Business, Politics, & Society

Business Essentials: What Is Company Culture and Why Is Corporate Culture Important?

Written by MasterClass

Last updated: Oct 22, 2019 • 4 min read

People in the workforce evaluate employers on more than just salary—company culture is an important part of the equation. As an entrepreneur or business person, there’s never been a better time to consider what your own personal business philosophy is and how you might apply your personal values in the workplace.

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What Is Company Culture?

Company culture consists of the overall character and mission of an individual company. Company culture is defined by a company’s mission, values, practices, brand narrative and overall ethos. The seed of company culture is planted at its founding and grows and evolves alongside the business. Many business owners and human resources professionals now regard company culture as a key component of any successful business. In order to attract quality employees and potential customers, more companies are embracing positive workplace culture and placing more emphasis on employee well-being rather than just focusing on the bottom line.

Howard Schultz, former CEO of Starbucks, defines company culture as “understanding human behavior and how to elevate a group of people to realize, believe, and trust that they are a part of something larger than themselves, where each person has a responsibility to shape the behavior of the organization. That behavior is the foundation of the company: It should express the company’s values and guiding principles, which ultimately define its core purpose and reason for being.”

6 Key Components of Company Culture

There are many different aspects of company culture. When thinking about what your ideal corporate ethos might be, consider the following areas that affect overall culture:

  1. Company Purpose: If you want driven and motivated employees, you have to have a very clear vision of your own motivation and purpose and be able to communicate it effectively to those around you. Good culture requires a unity of purpose. If your employees come to work knowing exactly what the company’s larger goals and purpose are, they in turn can set personal goals and do their part to help propel a company forward.
  2. Growth: For a company to grow, each individual employee must have the opportunity for growth. This means acknowledging employee success, giving them the opportunity to learn new skills, creating a work culture where meaningful relationships can be built and awarding promotions and raises to deserving employees.
  3. Success-oriented: New employees should know right away that growth and success are what propel your company forward. That being said, you should do your best to create a healthy culture built on success while maintaining an environment free from cutthroat competition. As leaders, we want to acknowledge and incentivize personal success and career development without encouraging competitiveness or backstabbing.
  4. Respect: Employees should feel respected by their superiors and co-workers alike. A positive culture built on trust and appreciation can create a team mentality and a happy workplace that employees look forward to coming back to.
  5. Employee well-being: Looking out for the well-being of your employees is paramount. Providing adequate health care benefits, ample vacation time, paid parental leave and reasonable work hours are all things that good managers should consider.
  6. Strong leadership: Culture starts at the top. Whatever goals and expectations you have for your employees, you also need to have for yourself. A company’s culture depends upon a strong leader who sets a clear example of company values.
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4 Reasons Why Company Culture Is Important

Creating strong organizational culture affects more than just the bottom line. Attracting top talent and maintaining employee engagement both depend on a positive and clear culture. Some of the areas that a positive corporate culture impacts include:

  1. Employee recruitment: People are drawn to companies with good culture and positive work environments. When recruiting new hires, you should be able to explain clearly why your company is such a rewarding place to work.
  2. Productivity: The best companies have cultures that bring the very best out of their employees. When people feel like they are a part of a workplace built on purpose and mutual respect, they are much more likely to work hard and put more care into their day-to-day tasks.
  3. Attracting Clients: Clients evaluate culture when they are considering what businesses to work with. A good culture doesn’t just affect employees who work for you, it also has a huge impact on the people you work for. A positive culture attracts new business and builds lasting partnerships with loyal customers.
  4. Profit: You are running a business so naturally one of your end goals is to turn a profit. That being said, there is a reason that profit is last on this list. If you create a corporate culture built on strong values without worrying too much about the bottom line, you’re much more likely to create a positive and healthy workplace. Focus on building the culture and profit will naturally follow.

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The Importance of Creating a Strong Culture

Company culture exists whether we’d like it to or not. As an entrepreneur or business owner, the company you run will have a culture even if you never stop to consider its importance. If you don’t take the time to craft a good workplace culture, the results will be predictably poor. You’ll probably end up with a company work culture that has poor communication, inconsistent management style, an off-kilter work/life balance, etc. The good news is, if you’re thinking about running a company, you probably already have a pretty good sense of your personal core values and what you look for in a work environment. Taking some time to consider how you want these values applied in your workplace can help set up a great company culture that will help you and your business grow.

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