What Makes a Great Company Culture (and Why It Matters)
Culture is critical to your company's success and a valuable tool to attract better talent. Here's why.
By Eric Tolic •
Opinions expressed by Entrepreneur contributors are their own.
If the ongoing "Great Resignation" has taught us anything since hundreds of workers began fleeing en masse in early 2021, company culture matters most.
According to a survey by FlexJobs, 25% of employees quit their roles in the six months leading up to March 2022 due to a toxic workplace. These days, unfortunately, many entrepreneurs and managers have a warped view of company culture — and when we define "culture," we can more accurately say what it's based on and what it is not.
Company culture is a system of shared values and beliefs that maintain social cohesion as well as contribute to ideation and growth. By contrast, it is not solely built upon material perks like free coffee or background music in the office.
A positive work environment promotes work-life balance, makes individuals feel as though they belong to a community, and encourages employees to be their best selves. Not only can it stave off high turnover rates but also boost productivity and foster innovation. These factors all lead to a startup being more competitive.
Related: Company Culture Is Everything
How to derive a winning company culture
Your actions as a founder directly impact your company as a whole, whether consciously or not. So even if you think your culture does not warrant considerable focus, it's a critical component of your business that you cannot ignore.
To better understand where your organization falls on the culture spectrum, I've outlined a few ways to identify the good from the bad.
Positive company culture traits
- Low turnover and opportunity for growth
- Transparent and responsive management
- Recognition of success and achievements
- Healthy work-life balance among employees
Negative company culture traits
- High turnover and a professional ceiling
- Lack of clarity and direction from management
- Failure to acknowledge and reward good work
- Employee alliances and gossip regarding others
And if you don't know where to start to build a positive company culture, here are a few steps to consider.
1. Build the right team
To begin, a startup's culture will ultimately be shaped by its founder and his or her vision.
As someone that has and continues to scale high-growth ventures across various domains, I've always prioritized hiring people who share the same values and beliefs. Finding the right cultural fit in a candidate during the hiring process is critically important. If your friends are a reflection of you, then your business will be a reflection of the people you hire.
Creating an inclusive community of people with similar values helps you build stronger social bonds within your organization that translate to longer employment and a warmer atmosphere. As anyone that's ever worked any job can attest, one of the best feelings is being able to call the people you work with, friends.
Related: 5 Must-Haves for Entrepreneurs and Their Startups to be Successful
2. Create incentives for success
Incentives drive human behaviour in a very primitive and social sense. The right motivators, when established, can lead your startup to great heights.
One of the most important outcomes for an employee in their role at a company is personal or professional growth. By prioritizing education, development, and rewarding workers with higher wages as a result of self-improvement, businesses can optimize their human capital.
Celebrating wins and recognizing productive behaviour will only lead to more of the same. As such, an easy way to predict the direction of your company as a founder is identifying the ceiling that employees can aspire to reach. Will you give them room to grow or have you set limits to their growth?
3. Establish goals and expectations
Alongside the need to implement proper incentives as a founder is the duty to set forth expectations of success.
As a startup, your mission is to become an innovator in the field in which you operate. While lofty, this goal is what attracts top talent in the first place and the best employees often rise to the occasion. By creating ambitious objectives, founders will inspire their subordinates to meet those goals.
Additionally, goal setting provides an outlet by which a team can align around and offers a tool for holding others accountable when targets are not met. Naturally, the goals and expectations you set for your startup will be the floor for its success.
Related: How to Build a Company Culture That Retains Loyal Employees
4. Develop trust
When we think of toxic work environments, we often think of toxic leaders. For this reason, upper-level management needs to embody and live by the core values they preach.
Establishing trust is not magic. It is quite easy to foster through positive action and reinforcement. Therefore, founders must always maintain open lines of communication and transparency. Being responsive to employee requests and encouraging meetings with informal dialogue have proven successful numerous times over.
They don't have to share every minute detail with their employees in regard to their personal life, but founders do have to be authentic if they want to build trust among staff within an organization.
Related: 7 Trust-Building Tips To Use In Your Business
5. Foster a work-life balance
Finally, no startup can escape the reality that every employee has their own life outside of work. Allowing for a work-life balance through fair working hours and restricting all tasks to these hours is essential.
Additionally, offering competitive wages, paid time off and healthcare benefits will strengthen your company as a founder and help you retain your most talented employees. Startups need to focus on perks that really matter, namely, those that provide long-lasting value and aren't cheap or gimmicky.
In an early-stage startup, the biggest causes of failure are often internal factors like poor workplace culture. By reforming your company's culture, you can drastically improve your employee retention, recruiting and productivity.
In a world dominated by technology, the most successful businesses prioritize talent over anything else.
