The Ultimate Guide to Company Culture: Examples, Influences & Benchmarks

01 January 2024

→ What is Culture & Why Does it Matter?
→ What Positive Culture Looks Like
→ Why Business Owners & Leaders Should Prioritise Culture
→ Problems of Neglecting Culture in Business
→ What These 11 Behaviours & Practices Say About Your Company’s Culture
→ How To Benchmark Company Culture (with KPIs)
→ 7 Practical Ways to Improve Company Culture (with Examples)
→ Video: “Why Culture is King for Business Success”

Understanding Company Culture

What is Culture & Why Does it Matter?

In a business context, culture refers to the shared values, beliefs, and practices that shape the work environment and behaviour of your team.

Company culture is reflected in daily interactions and situations, including how people communicate in meetings and over email, how managers treat their teams, approaches to problem-solving and decision-making, and even the physical workspace.

Culture matters because it directly affects employee morale, efficiency, and productivity. A positive culture can lead to higher engagement, better teamwork, and improved financial outcomes, while a negative culture can harm performance and profitability.

What Positive Culture Looks Like

Businesses with a strong, positive culture have five key components in common.

Strong leadership: They have effective leaders who provide direction and inspire their teams.
Team alignment: They make sure their team members share common values and goals.
Employee engagement: They keep employees motivated and committed to their work.
Clear communication: They have transparent and open channels of communication.
Recognition and rewards: They acknowledge and reward employees’ contributions.

Why Business Owners Should Prioritise Culture

Focusing on culture is not just about creating a pleasant work environment; it’s about driving business success. Businesses with strong cultures often see:

Increased efficiency: Motivated employees work more effectively.
Higher profit margins: Engaged teams contribute to better financial outcomes.
Reduced turnover: Happy employees are less likely to leave, reducing recruitment costs.
Improved innovation: A positive environment fosters creativity and innovation.

Problems of Neglecting Culture in Business

Ignoring the importance of culture can result in your business being less efficient, high employee turnover, low morale, and poor financial performance. Inevitably this can lead to an increased burden on management and operational challenges, like the below.

1. High employee turnover

Recruitment costs: Continuously hiring and training new employees is expensive and time-consuming.
Loss of expertise: Frequent turnover means losing valuable skills and knowledge, affecting productivity and innovation.

2. Low employee morale

Reduced productivity: Disengaged employees are less motivated, leading to lower output and efficiency.
Increased absenteeism: Unhappy employees are more likely to take sick days, disrupting workflow and increasing workloads for others.

3. Inefficient communication

Misunderstandings and errors: Poor communication can lead to mistakes, delays, and conflicts within teams, impacting project timelines and quality.
Lack of collaboration: Without a positive culture, collaboration diminishes, leading to siloed departments and a lack of cohesion.

4. Poor customer service

Customer dissatisfaction: Disengaged employees are less likely to provide excellent customer service, leading to complaints and lost business.
Damage to reputation: Consistent poor service can harm your business’s reputation, making it harder to attract and retain customers.

5. Decreased innovation

Stagnation: A negative culture stifles creativity and innovation, causing your business to fall behind competitors.
Resistance to change: Employees in a toxic culture are often resistant to new ideas and improvements, hindering growth and adaptability.

6. Management burden

Increased stress: Managers must constantly address cultural issues, leaving less time for strategic planning and decision-making.
Micromanagement: Poor culture often forces managers to micromanage, reducing overall efficiency and employee autonomy.

By addressing these challenges and prioritising culture, you can create a more efficient, productive, and resilient business.

What These 11 Behaviours & Practices Say About Your Company’s Culture

Company culture is reflected in a variety of daily interactions and situations.

By observing these daily behaviours and practices, you can get a good sense of what a company truly values and prioritises.

Here are some everyday ways company culture may show up in businesses, and the kind of culture you have as a result.

1. Communication in meetings and emails

Collaborative and open discussions during meetings show a culture that values everyone’s input.
Friendly and informal language in emails can indicate a relaxed, approachable culture.

2. How managers treat their teams

Managers who regularly check in with their teams and offer support demonstrate a caring and supportive culture.
Leaders who delegate tasks and trust their team members promote a culture of empowerment and trust.

3. Feedback and recognition

Regular, constructive feedback sessions reflect a culture focused on growth and development.
Publicly recognising employees’ achievements during team meetings highlights a culture of appreciation.

