15 Characteristics of (a Healthy) Organizational Culture
A healthy culture will drive engagement, productivity, happiness, and revenue growth. A toxic culture will only drive people away. Which do you want to create and sustain?
A healthy organizational culture supports a positive work environment and significantly boosts employee engagement, productivity, and overall corporate health, positively influencing the bottom line.
Various reports also reveal a strong correlation between a positive culture and employee satisfaction, making a strong company culture a strategic imperative that demands continuous attention and integration throughout all aspects of the organization.
Contents
What is organizational culture?
What role does HR play in organizational culture?
Types of organizational culture
15 characteristics of a healthy organizational culture
The role of HR in organizational culture
Great cultures in action
What is organizational culture?
In management expert Peter Drucker’s immortal words, “Culture eats strategy for breakfast.” But what does that actually mean?
Organizational culture refers to the shared values, beliefs, and norms that influence the behavior of individuals within an organization. It encompasses everything from the environment and ethos of a company to the values that guide how employees interact, make decisions and perceive their roles and responsibilities.
According to Harvard DCE Professional & Executive Development, the average adult living in the United States will spend one-third of their life at work. The culture they experience during those estimated 90,000 hours is incredibly important to how they feel, their general health and wellness, their work engagement, and overall productivity.
According to SHRM’s report, The State of Global Workplace Culture in 2023, employees who rate their organization’s culture as “good” or “excellent” versus “poor” or “terrible” are 79% more likely to feel satisfied at work. They are also 83% less likely to be actively looking for a new job.
Glassdoor and Indeed’s Work Wellbeing 2022 Insights Report supports these statistics, with 90% of people believing that how they feel at work matters. However, only 49% of people report that their company measures happiness and wellbeing.
This indicates that there is a gap between the importance of culture and the actual measurement and understanding of employee wellbeing. Add to that the fact that 46% of people are saying that their expectation around happiness at work has increased in just the last year, and it’s clear that there needs to be a greater emphasis on designing, implementing, and supporting organizational culture.
What role does HR play in organizational culture?
In the past, the approach to establishing organizational culture was quite linear: The CEO would direct the HR department to create a corporate culture. HR would then launch a campaign to promote a mission and values created by the CEO and senior management.
They might introduce workplace perks such as complimentary snacks or monthly birthday celebrations and perhaps conduct yearly employee engagement surveys, reporting the findings back to the CEO. Having ticked these boxes, the CEO and HR would often consider the task of culture creation complete and shift their focus elsewhere.
Treating culture with a tick-box mentality no longer works (if it ever did). The heightened emphasis on diversity, equity, and inclusion (DEI), workplace health and wellbeing, hybrid workplaces, and the ongoing competition for skilled labor mean that culture is no longer a peripheral concern.
It is a central strategic element with direct consequences for financial performance. It demands continuous attention and integration across all aspects of the organization rather than being siloed or seen as a one-off project. As an HR professional, you are uniquely positioned to create and support a healthy organizational culture.
Types of organizational culture
First, let’s take a look at the different types of organizational culture various businesses implement. According to Robert E. Quinn and Kim S. Cameron from Michigan University, organizational cultures are classified based on two types of competing values: flexibility versus stability and an internal versus external focus.
Here are six examples of how this looks in practice:
- Adhocracy culture: Often referred to as the ‘create culture’, this culture is dynamic and entrepreneurial. It emphasizes innovation, flexibility, and adaptability, encouraging employees to take risks and think outside the box.
- Clan culture: Known as the ‘collaborate culture’, clan culture is people-oriented and friendly. It focuses on teamwork, participation, and consensus, creating a family-like work environment where relationships and loyalty are valued.
- Hierarchy culture: The ‘control culture’ is process-oriented and structured. It prioritizes efficiency, stability, and doing things right, emphasizing formal rules, policies, and hierarchical authority.
- Market culture: Termed the ‘compete culture’, this culture is results-oriented and competitive. It drives employees to achieve measurable goals and perform at high standards, focusing on outcomes and productivity to outperform competitors.
