do, it involves accepting and valuing them for who they are. Belonging is such an important element of building employee engagement that it is the newest component to many diversity, equity, and inclusion initiatives.

Leaders who create an environment where their team members develop a sense of belonging create a tightly-knit community eager to achieve organizational goals. GPTW research shows that companies prioritizing belonging grow revenue three times faster than less-inclusive organizations.

EFFECTIVE LEADERSHIP

Leaders and, possibly to a greater extent, managers are the standard-bearers of a company’s culture. The CEO sets the primary example for how they want things done. Others in supervisory positions interact more closely with team members, and their actions and capabilities deeply influence employees’ performance and perception of the company.

Employees react to their bosses’ behavior and often emulate them. As Haswell observes:

“A great leader will inspire, motivate, and drive innovation. A bad one will demoralize, kill productivity, and push employees to walk out the door.”

Successful companies train and support their managerial staff so they set a good example and help their team members succeed. They also invest in new leadership development to sustain high performance and help the culture endure.

VALUES

Most CEOs identify a set of core values to emblemize how they want their companies to operate and be perceived. Leaders of highly successful organizations ensure that these noble ideas are activated by specific behaviors that form the company culture. They specify how they want their team to approach their work, collaborate, and interact with customers.

Today’s employees want to perform meaningful work that provides a sense of purpose. Leaders engage their staff by giving them a tangible way to bring company values to life.

INNOVATION

Companies where employees feel they can safely express ideas and offer suggestions encourage creative thinking and problem-solving. Leaders who want innovative teams must develop a culture where people can vocalize their opinions without adverse repercussions. It must be an environment with a solution focus where mistakes are viewed as learning experiences rather than causes for blame.

GPTW data shows that employees at innovative companies are:

• Four times more likely to say they’re proud to tell others they work there
• Nine times more likely to think their company is a great place to work
• Four times more likely to give extra to get the job done

The Benefits of a Great Culture

The benefits of developing an exceptional culture are significant, including organizational alignment, deepening employee engagement and morale, and motivating staff to perform at a high level. Gallup reports statistics reflecting that a strong culture drives personal and professional results.

Of polled employees, those who strongly agree with the statement “I feel connected to my organization’s culture” are:

• Four times as likely to be engaged at work
• 8 times as likely to strongly agree they would recommend their organization as a great place to work
• 62 percent less likely to feel burned out at work
• 43 percent less likely to be looking for another job

In addition, a well-planned and developed culture delivers a company’s brand promise to its customers. Beyond products and services, a great culture becomes a company’s most significant differentiator in the marketplace.