What Is Organizational Culture, and Why Does It Matter?

Organizational culture is how an organization turns its purpose into action. It shows how a company keeps its brand promise to customers, attracts talented employees and guides everyday behavior and decisions.

What Is Organizational Culture?

Organizational culture is the unique way that your organization turns its company purpose into action and keeps its brand promise to customers.

Key factors that shape organizational culture include:

leadership and communication styles
values and rituals
human capital practices, such as hiring and onboarding
work teams and structures
performance management strategies

An organization's culture is vital but often hard to define. Gallup describes culture as "how we do things around here."

Prospective employees want to understand your culture so they can see whether they will fit in. Customers want to know what to expect when they interact with your employees. Many of us want to understand where we came from, who we are and where we are going. Senior leadership wants to know what company culture is so they can use it to shape everyday behaviors.

The truth is that every organization has its own distinct type of culture. Each company’s history and future goals inform the values, rituals, work teams, and structures that influence its culture.

Defining the culture you want is the first step, and often the easiest. The more important questions are why your culture matters and how you will build it in a consistent way.

What Is the Importance of Organizational Culture?

Corporate culture matters because it expresses an organization’s purpose and keeps its brand promise to customers. It shows up in three core ways:

Culture starts with your company purpose.
Culture defines your brand.
Culture expresses your company purpose and brand through daily actions.

Your company purpose is a bold affirmation of why you are in business: historically, ethically, emotionally and practically. Your company purpose acts as a compass for your organization, explaining why it exists and where it is going.

Gallup finds that when it comes to communicating company purpose, actions matter more than words. Organizations that successfully incorporate a strong purpose into their culture go beyond mission statements and internal messaging. They show that purpose in how people work every day.

Organizations also make a brand promise to their customers, such as a standard of quality or level of service, that sets them apart from their competitors. The way employees express their organization's brand promise has a major effect on customer experiences, for better or worse.

A strong work culture gives employees clear direction on how to act on the company purpose and deliver on the brand promise.

What Are Some Types of Organizational Culture?

There are many different types of company culture. Some people define company culture in terms of its essential features such as being "innovative," "performance-based" or "traditional."

Other types of organizational culture include:

strengths-based culture
inclusive culture
fun culture
safety-first culture
customer-centric culture
high-performance culture

Because culture is complex and difficult to define precisely, it is often discussed in broad terms, with culture types used to highlight the dominant priorities and behaviors an organization tends to emphasize over time.

Culture Type

Strengths-based
Customer-centric
Inclusive
High-performance

What It Prioritizes

Individual talents, team alignment
Service consistency, customer experience
Equity, belonging, diverse perspectives
Results, accountability, excellence

Many culture survey tools attempt to fit organizations into certain "types" of corporate culture based on preset views of “good” or “bad” company culture.

When a survey forces an organization into a predefined box, it overlooks what sets that organization apart from others. Instead of highlighting what is unique, it nudges the company to look like everyone else. If culture is what makes each organization unique, leaders must define it for themselves, rather than simply categorizing it.

These surveys also tend to view culture in an abstract way rather than as the day-to-day expression of an organization's purpose and brand. A generic culture index survey often leaves leaders unclear about what to do next after they share the results with their employees.

In addition, a standard organizational culture survey compares your culture with external benchmarks instead of your own aspirations and goals. While that comparison might show how your organization stacks up against a generic standard, it does not reveal what is most distinctive and valuable inside your culture.

Consider customer centricity as an example. Many organizations say they want to be customer centric, but how they pursue that goal can vary widely by industry, market segment, product or service offering, and other factors. So, if you rely only on a fixed, generic set of questions, you may see some broad patterns but miss what progress looks like for your specific customer promise.

Your organizational culture survey questions should recognize what makes your organization distinct, connect clearly to your internal business processes and rest on scientifically rigorous research.

How Do I Identify Organizational Culture Issues?

Identifying organizational culture issues starts by comparing how leaders describe their culture with how employees actually experience it.

