Why does workplace culture matter?

When I finished college and started my career in business management and human resources 20 years ago, I recognized quickly the importance workplace culture has on attracting and retaining high performing talent. I’ve been asked thousands of times to describe company culture. I continue to find this question to be of genuine importance when recruiting new employees. So, how exactly do you describe organizational, work or office culture? Why is culture so impactful?

Workplace culture represents shared values, goals, attitudes and behaviors. Culture is developed and modified to enhance employee engagement, job satisfaction and productivity. Evidence of a strong company culture can be seen in successful organizations with consistent growth and low employee turnover. Workplace culture most often mirrors company leaders' personal attitudes and behaviors. Leaders have an ability to strengthen core values by careful adherence to a defined culture. Contrary to this, a leader can also alter culture with behaviors that are inconsistent with shared company values.

Employee benefits are often the first reference point of culture. For example, a company can show their value towards employee’s work-life balance through a generous paid time off policy. A comprehensive medical insurance plan helps employees feel better about maintaining good health. Office comforts such as a clean and professional workspace, employee lounges, meeting rooms, social events and activities, food, exercise equipment, and recognition help reinforce culture and are meaningful benefits to most employees.

In an MIT Sloan Management Review, a June 2019 article analyzes culture from 1.2 million employee reviews on Glassdoor, among 500 of the leading companies in the world. 9 out of 10 CEO’s and CFO’s believe that “improving corporate culture would increase their company’s value, and nearly 80% ranked culture among the five most important factors driving their company’s valuation.” Additionally, the article lists the ‘Big Nine Cultural Values’ most common among these 500 companies. Those values include agility, collaboration, customer, diversity, execution, innovation, integrity, performance and respect.

Developing and maintaining a positive culture, thereby enhancing employee engagement, is important to the sustainability and growth of any organization. In a December 2015 article in the Harvard Business Review, Proof That Positive Work Cultures Are More Productive, it states, “Disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time. Importantly, businesses with highly engaged employees enjoyed 100% more job applications.” In addition, poor employee engagement negatively impacts loyalty. “Workplace stress leads to an increase of almost 50% in voluntary turnover.”

The Society for Human Resource Managers (SHRM), published an article in November of 2019 with data that measures the costs of a bad work culture. See the table below.

A workplace culture that engages and empowers employees is one that will form a lasting bond of commitment and trust with employees. Benefits matter. Style and tone matter. Comforts and flexibility in the workplace matter. Being able to communicate ideas matter. While some old school business executives might find culture to be unnecessary ‘fluff’, data behind the results of a strong workplace culture are irrefutable. Building an effective culture takes time and effort. Maintaining that culture requires a universal commitment among senior management. When companies get culture right, most everything else falls into place. 

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