4 Ways to Create a Strong Organizational Culture

Your organizational culture should guide everything you do as a business and every decision you make. Learn how you can create a culture that aligns with your values and wins business.

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There is always a strong reason behind why someone starts a company. Sure, that reason can just be to make money, but it has to be driven by a gap in the market or by a need to solve a problem. Companies are often born out of their owner facing a problem and not being able to find a product or service to help them overcome that problem.

That raison d'etre is what should drive your organizational culture. There is no right or wrong business culture, just the right one for your purpose.

Overview: What is organizational culture?

Organizational culture reflects the values and beliefs that define the way a business runs, the way management operates, the way employees behave, and how you communicate with your customers. It shapes the way your company builds and develops its products or services, even the kind of products it offers.

The organizational culture is often created and defined by the business owners and put into practice by the HR department through an employee handbook or code of ethics.

Characteristics of a great organizational culture

There are fundamental characteristics any organization should use as the bedrock of its culture, no matter what the business does or how it sells its products.

1. Openness and transparency

Every employee should feel they can express their opinions and give honest feedback without fear of reprisal. You stifle innovation if you don’t encourage your employees to be open and honest with their peers, managers, and anyone they are managing.

Your company culture should reflect this from the top down. This means sharing plans when you know them and keeping all employees informed of changes that affect your organization and their positions as soon as you know them. The idea is to provide this information to discourage water cooler gossip.

2. Recognition

Recognition is important to make your employees feel like their work matters and you appreciate their efforts. This recognition doesn’t have to be a formal process. You can thank them for their hard work in person, send a quick email, or give them kudos or other recognition through your HR software.

You should also encourage employees to recognize the hard work of their peers and their managers in 360-degree feedback. This will boost employee retention as your workers feel seen and appreciated.

Zoho People’s HR solution can help. Its performance management module allows everyone to give feedback to their peers, their direct reports, and their manager.

Zoho People’s feedback functionality organized by feedback type and feedback categories.

Zoho People lets you provide various types of feedback. Source: Zoho software.

3. Diversity

Companies should embrace diversity in all its forms as part of their organizational values. Here are the different types of diversity you need to be aware of and ensure you respect:

  • Cultural diversity
  • Racial diversity
  • Religious diversity
  • Age diversity
  • Sex / gender diversity
  • Sexual orientation
  • Disability

Diversity is good for business. According to a study, companies that reported above average diversity on their management teams also reported innovation revenue that was 19% higher than that of companies with below average leadership diversity.

Charts showing the performance difference between companies with below average and above average diversity scores.

Businesses innovate better with a more diverse management team. Source: bcg.com.

4. Teamwork

Companies thrive when everyone works together for the common good. Some organizations pit employees against each other, believing this is the best way to motivate them to deliver results.

But if everyone pulls together in one direction, sharing knowledge and celebrating each other’s successes, then everyone feels supported to perform to the best of their abilities. It also makes for a much calmer and more pleasant workplace.

5. Growth- and development-focused

Some companies see learning and development as a cost center and don’t give employees the time or resources to learn new skills. But retaining employees adds more to your bottom line than the cost of training. According to one study, it costs up to 213% of their annual salary to replace an executive.

Training your current employees means you can boost retention rates and plug hard-to-fill skills gaps, all of which help you cut recruitment costs.

How to create a strong organizational culture in your business

A strong organizational culture can help guide business decisions by deciding if they are in line with your beliefs and vision. Here are four ways to build that culture.

1. Create a strong purpose

It’s hard to build a strong organizational culture if you’ve forgotten what your purpose is, or if it’s not clearly defined. The culture of an organization should support its end goal.

For example, if your purpose is to manufacture sustainable products in a local setting, then your cultural values will reflect that. Your company culture will likely involve minimal travel, at least on long-haul flights, and you’ll find solutions that allow your business to operate with minimal waste. You need employees who are committed to those values.

But your purpose may have evolved, and your organizational culture must evolve with it.

2. Align your hiring process with your culture

People are the foundation of your business, and you need to ensure new hires fit your culture. Make sure your hiring managers fully understand the culture and what to look for in candidates, and that your recruitment process is set up to screen and evaluate applicants accordingly.

This starts with expressing the company culture clearly on your careers portal and in all job ads. You can screen out candidates who don’t fit the bill much more quickly if you are upfront about who you are looking for and what kind of culture you offer. Then ensure you reiterate this in any subsequent interviews and ask the right questions to discover what a candidate is looking for.

For example, if your work culture is very honest, not all candidates may feel comfortable with that atmosphere. Or if everyone works autonomously, then you need a candidate who is comfortable with minimal supervision.

It’s not necessarily about finding the candidate with the most experience, but about finding one who will fit with your values and beliefs.

3. Keep your employees happy

When you’ve found employees who fit with your culture and care about what you do, then you’ll want to keep them happy so they feel motivated to do their best work and recommend their talented friends to join your company. But, as your perks will likely reflect your purpose, it’s important to have the right employees on board who appreciate these benefits.

For example, one of your perks may be a day off a month to volunteer at an animal shelter. This kind of perk won’t keep everyone happy. Other people may prefer a monetary reward, a long lunch, or more time working from home.

If you’re not sure what your employees want, send surveys asking them to choose which ones of the perks you’ve thought up that reflect your brand they would prefer.

4. Focus on retention

While your perks will no doubt help retain employees, you still need to provide a workplace that embraces diversity and inclusion, prioritizes learning and development, is open and transparent, and recognizes hard work.

Everybody needs to pay bills and has mouths to feed, so retention efforts need to include a competitive salary and a comprehensive benefits package. No matter what your purpose is, you need to treat your employees with respect if you want them to commit to your company and to help it grow.

A better way to sell

A strong company culture can help you win business. Customers are increasingly interested in buying from brands that align with their values. When you’re able to effectively explain what your purpose is and what kind of company you are, you can create more effective marketing materials that better convey your message. This not only attracts customers but also helps you turn one-time buyers into company fans.

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The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.