Warning signs of organizational culture issues may include:

a fading sense of identity inside the organization and in the marketplace
declining customer engagement feedback
trouble attracting world-class talent
slowing organic growth because of uninspiring customer interactions
leadership initiatives that start strong but lose momentum

Good organizational culture doesn't happen by accident. Leaders design it on purpose and learn how to improve company culture through consistent actions.

Culture issues often show up in familiar ways. The promises of a recent merger or acquisition fail to materialize. An expensive effort to create a new mission or purpose or to support a new set of values has little effect on employees. A bad customer experience goes viral in the media and prompts leaders to focus on improving workplace culture.

Sometimes, culture problems can be less obvious. People may sense a growing feeling of unease that "we are not who we once were," even if they cannot point to a single event.

In serious cases, a weak culture causes customers to lose trust in your brand promise and stop recommending you. Employees may no longer see meaning in their daily work and start to look elsewhere for a place where their effort and values feel aligned.

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What Are the Benefits of a Positive Workplace Culture?

A positive workplace culture attracts customers and talented employees, helps individuals and teams work toward the same goals, and improves employee performance.

Gallup finds that employees who strongly agree with the statement “I feel connected to my organization’s culture” are:

4.3x

as likely to be engaged at work

5.3x

as likely to strongly agree they would recommend their organization as a great place to work

62%

less likely to feel burned out at work very often or always

47%

less likely to be watching for job opportunities or actively looking for another job

Organizational culture is the special way you attract customers, keep them and turn them into brand advocates. It's also the way you attract highly talented employees and turn them into brand ambassadors. People want to work for an organization that lives out its mission every day. Culture sets the tone for the workforce and often determines whether prospective employees feel drawn to a company or decide to look elsewhere.

Organizations also gain momentum when employees move in the same direction toward the same goal. When alignment is strong, people inside and outside the organization — from current and prospective employees and customers to shareholders, industry influencers, and members of the media — think and talk about the company in the same way. The company culture then provides direction for leaders, managers and individual contributors by clarifying how they should prioritize their time, energy and resources.

Culture also affects performance. In our work with clients, employees and teams who most closely align with their company culture consistently perform higher on internal performance metrics than those who least align. Employees' understanding of their company purpose and culture directly connects to measures of business health.

How Are Organizational Culture and Employee Engagement Related?

Employee engagement measures how ready employees are to perform at their best. Organizational culture sets the direction for that performance and unites individuals and teams on shared goals, vision, and values.

Organizational culture and employee engagement are not the same.
Employee engagement strategies focus on meeting essential employee needs.
Culture influences the way people work together, how everyone makes decisions, which behaviors receive recognition and who gets promoted.

Employee engagement helps leaders and managers create team cultures that can achieve high performance. When leaders improve employee engagement, they support a high-performing culture and make it easier to accomplish the organization's goals.

Organizational Culture

Defines direction
Shapes values and rituals
Rooted in purpose and brand

vs.

Employee Engagement

Measures readiness to perform
Reflects psychological commitment
Strongly influenced by manager behaviors

Culture sets the tone for the workforce and strongly affects how employees feel about their organization as a whole.

In short, engaged employees are the fuel for your organization. Culture, grounded in company purpose and brand, points that energy in a clear direction.

When an organization does not meet employees’ basic needs, they may resist cultural change. On the other hand, when employees are engaged, they are more open to change and more likely to accept well-communicated messages about where the organization is heading.

How to Measure Company Culture

Organizations should take a holistic approach to measuring company culture by using an organizational culture assessment, an in-depth study of the current state of their culture.

An organizational culture assessment typically includes:

employee surveys
leadership interviews
stakeholder focus groups
artifact reviews
internal data analysis
a final report
a final executive presentation with recommendations

In nearly all organizations, a gap exists between what leaders say their company culture and values are and what they actually are according to employees.

Gallup begins an organizational culture assessment by talking with leaders about their desired culture and finding a clear, shared vision of the ideal culture. Gallup scientists then study the current state of the culture through rigorous interviews, surveys and material reviews.

