Why organizational culture is important

By Randi Sherman

13 min read

Why organizational culture is important
Illustration by Justin Alm

Does it matter that your organizational culture is one way rather than another way?

It turns out it matters a lot. Organizational culture is hugely important to the success and overall health of your company, people, and customers. So, it’s helpful to consider why your company’s culture is the way it is and why it must stay that way (or change).

What is organizational culture?

Organizational culture is the shared values, beliefs, behaviors, and practices that shape how a company does things. Think of it as the unwritten rules guiding people's actions and decisions. And let me tell you, it can totally make or break a company.

If you have a strong organizational culture, you’ll attract and retain top talent, keep employees engaged, and even make more money. But if your culture is toxic, you’ll get high turnover, low morale, and bad performance.

So, it’s essential to have a positive organizational culture. This means figuring out what values and beliefs matter most to your company and ensuring your policies, practices, and behaviors uphold those values.

The goal is to create a workplace where everyone feels part of a community, with a sense of purpose and motivation. And when everyone’s on the same page, the whole company benefits.

7 reasons why organizational culture is important


Having a strong organizational culture is akin to having a healthy, functional life in every way. When we take care to nourish and nurture the culture, it becomes a symbiotic organism that becomes stronger over time. For long-term employees, it may not even be visible because it is so ingrained in the company’s DNA that every process and interaction is logical and often effortless. 

Need more specifics? Here are seven reasons organizational culture is vital to your company’s health. 

1. It defines your company’s internal and external identity

Here’s a thought exercise: write down five attributes that best describe your organization’s culture on a piece of paper. You might write something like “good work-life balance,” “lots of meetings,” or maybe “team-oriented.”

Now, spend a few minutes thinking about why each attribute is particularly vital to your organization. Why is it significant that your company has a good work-life balance? What makes these cultural attributes valuable to your people and customers?

Peter Ashworth explains that your organizational culture “defines for you and all others, how your organization does business, how your organization interacts with one another and how the team interacts with the outside world, specifically your customers, employees, partners, suppliers, media and all other stakeholders.”

In other words, your organizational culture will reverberate across all aspects of your business because it represents the way you do business. It’s simultaneously your identity and your image, which means it determines how your people and customers perceive you.

2. Organizational culture is about living your company’s core values

Your culture can be a reflection (or a betrayal) of your company’s core values. How you conduct business, manage workflow, interact as a team, and treat your customers, all add up to an experience that should represent who you are as an organization and how you believe a company should be run. In short, your culture is the sum of your company’s beliefs in action.

But if your espoused values don’t match your culture, that’s a problem. It could mean that your “core values” are a list of meaningless buzzwords, and your people know it.

A strong organizational culture keeps your company’s core values front and center in all aspects of its day-to-day operations and organizational structure. The value of doing so is incalculable.

Bring your people together

3. Your culture can transform employees into advocates (or critics)

One of the greatest advantages of a strong organizational culture is that it has the power to turn employees into advocates.

Your people want more than a steady paycheck and good benefits; they want to feel like what they do matters. And when your people feel like they matter, they’re more likely to become culture advocates—that is, people who not only contribute to your organization’s culture but also promote it and live it internally and externally.

How do you achieve this? One way is to recognize good work. A culture that celebrates individual and team successes, that gives credit when credit is due, is a culture that offers a sense of accomplishment. And that’s one way to turn employees into advocates.

Then again, if your company culture doesn’t do this, you may be inviting criticism.

4. A strong organizational culture helps you keep your best people

Unsurprisingly, employees who feel like they’re part of a community rather than a cog in a wheel are more likely to stay at your company. In fact, that’s what most job applicants are looking for in a company.

Ask any top performer what keeps them at their company, and you’re bound to hear this answer: the people. It’s because a workplace culture focused on people has profound appeal. It helps improve engagement, deliver a unique employee experience, and makes your people feel more connected.

One way to attract top performers who are natural culture champions is to hire for cultural fit.


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5. A well-functioning culture assists with onboarding

Organizational culture also has the potential to act as an aligning force at your company. This is particularly the case with new hires who, more often than not, have put considerable thought into the type of culture they’re joining.

The culture at your organization is essentially a guiding force for them, so it must start with onboarding.

