Company culture determines how people feel about their work, their work environment, and their boss. At its best, company culture can be healthy and profitable for your business. But what does company culture actually mean? There are any number of guides out there that describe company culture based on vague platitudes.

Entrepreneurs can’t execute on that. Whether you’re just starting out with your side hustle or looking to scale from millions to billions in revenue, you need actionable intel. So, we’re breaking down company culture so that you can understand what exactly it entails and how you can create a strong culture. Then we’ll top it off with some examples of corporate culture that are so sweet we had to save them for dessert.

What Is Company Culture?

Company culture is defined as a set of shared values, goals, practices, and attitudes cultivated by a business. Company culture is often set by leadership, with organizational founders playing a key role in how people feel about the company, the work they do, and where they see the business going.

Every organization has a company culture—whether you deliberately cultivate it or not. Building an organizational culture with intention can be the difference between a strong, healthy company culture and a toxic culture. So let’s get intentional about it.

The Components of Company Culture

The core components of organizational culture are vision, values, practices, people, brand story, and space.

Vision

Company culture begins as an act of imagination. Starting a business is the first step in turning that act of imagination into action. This is where company culture starts—with a mission statement or a clear description of your company’s purpose. Not sure what we mean? These questions can help you narrow down your vision:

• What are you hoping your business will achieve?
• If your company could have one impact on the world, what would it be?
• Imagine your business in 5 years. What does it look like? What have you achieved? How do people feel working with you? How do they describe your company to their friends and family?

Values

Your company values provide an outline for what you want your company culture to be. If your mission is what you hope to achieve, your company values outline what you want the journey towards your mission to look like. Organizational values provide guidelines for how you want your team to approach their work. It encompasses the ethos and behaviors you want to cultivate.

Practices

Your practices are what you actually do to live our your company culture. A solid mission statement and beautiful values won’t get you very far if you don’t have the practices to back it up. Ideally, your practices should be an extension of your company’s core values. If you value “employee development,” for example, look for ways that your practices can support that—from giving a new employee with the training materials they need to succeed from the get-go to offering tuition reimbursement, skill development programs, or other opportunities for more senior employees to continue to grow.

People

Corporate culture is a collaborative creation, and the people you hire will either make or break your organizational culture. Hire people who either share your company’s values themselves or are willing to embrace your values.

Brand Story

Human brains are hardwired for stories, and the story you tell about your business has the powerful ability to influence your corporate culture. So when you tell your brand story, ask yourself how you want people to feel and whether or not your brand narrative supports or detracts from your desired culture.

Space

The physical location in which people work also contributes to your workplace culture. Does your company value flashy office space with tons of amenities? Are you looking for a pared-down office? Or is embracing remote work an integral part of your company’s culture? Look for ways that you can support your desired work environment through place.

The Benefits of a Positive Company Culture

The ROI on investing in positive company culture is real and measurable. When you invest in building a strong organizational culture, you can expect to reap some clear benefits.

Everyone Works with a Set of Shared Expectations

When your company culture is clearly outlined, everyone within the organization has a clear roadmap they can point to. This sets clear expectations for the behaviors and spirit you’re trying to cultivate within each team.

Increased Employee Engagement

An organizational culture that galvanizes your team will improve employee engagement, which in turn directly benefits the business’s bottom line. A 5% increase in total employee engagement can result in a .7% increase in a company’s operating margin, and companies with stronger employee engagement have experienced a 22% higher profitability than those with low engagement rates.

A study from the Harvard Business Review found that inspired employees significantly outperformed their colleagues. Your company culture can lay the groundwork for inspiring employees, increasing their commitment to the team and the caliber of work that they deliver.

Lower Turnover

A company culture that centers the employee experience can greatly reduce your turnover. A 2020 report from LinkedIn revealed that companies rated highly in “purposeful mission” saw 49% lower attrition rates. Businesses with highly-rated “employee training” offerings saw 53% lower turnover.

Improved Talent Acquisition

An enticing culture attracts talent, and negative company culture will repel it. More than one-third of workers have reported that they would pass on the “perfect” job if the culture was not a fit. On the other hand, we can consider another key finding from the 2020 LinkedIn Report: businesses with flexible work arrangements, a growing draw for Millennials and Gen Z workers, saw 137% higher headcount growth than competitors.

How to Build a Strong Company Culture

Entrepreneurs and employers can follow these steps to create a corporate culture that reflects your company’s values and makes you more likely to rank on one of those fancy “best places to work” lists.

