9 Powerful Signs You Are Building a Great Company Culture

Work culture is one of the most important predictors of employee turnover.

Don't believe me? Just take a look at the research that backs up this claim. For example, an MIT Sloan study found that toxic company culture was more likely to predict turnover than pay. 10X more, to be precise!

With that data in mind, we can see just how critical it is for leaders to stay in touch with their culture. But an important question remains:  how can you measure or monitor something so intangible?

What makes a company culture great

First, you can educate yourself and your leaders on the signs of toxic company culture. There's plenty of information out there on bad cultures. Yet, it's important to remember that dysfunctional cultures often manifest more subtly, especially in the beginning stages.

To that end, focusing on the signs of a successful culture is a more effective way to monitor how your culture is doing.

This article will outline the top signs of a great company culture. We will also discuss research and companies that illustrate these positive traits, providing examples of how they can be applied in the real world.

9 Powerful Signs of a Great Company Culture

People can respectfully challenge each other

In healthy workplaces, people know that some conflict is good for relationships. You will see a high degree of open communication among teams. These cultures may even go a step further and encourage debate. They know making space for people to feel heard is an important way to build psychological safety and uncover the best ideas. You won't see a group submitting to the authority of one person. 

For example, at Pixar, senior leaders purposefully create a culture where employees can raise their opinions. In the book The Culture Code, author Daniel Coyle discusses these unique "Brain Trust" meetings. During this exercise, employees come together and give their most honest opinions of the film during production. The teams will detail their likes and dislikes, essentially evaluating each other's work. These meetings can be tough to sit through. But they are crucial to producing the masterful films Pixar has become famous for today. 

Anyone can admit they made a mistake (even leadership)

Think about a workplace where employees sweep setbacks under the rug or ridicule each other for mistakes. What a terrible place to work! Mistakes are inevitable, and failures are critical learning opportunities. Healthy cultures embrace this reality. As such, they enable their workers to talk about failures so that everyone can learn from them. Leaders strive to be honest about their setbacks, too.

This positive spirit has a significant impact on the climate of the workplace. Workers are more likely to ask for help, try new things, and take risks when they are not afraid of failure or ridicule.

Take, for instance, the story of Shell oil company's "vulnerability seminars." In the late 90s, Shell launched these workshops to curb safety accidents on their oil rigs. The goal was to allow employees to connect and talk in a safe place. This exercise led to a massive reduction in accidents, by 84%, to be precise. Leaders believed that the openness helped workers stop fearing seeming incompetent and to seek help more quickly, resulting in fewer safety incidents on the front lines. 

Your colleagues are from different backgrounds

An organization's culture is a product of its people's belief systems. Especially leaders. When a culture becomes imbalanced, it's often because of a lack of diversity of beliefs and attitudes. 

By hiring and building teams with diverse beliefs and backgrounds, you can reduce cultural imbalances. Case in point: Research by Mckinsey shows companies in the top quartile of gender and ethnic diversity were 25% and 36% more likely to outperform those in the bottom quartile. Increasing diversity can be a difficult road, as many people are unaware of their biases, let alone willing to admit them to others. Even so, it is a goal that has shown to be incredibly fruitful for businesses.

Leadership welcomes new ideas and perspectives

Rigidity is one key feature of unhealthy cultures. These companies have everything set in stone—systems, policies, and procedures are overly complex. Leaders resist change even if there is a better way to do things. Psychologist Adam Grant calls these "cultures of bureaucracy" per his framework of the 4 deadly sins of work culture. Fear of the unknown is high, and risk-taking is low. 

On the flip side, strong cultures define themselves by a spirit of openness toward change and innovation; leaders embrace outside opinions and are open to trying new things. Balance is present.

Take, for example, a program called "Bureaucracy Busters," explained in Work Rules, a book written by Google's former Head of People. In this program, employees meet once a year to discuss their biggest bureaucratic frustrations. The ultimate goal is for leadership to listen to employee voices and reduce pain points. As a result, leaders free employees to focus on their most critical responsibilities, not tedious administrative tasks.

Employees feel comfortable airing their opinions

Psychological safety is a central trait in positive cultures. This means employees feel safe voicing their feelings and opinions to their leaders.

In contrast, you will find people bottling up their feelings and opinions in unhealthy cultures. This is usually done out of fear of criticism, wanting to conform to an unspoken standard, like not wanting to seem weak. Many leaders might think – "great; work should not be about feelings anyways." Yet, this is an unrealistic view of human nature.

