We often recognize it intuitively, but what exactly is company culture? Company culture refers to the values, beliefs, and attitudes that serve as guiding principles for everyone in an organization. It shapes employees’ daily experiences at your company — positively or negatively — and when cultivated effectively, it can boost engagement, increase productivity, and retain top talent.
Does your business have a healthy and vibrant company culture that leaves your employees motivated and inspired to do their best? If not, it’s time to invest in it.
In this article, we define what company culture truly is, provide methods to assess your current work environment, and offer strategies to improve it, ensuring you can create a workplace where every employee thrives.
A positive culture directly impacts employee retention, engagement, and productivity.
What is company culture and why is it important?
Company culture, also known as corporate culture or organizational culture, encompasses everything from a business’s physical work environment to its communication styles, leadership practices, and approach to employee wellbeing and compensation. A strong company culture reflects the organization's core principles and influences the business’s day-to-day operations, like how decisions are made, how teams collaborate, and how goals are set.
Its impact is far-reaching. As Donald Knight, former chief people officer at Greenhouse, put it in Lattice’s 2024 State of People Strategy Report, “A positive culture directly impacts employee retention, engagement, and productivity. It’s imperative that we share data linking positive culture to tangible business outcomes.” Done right, corporate culture can result in:
- Higher employee engagement: Employees who strongly agree with the statement “I feel connected to my organization's culture” are 3.7 times as likely to be engaged at work than those who disagree, according to a 2023 report from Gallup and Workhuman.
- Increased productivity: When employees’ personal values align with their employer's, they tend to be more motivated and driven. Cultures that make employees feel valued, respected, and supported foster greater commitment, often boosting productivity and your business’s bottom line in turn.
- Improved talent retention rates: Employees are more likely to stay longer at a company with a culture that values their work and rewards them accordingly. In fact, employees who feel strongly connected to their company’s culture are 55% less likely to look for another job, according to that same Gallup and Workhuman report.
- Higher job application rates: Businesses with toxic company cultures often have a hard time attracting or retaining talent. In the age of Glassdoor, it can be difficult for companies with bad culture scores to fill positions, whereas companies with great company culture may find themselves with a significant competitive advantage and no shortage of applicants.
Despite the importance of workplace culture, only 23% of surveyed US employees strongly agree they feel connected to their company's culture, according to Gallup data from May 2024. Clearly, most businesses still have a significant opportunity to build a culture that resonates with their workforce and drives engagement.
The Four Main Types of Company Cultures
There are four common types of company culture: adhocracy, clan, hierarchy, and market. Let’s take a brief look at each of these culture types, including their strengths and weaknesses.
1. Adhocracy Culture
Adhocracy culture thrives on taking risks and embracing unconventional problem-solving strategies. This type of workplace culture is especially prevalent in startups, where the focus is on fostering creativity and nurturing innovative ideas. It’s a dynamic environment designed to encourage experimentation and rapid growth, allowing new concepts to flourish.
Downsides of this approach? It can lead to an overly competitive work environment in which teams rush to create the company’s “next big thing.” This can put a strain on cross-team relationships and hurt collaboration. Similarly, the pressure to constantly design groundbreaking projects can be emotionally draining on employees and lead to burnout.
2. Clan Culture
We’re all family here! Clan culture focuses on creating a tight-knit, often flat workplace structure, allowing employees to have access to senior leaders, and fostering open communication and a sense of shared purpose. Most common in small companies, this culture fosters strong bonds between employees which can break down cross-departmental silos and boost collaboration. However, if things get too cliquey, employees can be resistant to change and office politics can complicate decision-making and planning.
3. Hierarchy Culture
In stark contrast to clan culture, hierarchy culture operates within a traditional corporate structure, with the C-suite and senior leaders at the top and employees at the bottom of the chain of command. Companies with this culture typically have regimented processes, well-defined career paths, and a focus on business stability and responsible growth. While this approach ensures order and predictability, it can also be inflexible, slow to adopt change, and more inclined to use by-the-book problem-solving rather than creative thinking.
4. Market Culture
Market culture is all about the money. This approach, also known as “compete culture,” is highly focused on tracking key performance indicators, hitting goals, and continuously improving results and the customer experience. While a market culture can drive profitability and performance, it often leads to a high-pressure work environment, especially when targets are overly ambitious. This can increase stress levels and burnout among employees.