- Purpose culture: This culture is centered on ideals and a sense of mission that surpasses daily business operations. It emphasizes shared values and a commitment to societal or environmental goals to inspire employees and align their efforts with a broader purpose.
- Learning organizational culture: Characterized by continuous improvement and adaptability, this culture promotes ongoing education, innovation, and a willingness to learn from mistakes. It nurtures an open-minded environment where knowledge sharing and collaboration are key to meeting new challenges.
15 characteristics of a healthy organizational culture
There is no right or wrong company culture. Instead, there are organizational cultures that suit the leadership, mission, purpose, and values of the business and its employees. When the culture and a company’s stated mission and values do not align, the environment can become toxic.
However, if your goal is to create a healthy organizational culture, here are 15 characteristics that contribute to the effectiveness and sustainability of a company’s culture.
Characteristic 1. Shared common values
Shared common values refer to the fundamental beliefs and principles that an organization adopts as its foundation.
These values act as a compass, guiding behaviors, decision-making, and interactions both within the organization and with external stakeholders. They help create a cohesive culture by aligning employees’ actions with the company’s core mission and vision.
Characteristic 2. Clear purpose and direction
A clear purpose and direction align the organization’s efforts and goals. This clarity helps unite the team, focusing their efforts on achieving specific objectives and guiding strategic planning and daily operations.
Characteristic 3. Transparent and regular communication
Transparent and regular communication supports openly sharing information and feedback throughout the organization. This practice fosters trust, helps in early identification of issues, encourages collaboration, and ensures that everyone is informed and aligned with the organization’s goals.
Characteristic 4. Collaboration and teamwork
Collaboration and teamwork underpin a cooperative environment where groups work together to achieve collective objectives. This approach enhances problem-solving, innovation, and efficiency, while also building a supportive work environment.
Characteristic 5. Active involvement and commitment
Employees are actively involved and committed to their work and the organization’s success. When employees are engaged and committed, they are more productive, contribute ideas, and take initiative, driving the organization forward.
Characteristic 6. Opportunities for growth
Opportunities for growth refer to the avenues provided by an organization for personal and professional development. This includes training programs, mentorship, career advancement paths, and learning resources. Such opportunities increase employee satisfaction, competency, and retention.
Characteristic 7. Recognition and rewards
Recognition and rewards involve acknowledging and appreciating employees’ efforts, achievements, and contributions. This can be through formal awards, bonuses, promotions, or simple verbal recognition. It motivates employees, reinforces desired behaviors, and enhances loyalty.
Characteristic 8. Welcoming and inclusive atmosphere
A welcoming and inclusive atmosphere is one that values diversity, promotes equity, and ensures all employees feel respected and valued regardless of their background.
An inclusive culture benefits from a wider range of perspectives and experiences, leading to better decision-making and innovation.
Characteristic 9. Credibility and trust
Credibility and trust are built through consistent ethical behavior, transparent decision-making, and integrity in leadership. This foundation allows for open communication, encourages risk-taking, and strengthens relationships within the organization.
Characteristic 10. Clear objectives and strategies
Clear objectives and strategies provide direction for what the organization aims to achieve and how it plans to get there. This clarity helps prioritize tasks, allocate resources efficiently, and measure progress, ensuring that everyone is working toward the same goals.
Characteristic 11. Flexibility and responsiveness
Everyone within the business has the ability to respond to changing environments and needs quickly and effectively due to high levels of trust and flexibility.
This agility is crucial for staying competitive and meeting stakeholder expectations in a dynamic business environment.
Characteristic 12. Empowerment and initiative
Employees are empowered and encouraged to take initiative and make decisions that influence their work and the organization positively. This empowerment fosters a sense of ownership, drives innovation, and accelerates problem-solving within the organization.
Characteristic 13. Constructive handling of disagreements
Constructive handling of disagreements means addressing conflicts in a positive manner that respects all parties involved and seeks a solution beneficial to everyone.
