By Barry Nyhan.
 

What is company culture? Let’s start with what company culture isn’t. It’s not perks such as craft beer, in-house baristas, 10 different types of flavored water, or ping pong tables (although these are fun to have).

Company culture means a lot of different things to a lot of different people.

In a sentence, company culture is the North Star that should help guide all of your business decisions. It’s the operating system that powers your entire organization. Get it right and your people can become your biggest asset. Get it wrong and your people can become your biggest liability.

At the end of the day, it’s all about having the right people on your team to deliver on opportunities and expectations to get your company to the next level.

Table of Contents

What is company culture?

Google the term “company culture” and you’ll find countless definitions trying to capture its essence. Here’s what you’ll take away. Company culture means the values, behaviors, and shared vision that drives your entire business.

But what does that mean?

Let’s learn from the definitions offered by some of the industry greats who attribute their success to culture.

Patty McCord from Netflix“It’s the stories people tell. It’s the way people operate when no one’s looking. It’s the values that you hold dear, that you know your colleagues do [as well]. It’s the expectations of how people are going to behave, and what gets punished and what gets rewarded.”

Jason Fried from Basecamp – “Company culture isn’t a moment in time. It’s not something you write down. Culture is the by-product of consistent behavior. It’s what you do over time. Your current company culture is essentially a 50-day moving average of your actions.”

Dharmesh Shah from HubSpot – “Culture is to recruiting as product is to marketing. The overall purpose of it is to help hire amazing, talented people and help them do their best work. Company culture is the operating system that powers a company.”

Why is company culture important?

The better your culture is, the easier it will be to attract the right people who want to contribute towards your company’s vision, mission, and goals. An engaging, enjoyable culture not only attracts talent but can also inspire employees to perform at their best.

If you get the culture right then most of the stuff like building the brand and customer service will take care of itself.

“Our number one priority is company culture. Our whole belief is that if you get the culture right, most of the other stuff like delivering great customer service or building a long-term enduring brand will just happen naturally on its own”Tony Hsieh, founder of Zappos

And what happens if you don’t have a good culture? Not good, right?

“A crappy company culture is not the quickest way to kill a company. But it’s one of the most reliable.”Dharmesh Shah, co-founder of HubSpot

If the culture is bad it’s just a matter of time before it brings your business to its knees.

Here’s some data from our friends at Glassdoor to back up how a good company culture adds to your bottom line and why you should care.

Graph example of investment in Company Culture What you’re looking at here is a correlation between employee happiness and business performance.

If you invested $1,000 in companies named as Best Places to Work with a leading company culture, you’d get a 553% return over 10 years. Comparing this to a $1,000 investment into the S&P 500 Index, you’d earn 295% less.

Long story short – good workforce cultures create high-performing teams, which create overall enterprise value.

How do you build company culture?

You’re going to have a workplace culture no matter what. Shouldn’t it be one that you’re proud of?

If you’re reading this page, odds are you’re either closer to the beginning of your journey as a leader at a new enterprise and trying to iron out what your culture and values are, or you’re in a scale up/enterprise organization and feel it needs to be tweaked in its current form.

Here’s the hard thing about improving company culture. Trying to drill down to tangible actions of ‘if we do X, we get Y’ can be foggy at best.

We think of building culture as we think of building software – it’s a constant process that is never set in stone and never ends. A truly strong culture is always under construction.

If you have the opportunity it’s best to start thinking about this when your team is small and the fabric of your culture is still malleable. Your earliest employees will influence the success trajectory of your business heavily so you must make sure they’re aligned with the culture, values, and movement. Bad actors will become speed bumps along the way and slow things down.

Zappos company culture logoWhen it comes to establishing culture early on, where do you start?

Let’s take a steer from one of the culture greats – Tony Hseih from Zappos. Hseih recommends that as a team you should come together and decide upon traits that the entire company can commit to, what he calls ‘committable core values’.

Core values (also known as guiding principles) can sound like a press release created by the marketing department, or become meaningless pieces of vinyl on the wall if they haven’t been chosen thoughtfully. This is a wasted opportunity.

These core values should be so important that hiring and firing decisions are based on them, independent of an employee’s job performance. If you’re willing to do that then you’re well on your way to building a company culture that is in line with the brand that you want to build.

This isn’t easy an easy task, by the way. It took Zappos a year to come up with their original list of 10 core values. Here’s some interesting advice Hseih shared in a talk at Stanford which may offer a path through the myriad options on offer.

