John Spence, Contributor
Organizational culture is the backbone of a successful business. It shapes how employees interact, make decisions, and feel about their work. It influences how employees treat vendors and customers.
In the end, it determines the revenues and profitability of the business. Yet far too many leaders don’t understand the impact of company culture.
A fantastic organizational culture drives employee engagement, boosts productivity, and reduces turnover. It aligns everyone with the company’s vision and values, creating a collaborative and motivated workforce. When done correctly, culture can be a powerful differentiator in the marketplace.
But there’s more to it than happy employees. Let’s examine the many benefits of cultivating an exceptional organizational culture.
What Is Organizational Culture?
Organizational culture refers to the shared values, beliefs, and practices that characterize an organization. It encompasses everything from leadership style to communication patterns and workplace environment.
Culture is the invisible hand of spoken and unspoken values that guide the company. Simply put, culture is “the way we do things around here.”
Leaders Set the Standard
Leaders play a crucial role in shaping organizational culture. Their behavior sets the standard for what is acceptable.
Employees look to leaders for cues on how to behave and what values to uphold. It is essential for leaders to model the behaviors they wish to see in their teams.
As I often say, as goes the leadership team, so goes the entire company.
Leading With Moral Love
I am a firm believer that leaders must lead with love. Not romantic love, moral love. The concept of moral love in leadership revolves around a deep sense of responsibility toward others in the organization.
Leaders who embrace moral love put people first, treating them with dignity, respect, and compassion. They act with integrity, being honest and transparent in their actions.
This form of leadership, often called “servant leadership,” focuses on supporting employees and creating an environment where they can thrive. Moral love requires leaders to be authentic, empathetic, and committed to ethical behavior. This builds a high level of trust and loyalty among employees.
Psychological Safety
Another fundamental element of a great culture is psychological safety. This refers to a work environment where employees feel secure enough to take risks—to voice their opinions and be their authentic selves without fear of negative repercussions.
Google’s Project Aristotle identified psychological safety as the most critical factor in high-performing teams. When employees feel psychologically safe, they are more likely to contribute ideas, collaborate effectively, and engage fully in their work. These core elements set the foundation for a fantastic organizational culture.
Now, let’s explore how these elements translate into practical benefits and steps to enhance your organizational culture.
15 Steps to a Fantastic Organizational Culture
Here are 15 benefits of a strong organizational culture and suggestions on how to attain them.
1. Enhanced Employee Engagement
Employee engagement is the emotional commitment an employee has toward their organization. A strong culture encourages this engagement by creating a sense of belonging and purpose.
Engaged employees are more productive, innovative, and willing to take on challenges. They are also less likely to leave the company, reducing turnover costs.
Recommendation: Implement engagement initiatives such as regular feedback sessions, recognition programs, and opportunities for professional development to foster a sense of purpose and belonging among employees.
2. Higher Productivity Levels
A positive organizational culture directly impacts productivity. Employees who feel supported and recognized are motivated to work harder and more efficiently.
A study by the University of Warwick found that happy employees are 12% more productive. A positive culture reduces stress and absenteeism. It also encourages teamwork and collaboration, leading to more efficient workflows.
As Richard Branson, founder of Virgin Group, says, “Take care of your employees, and they’ll take care of your business.”
Recommendation: Foster a supportive work environment through team-building activities, clear communication channels, and recognition of achievements to boost productivity.
3. Improved Employee Retention
Retaining top talent is essential for any organization’s success. A fantastic culture makes employees feel appreciated and part of a community, significantly reducing turnover rates.
According to the Society for Human Resource Management (SHRM), replacing an employee can cost, on average, six to nine months of their salary. High turnover not only incurs direct costs like recruiting and training but also affects team morale and productivity.
A strong culture that emphasizes recognition, growth, and work-life balance can mitigate these issues. Salesforce’s commitment to its “Ohana” (family) culture has led to high employee retention rates, with the company consistently ranking among the best places to work.
Recommendation: Create a retention strategy that includes competitive compensation, career development opportunities, and a supportive work environment to retain top talent.
4. Fostering Innovation
An innovative culture encourages employees to think creatively and take risks. This environment leads to the development of new ideas and products that can drive the company forward.
According to a report by PwC, companies with strong innovative cultures are 3.5 times more likely to outperform their peers in terms of revenue growth. When employees feel safe sharing ideas without fear of failure, they are more likely to contribute unique solutions.
This atmosphere drives innovation and attracts top talent that thrives in dynamic environments.
Recommendation: Encourage innovation by creating a safe space for idea sharing, offering resources for experimentation, and recognizing innovative contributions.
5. Better Customer Satisfaction
Happy employees lead to happy customers. Employees who are engaged and satisfied with their work environment are more likely to provide excellent customer service.
A study by Harvard Business Review found that companies with high employee engagement have 10% higher customer ratings and 22% higher profitability.
Engaged employees are more attentive and responsive to customer needs. They are motivated to ensure customers have a positive experience, fostering loyalty and repeat business.
Remember, the customer’s experience will never exceed the employee’s experience.
Recommendation: Enhance customer satisfaction by investing in employee engagement initiatives, such as training programs and recognition systems, to ensure employees are motivated and well-prepared to serve customers.
6. Attracting Top Talent
A strong organizational culture is a magnet for top talent. Job seekers today look beyond salary and benefits; they seek workplaces where they can thrive and grow.