Employees today place more emphasis than ever before on the alignment between company culture and their personal values.
Elements of a Great Company Culture
While company culture is made up of many different factors, there are a few that are particularly influential in shaping a positive and effective culture. Here’s a brief look at these elements, their significance, and how they play into the greater role of corporate culture.
Leadership
Effective leadership is crucial for shaping and sustaining a great company culture. Senior leaders and managers must lead by example and set the tone for organizational values and behaviors, so employees are inspired to follow suit. Their behaviors and attitudes can trickle down through the organization and establish a consistent and authentic culture that permeates every level of a company.
Of course, the C-suite also has the power to decide whether company culture is a business priority or not. Lattice’s 2024 State of People Strategy Report found that 64% of employees in companies where executives prioritized a positive culture are engaged, compared to only 30% of employees in companies where executives put productivity first. Having senior leadership buy-in is instrumental in getting the support and resources needed to launch meaningful culture initiatives and create an environment where employees thrive.
Company Mission, Purpose, and Values
A strong mission statement and set of inspiring company core values are behind many great businesses. Together, these guiding principles influence everything from daily operations to long-term strategic goals.
“Employees today place more emphasis than ever before on the alignment between company culture and their personal values,” said Regina Ross, chief people officer at Khan Academy, an education company aspiring to “provide a free, world-class education for anyone, anywhere.” In order to achieve its mission, Khan Academy also has seven core values: “Live and breathe learners,” “Take a stand,” “Embrace diverse perspectives,” “Work responsibly and sustainably,” “Deliver wow,” “Cultivate learning mindset,” and “Bring out the joy.”
These shared values are integral to shaping a positive company culture and guiding the organization's actions and decisions. Plus, by infusing their business practices with these core values, Khan Academy can foster a work environment in which employees’ personal values and organizational goals coexist.
Accountability
Accountability helps create a workplace where trust, credibility, and fairness are top priorities. It also holds employees accountable for their actions and outcomes, promoting a culture of responsibility and ethical behavior across teams and the entire organization. This can help companies cultivate a more transparent and trustworthy culture of high performance.
Employee Recognition
Employee recognition not only shows people that their hard work is noticed and valued, but it also boosts engagement. Gallup and Workhuman’s research shows that employees who receive strong recognition are 20 times as likely to be engaged as those who receive poor recognition. Despite the importance of ongoing recognition, only 34% of employees say their employer has a recognition program, and of those that do, just 13% rate it as “excellent,” according to Gallup.
By regularly acknowledging employees’ efforts, rewarding loyalty, and celebrating achievements, companies can create a culture where employees feel appreciated and motivated to do their best work.
A strong culture ensures that employees feel supported, respected, and connected, fostering a sense of belonging and loyalty.
Your work environment encompasses more than just the physical office space — it also includes how employees experience their roles and interactions within the company.
Effective Communication
Effective communication involves more than leaders just sharing information. It entails two-way dialogue in which employees feel valued and heard. Leaders must actively listen to their teams, take their feedback to heart, and implement mindful changes that drive the company forward. Regular surveys and open channels for sharing opinions and constructive feedback are essential for maintaining this ongoing conversation.
Work Environment
Even the physical setup of your company office can impact culture. Are employees cut off from each other in small cubicles? Or does your company offer common spaces for teamwork and socialization? A well-designed work environment can allow employees to find quiet, private areas for individual work, as well as public spaces for collaboration.
Your work environment encompasses more than just the physical office space — it also includes how employees experience their roles and interactions within the company. A strong culture ensures that employees feel supported, respected, and connected, fostering a sense of belonging and loyalty. Offering perks such as remote work options, flexible scheduling, and paid time off helps employees achieve a healthy work-life balance, allowing them to return to work refreshed and inspired.
How to Build a Great Company Culture
Looking to improve your company culture? It can be challenging to know where to start. Here are a few tips to help your team build a successful company culture.
1. Involve everyone.
For company culture to feel authentic, it’s essential that everyone in your company, from entry-level employees to the C-suite, is genuinely invested and involved. You can’t depend on your culture to trickle down through the organization. Rather, you need to ensure you have a deliberate and inclusive culture that actively engages all levels of the organization. This means collecting ongoing employee feedback, encouraging employee participation in decision-making, and creating opportunities for everyone to contribute to and shape the culture. This will help you build a cohesive and genuine culture that resonates with your entire workforce.
