Whether it’s positive or toxic, company culture creates ripples that affect everything from employee engagement and retention to productivity and a sense of belonging at work. And ultimately, these factors also impact wider business performance.
HR teams are in a powerful position to promote and maintain the kinds of positive workplace cultures that allow your people to do their best work. But sometimes it’s unclear if these efforts are seen by employees.
To find out more, Lattice, in collaboration with YouGov, shared the findings of our 2024 State of People Strategy Report with 1,011 UK employees and interviewed them. Our goal was to uncover employee perspectives on why a positive workplace culture makes such a difference — and how HR can help shape and maintain it.
Why Culture Matters to Employees
In her book Happiness at Work, executive coach and author Jessica Pryce-Jones estimated that individuals spend an average of 90,000 hours at work during their lifetime.
With so much of our lives spent working, it makes sense that company culture makes such an impact. “If the culture is exclusionary, uncomfortable, or misaligned with your own values, it can make making a living exhausting and sometimes literally bad for your health,” said creative copywriter C Marshall.
But when the organisational culture is good, Marshall added that “it makes you feel secure and supported in your working relationships, and creates space for you to do great work.”
64% of surveyed UK employees said a positive workplace culture greatly impacts their productivity.
But corporate culture isn’t just important for employees — it’s crucial for business success too, as Marshall pointed out. “A strong culture puts both individuals and teams on a stronger, more resilient footing, a firm foundation for performance even when the going gets tough.”
And as such a crucial facet of the employee experience, “company culture simply can’t be left to chance,” said Alison King, managing director at Bespoke HR. Here’s why.
A positive organisational culture promotes trust.
When employees have trust and autonomy, they’re free to do their best work. Our survey found that 64% of surveyed UK employees said a positive workplace culture greatly impacts their productivity. For women, the effect is even greater, with 71% indicating that a positive culture affects their productivity.
“A positive workplace culture will develop a sense of purpose and increase employees’ willingness and engagement,” said Tracey Beveridge, head of HR and senior executive assistant at Personnel Checks.
It can also drive creativity and improve processes — because employees want the business to succeed, added Beveridge. “When a person feels appreciated, valued, and supported, they are more likely to focus and deliver. When working as part of a team that are all committed and supportive of each other they will naturally encourage each other to reach their goals.”
On the flip side, 66% of employees said that a lack of trust from their managers or leadership contributes to a toxic work culture. This can also create competition where there doesn’t need to be any, said marketing executive Gina Jackson: “It breeds contempt, hatred, and sometimes fear in that people do not want to do anything in case they’re punished, given less work, or written up for no reason.”
A positive culture creates a sense of belonging and safety.
Employees want to feel safe and supported at work — and on the whole, most do. In our survey, 65% of respondents said their organisations have effective DEIB programmes. Perhaps this success is a reason DEIB has dropped down the list of priorities for HR, falling from being a top priority for 30% of human resources teams in 2021 to a top priority for only 17% in 2023.
The good news is that despite this shift in priorities, 90% of respondents to our 2024 State of People Strategy Report said their company’s DEIB efforts are staying the same or increasing.
That’s reassuring because, as King said, DEIB programmes help “create a sense of belonging, making employees more committed to their work and the overall success of the company.” She also mentioned that these programmes contribute to company cultures where all voices are heard, which in turn leads to more thoughtful and comprehensive decision-making processes.
To move toward this kind of organisational culture, King recommends cultural competency training, which can help employees understand and appreciate different backgrounds. “This leads to a more tolerant and respectful workplace culture where individuals are mindful and appreciative of each other's differences,” she said.
At her consultancy business, King has observed that organisations that prioritise diversity and inclusion are more likely to attract a diverse pool of top talent. “What’s more, we know that employees are more likely to stay with a company that values and respects their individual differences. DEIB programmes contribute to a positive employer brand, making the company an attractive place to work.”
A positive culture places wellbeing front and centre.
For employees, wellbeing is also a critical part of the puzzle. But sometimes, this aspect of a positive company culture isn’t given the attention it deserves. “Since the pandemic, wellbeing has remained a key priority for businesses — and those who neglect it will experience repercussions,” explained King.
To turn the focus onto wellbeing, King and her team have partnered with a wellbeing provider platform and offer free access to all their clients. “Despite this, take up has been slow from business owners or senior management,” she said. “This suggests that more needs to be done to understand the wellbeing needs of the workforce and to ensure that wellbeing is captured as part of the annual budgeting process. It’s no longer a nice-to-have, but a necessity.”
UK Employees Believe HR Impacts Culture
“HR has always played a crucial role in shaping company culture,” said Therese Procter, UK-based partner and senior consultant at global HR consultancy OrgShakers. HR teams achieve this through “implementing policies, fostering a positive work environment, and promoting values that align with the organisation's goals,” she added.
Procter noted that this also means that people teams “often serve as the bridge between employees and the leadership of the organisation, contributing to an inclusive workplace.”
So what should HR departments do when employees come to them with concerns about corporate culture? “Don’t assume they’re the only one — they won’t be,” said Marshall. “For every person who manages to speak up, there are always several who don’t have the energy to or think it's not worth it because nothing will change. So listen. Thank them, 'cause it takes guts.”
