Understanding Company Culture and What Makes it Effective

Today’s business world can’t stop talking about company culture. Whether corporate leaders are calling for a return-to-office to preserve the company culture, or workers are quiet quitting to escape a hustle culture, everybody agrees it’s pivotal.

Yet, it’s still so easy to talk past each other in conversations about company culture. After all, many people find the phrase ‘company culture’ tricky to define. And, even if you can articulate what exactly your company’s culture is, how can you see it in action? What are the ways you can leverage it? And why, at the end of the day, does it matter so much?

These are great — and really important! — questions. Let’s explore them, because understanding company culture can help you create one that will enable your employees and your business to thrive.

What is Company Culture?

Company culture is a business's collective values, beliefs, and behaviors. An effective corporate culture creates an environment where employees flourish individually and collectively. It defines an organization's personality and ethos, guiding the decisions made at all levels of the business and the everyday norms of how co-workers and managers interact. A healthy culture is one in which employees feel they are valued, trusted, and are working at a sustainable pace, all of which builds trust within the organization. 

Why is Company Culture Important?

Company culture sets the tone in the workplace and can directly impact the employees experience. A positive company culture helps to increase employee retention and attract top talent by showing that it's an environment where people can thrive and grow.

Research from Deloitte also shows that employees who enjoy their working environments are likely to stay with their employer for longer, which can reduce turnover rates and increase job satisfaction. This saves money on recruitment costs and creates a loyal team of employees committed to the company's goals.

Put simply, top-notch company cultures have the power to support your business goals, including:

• Improved employee engagement, collaboration, morale, and innovation.
• Increased organizational productivity.
• Increased profitability.
• Ability to attract top talent.
• Improved communication among teams.
• Reduced turnover rates.
• Greater commitment to company goals and objectives.
• Higher levels of trust within the organization.

Core Values: The Foundation of Company Culture

Great company culture is built on shared values, such as respect for colleagues and customers, integrity, communication, collaboration, and innovation. This can help existing employees succeed by providing them high-minded goals to strive for, as well as clear expectations of how work is done at your organization.

They can also help you recruit new team members. If you list your core values on your website, potential hires can preview the benefits of working for your organization. You can also use them in your interview process, creating questions that allow you to evaluate how well a candidate aligns with your principals. While you don't want to create a cookie cutter workforce, alignment on the foundational aspects of how your organization should function can help with team cohesion.

How to Express Your Company’s Values

Everything expresses your workplace culture, from the way the staff is welcomed on their first day to how team members are rewarded for their hard work. Since it impacts everything, a positive company culture can improve employee experience and make your workforce feel like they're part of something bigger than themselves.

Examples of values and initiatives that define an organization's culture include:

• Cordial collaboration between departments and teams.
   
• Celebrating birthdays, anniversaries, or other successes with company social events and outings.
   
• Encouraging open communication between employees and management.
   
• Prioritizing employee wellbeing through benefits packages or a wellness program.
   
• Rewarding hard work with perks like bonuses or gift cards.
   
• Promoting diversity and inclusion in the workplace.
   
• Creating an enjoyable employee experience, such as providing healthy snacks or spaces to socialize.
   
• Developing recognition programs for high-performing employees.
   
• Investing in employee training and growth opportunities.
   
• Giving employees the time they need to recover when they're sick or burnt out.

Hiring for a Cultural Fit vs Cultural Add

Cultural Fit: The Comfort Zone

This means hiring someone who blends easily into your existing team — someone whose personality, background, and values reflect what’s already there. The goal? Preserve the status quo. And there are benefits: onboarding tends to be faster, relationships form more quickly, and the team keeps humming along as-is. But that comfort comes with a cost. Over time, relying too heavily on cultural fit can lead to groupthink, limit diversity of thought, and stall innovation. Imagine hiring a new marketing lead who reminds you of your current star player. Same experience, same strengths. It’s a low-risk choice — but it also reinforces a homogenous dynamic that may no longer serve your evolving workforce.

Cultural Add: The Growth Engine

Hiring for culture adds prioritizes candidates who bring something new — perspectives, experiences, or identities that intentionally stretch and strengthen your culture. Instead of blending in, they build out. The payoff? Greater innovation, broader thinking, and a more resilient, adaptable organization. Yes, it can take more time to integrate these employees and may require extra effort from teams to navigate differences. But the long-term impact is worth it. Let’s go back to that marketing hire — maybe this candidate works in a completely different way or brings a background in a different industry. They might even challenge some of your team’s assumptions. And that challenge? That’s where the magic starts.