In Forbes, George Bradt explains further: “People fail in new jobs because of poor fit, poor delivery or poor adjustment to changes down the road. Assuming you’ve aligned the organization around the need for your new employees and acquired them in the right way, your onboarding program should accommodate their needs (so they can do real work), assimilate them into the organization (so they fit culturally), and accelerate their progress (so they can deliver and adjust).”

6. Your culture transforms your company into a team

A thriving organizational culture brings together the people at your company and keeps them aligned. When your culture is clear, different perspectives can gather behind it with a common purpose. The culture at your organization sets expectations for how people behave and work together and how well they function as a team.

This way, culture can break down the boundaries between siloed teams, guide decision-making, and improve workflow overall. Conversely, a toxic organizational culture can do just the opposite.

7. Culture impacts performance and employee well-being

Reports show that organizational culture directly impacts performance and, more importantly, your employees’ well-being. A healthy culture addresses both areas by finding an appropriate balance based on company values.

Does your company stress performance so much that you feel like your physical and mental health are being overlooked? There might be instances when that may not be a problem, but for the vast majority of cases, it’ll have a negative effect on your company.

Paul Barrett sums it up nicely, writing, "Employee well-being strategies have the potential to bring huge benefits to employees and employers alike, but they need to be introduced in the right way for the right reasons and at the right time. To be properly effective, they must be developed holistically and consistently with a business culture conducive to their success. That means supportive management behaviors, flexible working options, and an open culture that allows employees to have a voice and some say in shaping the working environment.”

Types of organizational culture 

Organizational culture can be categorized into archetypes, of which there are many. Today, we’ll look at the top four, representing modern organizations’ most typical culture types. 

  • Clan Culture emphasizes collaboration across teams and has a horizontal structure. It’s the most family-like of all, hence the term “clan,” and is characterized by participation, cooperation, and a strong allegiance to the company’s mission, vision, and values. Employees tend to be hired based on trustworthiness, and onboarding may resemble mentorship more than a structured training process. 
  • Adhocracy Culture is the most creative culture type, encouraging individuals to share ideas and take risks. The company structure is flexible, organic, and growth-oriented, with less emphasis on authority and more on individual initiative. 
  • Market Culture focuses on results in the interest of financial success and how each employee contributes to revenue. This culture is highly competitive with competing companies and within the organization, with the ultimate goal of profit and performance. Market culture companies often place a lot of emphasis on customer satisfaction and less on employee happiness. 
  • Hierarchy Culture is highly structured and process-oriented, emphasizing procedure, authority, and transparent managerial processes. Employees understand what’s expected of them, and performance is constantly observed to ensure it aligns with the code of conduct. 

Examples of great organizational cultures

Generalizing or saying one culture type is “better” than another is challenging. What works for one organization may not be appropriate for another. The industry, leadership, and competitive nature of the market may dictate what’s required. Most often, companies evolve their cultures based on shared values. Here are a few examples. 


Netflix is an example of an adhocracy culture, where creativity is encouraged, and employees are empowered to make their own decisions. Rather than having a top-down structure, the workforce consists of many small, autonomous teams that are trusted to work together to ensure their members have the best possible services and programming. 


NVDIA admittedly lacks hierarchy, which encourages innovation and out-of-the-box thinking. Their strong focus on being “one team” underscores their clan culture approach. Their CEO, Jensen Huang, strongly advocates for intellectual honesty—the capacity to admit and tolerate mistakes and failures to fuel creativity and innovation. Employees are motivated to perform at their best without office politics and traditional leadership hierarchies. 


Accenture’s culture is intensely focused on ethics and values, being a force for good, and always doing the right thing. They empower their people to act responsibly, make good decisions, and speak up confidently, fitting neatly into the clan culture archetype. The company has a robust code of conduct, which extends to all employees regardless of title, as well as third-party entities acting on their behalf. 

Can an organization change its culture?

Organizational culture isn’t always functional. While it is possible to change what’s broken, it takes time and commitment. It can’t be a purely top-down change, which could be seen as autocratical thinking. Forcing sudden change is never the right approach; a systematic, well-planned initiative will seed your culture with the values and principles it needs to thrive. Here are the steps to take to put your cultural plan in motion. 

