Is company culture important? Everything you need to know

Following the Great Resignation of 2021, organisational culture has been key to ensuring a successful business.

With more calls for flexible working arrangements, improved work-life balance and greater recognition of employee contributions, it’s now more important than ever for companies to create a positive and supportive work environment to attract and retain the best talent

After all, a strong strategy may determine goals and drive growth, but a strong company culture is what keeps teams motivated, fuels innovation and creates positive work processes and workplace for long term success.

In this article, we’ll explore the meaning behind company culture, why it’s so important in today’s businesses and its significance for long-term growth and employee retention.

What is company culture?

Some people might confuse a company’s culture with its perks and benefits. But organisational culture goes much deeper than discounted meals or free gym memberships. 

Instead, it’s what encompasses an organisation’s core values, beliefs and behaviours that shape how employees interact and perform their tasks daily. Businesses build their culture around these values and behaviours to create a unified environment where employees know what the rules are – written and unwritten – and feel aligned with the company’s mission and purpose. This in turn fosters stronger teamwork, greater job satisfaction and better overall company performance and growth.

Building a company culture isn’t a quick fix or a “one-size-fits-all” solution. With different culture types to consider, businesses must carefully build a bespoke culture that aligns with their values and desired working style. Whether it’s a flat hierarchical structure, a fast-paced and results-driven environment, or a collaborative and supportive atmosphere, it must be tailored to an individual enterprise’s unique goals and needs. Getting this right is so crucial that more and more businesses are hiring a culture consultant to help define, implement and embed the right culture.

The benefits of a good company culture

Companies with successful organisational cultures can attract top talent, build strong customer relationships and foster trust within their industries. After all, companies with happy employees outperform the competition by 20%, according to research by Marketing Innovators.

Here are the key benefits of building a strong company culture.

• Increased employee engagement: Engaged employees who relate to the company’s values are more motivated and committed in their roles because they feel a sense of purpose in their work. When employees identify with the core values and mission of the organisation, they see their roles as meaningful and contributing to a larger goal.
• Higher retention rates: A positive culture leads to greater job satisfaction, in turn reducing employee turnover and the costs of recruiting and training new staff (the average cost being around £6,125 in the UK). 71% of employees say they would be less likely to leave their organisation if they were recognised more frequently.
• Enhanced productivity: Employees in a supportive and well-aligned culture are often more efficient and collaborative, leading to higher productivity and better results. This is because they work in an environment where clear expectations, open communication and mutual trust are encouraged. As such, they understand the company’s mission, enabling them to prioritise tasks and work cohesively towards common goals. 82% of employees also say that happiness and engagement are key drivers of productivity, according to research by Slack.
• Attraction of talent: Internal culture has a strong influence on how a company represents itself outside, so a positive culture makes it more attractive to high-quality candidates, giving it a competitive edge in hiring. 63% of candidates consider a diverse workforce very important when choosing a company, while 86% claim that they would avoid companies with a bad reputation.
• Strengthens company identity: A good culture won’t just positively impact operations on the inside, but also the company’s external brand image. Positive word-of-mouth from employees can be beneficial for an organisation’s reputation in the industry, as well as attracting customers, partners and investors.
• Employees become company advocates: When employees are engaged with the company’s values and mission, they naturally develop a strong sense of pride and loyalty. This emotional connection motivates them to speak positively about the company, recommend its products or services and support its brand within their personal and professional networks.

Organisational culture: then vs now

Company culture isn’t a new concept, but the way businesses have incorporated it over the decades has evolved significantly. Rigid hierarchies and formal practices have now shifted to embrace flexibility, employee wellbeing and inclusivity. Today, organisations actively shape their cultures to foster innovation, collaboration and engagement, reflecting broader changes in societal values and expectations.

The introduction of company culture

The ideology behind company culture can be traced back to the 1950s when psychoanalyst Elliot Jacques introduced the concept through his study of factory workers in Great Britain. However, it wasn’t until the 1980s when the term was popularised following Peters and Waterman’s best-selling book “In Search of Excellence”, which argued that business success could be attributed to a decisive, empowering and people-orientated culture.

However,  the 80s and 90s were a prime time for “corporate greed”, in which profits and company performance were prioritised over employee satisfaction and wellbeing. The traditional 9-5 system was in full swing too, with little work-life balance for employees.

Tech startups change workplace culture

The rise of tech companies and startup culture in the 2000s is widely regarded as having redefined and influenced organisational culture across various industries. Cubicles were replaced with open-plan spaces to encourage collaboration among employees and perks like free food and nap pods were introduced to attract talent.

That being said, flexibility wasn’t completely adopted by this point, as statistics dated from 2004 revealed that 65% of managers believed that it was an employee’s responsibility to balance their work and personal responsibilities.

The shift to a “human-focused” culture

The COVID-19 pandemic put a lot of things into perspective, including what mattered most to employees. In turn, there was a stronger focus on employee wellbeing and satisfaction. More flexible working patterns were also introduced, with over 3.9 million people in the UK being able to take advantage of flexi-time between 2020 and 2021.

Additionally, remote work became more widespread, leading to significant changes in work habits and expectations. The percentage of people working from home reached 17.4% in 2020, compared to 14.2% the previous year. 

Company culture today

Nowadays, a strong organisational culture is considered vital.  94% of business owners and 88% of employees believe it to be essential to a company’s success and 67% of leaders still agree that  “culture eats strategy for breakfast”. In fact, recognising hard work to developing strengths, there’s a myriad of successful company quotes – from iconic CEOs such as Steve Jobs and Richard Branson – that emphasise the value of fostering a supportive and inclusive culture. Work-life balance quotes also underscore the importance of creating a healthy environment where employees can thrive both personally and professionally.

Conclusion

Company culture isn’t just important – it’s fundamental in driving business success. It’s no longer just an abstract concept or set of perks; it’s what defines a company’s identity and shapes its daily operations.

From the need to attract and retain employees and changing working patterns post-pandemic, fostering a strong culture has never been more crucial. The days of corporate greed and rigid hierarchies are over, replaced by a focus on flexibility, employee wellbeing and inclusivity.

A good culture enhances employee engagement, retention and productivity, all of which are critical for long-term growth. Businesses that prioritise core values and create supportive environments can ensure long term success and cultivate a motivated and resilient workforce.