Company Culture

What Is Organizational Culture — and Why Does It Matter?

November 4, 2022
November 16, 2022
Jennifer Ernst Beaudry
Lattice Team

Almost every company has an elevator pitch — a short, snappy sentence that distills what they’re about: their company culture. Unfortunately, there are plenty of companies with a well-crafted one-line mission statement but an inconsistent organizational culture that fails to connect to the brand’s core values, or a company culture that achieves its business objectives but leaves its workers demoralized and demotivated in the process.

The pandemic and the associated rise in remote work has only underscored how critical having a strong company culture is for hiring and retaining valued employees. And in what remains an ultra competitive job market, people are choosing to work at companies that have strong, positive, robust organizational cultures

“Strong organizations provide a purpose-driven culture that gives employees a clear sense of their job and how they contribute to company success,” said Julie Lamothe-Jensen, founder and principal of Human Resources consultancy Moxie HR Strategies. “Moreover, it reinforces, rewards, and recognizes employees accordingly.”

A strong, healthy organizational culture is a competitive edge, noted Gabriel Tupula, CEO of digital consulting firm Big Bang. “If everyone is aligned about what the vision is and how to get there, company culture can be a powerful lever to achieve organizational success,” he said.

What Is Organizational Culture?

While a company’s mission and values are the starting point, it’s how those values are expressed — every day and at all levels — that makes up an organization’s culture. 

“Company culture is the summation of all the thousands of interactions, norms, and behaviors at a company. Culture is also the vehicle through which employees can attain a meaningful work experience,” said Jack Altman, CEO and cofounder of Lattice, in his book People Strategy: How to Invest in People and Make Culture Your Competitive Advantage. The three pillars of company culture — purpose, community, and growth — all play a critical role in shaping a company’s environment.

According to Altman, each individual has a purpose — a reason they “get out of bed every day,” and a value that gives meaning to their lives. Each company, he said, has its own purpose as well, and a healthy corporate culture is built when employees can see a “clear connection between [their] personal purpose and how [they] spend [their] time at work.” At companies with strong cultures, leadership makes sure employees are clear about where and how their efforts support the company’s goals and mission. 

“Knowing that your work matters to the world and that you have a chance to make a dent in the universe is so important to employees,” Altman said. “I believe that the articulation of a company’s purpose, and how it connects back to employees’ purpose, is one of the most critical aspects of a leader’s role.”

“While leadership has a very important say in what they wish the culture to be...the ultimate definition for a company’s culture are the actions of [its] people.”

Altman explained that company mission ultimately helps drive the second critical pillar of company culture: community. “Community and purpose go hand in hand, feeding into one another and bringing employees closer together,” he said. “Through this shared purpose and identity, strong relationships are formed.”

Gina D. Weatherup, CEO and founder of facilitation and mediation practice Chantilly Mediation and Facilitation, echoed this sentiment. “Nothing has a stronger effect on culture than how people treat each other every day,” she said. “Culture is constantly co-created [by the joint actions of all company employees] and reinforced within every organization.” 

“The people define the culture,” agreed Jim Frawley, CEO of executive coaching firm Bellwether Hub. “While leadership has a very important say in what they wish the culture to be — and can be great role models — the ultimate definition for a company’s culture are the actions of [its] people, and the behaviors that are celebrated and tolerated.”

With mission and people aligned, success and opportunities — i.e., growth — is the final piece of the culture puzzle. “It’s an environment of growth that allows for all the other things that make a culture strong,” said Altman. “Growth provides fertile ground for employees to take on new responsibilities, new roles, and new problems. An environment where people can’t help but grow — that leads to great cultures.”

Signs of a Healthy Organizational Culture

Purpose, community, and growth may be the framework of a strong corporate culture, but how this manifests day-to-day can vary from company to company. While there’s no one right way that healthy organizational cultures need to look, experts say functional, robust corporate cultures share certain traits. Here are three signs of a healthy organizational culture.

1. Investing in Career Growth

Firms with thriving company cultures actively promote employee growth, with robust learning and development (L&D) programs and upskilling initiatives that prepare employees for future success.

Additionally, a commitment to delivering frequent, clear, kind, and actionable feedback — and a receptiveness from leadership to delivering as well as receiving feedback — ensures that team members are engaged in their work. It also lets them know that they’re valued and being given the tools they need to continue growing their skills and career with their firm.

“Strong cultures promote a growth mindset that views challenges and failure as a learning opportunity that can serve as a springboard to develop one's abilities,” Lamothe-Jensen added.

2. Valuing Work-Life Balance and Providing Robust Benefits

Equally important is how a company treats time away from work. Whether it’s paid time off (PTO), sick days, or just work start and stop times, company behavior says a lot about organizational values. So do the benefits a company invests in (or doesn’t) for its people. 

According to Maurice Bell, Head of People Operations at Lattice, benefits are one of the ultimate expressions of company culture. “Broadly speaking, we look at our values as a gut check,” he said in an article about Lattice building its benefits around company values. “When we consider new ideas, we ask, ‘Does this feel authentic to the employee experience we want to create at our organization?’”

“Strong cultures often exist alongside a great benefits package,” confirmed Weatherup. “In cultures that are seen as more positive and caring and happier, benefits are likely to include generous PTO and generously paid-for benefits.” 

3. Committing to Diversity 

In addition, strong organizational cultures prioritize diversity and support it in tangible ways, with robust DEIB initiatives. Strong cultures, Lamothe-Jensen said, “proactively include diversity of thought and perspective into daily work to unlock the full potential in the business and employees.”

In other words, she said, a healthy culture is one where ”people are allowed to bring their full selves to work each day regardless of their race, ethnicity, gender identity, religious expression, and the like.”

