.svg){kind=small}
What Is Company Culture? Definition, Types, and How to Improve Yours
Published on:
April 25, 2025
Updated on:
May 6, 2025
Share
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}
You can feel it the moment you walk into a workplace.
Sometimes it's in the way people talk to each other.
Other times, it's in the way decisions are made, feedback is shared, or recognition is given. Whether you define it explicitly or not, company culture is always there, shaping how employees feel, how they work, and whether they stay.
And it's not just a soft concept. Culture has a measurable impact on everything from engagement and retention to productivity and your bottom line. In fact, companies with strong cultures see up to 4x higher revenue growth and significantly lower turnover than those that neglect it.
Yet despite its importance, only 23% of U.S. employees strongly agree that they feel connected to their company's culture. That gap presents both a challenge and an opportunity.
In this guide:
We’ll also share strategies to evaluate and improve your workplace culture along with real-world examples and insights from industry leaders.
Ask five people to define company culture, and you’ll likely get five different answers and all of them would be partly true.
If you were to get to the bottom of it all, this would be the answer:
Company culture is the set of shared values, behaviors, attitudes, and norms that shape how work gets done and how people interact within an organization.
It’s not just about perks or mission statements on the wall.
It’s about what actually happens day to day: how decisions are made, how feedback is delivered, how team members collaborate, and how employees feel about showing up.
Some call it organizational culture or workplace culture but regardless of the term, the impact is the same. A strong culture aligns with the company’s mission and values. It guides people when policies fall short. It encourages innovation, trust, and accountability. And when done right, it becomes a competitive advantage that’s hard to replicate.
On the flip side, a weak or toxic company culture can quietly undermine even the best talent management strategies.
In fact, a poor cultural fit is one of the most common reasons top performers leave, even when compensation and benefits are competitive.
So while culture might feel intangible, its effects are anything but.
A strong company culture is the foundation that supports employee engagement, trust, and long-term growth.
It guides how teams collaborate, how leaders lead, and how problems get solved. And more importantly, it drives results.
Organizations with highly engaged employees outperform their peers by up to 202% in profitability. Meanwhile, companies with rich, clearly defined cultures experience turnover rates as low as 13.9%, compared to 48.4% in companies where culture is an afterthought.
A healthy company culture helps:
While every organization’s culture is unique, most fall into one of four dominant types, each with its own strengths, challenges, and leadership style.
Understanding where your company fits can help you identify what’s working, what’s not, and how your culture impacts everything from innovation to employee retention.
.webp)
This culture thrives on experimentation, creativity, and calculated risk-taking. Common in startups and tech-forward companies, adhocracy cultures empower employees to move fast, think outside the box, and innovate freely, even if that means failing sometimes.
💪 Strengths: Encourages innovation, agility, and ambitious thinking.
⚠️ Challenges: Can be chaotic without structure, prone to burnout if expectations aren’t managed.
Why it fits:
SpaceX thrives on innovation, risk-taking, and disruptive problem-solving. The company encourages engineers and teams to push boundaries and experiment rapidly, often failing fast to iterate and improve, a hallmark of adhocracy culture.
Key trait: Innovation over bureaucracy.
Example behavior: Engineers are empowered to design and launch experimental prototypes without traditional approval hierarchies.
Clan cultures feel like close-knit communities. They prioritize collaboration, mentorship, and relationships. Leadership is often more democratic than hierarchical, and employees are encouraged to speak up and shape the organization’s direction.
💪 Strengths: High trust, open communication, strong loyalty.
⚠️ Challenges: Can resist change, risk groupthink, or become too informal.
Why it fits:
Patagonia fosters a deeply collaborative, family-like environment. The company values open communication, shared purpose, and employee well-being. Teams are tightly knit, and leadership is accessible and values-driven.
Key trait: Strong interpersonal relationships and shared mission.
Example behavior: Employees are encouraged to bring their full selves to work, and decisions are made with strong employee input and community alignment.
This traditional structure emphasizes stability, clearly defined roles, and consistent processes. Think banks, government agencies, or large corporations with complex compliance needs. The focus is on efficiency, predictability, and order.
💪 Strengths: Reliable systems, clear decision-making, scalable operations.
⚠️ Challenges: Often slow to adapt, can feel rigid or bureaucratic.
Why it fits:
IBM is known for its structured organizational chart, well-defined processes, and long-standing emphasis on stability and order. While it has adapted in recent years, its culture still reflects hierarchical values, especially in governance and decision-making.
Key trait: Operational efficiency and clearly defined roles
Example behavior: Promotions, decision-making, and internal communications follow formal protocols across business units.
Driven by goals, metrics, and competition, market cultures prioritize performance and results above all. Employees are expected to hit ambitious targets and stay focused on outcomes. Common in sales-heavy or high-growth environments, this culture rewards achievement and drives profitability.
💪 Strengths: High accountability, results-oriented, drives growth.
⚠️ Challenges: Can create pressure cooker environments and stress if not balanced with support.