This approach prevents escalation, promotes understanding, and maintains harmony within the team.
Characteristic 14. High ethical standards
Upholding high ethical standards involves conducting business and making decisions in a manner that is fair, responsible, and compliant with legal and moral guidelines. This commitment to ethics protects the organization’s reputation and ensures long-term success.
Characteristic 15. Community engagement
Community engagement refers to the efforts made by an organization to contribute to the wellbeing of the communities in which it operates. Engaging in social responsibility initiatives demonstrates the organization’s commitment to making a positive impact beyond its business interests.
How to avoid a toxic company culture
Toxic cultures lead to poor productivity, how employee churn, and high levels of stress and anxiety. The first step to avoiding this kind of culture is being able to recognize it in the first place. Here are some steps HR can take to identify toxic culture and measure organizational culture:
- Conduct employee surveys: Regularly distribute surveys that inquire about various aspects of workplace culture, employee satisfaction, and the perceived values of the organization. Keep surveys anonymous to ensure employees are honest, and share the results with a plan of action. Importantly, follow through. Employees should trust they are being heard and that management will make changes based on their experiences.
- Analyze turnover rates: High turnover might indicate dissatisfaction and cultural issues. Analyzing the reasons behind turnover can provide insights into the culture. An exit interview is the ideal way to gauge why an employee is leaving the organization.
- Review employee feedback: Over and above exit interviews, collect and analyze feedback from performance reviews and any informal channel in place.
- Observe engagement levels: Low engagement can be a sign of a toxic culture. Monitoring participation in company activities and initiatives can reveal a lot about how engaged employees are with the organization and each other.
The role of HR in organizational culture
If you’ve reached this point in this article, you are hopefully all in on how important organizational culture is, as well as the critical role you can play in creating and sustaining a healthy company culture.
With that in mind, here are some areas where your input can be game-changing for your organization and its employees:
1. Define your company culture
HR plays a pivotal role in shaping and clearly articulating the company’s mission, vision, and values.
→ Do this: Collaborate with leadership to craft meaningful, resonant statements. Conduct workshops to ensure these values are relevant and embraced across all levels.
2. Measure the existing culture
Regular assessments of the organizational culture let you understand its strengths and weaknesses.
→ Do this: Use surveys and feedback tools to gauge employee sentiment and alignment with the company values. Analyze turnover rates and employee engagement scores.
3. Hire for cultural fit
Ensure new hires align with the company’s cultural values.
→ Do this: Incorporate cultural fit into recruitment criteria. Use behavioral interview techniques to assess candidates’ alignment with organizational values.
4. Implement programs that build company culture
Create and manage programs that reinforce the desired culture.
→ Do this: Develop comprehensive onboarding programs that introduce new hires to the company culture. Implement recognition programs that reward behaviors aligned with company values.
5. Support diversity and inclusion
Build a culture that embraces diversity and inclusion.
→ Do this: Implement diversity training programs. Create diverse hiring panels to ensure a broad range of perspectives in the recruitment process.
HR tip
Go beyond the numbers. As open-ended survey questions to get insights into employee sentiments and cultural dynamics. This can be especially powerful in pinpointing the root causes of cultural toxicity.
6. Assist with adapting the culture
Facilitate culture adaptation during organizational changes like mergers or rapid growth.
→ Do this: Provide training and support to help employees navigate changes. Establish clear communication channels to keep staff informed and engaged during transitions.
7. Support internal communication
Enhance the effectiveness of internal communication strategies.
→ Do this: Develop internal communication platforms that facilitate open discussions and sharing of ideas. Organize regular town hall meetings to discuss company values and direction.
8. Promote work-life balance
Encourage a healthy balance between work and personal life.
→ Do this: Implement flexible working policies and support remote work options. Provide resources and programs that assist with stress management and mental health.
9. Develop leadership
Ensure leaders are ambassadors of the company culture.
→ Do this: Offer leadership development programs that emphasize cultural leadership. Mentor leaders on how to exemplify and reinforce company values in their teams.