The good news is that many UK employees do recognise the role of HR in shaping company culture, with 57% of our survey respondents saying that their HR departments have a significant impact on company culture. Moreover, 67% of surveyed employees think that HR has a significant impact on morale, while 52% say HR has a significant impact on employee performance.
But this confidence isn’t necessarily bubbling up to C-suites.
The Disconnect Between HR and the C-Suite
According to our 2024 State of People Strategy Report, 83% of HR leaders say HR’s greatest area of impact is productivity, but only 61% think that their C-suite would agree. In addition, only 50% of HR leaders think that their C-suites recognise the direct impact a positive company culture can have on business outcomes.
King said that she views this disconnect as worrying, especially as “C-suite leaders are role models. Their behaviour, work ethic, and adherence to company values set the standard for employees.”
As the MD of an HR consultancy, King said that she often sees company leaders who create and publish the core values and principles that define their organisation’s identity, ethics, and standards. “However, they fail to fully establish them by embedding them into working practices and reinforcing them through the HR life cycle.”
Marshall added that often, this can stem from a lack of appetite to establish these values and see them through. “The values, the internal brand, the culture strategy is the sexy stuff — when you can get budget to do it. Bedding it in, building frameworks and structures and rituals to help everyone at every level understand how it should show up, is the boring but critical bit. Like many big projects, these things can be sweated over for months and then left in a drawer. And like many of the best things in work and relationships, culture is a practice. You do it continuously.”
But when C-suite leaders recognise the impact of positive cultural values — and do the boring but critical work required to embed those shared values throughout the company — the results can be impressive. At such companies, employee engagement levels rise to 64%, compared to 30% at those where productivity is the priority.
HR’s impact on revenue is under-appreciated.
While employees see the value of HR in shaping a positive, healthy culture, they don’t necessarily see the link between HR and the company’s bottom line. Our survey found that only 14% of employees see a connection between an effective HR team and company profits.
Unfortunately, that’s an opinion shared by the C-suite, with our 2024 State of People Strategy Report finding that only 27% of HR professionals say their company executives believe HR impacts revenue.
High-performing HR teams are better at demonstrating this link to revenue growth and business impact, with teams in Europe and the UK leading the pack. Strategies for achieving this connection include:
- Maintaining a seat at the leadership team table
- Defining clear, measurable metrics
- Aligning HR initiatives with wider business goals and objectives
- Conducting regular stakeholder surveys
- Using a data-driven approach to communicate outcomes and deliverables
People leaders can effectively illustrate the impact of HR on revenue by turning to research. HR has a key role in shaping the indicators of a great company, which the Fortune 100 Best Companies to Work For® list has shown to include elements like high-trust cultures, high retention rates, and lower levels of burnout.
But companies on the Fortune list aren’t just the best to work for — they also outperform the market by a staggering factor of 3.36. And results like those mean it’s even more important to ensure your company culture creates the kind of environment that employees need to thrive.
The Cost of Toxic Work Cultures
“It typically takes months to years to establish a strong, positive culture,” said Procter. But she also cautioned that destroying this hard-won culture can happen much more quickly: “Negative events, poor leadership decisions, or a sudden shift in values can erode a positive culture in a relatively short period.”
Procter noted that these incidents — if not addressed promptly — can have immediate and lasting consequences on the work environment. In our survey, employees in the UK identified a range of factors that they believe have driven toxic cultures over the past two years. First, 66% pointed to a lack of trust from managers or leaders, followed by 61% of employees who cited favouritism from managers as an issue. Additionally, 59% mentioned that a failure to address poor behaviour can be a factor, while 58% highlighted confusion around roles and responsibilities as a contributor.
“Addressing and rectifying toxic workplace cultures is crucial for the long-term success of an organisation,” said Procter. And that’s because these practices “directly impact employee satisfaction, organisational performance, and overall company reputation.”
The most damaging effects of these toxic cultures are a loss of trust and a lack of psychological safety, added Marshall. “People feel undermined and insecure. Over time, those feelings can accrete into damaging resentment, or a powerful motivation to go somewhere else.”
The Importance of Addressing Toxic Work Cultures
A failure to address this kind of employee feedback can stem from a disconnect between HR, employees, and executives, said Marshall. “When management fails to inform colleagues or consult with them properly, when they say one thing and do another when they push hard without motivating people properly, people quietly burn out and get treated like problem children, when their experiences are actually symptoms of a systematic issue.”
C-suites may think addressing these kinds of systematic issues is HR’s job, but HR can’t do it alone. Our 2024 State of People Strategy Report found that only 48% of HR practitioners say their C-suites take the data from employee engagement surveys seriously.
That lack of support can damage HR’s ability to properly assist and engage employees which, over time, may lead to the kinds of toxic workplaces we’ve touched on above. But there are plenty of things that can be done to drive culture change, too.
Moving the Needle: HR Priorities for 2024
Employee insights are one of the best ways for HR teams to shine a light on action points for assessing and improving company culture. Based on the survey results, it’s clear that HR leaders should focus on:
- Building trust among team members
- Maintaining investments in DEIB
- Enabling managers to better support employees with role clarity
- Cultivating a culture of feedback
- Implementing engagement strategies focused on surveys to listen and understand employee needs
Creating a strong organisational culture also relies on connecting HR initiatives to wider business impact. Find out more about how that’s possible in our 2024 State of People Strategy Report.