Why it fits:
Amazon is goal-driven, performance-oriented, and highly competitive. Teams are expected to hit aggressive KPIs, and success is measured by output, speed, and customer obsession: All characteristics of a market culture.
Key trait: Results above all
Example behavior: Employee performance is tied tightly to targets and deliverables, with internal competition used as a motivator.
Every organization has a culture, but not every culture supports engagement or growth.
So what separates toxic or stagnant environments from cultures where employees thrive?
Positive company cultures are shaped by the values people live by every day, the way leaders lead, and the systems that reward or discourage certain behaviors.
While every culture is different, high-performing organizations tend to share a few essential building blocks.
Culture starts at the top. Leaders who model openness, accountability, and empathy create a ripple effect throughout the organization.
Whether they realize it or not, managers set the tone for communication, recognition, and team dynamics, and employees tend to mirror those behaviors.
According to SHRM, 64% of employees in companies where leadership prioritizes a positive culture are engaged, compared to just 30% in organizations that focus on productivity alone.
A compelling mission and core values give employees something to rally around. When people understand not just what they’re doing, but why it matters, their work becomes more meaningful, and alignment across teams gets easier.
Take Khan Academy, for example. Its mission (“to provide a free, world-class education for anyone, anywhere”) is reinforced by seven clearly defined values.
These principles guide daily behavior, hiring decisions, and leadership priorities, ensuring culture isn’t just aspirational, but operational.
A strong culture creates space for honest conversations. That includes two-way feedback, regular check-ins, and the psychological safety to speak up, especially when something isn’t working.
In environments with open communication, employees are more likely to:
This kind of transparency isn’t accidental.
A transparent workplace culture is built through habits like 1:1s, pulse surveys, and clear communication expectations.
Employee recognition reinforces the culture you’re trying to build. Mutual appreciation, being tied to core values or team goals, strengthens the connection between behavior and impact.
Whether through shoutouts, performance reviews, or everyday praise, consistent recognition sends a clear message: we notice, and we value what you bring.
Culture doesn’t just emerge. It’s built through the systems you put in place, the behaviors you reward, and the habits you normalize. If you’re waiting for culture to “organically take shape,” chances are you’re leaving it to chance.
Here’s how to build a strong, values-driven company culture from day one.
It’s easy to list values like “collaboration” or “integrity.” But unless they show up in how people are hired, evaluated, and promoted, they don’t mean much.
What to do:
First impressions are everything. The onboarding experience should clearly communicate how your team works, communicates, and makes decisions, not just what tools they’ll be using.
What to do:
Recognition isn’t just about being nice it’s about shaping behavior. When employees are praised for the right things early on, it sets the tone for what gets celebrated.
What to do:
Flexible work isn’t a benefit it’s a reflection of trust. If your culture starts with rigid rules and unnecessary approval layers, it’s hard to shift later.
What to do:
Offer clear guardrails (e.g., core hours, meeting norms) but give people autonomy over when and how they work.
Train managers to lead based on outcomes, not time online.
Document expectations around async communication and time-off boundaries.
The earlier you create feedback loops, the easier it is to shape your culture intentionally instead of reacting when things break down.
What to do:
Start with simple pulse surveys (e.g., “Do you feel connected to our company values?”)
Run a quick culture check after onboarding and again at 90 days.
Regularly ask: “What’s one thing you’d change about how we work?”
You can’t improve what you don’t understand. Contrary to popular belief, company culture isn't some abstract vibe. Your company culture is made up of a set of behaviors and beliefs that show up in how people communicate, collaborate, and make decisions.
To shape it intentionally, you need to measure it regularly and take action on what you find.
Here’s how to evaluate your current company culture and make meaningful improvements:
Your employees are the most reliable source of insight into your culture. If they don’t feel safe, heard, or supported, it doesn’t matter what your mission statement says.
What to do:
Run short, anonymous engagement surveys every quarter.
Include open-ended questions like:
The best way to analyze your employee sentiment in your organization and how that sentiment affects company culture is through regular anonymous surveys. To conduct them effectively, you need the right survey software. If you're in the Microsoft Ecosystem, you're in luck!
Departing employees are often more honest about what isn’t working, and their feedback can help you spot issues you might be missing internally.
What to do:
Standardize your exit interview process with structured questions focused on values, leadership, and team dynamics.
Look for recurring themes (e.g., communication breakdowns, lack of recognition, misaligned leadership).
One of the biggest red flags? When leadership thinks the culture is great, but employees don’t.
What to do:
Why it matters: A misaligned perception of culture leads to mistrust, lower engagement, and slow adoption of change.
Culture can’t be improved if it’s not clearly defined. What does a successful culture look like for your organization, in behavior, not just theory?
What to do:
Create a culture playbook that defines:
Train managers to reinforce these values consistently.
Surveying without follow-up does more harm than good. If employees take the time to share feedback, they need to see what changes as a result.
What to do:
.svg){kind=small}
.svg)
.svg)
.webp)
