When I entered the world of business, I thought “culture” was merely one of many important components that defined a company. However, through the years, I’ve learned that it isn’t simply another component – company culture is the company.

Company culture is the only sustainable competitive advantage that is completely within the control of the company. With a good company culture established, engagement, productivity, innovation, well-being and the Employee Value Proposition (EVP) all improve. Good company culture promotes a positive, collaborative, and effective working environment.

What is company culture?

Company culture refers to the underlying beliefs, assumptions, values, and ways of interacting that contribute to the unique social and psychological environment within a company. Stemming from the leadership team, it is created and passed on to employees through consistent, authentic communication and behaviour. Employees are also responsible for contributing to the company’s culture in their own way too. Their attitudes, perceptions, and thought processes all have an impact on it.

Company culture is based on shared attitudes and customs, along with both the written and unwritten rules that have developed over time. It affects all aspects of business, from conversations and employee benefits to levels of well-being and even contract terms.

What is a GOOD company culture?

A good company culture exemplifies positive traits within the workforce and leads to happier employees who feel more comfortable, supported, and valued. On the contrary, a dysfunctional company culture brings out qualities that hinder performance and – ultimately – affect the company’s bottom line negatively.

Companies can elevate their internal culture to become part of their external identity. They can then leverage this to gain a competitive advantage when attracting and retaining both talented employees and valuable customers. This presents an opportunity to increase revenues.

Ultimately, company culture directly impacts performance. 

The benefits of establishing a good company culture include:

• Improving employee wellbeing: A positive culture and working environment leads to increased mental and physical well-being amongst employees and decreased levels of stress, anxiety, fatigue and burnout. This leads to healthier and happier employees which are more inclined to succeed at work.
• Increasing employee engagement: Engagement levels are based on the strength of the mental and emotional connection between employees and their colleagues or workplace. High levels of engagement leads to better communication, more positive interactions, and higher rates of teamwork.
• Decreasing employee turnover: Employees are far less likely to leave a company in which they feel valued and respected. This saves the company both time and money in the recruitment process and enables them to foster growth. It serves as an important way for companies to groom talented individuals into key roles and leadership positions. 
• Elevating employee productivity: In simple terms, this means that companies can get more done (increased output) with the same amount of resources (input). The increased efficiency enables the company to cut costs and/or generate greater revenues. 
• Building strong brand identity: This has positive impacts for both internal (employees, directors, etc.) and external (clients, partners, etc.) stakeholders. Companies with strong brand identities are able to attract more clients and job candidates that share similar values and support their long-term vision. 
• Motivating top performers: Individuals that are top performers understand the value of their skill-set and are quick to leave companies in which they feel unappreciated or undermined. Companies that recognise and support their top performers’ efforts are able to retain them for longer periods of time and encourage them to continue succeeding.
• Improving the Employee Value Proposition (EVP): This leads to a workforce that feels valued, supported and motivated. It also increases a company’s ability to attract, engage, and retain top talent.

On the other hand, a few warning signs that your company’s culture is dysfunctional include:

• High turnover and absenteeism rates.
• Unhealthy levels of stress, anxiety, and burnout.
• Unclear or uncommunicated core values.
• A lack of transparency and a large amount of office gossip.
• Managers that do not lead by example.
• Inconsistencies between what people say and do.
• Unfriendly competition between employees.
• Lack of adequate acknowledgement and rewards.

How do I establish a good company culture?

Every company’s culture is unique. There is no one-size-fits-all culture that is best for every company and factors such as size, structure, and industry need to be considered. 

Within this, establishing a good company culture involves integrating the core components of a company culture and the qualities that embody a high-performing company culture.

Here are four simple steps to help you to establish a good company culture: 

1. Be open-minded: Consider how your company’s people, vision, values, processes, environment, incentives, and heritage are positively or negatively impacting your company culture. Observe the ways in which employees engage with one another on a daily basis and assess how authentic their communication is. Adopt a curiosity mindset and attempt to understand the cultures of organisations which are similar to yours.
2. Communicate, openly: Connect with your company’s leaders to discuss how you could adopt a proactive approach to improving these components. Create an open space in which employees can share their thoughts and feedback on your current company culture. You’ll need to empathise with employees of various levels in order to understand the culture from their perspectives and identify components of your company culture which require the most attention.
3. Focus on employee wellbeing: Create a culture of health within your company by prioritising your employees’ mental and physical well-being. This can be done by educating them on its importance and facilitating engaging wellness initiatives such as wellness days or webinars as well as campaigns and challenges. Ensure your employees have access to well-being content and medical professionals or counsellors.
4. Be consistent and encouraging: Ensure that your communication and actions are consistent and authentic. Encourage your team to prioritise alignment, appreciation, trust, resilience, teamwork, and innovation. This can be achieved through motivating them to connect frequently on both a formal and informal basis. Ensure that the team celebrates successes (both big and small), remains supportive, and approaches all situations with curiosity.

By establishing a good company culture, you’ll increase your chance of attracting and retaining talented individuals which will drive your company forward and ensure its long-term success. 

Author: Joshua Fillmore

Joshua Fillmore is a Stellenbosch Business School Executive Development faculty member and facilitates the business module in the Future Managers Development Programme (FMDP).

Stellenbosch Business School Executive Development’s brand-new Future Managers Development Programme (FMDP) helps graduates and graduate interns/trainees master the first step in their overall development, management of self, and become well-rounded young leaders within an organisation. ​It is the responsibility of the organisation and its leaders to help them understand who they are within the broader business environment, enhance their communication and leadership abilities to ensure employee engagement, unlock their potential, and help them proactively plan and manage a long, fulfilling, and sustainable career path.