After the research phase, Gallup provides a report that highlights areas where the culture is strong and identifies barriers to culture change. Finally, Gallup works with leaders to create an action plan that includes clear metrics to track progress and support lasting culture change.

What Are the Benefits of a Workplace Culture Survey?

A workplace culture survey can help executives answer important questions about the strength, consistency and value of their organizational culture.

A workplace culture survey can:

help an organization identify its unique culture
show which teams feel most connected to an organization’s culture
focus culture change conversations on data rather than anecdotes
confirm how culture affects employee performance, customer experience and other business outcomes
provide benchmark measurements to track the results of future change initiatives

Your organizational culture survey questions need to be flexible enough to recognize what makes your organization distinct, connect clearly to your internal business processes and rely on scientifically rigorous research.

An organizational culture survey is only the starting point. A scientific survey of employees only improves company culture when it leads to action. Survey results can provide valuable insights into which teams are performing well and which are struggling. When combined with other performance data, it can also reveal where culture has a real effect.

Workplace culture surveys, combined with thoughtful analysis and action planning, can help point organizations’ culture change efforts in the most productive direction.

What Are the Steps to Changing Organizational Culture?

Changing organizational culture starts with understanding the culture you currently have, defining the culture you want and planning the initiatives you need to bridge the gap. Ongoing evaluation and accountability help improve and sustain culture change.

Four steps to improving company culture:

Understand the current state of your culture.
Define the gap between your ideal and current culture.
Align activities, initiatives and systems with your desired culture.
Establish accountability and ongoing evaluation.

Organizations can build and sustain a strong company culture that supports high performance when they use a structured approach to measuring and managing culture.

Assess Current Workplace Culture

In the first phase of our analysis, we talk with leaders across the organization to help them build a shared view of their desired culture, or their best possible company culture. For a company to successfully improve company culture, leaders need a unified view of what their ideal company culture truly is.
Define Ideal vs. Actual

In nearly all organizations, a gap exists between what leaders say their company culture and values are and what they actually are according to employees. In the second phase, we evaluate where leaders' desired culture matches the culture employees experience and where it does not.

We provide leadership with a report that highlights areas of consistency, alignment and clarity and reveals potential barriers to commitment.
Seek Alignment

Changing the company culture requires leadership buy-in and commitment.

We work with leaders to create an action plan for updating cultural expectations. For some organizations, this means realigning performance metrics with the desired purpose and brand. For others, it starts with improving how they communicate key messages.

Regardless of an organization's starting point, we work together to determine how quickly it wants to move and then create a road map to get there.
Establish Accountability

In our experience, cultural change is a gradual process that takes time. While organizations that focus on improving employee engagement often see positive results within one year, those that aim to change company culture typically experience the strongest gains over three to five years.

The most important long-term step is to monitor the right aspects of company culture. Scientifically based measurement tracks how company purpose, brand and culture align by location, business unit and role. Effective measurement and monitoring tools identify business units that lack a strong connection to the aspirational culture and those that face higher risk, whether it be turnover, low productivity, or compliance and customer service problems.

With Gallup's guidance, leaders should review culture metrics alongside other measures, including employee engagement and their organization's key performance indicators. Only then can they confirm the return on their investment in cultural change.

Organizational Culture Consulting: How Gallup Can Help

Gallup provides organizational culture consulting to help organizations achieve their ideal culture. This work often includes a culture audit, stakeholder interviews and employee surveys.

Through our analysis, Gallup helps executives answer important questions such as:

How well do our purpose, brand and culture align?
How clear are our purpose and brand to employees and customers?
Are employees truly committed to our culture?
Does our culture support strong performance?
Is our culture consistent across all units?
Does our culture influence employees to do what is best for customers?

Gallup helps organizations achieve their ideal company culture. Through in-depth research and a practical action plan, Gallup's organizational culture consulting helps you build and sustain a company purpose, brand, and culture that people clearly understand, consistently carry out , and fully support and align with.

Gallup's analytics and advice provide leaders with clear insights and concrete steps, enabling them to strengthen business performance and empower employees to become an unstoppable force.