What is the definition of culture in business?

Business culture refers to the set of behavioral and procedural norms that can be observed within a company — which includes its policies, procedures, ethics, values, employee behaviors and attitudes, goals and code of conduct. It also makes up the “personality” of a company and defines the work environment (e.g., professional, casual, fast-paced).

Other elements that make up company culture include management style, expectations, company goals, local and national government policies, benefits/perks, opportunities to advance, the way employees feel about the work they do and disciplinary action methods your business uses.

According to an Indeed survey, 72% of job seekers say it’s extremely or very important to see details about company culture in job descriptions.**

What is a “good” company culture?

A “good” company culture is good for your business and good for your employees. But what exactly is a “good” company culture? In a positive company culture, employees know your company values by heart and live by them in their day-to-day work. A good company culture also has high:

• Morale
• Flexibility
• Productivity
• Motivation
• Trust
• Autonomy
• Innovation
• Engagement
• Transparency
• Diversity

Other trademarks of a good company culture include comfortable workspaces, professional development opportunities, a transparent and accessible leadership team and genuine workplace friendships that make teams stronger.

Types of company cultures (with examples)

Businesses can adopt different company cultures depending on what aligns with their industry, goals and values. Common examples of company cultures include:

• Leadership company culture: A business with a leadership-focused company culture supports employee growth and focuses on helping them succeed in their field. They tend to have great mentorship and coaching programs in place to help employees develop their skills and offer opportunities for advancement (e.g., internal promotions, job rotation programs, tuition reimbursement, seminars and workshops).
• Traditional company culture: In a traditional business culture, everyone is typically expected to adhere to strict rules set by the company, including dress codes, company procedures and organizational hierarchy. As opposed to a more casual company culture, traditional company cultures are often more formal and corporate in nature (e.g, suit and tie).
• Innovative or adhocracy company culture: Innovative or adhocracy company culture focuses on development and innovation. Tech startups are a great example of this type of company culture. It sets aside the strict pattern of communication in traditional cultures, implements easy communication of ideas and accepts individuality and ingenuity from all parts of the company. People with strong creativity often work well in this kind of business culture.

How to build a strong company culture

Here are some steps you can take to create a great business culture where employees feel valued and appreciated and quality work gets done:

1. Develop your vision, mission and goals

Businesses often have a mission, vision and goal statement that serves as their guiding principle when deciding what direction they want to take their business in. It also helps customers understand the purpose of the organization and guides employee behaviors.

Start by identifying what you want your brand to be known for and what kind of employees you want to attract.

2. Identify your company values

Company values are the center of a company’s culture. While the mission, vision and goal express the purpose of the organization, values serve as behavioral guidelines and shape the mindset of your employees, giving them a purpose.

When brainstorming company values, make sure they’re inclusive of all members of your organization. They should also be simple, easy to remember, concise and authentic. Your list of values doesn’t need to be lengthy, but needs to cover the core of how everyone should behave at your company.

3. Live by your company values

Company values shouldn’t just be buzzwords listed on your website or posted on your office walls — they should be actionable and integrated in your employees’ regular activities. In other words, your company values should be visible in the day-to-day operations of your company.

4. Hire the right people

The most important part of building and maintaining a positive business culture is to employ the right people. Skills and talent are just a few things you should look for when screening applicants. It’s also important to look at the applicant’s ability to adapt to and embrace your company’s values. More importantly, most people have the tendency to cooperate and work well with people they agree and share similar personal values with.

When hiring employees, look for “culture add” instead of “culture fit” when hiring employees to make sure your teams are diverse and inclusive.

Related: 10 Recruiting Strategies for Hiring Great Employees

Why is culture important in business?

Having an outstanding business culture can have positive effects on your business. Here are some of the advantages of having a good workplace culture:

Lower staff turnover

One of the main reasons why employees leave a company is because they don’t enjoy their work environment. Work environment can refer to the social aspects of a workplace, the overall atmosphere, how people treat each other and the space where employees work (e.g., open office plan, cubicles). Since company culture is often closely connected to the work environment, having a positive culture can reduce turnover.

Attracts more applicants

Job seekers often prefer a good working environment and outstanding business culture over high-paying jobs. Many people choose to apply to companies that have a good reputation where they have more flexibility, autonomy and connect with the company’s goals and values. Not only that, but job seekers look for details about company culture in job descriptions.

Improves credibility and public image

When your business has a good company culture, people are more likely to tell their friends, family and personal networks about their positive experience. Companies with this good reputation and high credibility are trusted by customers, clients and business partners.

*Indeed survey, n=217

**Indeed survey, n=2,091