Why Having a Strong Company Culture is a Competitive Advantage in Today’s Environment

Your business's work culture is one of its most valuable assets. Get your culture right, and you'll be positioned to tackle challenges, overcome hurdles, and seize opportunities. Get it wrong, and even the most innovative products and services won't save your company.

Building culture at work isn't an overnight project nor a one-and-done activity at your executive off-site. It's a continuous effort that takes time, money, energy, and employee buy-in. Your workplace culture impacts everything from your hiring decisions to your sales ethics to even your decision to IPO or stay private.

Below, we'll walk you through everything you need to know about culture in the workplace, including why a strong culture is a competitive advantage today, how to perform your own culture audit, and steps you can start taking to improve it.

 

What Is Work Culture?

First, let’s establish what work culture is and is not. Work culture is a collection of values, beliefs, behaviors, and expectations. It guides employees in their day-to-day interactions, and it also directs the company's decisions and business strategy.

Some businesses make the mistake of thinking workplace culture is defined by ping-pong tables, office snacks, and flexible time off. While culture will define your company's perks, your perks don't necessarily define your company's culture. Businesses with toxic cultures can still offer enticing benefits - sometimes even more so.

Merriam-Webster's work culture definition: “The set of shared attitudes, values, goals, and practices that characterizes an institution or organization.”

For example, a workplace culture focused on profitability doesn't mind asking employees to work some weekends to finish the job. However, a workplace culture centered around work-life balance never lets the job interfere with or damage employees' lives outside the office.

 

Why Is the Culture at Work Important

Your workplace culture supports employees and promotes the overall well-being of staff and the business. Having a positive work culture doesn't mean putting feelings before profits. Instead, it means being transparent with your values and building a team of individuals with harmonious beliefs and attitudes.

Here are a few reasons why workplace culture should be a top priority for your business:

• 67% of leaders and employees said, "culture is more important than strategy or operations."
• Disengaged employees are 8x more likely than engaged employees to leave a job for a better culture.
• A healthy work culture is 10 times more important to employees than pay.
• 66% of employees believe positive cultures impact their work for the better every day.
• Toxic company culture was cited as the top reason employees quit in 2022.
• 53% of employees say they experience culture through recognition and celebrations, and 69% would work harder if they received more recognition.

Work culture directly influences your employees' performance, engagement, and happiness—and those all impact your bottom line. So what happens when you have a negative company culture?

 

Signs of a Toxic Company Culture

No one wants a toxic company culture, but knowing what a toxic culture looks like can be harder to pinpoint. First, let’s discuss what a toxic culture is.

Toxic company culture places a strong emphasis on efficiency, productivity, and “getting ahead.” At the same time, it minimizes the importance of rest, self-care, and work-life balance.

Characteristics of a toxic culture often include:

• Employees feeling the need to come in early and/or work late
• Feeling pressure to not take their breaks or not take their full break
• An emphasis on hours worked
• Feeling reluctant to use PTO or sick days
• Answering calls, emails, IMs after hours and/or on weekends
• Feeling pressure to “keep up” and an inability to say no or set boundaries

Effects of Toxic Company Culture

At a glance, it may seem that toxic cultures aren’t all that bad. After all, it emphasizes efficiency and productivity – great qualities for any successful business.

But the problem with toxic cultures isn’t valuing these things. It’s valuing them above all else. It’s having work dominate employees’ lives and believing the more they do, the more valuable they are. It’s the inherent lack of balance between work and the things that make us human.

And this lack of balance naturally lays the groundwork for stress, disengagement, and burnout. In fact, an analysis from Deloitte found that 77% of American workers have experienced burn out at their current job.

Furthermore, a 2021 survey published by the ADP Research Institute found that 1 in 10 employees surveyed across 17 countries have been putting in more than 20 hours of free work per week – a common issue with the rise of remote work and blurred boundaries between work and personal life.