1. Audit your current culture

Start by evaluating your current culture. Consider the risks you face from employee, customer, and vendor behavior as it pertains to operations and reputation. You can’t implement change unless you understand what needs to change. Review your mission and vision statements, operational structure, and publicly stated values. Compare them to the competition, and review codes of conduct and ethics and how they align/misalign with employee behavior. 

2. Set a vision

Articulate your goals and envision what your ideal culture looks and feels like once the change process is complete. 

3. Organize a team of facilitators

Change management is essential during a cultural transformation. Consider bringing on outside consultants to remove unconscious bias and ensure objectivity. 

4. Set a timeline and budget

Changes may involve process transformation, new software, consultants, and possibly new hires. Give yourself adequate time to achieve your goals and ensure sufficient resources are allocated to the task. 

5. Communicate with employees

Monumental change may cause ripples in the workforce. In best practice, be as transparent as possible, communicate why you are undertaking the process and what it involves, and encourage feedback along the way. Trust is essential, and without adequate communication, you may lose valued employees simply because they don’t feel connected to what’s happening. 

6. Create a Plan

Based on your culture audit, create a roadmap illustrating how you will get from point A to point B. Your plan should include team development, culture change workshops, town halls, direct coaching, and any other activity that fosters connection and stresses that you’re all on the same journey. 

7. Begin rolling out the changes

Training, coaching, and team-building workshops are some examples of engagement initiatives that empower your employees to embrace the new culture and step into their potential. 

8. Follow up

Surveys, one-on-ones, and reviews are critical to measure the impact of your efforts. Surveys, in particular, can give you a good overall impression of employee sentiment. If you identify any issues or barriers, take action immediately to reinforce your commitment to a positive, trusting, and collaborative culture. 

How to boost your organization's culture


Improving your organization’s culture can be tough, but it’s super important to keep your employees happy and successful. Here are some tips on how you can boost your organization’s culture:

1. Define and embody your core values

Clearly defined values are foundational—but they mean nothing unless they are acted upon. Lead by example to provide employees with a benchmark for conduct. 

2. Hire people who fit

Once your culture is established (or at least well-defined), build it into your recruiting process and employer brand. Using your cultural values to gauge fit is the best way to reduce hiring mistakes and ensure happy employees. 

3. Tailor your employee experience to individuals

Not everyone works the same way. Recognizing this and building flexibility into the work environment allows people to do their best work and shows that you trust, respect, and value them as individuals. With five generations in the workforce today, employers sensitive to needs, desires, and career objectives will always be in demand. 

4. Create a positive work environment

Establish trust, set clear expectations, recognize good work, provide and encourage feedback, and offer development opportunities to ensure a positive, inclusive work environment. Focus on engaging employees through communication and active participation. 

5. Celebrate success

Recognition and celebration are massively important to a strong organizational culture. From team wins to individual milestones, celebrating these moments creates a stronger connection to the company’s mission and helps employees understand how their work contributes to the greater goals. 

6. Encourage open communication

Employees should not be afraid to speak up. Fostering a feedback culture empowers all workers to speak up when inspired, leading to greater trust and innovation. 

7. Allow employees to connect with each other

Employees should be encouraged to work together, even outside of work. Non-work-related get-togethers allow people to get to know each other more personally, building trust and camaraderie. 

8. Embrace learning and education

When learning is engrained in the culture, employees become more curious, building the company’s knowledge currency. Learning opportunities allow employees to envision their future and may help to develop new leaders and support succession planning. 

9. Lead the way

Your leaders set the tone for the entire organization. With that in mind, company leaders and managers must embody cultural values as if they were part of their DNA. Employees look to their leaders for direction and humanized examples of the company’s personality. Leaders whose conduct aligns with the culture command loyalty, trust, and a sense of safety.


These are just a smattering of reasons why organizational culture is important. Still, they’re a good starting point to get you thinking about what your own organization brings to the table. What’s important at your company might be totally different depending on the situation.

So, what are your next steps? Find out what aspects of your organizational culture are most important to your people, and consider performing a culture audit. Your goal is to discover what your people value most and support that. Congratulations, you’re one step closer to creating an extraordinary workplace.

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Randi Sherman

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