4. Problem-solving approaches

Encouraging team brainstorming sessions for problem-solving shows a collaborative culture.
Transparent communication about challenges and solutions fosters a culture of openness.

5. Teamwork and collaboration

Cross-departmental projects and cooperation indicate a culture that values teamwork.
Regular team-building activities demonstrate a commitment to fostering strong relationships.

6. Social interactions

Casual conversations and shared lunches among employees reflect a friendly and inclusive culture.
Organising social events, like after-work gatherings, shows a culture that values employee relationships.

7. Work-life balance

Flexible working hours and remote work options indicate a culture that respects personal time.
Policies that promote taking regular breaks and vacations show a commitment to employee well-being.

8. Physical workspace

Open-plan offices encourage communication and collaboration, reflecting a transparent culture.
Comfortable and well-designed workspaces demonstrate that the company cares about employees’ comfort.

9. Dress code

A casual dress code can indicate a relaxed and creative culture.
A formal dress code might reflect a more traditional and professional environment.

10. Onboarding Process

A thorough and welcoming onboarding process shows that the company values new employees and wants them to succeed.
Providing new hires with mentors highlights a supportive and inclusive culture.

11. Decision-Making Transparency

Regular updates from leadership about company decisions reflect a culture of transparency.
Involving employees in decision-making processes shows that their opinions are valued.

How To Benchmark Company Culture

Business owners and leaders can benchmark company culture by observing and measuring several key areas.

Assess communication styles in emails, meetings, and daily interactions – look for openness and approachability.
Evaluate how managers interact with employees and provide feedback, as supportive and constructive interactions indicate a positive culture.
Review teamwork and collaboration during projects, noting if the environment encourages cooperation or competition.
Consider social interactions, work-life balance policies, and the physical workspace setup.
Examine processes such as onboarding new team members, and how transparent your leadership team’s decision-making is.
Gathering employee feedback through surveys and regular check-ins can also provide valuable insights.

By systematically evaluating these aspects, you can get a clear picture of your own culture and identify areas for improvement.

KPIs to Quantify Company Culture

To measure culture, businesses can use KPIs related to workforce engagement, retention rates, productivity and profit margins.

For example, you might aim for:

High employee engagement scores
Low turnover rates
Increased productivity
Improved profit margins.

Regular feedback and cultural assessments can help track these metrics.

7 Practical Ways to Improve Company Culture (with Examples)

Business owners and leaders play a pivotal role in setting and shaping culture. But a strong, positive culture doesn’t come from one of those corporate “team-building” activities where your employees begrudgingly stand in pairs and catch each other as they fall. (Surely it’s not just us scarred by the mere mention of “ice-breakers”...)

Instead, fostering strong company culture comes from the business owner and leadership team’s vision and conduct,

Here are 7 tangible ways to ensure your company culture will be a positive influence on business performance.

1. Set clear values

Why it matters: Clear values provide a foundation for decision-making and behaviour, aligning everyone in the company towards common goals and creating a unified direction.

Strategy: Clearly define and communicate your company’s core values, like integrity, innovation, and teamwork. Think of them as guiding stars that everyone can navigate by.

How to implement: Create a values handbook that outlines what each value means in practice and distribute it to all employees. Regularly reference these values in meetings and company communications to keep them front and centre.

2. Lead by example

Why it matters: When leaders model the behaviours and attitudes they want to see, it sets the standard for the rest of the team, fostering trust and respect.

What to do: Leaders should walk the talk. If your company values work-life balance, make sure the leaders are not burning the midnight oil every night. It’s about showing, not just telling.

How to implement: Schedule regular "quiet hours" where no meetings are allowed, and encourage everyone, including leadership, to focus on their tasks or take a break. Show that it’s okay to step back and recharge – even the big bosses need some downtime.

3. Remove toxic employees

Why it matters: Toxic employees can severely damage team morale and productivity. Removing them can create a healthier work environment and improve overall efficiency.

What to do: Identify and address employees whose negative behaviour and attitudes are dragging down team morale and productivity. It’s like weeding a garden – sometimes you have to pull out the bad to let the good thrive.

How to implement: Conduct regular anonymous surveys to get the lowdown on team dynamics and identify toxic behaviours. Use this intel to have honest conversations and, if needed, make the tough call to let go of those who are poisoning the well.

