The Impact of Organizational Culture in the Workplace

6 months ago   •   4 min read

By Zero Machina

Every business owner wants their company to perform at a high level.

To accomplish this, they'll need to build a strong organizational culture made up of employees and team members.

Not sure what organizational culture is, or why it matters? Keep reading.

Throughout this article, you'll learn why organizational culture is so important, and how to improve it.

What Is Organizational Culture?

In the business world, the term “organizational culture” refers to the day-to-day attitudes, actions, and behaviors of an organization and its employees.

A company's culture consists of multiple factors:

  • How everyone does their work.
  • Decision-making strategies.
  • Internal communication (teams and across departments).
  • External communication (customers and clients).
  • Celebrating milestones.
  • Recognizing others' achievements.

How Organizational Culture Shapes the Workplace

Every business has a culture—whether the owners and employees realize it or not.

The impact of organizational culture on business success is undeniable.  A strong, well-defined culture matters because it impacts performance throughout the entire company. It affects the way employees complete their assignments, the way they communicate with one another, and their willingness to remain loyal to a business long-term.

In the wake of The Great Resignation, employers need to think about the type of culture they're creating.

Over the past couple of years, we've seen how employees are willing to leave a company if it provides a toxic work environment (even if they don't have another job lined up).

This trend will likely continue. So businesses that are unwilling to make cultural changes run the risk of losing talent and performance gains.

When you take the time to establish a great organizational culture at your company, you can expect multiple benefits in performance and employee well-being.

Increased Employee Engagement

A positive company culture increases engagement levels.

In companies with positive workplace cultures, employees report being 3.8 times more likely to feel engaged compared to those whose company culture is not positive.

When employees feel strongly connected to their organization and its values, they’re more likely to be motivated and committed to their projects. They’ll also have more positive attitudes toward their work.

Decreased Employee Turnover

Expanding on the study above, employees who are not engaged are more likely to leave their employer for a job that provides a better organizational culture.

Approximately 60 percent of disengaged employees said they would do this, compared to just 23 percent of engaged employees.

Employee engagement appears to play a key role in boosting retention rates. And a positive culture leads to better rates of engagement.

Increased Productivity

In companies with a positive organizational culture, employees are more productive during the workday.

Todd Davis, the chief people officer at FranklinCovey, says that highly engaged employees treat the business “as if they are an actual owner.”

They care more about the company's results and are more inclined to go above and beyond to do their best work.

More Teamwork and Collaboration

A great culture encourages teamwork and collaboration among employees and team members.

When everyone is engaged and committed to the company’s success, they’re more motivated to work together and achieve team goals.

When a company has a clearly defined culture, mission, and values, it's easier for everyone to work together (even when perspectives clash). This helps everyone be more receptive to new ideas and effective at solving problems.

Better Physical and Mental Health

In addition to improving the way employees handle their work, a great culture can also impact employees' physical and mental well-being.

A healthy work culture doesn't place excessive emphasis on performance at the expense of its employees' physical and mental well-being.

Instead, it encourages work-life balance and gives employees the resources they need to take care of themselves—sufficient healthcare coverage, access to mental health professionals, and flexible schedules.

How to Improve Organizational Culture at Your Company

You may be convinced of the importance of developing a better culture, but maybe you're wondering how to start implementing change at your company. If this is the case, here are some tips that can help.

Define and Share Company Mission and Values

The first step to improving organizational culture is to clearly define the company’s mission and values. Remember, every business has a culture—whether its leaders proactively create one or not.

If you want everyone to be on the same page regarding the company's mission and values, start by clarifying them.

Make sure they’re on display throughout the office, too, and are brought up regularly during meetings.

This keeps the key elements of an organization’s culture at the top of everyone’s mind and ensures work outputs continually reflect the company’s values.

Improve Hiring and Onboarding Practices

Effective hiring practices can help you to improve organizational culture and ensures you’re bringing on employees who align with your values.

Some ways to ensure a good cultural fit during the interview process involve:

  • Asking questions that include information about organizational values (like honesty or integrity).
  • Gathering multiple people in the hiring process to get different insights and perspectives.
  • Listening to candidates’ responses and paying attention to their belief structures (this can tell you a lot about their values and whether or not they align with the company’s values).

It's also important to integrate your company culture into the onboarding process.

Share the organization’s mission and core values right from the start, and immediately encourage experiences that reinforce this culture. For example, if your company values teamwork, get new hires involved in collaborative assignments and projects.

Offer Rewards and Recognition

Recognition is a vital component of a positive organizational culture.

Remember, 71 percent of highly engaged organizations recognize their employees when they do good work. People want to feel seen and appreciated.

If your employees’ hard work is never recognized, there’s a good chance they’re going to be less engaged. They may even start to look for new job opportunities with employers who are better known for rewarding and recognizing their team members.

Encourage Transparency and Communication

Another important part of a positive organizational culture is transparency and frequent communication. This involves consistent communication among team members, employees, and the leadership team.

Research shows that organizations that increased transparency during the early stages of the COVID-19 pandemic experienced impressive results. This includes 85 percent more engagement, a 75 percent increase in employee satisfaction, and a 17 percent increase in the likelihood that employees would stick around.

Start Changing Organizational Culture Today

Organizational culture has a significant impact on work performance and employee well-being. Remember the guidelines discussed above so you can start making changes to your organizational culture.

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