10 Characteristics of a Great Company Culture

1. Clear Vision, Mission, and Core Values

When employees understand why the company exists and how their work contributes, they’re more engaged and aligned. A strong sense of purpose turns everyday tasks into mission-driven action.

2. Open and Respectful Communication

Transparent communication—from leadership and between peers—builds trust, reduces confusion, and helps teams work together with clarity. This kind of openness is the backbone of strong cultures.

3. Psychological Safety

Employees thrive when they feel safe to speak up, share ideas, and take smart risks. Psychological safety fosters innovation, inclusion, and better problem-solving across the organization.

4. Empowerment and Decentralized Decision-Making

Empowering employees to make decisions at their level creates ownership. When people have authority, they become more engaged, responsible, and creative.

5. Commitment to Growth and Development

Regular access to learning, mentorship, and career pathways shows employees that they’re valued—and that the company is invested in their long-term success.

6. Recognition and Appreciation

Employees who feel seen and celebrated bring more energy to their work. Recognition—formal and informal—boosts morale and retention, and helps build a culture of gratitude.

7. Teamwork and Collaboration

Cross-functional collaboration makes problem-solving richer. When teams work in sync, you get better solutions—and a greater sense of camaraderie.

8. Belonging, Inclusion, and Diversity

A culture of inclusion helps everyone feel safe, respected, and valued. When people feel like they belong, they show up fully—and performance rises as a result.

9. Adaptability and Resilience

In fast-changing environments, companies with resilient cultures respond quickly and learn from setbacks. Agility isn’t just a strategy—it’s a cultural advantage.

10. Trust

Trust is the foundation of collaboration. When employees trust their leaders and their peers, they’re more willing to share ideas, take initiative, and work through challenges together.

Types of Organizational Culture

Organizational culture is intended to enable team members to do their best work in line with company values. How companies approach this ideal varies, but the four main types of corporate cultures include: clan, adhocracy, market, and hierarchy. While not every company fits into just one of these types of cultures, understanding these common frameworks can help you choose the characteristics that align best with the culture you want to build. 

Adhocracy Culture

Adhocracy culture celebrates innovation, risk-taking, and experimentation. In this organizational structure, teams can take the initiative and try out new ideas without fear of failure. Employees are encouraged to be flexible and develop creative solutions to problems. This culture promotes quick decision-making and is particularly well-suited to a start-up environment.

Clan Culture

Clan culture is built upon strong relationships and a familial atmosphere. It promotes collaboration and teamwork by creating an environment where employees feel safe to share their ideas and work together to develop better solutions.

Clan culture focuses on employee engagement, allowing teams to become close-knit and trust each other. This culture also emphasizes employee development, such as mentorship programs, as team members are encouraged to learn from one another and grow together.

Hierarchy Culture

Hierarchy culture is marked by top-down decision-making and traditional workplace roles. Its main focus is structure and efficiency, as each team member has a specific job with well-defined processes and responsibilities. Hierarchy cultures are risk-averse and often found in organizations that have been around for a long time. The inherited established order and systems create separation between top-level managers and their employees.

Market Culture

Market culture is an organizational culture that values competition and achievement. It emphasizes results-oriented behavior and prioritizes external success, such as increasing sales or meeting quotas. Staff is typically driven by the desire to succeed to gain rewards like recognition, status, or financial compensation. This type of culture is often found in fast-paced and highly competitive industries such as advertising, media, technology, and finance.

How to Build a Positive Culture in Your Organization, Step-by-Step

Step 1. Define and Embed Core Values

Start by choosing the values that matter most to your company—think trust, growth, inclusion, or innovation. Then, weave those values into every decision, process, and policy. And here’s the key: leaders must model those values daily. Culture starts at the top.

Step 2. Promote Honest Communication

Open communication is the bedrock of a positive culture. Create space for real conversations through town halls, anonymous surveys, suggestion channels, or regular one-on-ones. Transparency builds trust—and trust fuels alignment.

Step 3. Build Psychological Safety

If your people don’t feel safe speaking up, your culture can’t grow. Psychological safety means employees can share ideas or raise concerns without fear of judgment or retaliation. When people feel safe, innovation follows.

