Why Corporate Culture is So Important

In the digital age, the competition to develop innovative new products, capture customers, and achieve widespread brand recognition has grown fierce. Without a talented team that will push to make you first to market and become brand ambassadors for your company inside and outside the office, you’ll soon find yourself out of the running. That’s why attracting, retaining, and keeping talent engaged and motivated has become a top priority for businesses, leading to a ‘war for talent.’

And just what is the key to winning the war for talent? A survey by the Korn Ferry Institute revealed that the number one reason candidates choose one company over another was company culture. In this guide, we will deep dive into why corporate culture is so important!

The new reality of the corporate world

A shift can definitely be attributed to the new generation that’s now dominating the workplace. According to Jeanne MacDonald, the organization’s global operating executive, “Millennials are absolutely looking for culture and fit. They want to feel good about where they’re working and require a shared sense of purpose.”

Beyond hiring, a study by Gallup found that employees with a strong connection to their organization’s culture show higher levels of engagement. And, according to Harvard Business Review, organizations with high levels of employee engagement report 22% higher productivity, lower turnover, and even fewer safety and quality incidents.

Not only does corporate culture help attract and retain employees, it can also be leveraged to instill certain norms within an organization and align the team towards common objectives. For example, in 2014 Facebook replaced its famous motto, “Move fast and break things,” with “Move fast with stable infra,” signaling a clear shift in its way of working and mentality as the company matured. While in the beginning it was important to build as fast as possible (even if there were bugs along the way), now the company promises its users it will fix all bugs within 48 hours.

All of these potential benefits have led to the rise of ‘employer branding’ with HR teams using traditional marketing tactics to promote their culture externally and attract more talent.

But a word of caution. While company culture can be a powerful tool for your organization, it can just as easily undermine your employer brand if your efforts aren’t sincere. Just like consumers, employees are now able to share what it’s really like inside your organization via sites like Glassdoor. Therefore, developing a corporate culture that only looks great from the outside isn’t going to cut it.

But the great thing is that putting your efforts into building a truly great corporate culture for your current employees will pay off. According to the study by Gallup:

• Engaged employees are more likely to refer friends to their organization.
• And 71% of workers say that they use referrals from current employees of an organization to learn about job opportunities.

What is Corporate Culture?

Corporate culture refers to the beliefs and practices that exist within an organization and it determines how employees and management interact as a team, and how they conduct business.

It’s not necessarily something that is explicitly defined but is often implied through various factors such as dress code, office setup, business hours, employee benefits, and how the team celebrates achievements or addresses failure. Harvard Business Review identifies six components of a great corporate culture:

1. Vision: An organization founded on an authentic mission provides purpose and direction, helping employees and stakeholders make all of their decisions.
2. Values: While a vision defines a company’s purpose, defined values offer guidance on the behaviors needed to achieve that vision.
3. Practices: It’s all well and good having nice values on paper, but these are redundant if people don’t incorporate them into their everyday life.
4. People: Culture is created by the people themselves.
5. Narrative: The ability to craft your company’s history into an ongoing story that can be embodied by your employees.
6. Place: This refers to both the physical space and location in which you work; the geography, architecture, and aesthetic design and layout all impact the culture of your business.

Where is corporate culture going?

We’ve come a long way since we began to truly understand the key importance of corporate culture. The term itself emerged in the 1960s, becoming developed and widely known in the 1980s, being used by managers and academics to describe company character. This included the generalized beliefs and behaviors of the company, management strategies, the work environment, and employee attitudes.

But the contemporary workplace is going through major changes. Digital transformation is taking hold and in need of, not just new digital talent, but also new approaches to talent management. Traditional top-down hierarchies are being toppled in favor of flatter and more autonomous ways of working. At the same time, a company’s moral compass is becoming more heavily scrutinized with consumers favoring brands that take a strong stance on improving diversity and sustainability.

Here are just a few of the most important trends we’re seeing in corporate culture right now:

A culture of diversity and inclusion

While for decades discrimination and disparities in pay and opportunities faced by women and minority groups have been apparent, in recent years the push towards building a more diverse and inclusive workplace has finally gained traction.

There are a number of reasons for this, one very important one being that having greater diversity in the workplace is not only the right thing to do, it also significantly impacts a company’s bottom line. In fact, according to a report by McKinsey, companies in the top quartile for racial and gender diversity are respectively 35% and 15% more likely to have financial returns above their national industry medians.