1. Do Some Research on How Other Businesses Have Done It

You can learn a lot about what makes a great company culture by studying how others have approached it. Read through examples of organizations with good company culture to get a sense of what will and will not work for you. (Don’t worry, we’ve rounded up some of our favorite examples below, so you won’t have to go far.)

2. Assess What Your Current Culture Is

If you’re looking to more clearly define organizational culture for an existing business, you want to begin by taking stock of what your current culture is. You can use employee surveys, exit interviews, and conversations with engaged employees to give you a sense of what is working.

There’s also a chance that you may dig up some toxic practices or negative habits that you’ve unconsciously cultivated. If this happens, take a deep breath. Building a business is hard, and you’re bound to make mistakes. It’s okay if your culture isn’t where you want it to be, as long as you don’t get stuck there. You can use your discoveries to help guide a culture change.

3. Get Specific What You Want Your Company Culture to Be

The more specific you get about what you want your company culture to look like, the easier it will be to execute. Is your vision specific or general? This is the time to narrow it down with a clear vision statement and company values that support it. If you need help getting specific, these questions can help.

• What single, overarching goal is most important to your business? (Hint: this is your mission statement)
• In your mind, what does or should drive employee motivation?
• What does a strong culture fit look like?
• How does diversity play a role in your corporate culture?

Still stuck? Write a list of companies you want to emulate. Head to their website and check out the “company” or “careers” page to see how they list their company values. It can be a great opportunity for inspiration.

4. Take Concrete Steps to Create a Positive Company Culture

Vision is nothing without execution. To make sure that your company culture has a measurable impact on criteria like job satisfaction, employee retention, and productivity, you need to take clear, concrete steps to implement your organization’s culture.

Steps That Cultivate a Positive Culture

• Hire people who support your company’s core values
• Deliver on what you promise in your company values. If you say you support teamwork, how are you going to do that? Write it down and figure out how to put it into practice.
• Enact regular team building.
• Work with human resources to find out what’s causing employee turnover and what you can do to improve.

5. Lead by Example

Leadership drives company culture. If you want your whole organization to embrace a certain set of values, they’ll want to see you lead them. Ensure everyone at the highest levels of leadership is setting an example for your desired culture.

6. Cultivate Buy-In from Your In-House Influencers

Company culture may require leadership from the very top, but you can’t do it alone. Look for help from your in-house influencers. Happy employees are a great place to start. Find ways to enlist them—whether it’s asking them for input on team building or feedback on how the company’s core values, as they’ve been written, reflect the day-to-day experience of life at your organization.

7. Listen to Feedback

Embrace feedback even, and especially, when it’s hard to hear. Exit interviews and surveys can give you insight into the reality of your company culture and where you might be falling short in a way that’s contributing to employee turnover. On the flip side, feedback might also bring your attention to some unexpected drivers of employee happiness.

8. Make Adjustments

You’re never gonna hit it out of the park on the first try. Company culture is a practice, and it’s normal to continue to adjust as you understand what works and what doesn’t.

9. Change with the Times

As the world changes, the strongest organizations will change their culture with it. Many businesses are changing in the wake of the pandemic to embrace a shift to remote work, in response to increased demand from talent. This is just one example of how your business or organization might change with the times.

Ultimately, the work of company culture is continually evolving. It’s a practice that you live every day.

3 Company Culture Examples You’ll Want to Replicate

These companies are killing it in the company culture game.

Gravity Payments

Gravity Payments CEO Dan Price made headlines a few years back for pledging to pay every employee a minimum of $70,000/year. Believe it or not, it just gets better from there. Gravity Payments continually lives out company culture #goals to the point that when the pandemic hit, Price asked employees to volunteer if they were willing to reduce their pay (and by how much) to avoid layoffs…. And the whole company stepped up. They choose people and purpose above profits time and again, only to have the profits follow suit.

Sweetgreen

Sweetgreen, the fast-casual health food chain, has put strong company culture at the center of how it views success. They’ve supported specific initiatives to boost morale and increase employee engagement throughout the company, including offering a family fund (financial assistance for employees in times of need, like needing to travel to care for a sick loved one), offering opportunities to work on projects that impact the community, and hosting a “Gratitude Night” to thank employees for the positive impact they have on Sweetgreen customers.

Chani

Chani, an astrological company founded by astrologist Chani Nicholas and based out of LA, is a queer/POC/woman-led business, and you can tell through every aspect of their company culture. In addition to robust support for employees who need family leave, Chani also offers forward-thinking benefits like “gender-based violence paid and protected leave” and “unlimited menstrual leave for people with uteruses.” Oh, and if you think they forgot about closing the wealth gap, they address that, too, with a stipend to help employees build wealth.