Step 4. Set Clear Goals and Measure Progress

People want to know what success looks like. Define clear company-wide and individual goals. Regularly check in on progress, offer feedback, and adjust when needed. A sense of direction creates a sense of purpose.

Step 5. Recognize and Reward Often

Recognition is powerful. Celebrate the big wins—and don’t miss the daily efforts. Whether it’s a shout-out in a meeting, a peer-nominated award, or a handwritten note, showing appreciation boosts motivation and loyalty.

Step 6. Prioritize Wellbeing and Flexibility

Flexible schedules. Remote options. Wellness benefits. These aren’t just perks—they’re essential tools for reducing burnout and supporting retention. When employees feel supported as humans, they bring their best selves to work.

Step 7. Invest in Growth and Inclusion

Offer mentorships. Support ongoing learning. Make DEI training the norm. And provide clear paths to promotion. When people see opportunity—for themselves and others—they’re more likely to stay and thrive.

Step 8. Encourage Team Bonding and Community

Connection matters. Host social events, volunteer together, try peer-learning sessions, or launch a company hackathon. These experiences build relationships across teams and help your culture feel like a community.

Step 9. Listen and Adapt Continuously

Your culture isn’t one-and-done. Use pulse surveys, monitor engagement trends, and respond when things aren’t working. A culture that listens—and adapts—earns trust and evolves with its people.

Step 10. Ensure Visible, Supportive Leadership

Train your managers to lead with empathy and accountability. Great leaders coach more than they direct, and they take ownership of the culture they create. When leaders step up, the whole culture gets stronger.

7 Company Culture Examples

1. Patagonia: Purpose leads the way at Patagonia. The company channels all profits into environmental causes through a dedicated trust. Flexible schedules, paid time for passion projects, and built-in holiday breaks reinforce its values-first approach.
    
2. Zoom: Zoom centers its culture on employee happiness. Even post-pandemic, it offers hybrid work, compassionate leadership, and adaptable policies that help employees feel heard during times of change.
    
3. Spotify: Spotify makes experimentation safe and expected. With an agile mindset and room for trial and error, employees are encouraged to take risks—and learn from every stumble along the way.
    
4. Nike: Nike builds culture around innovation, inclusivity and passion. Leaders encourage bold ideas via cutting‑edge labs and agile teams that push boundaries.
    
5. Wellhub: Wellhub fosters a trust‑based culture with high autonomy. Employees shape their own work styles and make decisions with accountability. Flexibility and wellness are core values. The mission to make every company a wellness company is woven into daily operations.
    
6. Capital One: Capital One supports wellbeing through intentional perks like self-care days, “No-Meeting Fridays,” and cooking classes. These initiatives promote rest, creativity, and stronger connections across the organization.
    
7. Dow Chemical: At Dow, innovation thrives through cross-functional collaboration. Teams regularly share insights across business units. Personal flexibility and scientific teamwork are both prioritized.

Shaping Your Company Culture Around Employee Needs

Whether you want to bolster your established company culture or are just starting to build something fresh, understanding and considering the needs of your employees is key. They are the people who bring your culture to life.

To determine what they need or what's missing, you can conduct employee surveys and use that feedback to make positive changes. For example, if burnout is a recurring issue, you can consider launching a wellness program, offering more flexible work options, or providing better resources to help employees manage workloads.

For help establishing an employee wellness program that drives a healthy company culture, talk with a Wellbeing specialist! Our flexible subscription to an international network of thousands of fitness centers and wellness apps empowers employees to feel their best. 

References 

• 2022 Global Talent Trends: The Reinvention of Company Culture. (2022). Linkedin Talent Solutions. Retrieved April 19, 2023 from https://business.linkedin.com/content/dam/me/business/en-us/talent-solutions-lodestone/body/pdf/global_talent_trends_2022.pdf?trk=bl-po&veh=Global-talent-trends-2022-launch-post.
• Becoming irresistible: A new model for employee engagement. (January 27, 2015). Deloitte. Retrieved April 19, 2023 from https://www2.deloitte.com/us/en/insights/deloitte-review/issue-16/employee-engagement-strategies.html.
• Current Company Culture Trends: Survey Results [Infographic]. BambooHR. Retrieved on April 19, 2023 from https://www.bamboohr.com/resources/infographics/current-company-culture-trends.
• Employee Engagement vs. Employee Satisfaction and Organizational Culture. (April 12, 2017). Gallup. Retrieved April 19, 2023 from https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx.