What Does Company Culture Really Mean? Are You Living Up to Yours?

Culture should be what an organization says it is—and can’t be taken for granted

Almost everyone knows the importance of organizational culture, but some people have trouble defining it. Even worse, many company leaders believe they have a strong culture, but it’s an illusion—occasionally, a bad joke.

Creating and maintaining a positive culture isn’t a set-it-and-forget-it effort, and it should always be a two-way street. Here’s a review of culture’s importance, how ideals and reality diverge, and what business leaders can do about it.

Defining culture and its impact

As innumerable business books, organizational design consultants, and leaders will tell you, culture is crucial. As Peter Drucker said, it “eats strategy for breakfast.”

Culture comprises the organization’s shared values, mission, and standards, culminating in behaviors that achieve these elements. It’s not supposed to merely be an ideal or a mission statement on a wall. This pithy definition captures the practical impact: “At its core, company culture is how things get done around the workplace.”

A quality culture can improve engagement, productivity, customer satisfaction, profits, adaptability, and enterprise value. A significant portion of the ROI is in attracting and keeping talent. In particular, PwC researchers found that employee engagement is inextricably tied to the strength of the culture:

The impact of culture and values on employee engagement is significant. Survey respondents who said their behaviors were aligned with the company culture were more likely to be satisfied with their job, more likely to recommend their company as a good place to work, and more likely to say they planned to stay on with the company.

A highly engaged organization can see immense financial benefits, of course. Gallup researchers argue that robust cultures are a “competitive moat” and an “intangible value creation lever,” estimating that giving employees purpose could unlock:

• 10% higher customer ratings
• 17% higher productivity
• 20% higher sales
• 21% higher profitability

The benefits are exceptional and well-recognized. So, why do many company cultures fall flat?

The disconnect between culture and reality

Almost everyone seems to value culture, but its execution often leaves something to be desired.

For example, only 15% of CEOs surveyed by PwC in 2023 said that “employees’ actions and behaviors” were “rarely, occasionally, or sometimes” misaligned with “their company’s values and direction.” However, a separate PwC survey of employees revealed “that number was nearly three times as high (39%).”

In addition, regular Gallup surveys show that only about two in 10 employees “feel connected to their company’s culture.” The number grew from 16% in 2018 to 21% in late 2023, but it’s still remarkably low.

Gallup’s researchers have some conclusions about why this disconnect exists:

Employees’ feelings of detachment align with how they believe their teammates and managers contribute to their organization’s culture. Only two in 10 employees strongly agree that their coworkers are committed to their organization’s cultural values, and the same proportion of employees strongly agree that their manager explains how the organization’s cultural values influence their work.

Thus, just because a company has stated a culture doesn’t mean it’s fulfilling its purpose. In some cases, the ideals are so far from reality that people view them with bitter irony. Consider Boeing, which states, “Quality, along with safety and integrity, is a core Boeing value.” As the company’s recent troubles attest, just stating a culture doesn’t make it so.

Many workers have experienced examples of this disconnect. Excellent customer service might be a cornerstone value, yet supporting systems, training, and hiring for aptitude are subpar, making it impossible. The company could preach a supportive culture or family atmosphere, yet the workplace is ‘sink or swim.’ Openness and collaboration might be lionized, yet leaders make decisions without input from the team.

Perhaps more common but nearly as pernicious is when employees ignore culture or treat it as an afterthought.

Fixing culture and alignment

So, how can we take a culture from buzzwords to something that tangibly benefits an organization and its employees?

As even many companies with weak cultures recognize, the preemptive step is to define and implement culture. Fundamentally, it should be based on tangible behaviors that benefit the organization.

For example, Adobe prioritizes accountability and innovation. Southwest Airlines and Zappos are often cited as examples of strong, positive cultures, and both aggressively focus on providing excellent customer service.

Devising a culture, including a mission and core values that drive behavior, is only the first step. The common missing ingredient is maintaining these ideals and assessing the environment to ensure culture takes root and lives up to its potential.

This effort relies on communication, but problems arise when companies assume it’s a one-way street. Leaders, training, and reminders may promote culture, but leaders must also listen. Culture and core values provide a roadmap for employees, but is this map practical, and do people use it?

“Articulating a desired culture does not make it a reality. Only when the target culture is aligned with business realities can it be fully reflected in the everyday employee experience,” PwC strategists note.

Thus, the fundamental step in maintaining a robust culture is to measure its health and solicit feedback. Leaders should set realistic expectations and engage with subordinates to see what’s working, what should change, and where ideals fall short. Employing anonymous surveys is another useful tool, providing a data-centric way to assess performance.

Leaders must also walk the talk, as PwC notes that “sincere leadership and cultural cohesion are aligned with higher levels of connectivity.”

Regardless of the precise methods, the underlying principle is to listen rather than just preach. Promoting culture without team members embracing it is futile and potentially harmful. Employee retention and engagement may suffer, and company culture will remain aspirational rather than a practical driver of success.

Karp HR Solutions helps businesses master the mix of finance and human resources. Contact us today for a free consultation.