What is company culture and why is it important?

4 min read  |   3 February, 2021   By Rachael Down


Company culture is an HR buzzword with a difference. Originally hitting headlines in 2017, we’re pleased to see it jumping from the page (or screen) right into the heart of our offices.

Gaining momentum throughout Australia  and spreading worldwide, company culture is changing the way we think about work and urges us to consider how we can conduct business for the better. 

So, let's delve into the basics of what company culture is and why it is important for small businesses.  


What is company culture? 

Referring to an organisation’s social order and setting guidelines for expected work practise, company culture (AKA organisational/corporate culture) has the power to make or break a business; big or small.  

It’s not just the values plastered on the walls, nor is it the office fruit bowls, bean bags or table-tennis tables.

It isn’t even the leadership style. Company culture is all the above and more. It's how a company cultivates business growth by offering each employee a voice, while encouraging healthy day-to-day attitudes, behaviours and work ethics.  

Great company culture sets the foundations for real, tangible business growth. It’s based on honest, productive conversations and helps companies to identify issues and collectively form resolutions.

Small Business company culture 

Small businesses are at an advantage here. With less large corporate hierarchical systems and more millennial-led startups emerging each year, internet-led entrepreneurism encourages small businesses to work on their business from the inside out.  

Gifted with more opportunities for face-to-face communication and flexible working conditions, small businesses can respond quickly and adapt their company culture to gain a happy work-life balance for its employees from the start.  

On the flip-side, ignoring the needs of your employees and adopting what is known as a ‘toxic company culture’ heralds disastrous results for overall business performance.  


Why is company culture important? 

In a nutshell, cultivating a great company culture is important not only for employee engagement, happiness and retention, but also, plotting the blueprints for a thriving business; regardless of the economic climate.  

Gaining significance and speed over the last decade, company culture encourages CEOs, HR consultants and company leaders to ask the right questions that lead to honest evaluation and pushes for change. 

After all, it is only when we identify and establish what could be changed that we can then set about resolving issues and conflicts to progress and grow above our own limitations and, indeed, business competitors. 

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The importance of company culture: 

Reputation-led results 

It’s no lie that reputation is everything. In a time where online publishing, blogging and company trolling is prolific, media scandals and recent headlines have given voice to large and small business malpractice. 

Thanks to the necessary exposure of misplaced company and employee welfare practices (such as BBC gender pay gap, Uber and not forgetting the Harvey Weinstein #Metoo campaign), HR consultants are urged to push past the ‘fluff’ and address what really matters; their people.  

If we can take anything from the pitfalls of these Big Players, it is that corrupt company cultures are toxic to productivity and profit. Offices that dismiss the importance of employee independence, flexibility and role fulfillment are at risk of increasing consumer distrust through reputation slamming. 

On the other side of the water cooler, we are now seeing the positive impact that company culture reviews have on not just individual employees but businesses as a whole. (Kudos to Uber and Netflix for learning from their mistakes.) 

Employee and economic health 

Employee and economic health are important measures of company culture. 

Great company culture theories, such as the HBR Framework and Schein Culture Model clearly demonstrate that companies who measure profit and monetary incentives higher than human empathy and employee understanding are more likely to damage business performance.  

Such fractured working communities not only jeopardise an employee’s mental and physical health but can also lead to an adverse effect on our society and Australian economy. 

Business growth, longevity and results 

Great company culture positively impacts business growth, longevity and results.  

Contrary to what some HR specialists are led to believe, the most profitable companies are not actually the most profit-focused. Through switching their target from profit to purpose, employees and employers alike gain greater role-fulfillment, which in turn increases productivity, efficiency and quality results. And what does quality lead to? Profit of course.  

So, by ensuring that all employees understand their company’s culture, objectives and targets, all team members can start on the right page.

Setting the stage for success, when a company begins with solid foundations, their employee engagement, staff retention, business longevity and growth targets are more likely to sync, leading to results the whole company can be proud of.


Author: Rachael Down

With a passion for words, Content Specialist Rachel Down, is an experienced communicator with skills in journalism, content creation and web copy writing.

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