10 Monitor and enhance employee satisfaction
Regularly assess and improve employee satisfaction.
→ Do this: Conduct annual employee satisfaction surveys. Create action plans based on survey results to address areas of concern and enhance positive aspects of the work environment.
11. Enhance organizational ethics
Uphold and promote ethical standards within the company.
→ Do this: Create clear ethical guidelines and conduct regular ethics training. Establish a confidential system for employees to report unethical behavior.
12. Facilitate team building
Strengthen team cohesion and promote a collaborative environment.
→ Do this: Organize regular team-building activities that align with company values. Create cross-departmental projects to enhance collaboration.
13. Sustain safety and wellbeing
Ensure the physical and psychological safety of the workforce.
→ Do this: Conduct regular safety drills and training. Offer wellbeing programs that include physical, mental, and emotional health resources.
Great cultures in action
To give you some inspiration, here is how HubSpot and Zappos approach culture.
Example 1: The HubSpot Culture Code
HubSpot views company culture as the promise you make to your employees and candidates. It answers key questions like, ‘What sort of environment can people expect to work in? What are our core values? What are our norms?’
To ensure everyone at HubSpot understands what that promise is and what to expect, employees who work at HubSpot are expected to have HEART: To be Humble, Empathetic, Adaptable, Remarkable, and Transparent.
Here is how HubSpot defines its culture:
- Culture is to recruiting, as product is to marketing
- Solve for the customer, not just their happiness but their success
- Power is gained by sharing knowledge, not hoarding it
- HubSpot has a no-door policy, where everyone in the company has access to anyone
- You shouldn’t penalize the many for the mistakes of the few
- Results should matter more than when or where they are produced
- Influence should be independent of hierarchy
- Great people want direction on where they’re going, not directions on how to get there
- We’d rather be failing frequently than never trying.
Example 2: Zappos lives and delivers WOW
Known for ‘the culture everyone wants to copy’, Zappos’ culture is defined by its commitment to customer service and company values, emphasizing employee happiness and organizational flexibility.
Core elements of its culture include a strong focus on customer satisfaction, a distinctive approach to employee engagement, such as the $1000 offer to quit after a few weeks on the job (Zappos does not want anyone who does not 100% want to be there), and a flat organizational structure through ‘Holacracy’. This blend of creativity, autonomy, and a strong value system has proven itself through a cohesive and innovative work environment.
Here are a few cultural phenomena Zappos has personified:
- Zappos strongly emphasizes exceptional customer service and aligns its entire culture around enhancing customer satisfaction. Founder Tony Hsieh has made it clear he willingly gives up short-term profits to ensure his company has the best culture possible.
- Initiatives like the ‘Pay to Quit’ bonus are designed to ensure employees are genuinely committed to the company’s culture.
- Zappos employs a unique management system that removes traditional hierarchies, promoting autonomy and rapid decision-making.
- New hires undergo extensive training to immerse them in the company’s values, ensuring a good fit with the organizational culture.
- Zappos values adaptability and continuous improvement, encouraging employees to embrace change positively.
To sum up
With a majority of people (79%) more likely to feel satisfied at work in a positive culture, and 83% less likely to seek new jobs, it’s evident that how employees perceive their workplace culture directly impacts their work satisfaction and loyalty. This underscores Peter Drucker’s sentiment that culture is more influential than strategy in determining a company’s success.
HR (that means you) has moved away from implementing top-down culture initiatives to actively shaping and nurturing an organizational culture that aligns with modern workplace demands such as diversity, equity, inclusion, and employee wellbeing. HR professionals have the critical role of focusing on continuous culture assessment, crafting inclusive policies, and aligning hiring practices with the organization’s cultural values to ensure sustained organizational health and effectiveness.
There are many different types of organizational cultures. The suitability of a culture type depends on your organization’s goals, industry, and workforce dynamics. Recognizing and intentionally cultivating a specific type of culture can lead to better alignment with organizational objectives and enhance overall performance, suggesting that one-size-fits-all approaches to culture may not be effective.
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