LinkedIn’s Global Talent Trends report indicates that 86% of job seekers consider an employer’s culture essential when applying. A positive culture that promotes growth, inclusivity, and work-life balance appeals to high performers who seek long-term career satisfaction.
Netflix’s Culture Deck, which outlines their commitment to high performance and freedom, has helped them attract and retain some of the industry’s best talent.
Recommendation: Develop and promote a strong employer brand that highlights your culture, values, and opportunities for growth to attract top talent.
7. Enhanced Team Collaboration
Employees who feel part of a supportive environment are more likely to work together effectively. An Institute for Corporate Productivity study found that companies promoting collaborative working were five times as likely to be high-performing.
Collaboration leads to better problem-solving and innovation. It also enhances communication, ensuring everyone is aligned with the company’s goals.
At Pixar, the culture of collaboration is so ingrained that all employees are encouraged to give feedback on projects, fostering a sense of collective ownership and creativity.
Recommendation: Promote collaboration through regular team-building exercises, open communication platforms, and a culture that values diverse perspectives.
8. Stronger Brand Reputation
Companies known for their positive culture attract not only employees but also customers and partners. According to Edelman’s Trust Barometer, 78% of people believe how a company treats its employees is one of the best indicators of its level of trustworthiness.
A positive culture reflects well on your brand, leading to higher customer loyalty and better business opportunities. “Your brand is what other people say about you when you’re not in the room,” says Jeff Bezos.
Recommendation: Strengthen your brand reputation by consistently demonstrating your commitment to a positive organizational culture through your actions and communications.
9. Increased Adaptability
A strong culture that encourages flexibility and continuous learning helps organizations pivot and thrive amid changes.
According to Deloitte, companies with strong cultures are more agile and better prepared to respond to market changes. An adaptive culture promotes resilience and innovation, enabling companies to navigate challenges effectively.
Recommendation: Foster adaptability by encouraging continuous learning, providing flexible work arrangements, and promoting a culture that embraces change.
10. Promoting Ethical Behavior
When a company’s values are clearly defined and practiced by leadership, it sets a standard for all employees. Ethical behavior builds trust internally and externally. It ensures long-term sustainability and protects the company’s reputation.
As Supreme Court Justice Potter Stewart once said, “Ethics is knowing the difference between what you have a right to do and what is right to do.”
Recommendation: Promote ethical behavior by clearly communicating your company’s values, leading by example, and implementing policies encouraging transparency and accountability.
11. Higher Job Satisfaction
According to the American Psychological Association, employees who feel valued by their employer are 60% more likely to be motivated to do their very best. Job satisfaction leads to lower absenteeism and higher productivity. Satisfied employees are more likely to stay with the company, reducing turnover costs.
At Zappos, the company’s focus on employee happiness and satisfaction has resulted in high retention rates and a thriving business.
Recommendation: Increase job satisfaction by ensuring employees feel valued through recognition programs, career development opportunities, and a supportive work environment.
12. Boosting Employee Morale
High morale is a sign of a healthy organizational culture. When employees are happy and motivated, it creates a positive work environment that benefits everyone.
Research by the Queens School of Business and Gallup indicates that disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects.
High morale reduces stress and improves mental health. It also fosters a sense of camaraderie and teamwork, enhancing overall productivity.
“Morale is the state of mind. It is steadfastness, courage, and hope,” says George C. Marshall.
Recommendation: Boost employee morale by creating a positive and inclusive workplace, offering support programs, and celebrating team achievements.
13. Encouraging Personal and Professional Growth
A LinkedIn Learning report found that 94% of employees would stay at a company longer if it invested in their career development. Growth opportunities increase employee satisfaction and retention and ensure that the company has a skilled and knowledgeable workforce.
IBM’s focus on continuous learning and development has helped it retain top talent and stay competitive in the tech industry.
Recommendation: Encourage growth by providing access to training programs, offering career development opportunities, and fostering a culture of continuous learning.
14. Facilitating Effective Communication
Effective communication is a cornerstone of a fantastic organizational culture. It ensures everyone is on the same page and working toward the same goals.
According to McKinsey, improving communication and collaboration through social technologies could raise productivity by 20-25%. Clear and open communication reduces misunderstandings and conflicts and promotes transparency and trust within the organization.
Recommendation: Facilitate effective communication by implementing open communication channels, encouraging feedback, and ensuring transparency in all organizational activities.
15. Building a Sense of Community
A strong culture creates a sense of community among employees. They feel connected to their colleagues and the organization, increasing job satisfaction and loyalty.
Research by the Harvard Business Review found that 50% of positive changes in communication patterns within the workplace can be attributed to social interaction outside of the workplace. A sense of community enhances teamwork and collaboration. It also makes the workplace more enjoyable and supportive.
At Patagonia, the emphasis on environmental activism and community engagement has created a loyal and passionate workforce.
Recommendation: Build a sense of community by organizing social events, encouraging team-building activities, and developing an inclusive and supportive work environment.
Reaping the Benefits
A fantastic organizational culture is more than just a feel-good factor. It has tangible benefits that drive business success.
Investing in your culture is investing in your future. Building a strong culture takes time and commitment, but the rewards are worth it. Your company’s success depends on it.
John Spence is a keynote speaker, consultant, and executive coach, who was named by the American Management Association as one of America’s Top 50 Leaders to Watch along with Sergey Brin and Larry Page of Google and Jeff Bezos of Amazon. He is the author of the acclaimed book on business excellence, Awesomely Simple.