People come to work as whole beings. They experience positive feelings but also negative ones, like frustration, confusion, and stress. People are not robots. When you stifle human expression, it will always fester and come out in other ways. It usually ends up manifesting in counterproductive ways, such as passive-aggressive communication. This can include gossip, procrastination, sulking, and even intentionally doing tasks badly. You can imagine how damaging these actions are to a team's morale and results in the long term.

The company encourages promotion from within

Humans are hard-wired to seek growth, improvement, and challenge. If you hire people, slot them into a role, and leave them there too long, you risk hurting their motivation. But most importantly, you risk harming the climate of your culture. Managers in healthy cultures give employees roles and responsibilities that align with their aspirations. It's a win-win. 

For example, Costco's culture is a perfect example of this approach. At Costco, many senior leaders started on the front line. This company's strong promotion track is one trait that sets it apart from a sea of retail employers known for their poor culture and low engagement rates. This factor, among others, has earned Costco the title of Forbes America's best employer for several years. Very few retail stores make it onto this list.

Employees are given recognition for specific contributions

According to research by MIT Sloan, "disrespectful behaviour" is the number one attribute of a toxic work environment. In these cultures, managers and employees lack consideration for one another. It's common to find employees working in silos, hoarding information and taking credit for each other's work. It's every man for himself.

In contrast, in positive cultures, respect is the bedrock of a team. Employees collaborate, help each other and praise their colleagues. 

To that end, genuine recognition is a core feature of respectful cultures. Expert on appreciation in the workplace, Paul White, explains why recognition is so important in his book The Vibrant Workplace. Expressing authentic appreciation is about showing value to the person; it makes people feel deeply seen and respected. This, in turn, boosts feelings of trust and safety. As a result, a team's climate will feel more healthy, and there will be less space for toxic behaviours such as resentment, passive aggression, and gossip.

Important decisions are made objectively

In toxic workplaces delivering results is not enough for employees to get ahead. These workplaces reward the wrong things—external appearance, busyness, or just being liked. Ultimately, decisions are tangled in a web of politics. This type of unfair treatment can seriously harm employee motivation, well-being and your culture as a whole.

In fact, a popular Gallup survey of 7,500 full-time employees found the top reason for burnout to be "unfair treatment at work." To that end, monitoring for unfair practices is crucial to managing feelings of fairness. 

Companies like Google, for example, try to control bias as much as possible. At Google, leaders cannot unilaterally make major decisions (like promotions and raises). Major decisions are made by a committee of managers and are always backed by data. They also apply a calibration process to bi-yearly employee evaluations. These steps are crucial to ensuring transparency and employees' perceptions of fairness.

Toxic actions (and people) are dealt with quickly

Exclusion, gossip, manipulation, harassment, and other problematic behaviour spread like viruses. Many companies wind up with toxic cultures because they fail to address harmful behaviours (and people) early on. This is either done to protect results or people. Regardless, it's a recipe for disaster. Ignoring bad behaviour can damage an organization's culture and, by extension, its results. 

For instance, another piece of fascinating research from MIT Sloan shows leadership quality as the top predictor of a toxic culture. And one notable study from Harvard reveals it doesn't take many "bad apples" to spoil the barrel. If companies avoid just ONE toxic hire, it translates into a $12,500 cost-saving. In other words, the impact of toxic people on a work culture is so strong that even one bad apple can cause damage.

Final Thoughts

If you examine our list above (or look at any company famous for its culture), you'll see what sets these businesses apart is entirely intangible.

• Listening and implementing change based on employee opinions
• Making important decisions using objective methods
• Providing internal opportunities for growth

Yet, many leaders continue to buy into the myth that you can fix cultural problems with fun perks and social events. So they relegate all the "culture stuff" to Human Resources. Senior leaders prefer to focus on things that have a "real" impact on business and results—it's all about hitting those numbers.

And for a time, they were justified. In truth, it was hard to prove the ROI of investing in something as fluffy as "company culture." But now, solid evidence is emerging to validate the link between culture and financial performance. As such, we can now appreciate how crucial leadership is in bringing about cultural change. Bottom line: A strong, authentic culture can only flourish if it's viewed as a holistic entity and everyone plays a role in its creation.