4. Encourage open and honest communication

Why it matters: Open communication builds trust, fosters innovation, and ensures that everyone feels heard and valued within the company.

What to do: Create an environment where employees feel safe sharing their ideas and feedback (weird office stories optional) without fear of retribution. Transparency is the name of the game.

How to implement: Have an open-door policy and regularly schedule "ask me anything" sessions with senior leadership. Use anonymous suggestion boxes or digital platforms to encourage honesty and ensure everyone has a voice.

5. Promote continuous learning and development

Why it matters: Continuous learning keeps employees engaged, helps them develop new skills, and keeps the company competitive by fostering innovation and adaptability.

What to do: Encourage employees to keep learning and growing. Whether it’s picking up new skills or diving into a passion project, continuous development keeps things fresh and exciting.

How to implement: Provide a budget for employees to attend conferences, workshops, or online courses. Delegate the creation of a "Lunch and Learn" series where team members can share their newfound knowledge and impress everyone with their brilliance.

6. Encourage cross-departmental collaboration

Why it matters: Cross-departmental collaboration breaks down silos, fosters innovation, and builds a sense of community within the company.

What to do: Break down those silos and encourage departments to work together. It’s like mixing different ice cream flavours – you never know what awesome combination you might get.

How to implement: Organise cross-departmental projects and regular inter-departmental meetings to share insights and strategies. Encourage job shadowing or rotation programs where employees can experience the roles and challenges of their colleagues in other departments.

7. Invest in your leaders

Why it matters: Investing in professional development ensures the people leading your business are doing so in a way that aligns with your overall values and goals. Good leaders don’t just happen; they’re made (with a little help from some training sessions).

What to do: Invest in programs that train managers on how to lead effectively and align with the company’s values.

How to implement: Identify current or potential leaders within your team and enroll them in a leadership training program. Follow up with regular coaching sessions to support their growth and ensure they’re implementing what they learn.

“Why Culture is King for Business Success”

WITH BRENDAN MILLS, CFO DYNAMICS FOUNDER & DIRECTOR

“As an accountant, you’d imagine I’m very numbers-driven. But to go one step further, what is influencing those numbers? If something’s good, what created it? If something’s bad, what’s causing it? How do I remedy things, or how do I take advantage of things as they occur?

Two manufacturing businesses that we’ve spoken to in the last six months... and we were talking about culture, team, environment. You might go, “That doesn’t sound very accountant-y.” But remember what I said a moment ago: We’re talking about influence and how to change things.

I want to give you two examples of why culture is so crucial to the overall performance and financial success of your business, and why you and your accountant need to be just as concerned about culture as you are with your numbers.

Firstly, a personal belief I have is if you were to benchmark our businesses we work with, and compare culture and performance, there would be a very close correlation between the best-performing businesses also having the best cultures.

The first of these examples is a business we work with on the east coast of Australia, and they run a manufacturing operation. Their operation employs around 21 or 22 people actually on the job, on the tools. And they said, “18, we love... they’re great, they’re awesome, they’re brilliant; 3, they’re not a good fit for culture, impact on the team - all those things you can imagine - a drain on management, et cetera, et cetera.”

They were able to remove those three people from the business, but keep the other 18. Do you know what happened? Efficiency went up 18%! So three fewer people... they didn’t replace the people... they kept what they had, but did not replace the people who left – the cancerous people. Their efficiency went up, and their output went up 14%! So you’ve lost three people out of 20, you’ve lost around 15% of your capacity, but you’ve gained 14% output. All by eliminating those three people. They did nothing different by their own admission.

That’s at the granular level of your team members. Then you look at leadership and management of your team. Another manufacturing business had been having challenges with their operational manager. The team was happy, but the leader of that team they felt was not giving the direction that they needed for their business. We worked out that from when they employed the operating manager that they wanted to have and that they trusted, they improved their gross profit performance – just in the first three months by 3.5% just by getting good leadership.

Now, you can insert your numbers here... If you’re looking at a million dollars a month, $2M a month, $3M a month... $1M a month in revenue at 3.5% improvement, that’s $35,000 that you’ve just got from nowhere – you’re not outlaying any more costs – just by how your team is led by your operations manager. So great leadership, great team members, produced great results, which give me great numbers, which makes me very happy.”

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