And that’s not all. Studies show that greater diversity and inclusion helps companies:

• Attract more talent. According to a study from Glassdoor, 67% of job seekers say that a diverse workforce is important when considering job offers.
• Solve problems faster. Harvard Business Review found that diverse teams are able to solve problems faster than a group of cognitively similar people.
• Improve decision making. A white paper from online decision-making platform Cloverpop found a direct link between diversity and decision making, with researchers finding that diverse teams making decisions outperformed individual decision-makers by 87%.
• Drive innovation and profits. A 2017 study from the Boston Consulting Group revealed that diversity in the workplace is a key driver of innovation and that diverse teams produce 19% more revenue.

Despite these advantages, the numbers aren’t reflective of the diversity within our society. Looking at data from tech corporations, little has changed in the six years since companies like Facebook, Microsoft, and Twitter began publishing diversity reports. While women have seen a slight increase in representation, Black employees have seen little increase in their representation in the tech industry. And despite this slight increase, women leadership still suffers, as they represent 45% of the S&P 500 workforce, yet only 4% of CEOs are female.

The key here clearly isn’t just to focus on hiring more diverse talent. Instead, creating an inclusive corporate culture is essential to fostering a truly diverse workforce. Andres Tapia, author of The Inclusion Paradox, offers a simple way to understand the nuances between these two words:

“Diversity is the mix. Inclusion is making the mix work.”

So diversity is having a range of approaches, styles, cultures, and backgrounds within your organization, whereas inclusivity is ensuring that these differences are valued by providing an open environment in which everyone is given equal access to growth opportunities and decision-making roles that will enable them to reach their full potential. This means that while diversity is something that can be measured, inclusivity requires direct action.

A culture of agility

In our fast-moving digital world, lean and agile startups have greatly benefited from being able to quickly adapt to sudden market changes, disruptive technology, and fast-changing business priorities. Now larger corporates are learning from their more nimble younger siblings by embracing agile leadership.

In fact, a study by McKinsey found that companies which have introduced agile management strategies were better prepared to respond quickly to the sudden changes brought on by Covid. And it’s likely that these organizations will come out on top in the uncertainty of the ‘new normal.’

However, McKinsey also found that the human factor was the biggest obstacle for organizations that want to introduce this change. Indeed, 76% of the organizations they surveyed said that transitioning to agile management and adopting these new ways of working was the biggest hurdle.

This really illustrates the power that company culture can have in setting the tone for the rest of the organization. However, changing your corporate culture isn’t impossible. In the next section, we’ll provide insights into how you can do this.

Innovation management / Creating a culture of continuous learning

Innovation is what all companies strive for. Today’s workforce is focused on creating new ideas, processes, or products that will get them ahead of the competition. But, while innovation is our end goal, using traditional factory-style management strategies are not the means that will get us there.

Instead, companies are now shifting towards innovation management strategies that foster bottom-up innovation. They’re introducing new processes like design thinking, prototyping, and rapid experimentation. However, this vastly different work environment also requires a new type of leadership.

The role of management is changing significantly. Instead of being seen simply as supervisors, managers are now taking a more active ‘coaching’ role tasked with helping each of their team members reach their full potential.

The best way to do this is by fostering a feedback culture that promotes continuous learning and development. In fact, a study by Deloitte found that high-performing learning organizations are:

• 92% more likely to innovate
• 46% more likely to be first to market
• 58% more prepared to meet future demand
• 37% greater employee productivity

However, a survey of millennial employees by Gallup found that only 19% receive routine feedback and only 17% say the feedback they receive is meaningful. In fact, 65% want more feedback and coaching.

This creates a great opportunity for companies who are willing to invest in a culture of learning and ongoing feedback.

How to build a great corporate culture?

Building a corporate culture that supports your business strategy takes time. Many corporate culture initiatives fail because they rely on short-term programs or top-down mandates that are not embedded into everyday work. Here are some strategies that can help:

• Define and communicate your purpose and values clearly. They need to be visible and regularly discussed.
• Lead by example. Senior leaders need to embody the culture.
• Hire for cultural fit. Find candidates that align with your values.
• Create rituals and traditions. This can be anything from regular team celebrations to daily stand-up meetings.
• Foster open communication and feedback. Make it safe for employees to voice opinions.
• Invest in employee development. Provide opportunities for growth.
• Celebrate successes and learn from failures.

Conclusion

The war for talent is real and corporate culture plays a decisive role in winning it. With a strong culture, you don’t just attract the right people—you keep them engaged, motivated, and aligned with your business goals. As workplaces evolve, focusing on diversity, agility, and continuous learning will position your company as an employer of choice in the future.