And what happens when employees become stressed, disengaged, and burned out? They quit. Especially millennials (people roughly 27 to 42). Deloitte’s study found that nearly half of millennials say they have left a job specifically because they felt burned out.

 

How Can Toxic Cultures Impact Health?

We know that overworking can lead to stress, burnout, and consequently, employee turnover. But what impact does it have on people’s health?

It’s likely no surprise that overworking has detrimental effects on health and wellbeing. This is because with constant work comes an increase in stress, and stress has been linked with a range of health concerns.

These health risks include an increased chance of developing:

• Type 2 Diabetes
• High blood pressure
• Digestive problems
• Muscle tension
• Stroke
• Fatigue
• Heart attack

But it’s not just physical health that’s impacted either. Mental health can take a turn under the chronic stress of overworking.

Toxic cultures can increase the risk of developing:

• Anxiety
• Depression
• Burnout
• Insomnia

 

How a Great Company Culture is a Competitive Advantage

Now that we know the effects of a toxic culture, what does it mean to have a truly healthy company culture? Here, we’ll take a look at how a strong company culture is not only good to have but how it’s a competitive advantage in today’s environment.

Improved Employee Retention and Engagement

It’s likely no surprise that strong company culture is linked to lower employee turnover and higher engagement. The problem is that most companies are missing the mark. Research from Gallup found that 2 in 10 employees feel meaningfully connected to their company’s culture. Furthermore, only 27% strongly agree that they believe in their organization's values.

So, it should be unsurprising that employee engagement in 2022 declined to a mere 32% – down from 36% in 2020 and 34% in 2021. And employee disengagement is on the rise, with 18% of employees now reporting being actively disengaged.

While there are many factors that go into employees disengaging, feeling disconnected from the company’s purpose is one that leaders have the power to influence. And doing so will result in higher employee engagement and less turnover.

In fact, a study from McKinsey & Company found that 82% of employees believe it’s important their company has a purpose; ideally, one that contributes to society and creates meaningful work.

And when a company has purpose, its people do, too. Another study from McKinsey found that 70% of employees say their personal sense of purpose is defined by their work, and when that work feels meaningful, they perform better, are much more committed, and are about half as likely to go looking for a new job.

So, finding ways to connect what your employees do and care about to the company’s culture and values will not only benefit your employees, it’ll benefit your company too.

 

Better Business Outcomes

An engaged team who’s connected to their company’s mission is a team that delivers. According to Gallup, engaged employees make it a point to show up to work and do more while they’re there.

So much so, companies with highly engaged teams realize an 81% difference in absenteeism and a 14% increase in productivity. Engaged teams are also linked to a 10% increase in client ratings and an 18% increase in sales.

All this to say, companies with engaged teams who feel connected to their organization’s mission see higher profitability and better business outcomes overall – a clear competitive advantage for any company.

 

Attract Talent, Smoother Recruitment

It’s inevitable for every company to experience some turnover. And when these employees leave, they’ll tell people about their experience at your company, either first-hand or through websites like Glassdoor. This is how companies either get reputations for being a great place to work or for being somewhere to avoid.

It’s also true that top talent will have their pick of offers when job hunting. Chances are, they won’t risk taking the job at the company with the reputation of a toxic culture.

Furthermore, having a strong company culture can help guide the recruitment process. You’ll be able to identify which individuals will bring a fresh perspective to your culture. So much so, some companies require applicants to complete a culture index questionnaire before interviewing.

Being able to attract top talent and have them acclimate quickly means less time spent candidate hunting and a shorter training period.

 

Millennial Expectations

Millennials have somehow found a way to impact the housing market, diamond sales, and, of course, avocado toast. And company culture is no exception. This demographic is now between the ages of 27 to 42, meaning they’re likely a significant portion of your workforce. And millennials want a strong company culture – sometimes above anything else.

Some experts believe this value grew out of millennials entering the work force during a recession and their need to job hop - where Gen Xers and Boomers were used to staying with a company for years, many millennials simply couldn’t. So, the promise of a nice 401k package carried a bit less weight than being able to enjoy going to work each day. After all, who knew how long they’d be there?