“We formalize the definition of our culture into… 10 core values at Zappos. And one of the really interesting things I found from the research is that it doesn’t matter what your values are, what matters is that you have them and that you align the organization around them. And the power comes from the alignment, not from the actual values….”

What makes a great company culture?

A winning company culture emerges when every employee feels they personally own the culture, where each individual feels accountable to make the right decisions for the business and not for themselves.

We spend over one-third of our lives at work. Shouldn’t we strive to make it a place that’s positive, enjoyable, and where you feel like you’re making a difference in contributing to your company’s movement?

The vast majority of us work to earn a living and support our friends, family, and ambitions. But here’s the thing, the topic of work-life balance doesn’t need to focus on the separation element of the 24 hours you have in a day. I’m not ‘Enterprise Barry’ at work during the week and then ‘Casual Barry’ during the weekend. I’m the same person. My identity doesn’t change.

What I’m getting at here is that you should be able to bring your whole self to work and let that weird part of you shine (we’re all a little weird in our own way). Integration over separation, because that’s the zone where your employees will have their best ideas, where their creativity will shine, and where true friendships are formed, not just co-worker relationships. This is the type of environment that forms a powerful sense of community and belonging. Building engagement across the entire organization, top-down and bottom-up.

This powerful sense of community and belonging is part of a hierarchy of needs that we believe is critical to the longer term success of the organization.

These higher order needs will include building and maintaining a great company culture, aligning employees around the goals and values of the organisation, helping people feel part of something bigger than themselves, building a culture of recognition, facilitating natural communities and creating that sense of belonging within the organisation.

Workvivo is helping organisations with this higher order need in the same way that technologies like Zoom and Slack have addressed the transactional and functional need. Here’s a glimpse of how we do that inside the Workvivo employee communication platform.


This leads me to the question of what makes a great company culture. What are the patterns shared by some of the best companies known for their inspiring company culture?

From what we’ve seen, it all comes back to the focal point of getting wonderful people around you – people who are good with people, who align with the chosen committable core values, and who naturally praise good work when they see it can not only be assets to your organization but help shine a light on all of the positive things within it.

People who believe in personal development. People who aim to become 1% better every day. People who go to bed smarter than when they woke. This is the mind-set of champions. Because if we’re not growing and moving forwards, we’re falling behind.

“Learn to work harder on yourself than you do on your job. If you work hard on your job you’ll make a living. If you work hard on yourself, you’ll make a fortune” – Jim Rohn

Above all, attitude is everything. Fantastic teams (and likewise fantastic companies) don’t maliciously criticize or grumble. Gossip, inside jokes, and grumbling should not be tolerated because it drains the culture and energy of the people around you.

What are the elements of company culture?

Company culture can be foggy to describe. Sometimes you can just feel it after listening to an organization’s town hall, but still have difficultly identifying the ingredients.

We can’t put it better, so we won’t. Out of more than one million employee reviews of companies, the MIT SMR/Glassdoor Culture 500 found 9 key values cited as having the greatest impact on results.

1) Agility
Employees can respond quickly and effectively to changes in the marketplace and seize new opportunities. Also known as: Flexible, Nimble, Fast-moving

2) Collaboration
Employees work well together within their teams and across different parts of the organization. Also known as: Demonstrate teamwork, Identify with the company, Join forces

3) Customer
Employees put customers at the center of everything they do, listening to them and prioritizing their needs. Also known as: Have a customer focus, Deliver for clients, Customer-driven

4) Diversity
The company promotes a diverse and inclusive workplace where no one is disadvantaged because of their gender, race, ethnicity, sexual orientation, religion, or nationality. Also known as: Inclusive, Welcomes everyone, Celebrates difference

5) Execution
Employees are empowered to act, have the resources they need, adhere to process discipline, and are held accountable for results. Also known as: Demonstrate operational excellence, Manage projects well, Take ownership

6) Innovation
The company pioneers novel products, services, technologies, or ways of working. Also known as: Cutting edge, Leads change, Technologically advanced

7) Integrity
Employees consistently act honestly and ethically. Also known as: Do the right thing, Behave ethically, Play by the rules

8) Performance
The company rewards results through compensation, informal recognition, and promotions, and deals effectively with underperforming employees. Also known as: Meritocratic, Recognizes achievement, Results-driven

9) Respect
Employees demonstrate consideration and courtesy for others and treat each other with dignity. Also known as: Treat others with dignity, Courteous, Show appreciation for one another

Best Company Culture Examples

Which companies are the best of the best at empowering employees to feel like they own and contribute to the company culture in a meaningful way? The companies deserving of a hat tip below are magnificent at doing the little things every day that contribute to a great place to work.

