Organizational Wellness

Understanding Company Culture and What Makes it Effective

May 9, 2023
Last Updated Jul 22, 2024

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. 

Strong Company Values

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.

Expressing Company Culture

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 Cultural Adds

Company culture should be consistent, but not stagnant. In today's diverse and globalized business landscape, many companies are looking to hire “cultural adds” not "cultural fits.” Eyeing what potential new hires can bring to the table the team doesn’t already fosters diversity and nurtures innovation over seeking employee uniformity. It allows companies to take advantage of a variety of perspectives, backgrounds, and experiences in the workplace. In effect, diversity itself becomes another crucial aspect of the work culture.

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.

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.

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. 

Company healthcare costs drop by up to 35% with Wellhub! (* Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.) Talk to a Wellbeing Specialist to see how we can help reduce your healthcare spending!



Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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