So, a strong company culture today resonates with the millennial demographic. It helps not only attract talent to your company, but it helps retain them as well.

 

Perform Your Own Culture Audit

Ready to start improving the culture at your company? Get started with our 6-step culture audit.

Survey Your Team

Whether you think your company culture is healthy or not, it’s important to start on the right foot. So, consider giving employee surveys to gain a deeper understanding of your current environment.

You may think you know what areas your company needs to prioritize, but you may find your employees are having a different experience altogether. For example, you may think your employees are handling their workloads easily, but your survey reveals a significant number of your staff are struggling with stress and burnout.

In this case, managers can begin to be proactive and use this information to address workload with their employees in one-on-one check-ins.

Choose Your Words

Ask top executives and employees alike to choose a few words to describe your current company culture as well as their ideal company culture.

From here, you’ll likely notice trends forming, whether it’s some words coming up consistently or no commonality between leaders and employees. Either way, you’ll gain valuable insight into your current culture.

 

Evaluate the Results

If you find trends, either in the words chosen or feedback given, that don’t align with the culture you’d like, you’ll want to take a deeper look at why that is.

For example, you might want a diverse culture based on innovation and trust, but your employees feel that the culture is rigid, stagnant, and based on micromanagement. In this case, further research should be done to uncover where this disconnect is coming from.

Are you inadvertently hiring the same kinds of people? Do you reprimand people for making mistakes (discouraging risk and innovation)? These will be questions only your team can answer.

 

Write It Down

Once you determine the words that you’d like to describe your culture, write them down. Make it concrete and legitimate by communicating your culture goals to employees. And publish your culture and values on your website, employee resources, and office walls as a reminder to live the words you chose.

And if you make changes to your culture, publicize the changes, and explain the reasoning. For example, you might have a culture of closeness and collaboration—if you switch to a remote work policy, explain how this will impact your culture and what you'll do to keep it alive.

 

Walk the Walk

It’s important to recognize the role leadership plays in cultivating the culture that actually develops in an organization, so be sure to hold them accountable.

For example, employees typically don’t prefer to work through lunch or send emails late at night. So, if this is happening at your company, consider why. Do you expect employees to work late or through lunch to meet deadlines? Are their workloads excessive? Are they simply following the example set by their leader?

These types of unspoken (or spoken) expectations can breed a toxic culture. To combat this, it’s typically not enough to only reiterate taking breaks and signing off at 5pm – although you should do so. Oftentimes, employees end up feeling like it’s not worth taking breaks because it will only set them back and cause more work later.

Instead, have an open conversation with your employees. Take a look at their workloads. Try to understand the root cause of their burn out. Then, work towards making changes that will help alleviate causes of stress. This will show your employees that you’re committed to making real change and it’s not just talk.

 

Measure Your Efforts

Lastly, follow up. Use feedback platforms and regular surveys to understand how the culture of your business is evolving. Compare your efforts to previous surveys and adjust your efforts accordingly.

recognition platform gives you an easy-to-use dashboard to monitor performance and engagement data for individuals, teams, departments, and your organization as a whole.

How to Build Culture at Work: 6 Tips

Conducting a culture audit is the best way to understand your company’s unique environment. However, there are still things every company can do to improve their culture.

Here, we’ll dive into a few strategies every company’s culture would benefit from implementing.

 

1. Prioritize Mental Health

Mental wellness is a critical factor in any job, especially today. In fact, Indeed surveyed more than 1,500 employees in March 2021 and found that 52% of respondents were feeling burnt out. Furthermore, 53% of remote workers say they work more hours now than they did in the office and 63% say they find it more difficult now to "unplug" after hours.

With burnout so prominent today, prioritizing employees’ mental wellbeing is crucial. You can start by setting an example. Company culture is determined from the top down, so be sure you have a healthy work/life balance and encourage others to do the same.

