A Guide to Defining Company Culture
Company culture has been a trending business topic over the last few years, with important leaders like American Airlines CEO Doug Parker1, Airbnb CEO Brian Chesky2, and Huffington Post co-founder and editor-in-chief Ariana Huffington3 touting its vital importance.
But why is company culture so important, and how does an organization identify and define its culture?
Ultimately, company culture can make the difference between an organization succeeding or failing – it’s that significant.
What is Company Culture?
Company culture is also referred to as organizational culture. It’s a term that is all-encompassing of the workplace. It comprises the environment in which we work, the standards to which we are held, the relationships we have with our colleagues, the processes in which we communicate, and the unspoken beliefs we share with our staff members.
Why is Company Culture Important?
Here’s what we know: company culture impacts a business’s bottom line4. Positive company culture that has high levels of employee loyalty, satisfaction, and productivity is directly linked to customer loyalty and satisfaction, and more importantly, profit and revenue growth.
Company culture is incredibly important when it comes to employee retention. In one study of six public companies, company culture had a stronger influence on employee retention than the combined influences of the labor market and employees’ demographic characteristics5. This resulted in an estimated six million dollars’ difference in human resource costs between firms with different cultural values.
Needless to say, organizational culture influences an employee’s satisfaction and morale. If an employee doesn’t feel connected to the organization, he or she is more likely to seek out other employment opportunities, costing your company valuable time and money.
By defining your company’s culture, you are in the position to shape the organizational culture into a positive, supportive, and enjoyable workplace. Companies with supportive environments that foster employee learning, growth, and career satisfaction have lower turnover rates6 and better customer retention7.
Defining Your Company’s Culture
1. Espoused Values
Espoused values are the publicly stated values and standards of an organization. You can find them in:
- Mission statements
- Vision statements
- Commitments to business practices
- Publicly stated standards
Essentially, espoused values are the aspirations of a company8. They directly influence how a company operates and how employees function. However, these values don’t always translate perfectly into practice.
2. Enacted Values
Enacted values are the standards and norms that are actually exhibited by a company and the organization’s employees on a daily basis9. They typically differ slightly from espoused values.
When there is a big discrepancy between espoused and enacted values, it can be confusing and frustrating for employees. In fact, large gaps between espoused and enacted values can have a negative influence on employee morale and organizational performance10. It’s important for upper management and leaders to actively try to reduce gaps between the two.
You can identify your company’s enacted values and gauge the gap between espoused and enacted values by carefully observing and monitoring the actions of employees, the standards the company holds itself to, and the short-term goals that are being worked towards. Do they align with the company’s greater espoused values? Do they diverge? If so, in what way?
3. Basic Assumptions
Basic assumptions are the core of an organization’s culture11. They are unobservable and taken for granted; so much so that they guide a company’s behavior without having to be explicitly stated. Kinicki and Fugate (2012) use the example of Google’s underlying assumption that innovation is vital to the company12. This basic assumption is ever-present in Google’s actions and practices; Google would never act in a way that prevents or stifles innovation.
It can be hard to identify basic assumptions when you are embedded in an organization as an employee. You can try to brainstorm underlying company assumptions with various teams and staff members; different areas of a company can offer different insights. However, sometimes an outside consultant is necessary to pinpoint these crucial assumptions.
4. Observable Artifacts
Observable artifacts are the easiest part of an organization’s culture to identify because they are the visible components of a company13. They include:
- Office layout
- Décor and furnishings
- Logos and branding
- How employees dress
- Rituals and ceremonies
- Meeting behavior
- Interactions among colleagues
Observable artifacts should support a company’s espoused values, and not counteract them. For example, if a company is committed to reducing their ecological footprint, there should be observable artifacts such as a rideshare program, energy efficient appliances, biodegradable cleaning products, or recycled furnishings. In other words, there should be some evidence of an effort working towards the company’s espoused values.
Promoting a Positive Company Culture
Once you’ve defined your organization’s culture, you have the power to change it for the better. You can empower employees by ensuring the culture is consistent, cohesive, and transparent. You can also empower employees by giving them tools to succeed and adapt to work environments, no matter the context.
Our 30-Day Learning Journey is designed to empower employees by building awareness of different work styles, and teaching them how to switch their work styles when (and if) circumstances require it.
The best part? The 30-Day Learning Journey is fully scalable and ideal for large audiences. No matter the size of your company, this learning tool will help your staff feel confident and comfortable working with different staff members in different environments.
1 Gharib, S. (2018, February 2). American Airlines CEO: Our Culture Will Continue to Evolve. Fortune. Retrieved here
2 Bulygo, Z. (2018). Building a Strong Company Culture, with Airbnb CEO Brian Chesky. Retrieved here
3 Connley, C. (2017, October 5). Arianna Huffington: Culture is ‘a company’s immune system’. CNBC. Retrieved here
4 Imaizumi, M. (2017). Company Culture Drives Productivity: A Study on How Company Culture Impacts the Bottom Line. TCU Digital Repository. Retrieved here
5 Sheridan, J. E. (1992). Organizational Culture and Employee Retention. Academy of Management Journal, 35. Retrieved here
6 Joo, B. K. and Park, S. (2010). Career satisfaction, organizational commitment, and turnover intention: The effects of goal orientation, organizational learning culture and developmental feedback. Leadership & Organization Development Journal, Vol. 31 Issue: 6, pp.482-500. Retrieved here
7 McCrory, B., Pilcher, N., and McMillan, J. (2017). A holistic framework to embed good company practice for customer retention. The TQM Journal, Vol. 29 Issue: 2, pp.257-275, Retrieved here
8-13 Kinicki, A. and Fugate, M. (2012). Organizational Behavior: Key Concepts, Skills & Best Practices. Retrieved here