2. Leaders need to live and breathe culture.
Leading by example is the easiest way for managers and executives to inspire and align their teams. Ensure that your senior leaders and people managers consistently embody the company culture. Employees are much more likely to adopt similar values and behaviors when they see them practiced at the top.
3. Hire for the culture you want.
Company culture is influenced by everyone who works at your company, so don’t forget to carefully weigh culture fit during the recruiting process. Just remember that focusing solely on culture fit can lead to hiring similar people, resulting in a homogeneous workplace over time.
To foster a dynamic and diverse work environment, prioritize culture add when evaluating candidates. Focus on choosing applicants with the best skills, interesting backgrounds, and compelling experience, which can help you cultivate a culture that values diversity and drives innovation.
4. Celebrate success.
In a thriving culture, employees work together toward the company’s shared goals, and acknowledging their efforts can reinforce this collective effort. Celebrating achievements boosts morale, strengthens team spirit, and draws a clear connection between an individual’s contributions and the company’s success.
Lattice Praise encourages employees to recognize their team members' accomplishments and tie their achievements to company values. This can help build a more positive and supportive workplace and create a more engaged workforce.
5. Implement job leveling.
Job leveling establishes clear job roles, hierarchies, and career paths within an organization, helping employees understand the expectations of their role and the skills needed for advancement. This can help businesses build a more transparent, fair, and growth-oriented organizational culture, which can engage and motivate ambitious employees.
Job leveling also allows your business to be more open around salary band data, so employees can understand their earning potential and where they fall in their current payscale. Using a tool like Lattice Compensation can help your business communicate pay philosophies, policies, and pay bands across your organization, ensuring consistent and equitable practices.
How to Evaluate Current Company Culture
Looking to assess your current company culture? Here are three ways to keep a pulse on its health and overall effectiveness.
1. Conduct regular employee surveys.
Your employees are the best source of insight into your company culture, so when it comes to evaluating your culture and identifying areas for improvement, start by asking them! Regularly analyzing qualitative and quantitative data from engagement and pulse surveys can reveal key areas where your business can enhance engagement, productivity, and culture.
Using tools like Lattice Engagement and Lattice Analytics, your business can break down the data by factors like gender, tenure, job level, office location, and more. These views allow you to quickly pinpoint high-impact areas of improvement and develop targeted action plans to address employee feedback swiftly and effectively.
2. Leverage exit interviews and surveys.
Departing employees are often more forthcoming about how your business can improve, making them a valuable resource when you’re trying to revamp company culture. If you haven’t already, incorporate exit surveys and interviews into your company’s offboarding process. This feedback can help you identify and address underlying issues so they don’t push other employees out the door.
3. Ask leaders and employees to describe the company culture and compare their responses.
Another helpful exercise is having senior leaders and employees describe your company culture. When you compare their answers, are they similar? Where do they differ? Identifying gaps or discrepancies in the perceptions of these two groups can highlight areas for improvement and alignment within your company culture. Then, your HR team can take targeted actions to bridge those gaps and ensure that your company's stated culture is reflected in employees’ day-to-day experiences.
How to Improve Current Company Culture
After assessing the current state of your company culture, you might decide a few things need to change. To build a good company culture that attracts and retains top talent, your business can implement several key strategies.
1. Make appreciation a part of your everyday workflow.
From day one, introduce new employees to your company’s culture of recognition by teaching them how to acknowledge their peers’ hard work. If you use a tool like Lattice Praise, set up everyone with an account and train them on how to use it during new hire onboarding. This helps new hires quickly grasp your company’s approach to recognition and reinforces a culture that celebrates great work.
For existing employees, make it as easy as possible for them to celebrate their peers. Lattice Praise integrates seamlessly with instant messaging platforms like Microsoft Teams and Slack, allowing employees to easily shout out their colleagues’ achievements without having to log into a separate system.