Remind your employees to unplug at the end of the day and don't send emails after hours. Be careful about who you promote as well. If chronic over-workers are the ones who are "getting ahead," think about the message that sends to other employees.

Also encourage employees to use their PTO - and consider offering more of it. According to Indeed, 36% of all workers say more PTO could help reduce their burnout. Two weeks may be standard, but what if you offered three? What if every month had at least one three-day weekend? What about giving more PTO around the holidays?

Remember though, time off isn't the cure to burnout, it's an additional support. Organization psychologist Adam Grant says, "The holidays shouldn’t be a time to recharge. They should be a time to celebrate. If work is exhausting people to the point that they’re using their time off to recover, you might have a burnout culture. A healthy organization doesn’t leave people drained in the first place."

Furthermore, consider allowing mental health days, starting a wellness program, and offering free counseling through an Employee Assistance Program. Talking about how you care about mental wellness is good, but implementing processes to help support mental wellness is what matters most.

 

2. Invest in DEI

DEI (or diversity, equity, and inclusion) is a framework that strives for more fairness and empowerment for individuals who have typically been underrepresented or subject to discrimination in the workplace.

While DEI isn’t new, it has become more popular in the past decade or so – and for good reason. DEI efforts help build a company culture of belonging, community, and psychological safety.

Research has also found:

• Companies with executive teams with more gender diversity were 25% more likely to have above-average profitability than companies with less gender diversity.
• The most gender diverse companies were 48% more likely to outperform the least gender diverse companies.
• Companies with racial and ethnic diversity are 36% more likely to outperform their peers.
• People who felt their company wasn’t doing enough for diversity reported lower scores in all areas of job satisfaction - particularly in areas of pay and career advancement.
• 78% of people feel that it’s important for them to work for an organization that prioritizes diversity and inclusion, with 58% saying it’s “very important.”
• Companies with inclusive cultures have 22% lower turnover rates.
• Millennials are 83% more engaged when working in an inclusive culture.

Furthermore, prioritizing DEI can help bring company values to life. If your organization has any kind of corporate value around community, belonging, inclusion, collaboration, etc. DEI efforts will likely be needed to truly uphold those values.

Get started by implementing DEI training, creating employee resource groups, and celebrating a wide variety of holidays and traditions at work.

 

3. Encourage Open Communication and Transparency

A healthy company culture is based on trust – and trust is based on transparency. When employees feel that they’re out of the loop, it lays the groundwork for insecurities and disengagement.

Avoid these insecurities by addressing (appropriate) business decisions publicly. During company meetings, talk about the direction the company is moving in, goals that were achieved and upcoming targets.

And don’t be afraid to talk about difficulties – chances are, your employees will notice any issues in the company and be talking about them amongst themselves anyway. Addressing it directly allows you to control the narrative while instilling trust.

Encourage your employees to share feedback either openly or through an anonymous survey program, as well. Many employees have great suggestions for improving culture and employee engagement but can sometimes feel unsure about sharing ideas openly. Providing a safe space for employees to voice their thoughts can make employees feel heard.

Additionally, consider adopting 360 feedback for your review process. Traditionally, evaluations are given to an employee from their supervisor in a “top-down” approach. With 360 feedback, the employee will be able to evaluate their supervisor as well.

The employee will also be reviewed by more than just their supervisor. This helps give each person a more rounded, objective, honest review.

 

4. Build Trust, Be Flexible

Flexibility at work can mean all kinds of things. It could be letting employees start work later in the morning and finish later in the evening. It can be offering remote or hybrid options. It can be embracing mistakes as a learning opportunity when they inevitably happen.

But at the root of a flexible workplace is trust. Flexibility at work embraces the idea that employees can be productive no matter when or where they perform their work. Rather than enforcing a rigid workplace environment or schedule, workplace flexibility puts trust in the employee and empowers them to do their work in a way that’s best for them.