Warning Signs of a Toxic Culture

On the flip side, experts said, there are warning signs or red flags that a company’s culture isn’t the healthiest, or is heading in the wrong direction.

One way to tell, Lamothe-Jensen said, was to take a look at which employees the company rewards — and which ones it doesn’t. When organizations focus recognition and promotions exclusively on the top performers or most visible leaders — even if those recognized are disruptive employees or selfish colleagues, or they alienate coworkers and collaborators in the process of achieving their goals — it sends a clear, negative message about the organization’s cultural values.

And while some businesses require long hours or near-constant availability, how well firms live up to their own stated expectations about workload and time off is an unmistakable sign of its actual priorities.

“If a company has a policy that there are no meetings on any given day, are there truly no meetings happening? If a company claims to offer work-life balance for employees, is it considered normal to text staff when they are not working to check in on work-related things?” Weatherup asked. 

That coherence — or disconnect — is immediately obvious to employees, she said. And if the reality isn’t aligned with the promise, “there may be a strong culture, but it is not the same culture [the company is] advertising,” she said.

In fact, Tupula said toxic culture can often be seen as a disconnect — between employees and leadership, between professed values and real-life actions, or between what the company owes employees and what it delivers. “The biggest measure of a healthy culture is alignment,” he said. “When employees come into the office unconvinced, unmotivated, and with a negative outlook, it’s often a sign of a deeper problem.”

How to Build and Evolve a Strong Culture

Whether a firm is just starting out or trying to evolve its culture to meet the needs of a newly remote or hybrid workplace or other changes in the broader environment, there are critical actions to take. Here are three key steps for building a strong culture — and continuing to evolve it over time. 

1. Listen to employees. 

Giving employees a voice at all levels of decision-making — and listening to and taking action on their feedback — is not just a show of respect, it’s an essential way to build community in the workplace. At Lattice, Bell said the company uses frequent pulse or feedback surveys to make important decisions (like what benefits package options are most crucial to employees as the organization grows), as well as to assess initiatives, like how well a new onboarding process was going, for instance.

“In company cultures where transparency is highly valued, strategic planning will include everyone in some way, shape, or form,” said Weatherup. 

“Organizational culture can be a firm’s best and most potent weapon, as it leads to employees who are typically happier and more resilient.”

Companies looking to incorporate more employee feedback into their planning and decision-making have options. While in smaller firms a commitment to open communication might mean every employee has a literal seat at the table (or at least commenting rights) during planning, it’s not the only way. Larger companies, or firms looking for a place to start, can use surveys, town hall meetings, and smaller focus groups to hear directly from employees about what matters to them. But once you collect that feedback, it’s critical to acknowledge that the feedback was heard, and share follow-up information with employees about the ways it’s being acted on or incorporated. 

2. Hire in alignment with company values. 

Bringing company priorities to the hiring process is essential for firms looking to backfill or continue to boost their headcount — and their culture. 

“We highlight our company culture to attract those with whom it resonates, and we don’t try to convince candidates that this is the right fit for them,” said Tupula.

Recruiting potential new hires who share brand-critical values can make teamwork more seamless, mentoring easier, and the growth of the company as a whole much more possible. Conversely, failing to query candidates on their corporate culture preferences can have unforeseen negative consequences.

“When you dilute your culture by hiring people whose values do not match your company’s, you may see short-term productivity and cash gains, but you will inevitably run into problems in the long run,” Tupula cautioned. 

Companies that have seen mismatches between their new hires and their business's aims should assess whether organizational culture is included in job postings, covered in interviews, and present in all aspects of the recruitment process. If not, some or all of the recruiting and hiring process could need an overhaul.

3. Be open to change. 

As paradoxical as it sounds, companies with strong organizational cultures aren’t afraid to let those hard-won cultures change and develop. The shift for many workplaces to a hybrid or even fully remote model has been an enormous stressor when it comes to building culture, but companies that were able to identify what was essential to their culture — and find ways to foster it regardless of where employees are located — have been able to move forward with a renewed sense of purpose and mission. 

“Companies need to evolve with changing times, shifting market demands, different customer needs, and ever-evolving employee expectations as new generations enter the workforce,” Lamothe-Jensen noted. “This doesn't mean employees get to make all the decisions about how a company is run. But it does mean that businesses need to pay attention and respond by evolving organizational practices along with changing times.” If they don’t, they risk a host of negative consequences, such as dips in employee morale, engagement, retention, and more. 

Why Organizational Culture Matters

An organization can only be as successful long-term as its workplace culture is healthy. When the work environment is positive, and the organizational culture and leadership team are steered by well-communicated shared values, employees are set up for success — and they know it.

And while building a strong organizational culture has always been top-of-mind for forward-thinking firms, Weatherup said that in today’s climate of ever-present change and uncertainty, it’s more important than ever for all employers. 

“Particularly right now, in a job-seeker's market with the continuing Great Resignation, leaders [should] consider culture as both an integral part of how to do strategic planning, and also as an employee-led project to improve the culture in whatever ways the employees are most interested,” she recommended. 

That deeper employee engagement, Lamothe-Jensen said, can be seen in employee motivation, as well as in retention and recruiting. “Healthy organizations tend to have low turnover, high employee engagement, and a much more favorable employee brand than competitors that insist on draconian practices that put profits over people,” she said.

Organizational culture can be a firm’s best and most potent weapon, as it leads to “employees [who] are typically happier and more resilient to challenges, [and] have opportunities to grow and a sense of belonging,” Lamothe-Jensen said. “And [those employees] tend to be more committed to excellence because they feel appreciated and valued for their contributions.” 

Looking to grow your company culture while staying remote? Watch Lattice’s webinar
The Art of Building a Thriving Company Culture in the Remote Work Era.