2. Offer flexibility to employees.
Giving employees control over their schedules and work locations can build a culture of trust and accountability. Offering perks like flexible scheduling, asynchronous work, work from home, and mental health days can help employees find better work-life balance. These benefits can support employee wellbeing and enhance efficiency and productivity, creating a more engaged and motivated workforce.
3. Review and revamp compensation and benefits to stay competitive.
In order to attract and retain top talent, your business needs a competitive total rewards package. Lattice Compensation offers accurate market benchmarks powered by Mercer to help you assess your pay against your competitors. Plus, it allows you to look at data based on factors like role, level, geography, and more for informed decision-making. In addition to keeping your workforce satisfied, this approach also helps ensure all employees are compensated fairly for their contributions.
4. Check in with your employees regularly.
Lastly, regularly check in with your employees and gather their feedback on how to enhance your company culture. Think of your culture as a dynamic entity that evolves with your business and workforce. To support its growth, you'll need to implement targeted initiatives, update policies, and adapt as needed.
Lattice Engagement simplifies this process by enabling you to launch regular employee engagement and pulse surveys. With these insights in hand, your business can quickly address issues, maintain successful practices, and prioritize employee happiness.
How People Teams and Managers Can Collaborate to Build Company Culture
Building an effective corporate culture takes teamwork. Luckily, human resources teams have the perfect partner for the job: managers. Managers significantly influence employee experience and team culture, making their role crucial in shaping a positive work environment.
With a people platform like Lattice, people teams can empower their managers with the right tools to support their employees effectively, including:
- Collaborative one-on-one agendas: These ongoing conversations foster open communication and trust between employees and managers by regularly addressing performance and career goals.
- Two-way feedback: Constructive feedback promotes continuous growth and improvement, supporting a culture of learning and development.
- Goal-setting: Clear goal-setting aligns individual objectives with company goals, driving accountability, performance, and purpose.
- Career tracks and individual development plans: Together, these tools provide a roadmap for advancement, showing employees how their career can grow within the organization.
- Compensation cycle management: Consistent and equitable merit increases can enhance employee satisfaction and retention by reinforcing a company culture of recognition and fairness.
By empowering managers with these strategies and tools, HR teams can cultivate a cohesive and engaged workforce, ultimately enhancing overall company culture.
Examples of Companies With Great Organizational Culture
While there are tons of companies out there with strong work cultures, below are three brands known for fostering a healthy culture that helps employees thrive.
Warby Parker
Eyeglasses retailer Warby Parker is known for its commitment to social responsibility. The company’s “Buy a Pair, Give a Pair” program has distributed over 15 million pairs of glasses to those in need, proving Warby Parker’s commitment to its mission, “to inspire and impact the world with vision, purpose, and style.” Plus, the company issues an Impact Report each year to show how it embodies its core values and is growing responsibly.
The company also loves to recognize its employees’ achievements. To highlight its great employees, Warby Parker hosts company-wide virtual shoutouts, monthly Blue-Footed Booby Awards, custom-designed anniversary gifts, and more.
Squarespace
Website-building company Squarespace excels in fostering a culture of inclusivity and creativity. The company supports hybrid work, encourages employees to pursue their passions, and regularly plans virtual and in-person events to bring teams closer together.
Squarespace is deeply committed to diversity and inclusion, demonstrated through its comprehensive policies. The company offers paid family care leave, fertility and adoption benefits, and transgender-inclusive healthcare, ensuring that employees from all walks of life feel welcomed and supported.
Adobe
Computer software company Adobe is celebrated for its commitment to a culture of innovation and employee empowerment. The company also delivers top-notch perks like wellness reimbursements, a paid sabbatical after five years of service, delicious in-office catering, professional development and higher education stipends, and donation matching to keep employees happy, healthy, and fulfilled.
Adobe also encourages managers and employees to have ongoing, two-way discussions about performance and career growth in their Adobe Check-in conversations. This ensures employees get the support and feedback they need to grow within the company.
Improve your company culture with Lattice.
Ready to invest in your company culture? The right technology can help you take a data-driven approach to improving workplace culture.
Lattice’s AI-powered people platform can help you track employee engagement, analyze feedback to identify high-impact areas, and enact meaningful change within your company. By leveraging these insights, you can build a company culture that truly supports and engages your employees.
Start building a better culture today. Schedule a demo to see Lattice in action and discover how our tools can transform your workplace.