In many overworked, toxic culture environments, employees feel the need to prove their work. They may feel the need to partake in performative acts, like telling coworkers how late they worked or how little they slept.

A flexible workplace that’s based on employee trust is the antidote to the pressure of a toxic company culture.

 

5. Make Employee Recognition Your Foundation

Employee recognition is arguably the simplest thing companies can do to improve not only their work culture, but drive retention and engagement as well.

In fact, research shows that:

• 82%of people are happier when they’re recognized at work. (Curiosity at Work)
• 85%of HR professionals say employee recognition programs positively affect organizational culture. (Mercer)
• When employees believe they’ll be recognized for their work, they’re 7 times more likely to be highly engaged. (Quantum Workplace)
• 63%of employees who feel recognized are unlikely to look for a new job. (Curiosity at Work)
• Companies with effective employee recognition programs have 31% lower voluntary turnover. (Forbes)

So, how can leaders create a culture of recognition at their organization? Here are a few simple and effective ways.

 

Give employees the gift of time:

Research shows that working hours for college graduates have been steadily increasing over the past 30 years. This has left many employees feeling as though they have little to no free time. So, being able to offer employees extra time will typically be appreciated.

Whether it’s awarding extra PTO, non-work-related outings, or providing time-saving perks (like discounts for housecleaners or food delivery services), when people have time to invest in their own interests, they become better employees.

 

Publicly recognize employees:

Consider adding in a moment to team and/or company meetings to give individuals public recognition or a shout out for a job well done. It’s a simple gesture that carries significant weight.

That’s because when an employee’s hard work is acknowledged and appreciated, it creates a dopamine surge in the brain. Dopamine is powerful and motivating, and reinforces the behavior.

One study even found that receiving a compliment, like genuine recognition, is just as thrilling to the brain as receiving cash— both are perceived by the brain as "social rewards."

 

Giving employees a monetary bonus:

While monetary recognition can be effective, it’s also impersonal. So, it's important to remember that it’s not the only way to show appreciation. In fact, money should never be the only form of recognition you give your employees.

Too much focus on monetary rewards can also create a toxic environment, which is often counter-productive. It’s important to find a balance that works for your company culture.

 

Implementing a social recognition platform:

If you have an employee recognition budget in place, consider investing in a recognition program. There are all kinds of programs available to help build recognition into your company’s culture.

Terryberry's social recognition platform offers a comprehensive solution that can host your recognition efforts, including milestone and service awards, peer-to-peer social recognition, feedback and surveys, and performance and incentive rewards.

This platform even allows for analytics that show in real-time key performance indicators so you can be sure your program is effective. This is a great way to help in creating a culture of recognition by empowering employees (as well as leaders) to recognize each other.

6. Be Conscious of Perks and Amenities

While perks and amenities can't fix a broken culture, they can play a big part in defining and expanding your culture. For example, if you want work-life balance to be a primary tenant of your culture, you'd likely want to implement remote work policies and flexible work schedules.

Think of what perks and benefits you could offer your staff to align with your culture. It could be anything from employee wellness programs to employee stock purchasing plans.

Just be wary of mistaking perks alone for culture. A ping pong table and nap pods won’t be an antidote for a culture that drives employees to burn out. Instead, perks and amenities should act as a support to your culture and values.

For example, a company that values employee wellness might have an on-site gym or offer discounts on gym memberships while also encouraging employees to use their PTO and sign off at 5pm.

 

Improve Company Culture and Employee Engagement with Terryberry

Terryberry provides the solutions you need to better recognize employees and build the work culture that keeps employees engaged:

• Service Awards and Performance Awards: Recognize and reward employees based on years of service awards, anniversaries, or performance.
• Social Recognition: Empower your employees and managers to recognize their peers and celebrate successes with an easy-to-use social recognition application.
• Feedback and Communication: Unlock improved feedback and communications with employee and customer feedback solutions.

Ready to learn more? Schedule a demo with our team to get a hands-on walkthrough of how Terryberry can transform the culture of your workplace.