Published on 14-09-2017
Company culture is a social fabric that is hard to manage due to its complexity. It is supposed to have a positive impact on the workforce and consequently contribute to the success of companies. Numerous scientific studies prove there is a link between a positive company culture and economic success. Before diving into the topic, it needs to be clarified what exactly is a company culture.
People often talk about company culture presuming that everyone has the same definition of the term in mind. But is that the case? Briefly researching the term online already provides a number of definitions and concepts. Wikipedia terms it organisational culture. Certainly, every company is an organisation but that’s not the term most people would use on a day-to-day basis.
What is the definition of company culture?
There are two approaches to answer the question. You can refer to science and theory or derive the definition from corporate practice. In science, there is one man that has to be brought up – Edgar H. Schein. His definition of company culture is:
“The company culture is a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”
So much for theory – very extensive and complex.
Bright and Parkin have summed company culture up as:
“This is how we do things around here!”
Kununu has collected some funny and unique definitions, which have been widely shared by business leaders. The thoughts on company culture range from “DNA” or “glue” to “atmosphere”.
Significance and impact
A majority of people have positive associations with company cultures, but how important is it for companies to be successful?
According to a large-scale study conducted by Kienbaum Management Consultants and Harvard Business Manager (157 business in the DACH region were surveyed), 63 percent of participants regard the company culture as important or very important to the economic success of a business. If companies manage to establish a positive workplace culture, there are numerous benefits for employees:
- Increased positive emotions and well-being
- which in return improves people’s relationships with each other and amplify their ability and creativity
- which buffer against negative experiences such as stress
- and eventually makes them more loyal to the leader and organisation and attracts new candidates
Wellbeing vs. perks
Since companies became aware of the importance of a positive company culture many started indulging employees with additional benefits. These perks range from working from home to office gyms and are supposed to help companies holding onto and attracting the best talent. Some might fancy these perks, but research suggests the opposite!
Wellbeing comes from one place, and one place only – a positive culture. In order for candidates and applicants to find out whether or not they match the company culture, companies need to provide them with opportunities to connect.
Risk factor company culture
In light of talent acquisition and HR marketing campaigns highlighting employer brands companies sometimes try to boost their company culture. Trying to exercise control and fine tuning it to perfection could have the opposite effect and work out negatively for the workforce. Especially if the emphasis is only on the end goal of economic success. A large and growing body of research shows that a cut throat and high pressure company culture is harmful to productivity over time.
Experiencing stress and high pressure in the workplace might result in health problems ranging from metabolic syndrome to cardiovascular disease. Health care expenditure at high pressure companies is nearly 50 percent higher than at other organisations.
Furthermore, stress producing company cultures can lead to disengagement of employees over the long term. To establish a positive workplace culture, employers would be wise to ease out stress-producing and high-pressure building factors.
- Foster social connections
Empirical studies prove that positive social connections at work produce highly desirable results e.g. people get sick less often.
- Show empathy
Leaders who demonstrate compassion towards employees foster individual and collective resilience in challenging times.
- Go out of your way to help
When leaders are not only fair but self-sacrificing, employees are actually moved and inspired to become more loyal and committed themselves.
- Encourage people to talk to you – especially about their problems
Trusting the leaders improves employee performance.
Whilst factoring in these considerations when developing the company culture, you can certainly say that the culture can have a positive impact on productivity and economic advancement. Consequently, companies have an competitive advantage due to an unique company culture. That is especially true for recruitment and talent acquisition. However, companies need to continuously work on their candidate experience and ensure candidates match the employer brand.
Read more on the match between employer and employee and how to optimise recruitment processes in our latest whitepaper below.