It can be hard though, right? Think of all the potential speed bumps a growing business might hit along the way that need to be ironed out. For example: If you’re a business that predominantly grows through mergers and acquisitions, then one of your biggest jobs at maintaining and iterating on the culture is to take the newly acquired organization’s employee handbook and merge it with your own while coming up with the fewest policies that would annoy the fewest people. AOL/Time Warner, Daimler, and Chrysler, HP, and Compaq. These are all mergers where a culture clash ended up sinking the energy of the people on the inside.

That said. Here are a few notable brands that are fighting the good fight, staying focused on creating a connected, informed, and inspiring culture. These are the role models for company culture.

Netflix

Could we start talking about great company culture examples without mentioning Netflix and their culture deck which has been viewed more than 20 million times? I don’t think so.

What makes Netflix a culture champion?

The Netflix culture is not for everyone. Reed Hastings has been known to openly share their thinking of themselves as a professional Olympic sports team where they’re not afraid to have the hard conversations about performance and whether you’re the right person for the job Netflix needs you to be.

That said, it attracts the type-A people that crave working in high-performing teams to make an impact on the world. What Netflix labels as the ‘Dream Team’.

“Our version of the great workplace is a dream team in pursuit of ambitious common goals, for which we spend heavily. It is on such a team that you learn the most, perform your best work, improve the fastest, and have the most fun.”

Netflix understands that incredible people don’t want to be micromanaged. Their management belief is through setting the context and letting people run (otherwise known as getting out of their way). The idea is to build a system based on freedom and responsibility that allows people to think for themselves. When you attract thinkers who don’t base their decisions on ‘that’s what every company does’ then that’s when the magic of unusual employee culture happens.

Interesting takeaway:

Be respectful to your employees, but fundamentally it’s about performance. If you’re questioning whether you have a team of superstars in every position, try using the keeper test.

It’s simply where you ask yourself if your people told you they were leaving for a similar job at another company, would you fight hard to keep them at your own or would you allow them to leave? If you let them leave, you have your answer. If Netflix came to that conclusion they’d be whipping up a severance package while on the lookout for a new star for that role. 

Trader Joe’s

Trader Joe’s is known for having one of the best retail experiences in North America, but what goes under the radar is their strong culture of execution and collaboration.

Each Trader Joe’s store runs with a ‘captain’, a dozen or two of mates, with everyone else a crew member. (We’re sensing someone has a passion for pirates/sailors.)

What makes Trader Joe’s a culture champion?

Integrity, product-driven, hating bureaucracy, all core values that inspire and align the separate Trader Joe’s ships. But here’s what differentiates them in the sea of retail across North America: they’re committed to reinforcing and living their culture every day. They’re not just values pinned to the back office wall just for the sake of it. The culture is sewn into the fabric of the company and ripples throughout the organization from crew member to mate to captain. You can see that from Reddit posts where your everyday crew member is shouting from the rooftops about the core values of the brand, to the higher up leaders such as Doug Rauch (former president of Trader Joe’s) putting the success of the business down to one thing – culture. Here’s a video of Rauch sharing his thoughts on how your culture is your company’s DNA.

Trader Joe's Company CultureHere are Trader Joe’s 7 core values

Integrity.
In the way we operate stores and the way we deal with people. Act as if the customer was looking over your shoulder all the time.

Product-driven.
Our strategy emphasizes price, product, access, service, and experience. We want to excel at one, be very good at another, and meet customer expectations on the others.

Produce customer wow experiences.
We celebrate the special way we treat and relate to our customers. We think retailing is all about customer experience, and that is what really differentiates us.

We hate bureaucracy.
We give everyone a license to kill bureaucracy. All officers are in cubicles. The CEO is in a conference room. We have very few layers—a very simple organization.

Kaizen.
Each one of us every day is trying to do a little better. This is infused into our training programs. We really stress teamwork and working together, while we do not do elaborate budgeting at the store level.

Treat the store as the brand.
Individual products are not the brand. The store is. Brand is really the covenant between the company and the customer, and the real key is day-to-day consistency in meeting and satisfying needs.

We are a “national/neighborhood” company.
Our customers benefit from our national buying ability, but we want each store to be close to the customer and really a part of their neighborhood.

Interesting takeaway

Culture causes performance, not vice versa. Producing customer wow experiences is one of the most magical values Trader Joe’s lives by. It’s easy to forget about making those wow moments in the daily motion of work and life, but Trader Joe’s has set these expectations company-wide and as a result there are countless stories from customers for years afterward.

