What Is Organizational Culture? Why a Healthy Culture Matters
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Imagine you’re on the job hunt and get two different interviews: one at an early-stage startup and another at an established company.
When you arrive at the startup, you’re offered cold brew on tap from the kitchen as you wait in an oversized lounge chair. You watch people work around communal tables and overhear plans for happy hour later. The next day, you leave work early for your other interview. There are cubicles instead of communal tables and everyone is quietly working at their desks. As several people are wrapping up to head home, the hiring manager walks you to a conference room. There, you notice something — a wall of accolades, including several “Best Places to Work” awards.
Are you surprised? We’d guess you’re not the only one. In today’s world, it’s all too common to correlate “good” organizational culture with free snacks and social outings. While these perks can certainly exist in a healthy work environment, they’re far from a necessity (or even a strong foundation). The truth is that organizational culture runs much deeper. It’s also about your organization’s fundamental values and how these values inform everything else — your strategy, structure, actions, and more.
What is organizational culture?
Organizational culture consists of the shared goals, values, attitudes, and practices that guide people at work. Think of it as the “personality” of your organization.
Every organization has a culture — intentional or not. In fact, whether your culture is “good” or “bad” often comes down to the presence of intention. As Hunter Walk, a partner at venture fund Homebrew, explains, people are often quick to label cultures that don’t appeal to them as “bad.” But, in reality, a bad workplace culture isn’t simply defined by having communal tables or cubicles — it’s about whether those choices are deliberate or not.
On the other hand, a good workplace culture is intentional. While bad cultures are mired with inconsistencies in how values are implemented, a lack of self-awareness, conflicts between business strategy and goals, and an acceptance of unethical behavior, Walk describes good cultures as “clear, consistent, scalable, actionable, well-matched to the company’s business model, and legal.”
If you want to be intentional about the type of culture you’re building, consider several different factors, such as:
Mission and values. What is your company mission? What are your guiding principles?
Compliance. What are the rules in your industry and how do you follow them?
Structure. How are decisions made? By whom? Is it a hierarchy culture with a few people at the top, a decentralized holacracy where teams distribute decision-making power, or something else?
Communication. How does information flow through your organization? Who has access to information?
Motivation. How does your organization view and value employees? How are collective or individual achievements recognized? What encourages employee growth?
Inclusion. What intersectional identities are represented in your organization? How are different viewpoints or opinions expressed and received?
Transparency. Is there an inclusive workplace culture where every employee is part of important conversations? Does everyone have an opportunity to feel heard?
Why does organizational culture matter?
Culture isn’t just about creating a “feel-good” environment at work. It has practical implications on the long-term success of your organization: culture impacts recruitment, retention, productivity, compliance, and so much more.
A recent nationwide survey found that “company culture and values” is one of the top three influences on job acceptance for candidates — more so than job security, vacation time, or healthcare benefits. For current employees, Glassdoor research consistently finds that culture is the number one workplace factor impacting satisfaction in the U.S., Canada, the UK, and Germany. And other studies show higher employee satisfaction, in turn, has a direct impact on your bottom line: increasing productivity by 12% and improving returns by up to three times.
When there’s a failure to invest in organizational culture, you risk allowing a toxic — or even hostile — work environment to emerge. A toxic workplace isn’t just unpleasant for everyone involved; it also has severe impacts on your organization in the form of high turnover, low productivity, and legal risks.
How is organizational culture measured?
How can teams assess where workplace culture currently stands? As a qualitative part of your organization, culture can be fuzzy and difficult to measure. However, there are quantitative ways to understand how employees and leadership perceive the workplace environment (including whether these perceptions are inconsistent with each other or your intentions).
For example, employee engagement platform Culture Amp uses several different factors to evaluate healthy cultures, such as:
Alignment and involvement. How connected and involved employees feel in the organization's operations, including how well their abilities are matched to their roles or responsibilities.
Enablement. Whether people have access to the right resources, tools, and environment to fulfill their roles and responsibilities.
Engagement. The level of connection employees have with their organization, including how committed they are to staying there.
Learning and development. The number and quality of opportunities for employees to learn new skills and grow professionally.
Leadership. Employees’ confidence in, and respect for, organizational managers and executives.
Social connection. How much employees feel the organization allows them to be part of a wider community or industry.
Work and life balance. An employee's ability to manage their workload alongside their personal life effectively.
No matter the benchmarks used, it’s important to regularly assess the health of your organizational culture to address concerns and inconsistencies before they become major issues. And if you hear off-hand that an employee feels undervalued, distressed, or disrespected, take their experience seriously — they may not be alone.
Example of strong organizational culture
In 2009, Netflix released a culture deck that has since been called one of the most important documents to come out of Silicon Valley. It outlined nine behaviors and skills that the company values, and explained how they “walked the walk” of these values by hiring and promoting people who lived up to them.
The deck was a cohesive and clear example of organizational culture — one that’s since shaped the way other organizations approach their work environments, too. Today, you can find an evolved version of Netflix’s culture statement on its website.
How to build a positive organizational culture
Taking a page from Netflix, the first step to creating a healthy, inclusive, and successful work environment is defining your company values.
Define your company values
You can’t design a company culture without knowing what you’re trying to build. So, start by thinking about your fundamental mission as an organization and how you want to achieve it. Netflix, for example, aspires to entertain the world with great storytelling. In order to do so, the company prioritizes nine values, some of which have changed since 2009:
No matter what stage your company is in, you should define your own organizational values: Reflect on what matters to your leadership team and gather input from employees to come up with your specific guiding principles. You can do this exercise internally or work with an outside consulting firm to help you create a list of values that aligns with your workplace, company goals, and mission.
4 Best practices for acting on your values
Every organization will have different values. There are best practices to help build a truly healthy culture around your unique organizational values.
Encourage ethical behavior. Establish a Code of Conduct that provides employees with guiding principles, rules, and regulations that make a clear commitment to ethical day-to-day behavior. Most importantly, create a process for acknowledging and addressing misconduct.
Provide honest, ongoing feedback. Don’t limit feedback to once-a-year performance reviews or top-down evaluations. Feedback is crucial for building resilience and transparency. For example, we encourage a healthy feedback culture through the tradition of “Feedback Fridays” at Ethena. These weekly, one-on-one sessions both prompt feedback and foster better communication between team members.
Invest in career development. When it comes to creating value, an organization shouldn’t be a one-way street. If you want employees to invest time and energy in the company, you also have to invest time and energy in their career growth, learning, and development.
Assume good intent, but take accountability for impact. People make mistakes. In order to build a culture of trust, assume good intent while encouraging people to take accountability for the impact of their actions (regardless of original intent).
These best practices demonstrate that organizational culture isn’t a one-and-done effort. Instead, it’s an ongoing commitment. That’s why it’s important to invest in building a healthy work environment right from the start. With a thoughtful, comprehensive approach, you’ll attract a dedicated, talented team who are just as committed to your organizational culture as you are.
Ethena is a modern compliance training platform that delivers current, cringe-free content that employees actually enjoy. Request a sample course to see for yourself! If you’re ready to bring complex issues to life through thoughtful real-world examples, dynamic multimedia, and actionable next steps, let’s talk to see if Ethena is right for your company.