One in particular comes to mind. A Trader Joe’s employee packed a customer’s grocery bags before they paid and helped carry them to the carpark. What happened next is the spark of magic that is engraved into the Trader Joe’s brand. The customer had left their wallet at home and couldn’t pay for the groceries, even though they were now snugly packed into their car. Without skipping a beat, the cashier replied: “That’s alright. I’ll cover you today, you can pay me back next time you’re here.” The crew member paid out of their back pocket.

Talk about a wow moment.

HubSpot

HubSpot believes culture is to recruiting as product is to marketing. Their culture code is the operating system that powers the company. They’ve built a thriving hiring engine on the back of their culture code deck which followed in Netflix’s footsteps.

I can speak to HubSpot’s culture code with a stronger viewpoint because I worked on the inside for many years. I can remember countless times throughout my tenure where ‘use good judgment’ was echoed throughout the orange hallways.

What makes HubSpot a culture champion?

 

HEART.
Humble, empathetic, adaptable, remarkable, transparent.
People that are hired into HubSpot have HEART.

Pages and pages of policies and procedures are minimized at HubSpot. Instead, you’ll hear the words ‘use good judgment’ from co-workers and leaders alike when it comes to making decisions on grey areas without clear bumpers to stay within the lane.

The beauty of this is if you hire the right people with the right judgment then you won’t need many rules for them to follow. They’ll be able to use good judgment to do what’s right for the business and make the right call.

The mental model we were asked to follow when it came to making use of good judgment decisions was to follow the sequential order of solving for the customer, solving for your team, and solving for yourself as an individual. In other words, don’t solve for yourself to the detriment of your team, and solve for the customer above all else. Following this builds the type of company you’d be proud to work for.

Interesting takeaway

When HubSpot says they share openly and are remarkably transparent, that’s not spin. Usually, publicly traded companies can only share detailed information with a select group of insiders, but this would have built a wall between the typical HubSpot employee and leadership, and they couldn’t have that. So they decided to make every employee at HubSpot a designated ‘insider’ so that typically hidden information is shared company-wide from fresh recruits to venerable veterans.

That means financials such as cash balance and burn rate, board meeting decks, and the ‘what’s next’ strategy, were all shared.

Have you ever taken an employee engagement survey? Bad past experiences from years ago might lead you to think that employee surveys like this were where your feedback went to die. You might fill one out, and a year later your HR team would come back to you with an update saying we heard you, we made these small changes to reflect that, and by the way, there are some cupcakes in the lobby. Anything hard to hear about the company and the management team was redacted. This feeling of it all being a check-the-box exercise is probably more common in traditional industries than we’d think.

HubSpot did the opposite of this. All of the raw employee feedback was shared internally every quarter on what was called ‘the wiki’ for everyone to see.

Transparency is most important when things are hard. Internally, we thought of this as ‘sunlight being the best disinfectant’. For that reason alone the teams in HubSpot valued the quarterly pulse survey. We knew we were going to be heard and that our Chief People Officer, Katie Burke, and the leadership team were going to be reading it, so we always gave it the effort and thought it deserved.

Here’s the key idea that you must infuse into your own company. Power is gained by sharing knowledge, not by hoarding it. Think about how you can break down the walls of knowledge silos in your organization to create a stronger connection between your employees and the mission, vision, and goals of your company.

Our Final Thoughts On Company Culture

Company culture is an essential component in building the kind of organization you want. It’s what you say and how you act, and making sure that those words and actions are aligned. Doing the little things every day that help build a great company culture will result in your workplace being known as a great organization.

We hope this article helped to paint a clearer picture of what modern, successful, compelling, and exciting company culture looks like.

Here’s a quick recap of what we shared:

● Company culture is the North Star that should help guide all of your business decisions. It’s the operating system that powers your entire organization.

● Good company cultures create high-performing teams, which creates enterprise value.

● Get off the side-lines and into the game – democratizing your employees’ thoughts and opinions will build engagement across your organization.

● Come together and decide upon core values that your entire company can commit to aligning on.

● A winning company culture emerges when every employee feels they personally own the culture.

● Takeaways from some of the best enterprise cultures.

● Be respectful to your employees, while understanding that it’s all about performance.

● Culture causes performance, not vice versa.

● Share openly and be transparent.

For those of you wondering how to take your company culture to the next level – we have a suggestion: Start by thinking about bringing your workplace to life digitally… not just transactional communication like Zoom, Slack, or Teams, but with organizational communication that brings your bigger company message and culture alive.

See how Workvivo makes digital employee experiences simpler through an employee communication and engagement platform. Helping you stay connected, informed, and inspired.