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How Workplace Culture Impacts Employee Retention

A team of people happily agreeing in an office
Diversity, open-mindedness and innovation have been linked to building a great company culture

Over the last few weeks, we’ve been looking at employee retention and the key factors that contribute to attracting and retaining the quality and quantity of workers needed for a business to survive and thrive.

Firstly, we looked at payrate and the difference that generous wages can make. Secondly, we acknowledged that wages aren’t everything, the work environment is just as important for staff morale, comfort and productivity.

This week we’re looking at company culture and its connection to employee satisfaction. The thing is, is salary and environment seem super obvious and are pretty tangible – it makes sense that no one would want to work for a tiny wage in a damp and unsafe office, but who really cares about company culture? And what real impact does it have?

Let’s find out.

What is workplace culture?

Also known as ‘company culture’, ‘organisational culture’ and more, the culture of a workplace is much less tangible and more psychological than environment and wages, but no less important to get right.

According to the CIPD, the success of an organisation is heavily dependent on how strong a company culture is, “Culture influences everything from your daily processes to your top-level strategic decisions”. It is built around the company ideals, values, mission and actions and constantly evolves as attitudes and processes in the business change.

For example; a small hypothetical firm that started in 1992 might have had a very rigid corporate culture, with values that focus on the company growth, a close-minded (from today’s standards) hiring process and no hint of flexible working. Over the decades, the management and thinking change to a more flexible and relaxed style that includes hiring diversely and acting upon their newer values of transparency and a dedication to their employees. Those two cultures are different but it is still the same company. If the management stayed rigid and inflexible, 30 years later their company culture would be the same as it was and that could be a deterrent for modern candidates.

If a company wants to be perceived as having a culture of ‘open doors’, transparency, and freedom to be yourself, then that needs to be present from top-down. A CEO who hasn’t met the junior staff, doesn’t listen to new ideas and spends most of their time behind a closed door, isn’t creating the culture they want others to think they have. It makes the managers more likely to follow suit and a savvy new employee will spot that straight away because it will be present at all levels, they might talk-the-talk, but that’s nothing if they don’t also walk-the-walk.  

So, company culture isn’t just about saying, it’s about doing as well. It’s about whether staff feel listened to, whether promises are kept and that gut feeling you get when you walk into a new job and everyone seems utterly miserable but you get the feeling they can’t speak up about it.

Something else company culture isn’t, is hollow gestures and fads. Having a pool table in the break-out room looks good, but if staff are overworked and under so much pressure they feel that they cannot take breaks away from their desks, then something is wrong and the culture isn’t a positive one.

Managers have the ability to foster the culture they envision by publishing company values and conducting performance appraisals and hiring processes to run in tandem with them. If the values are integrated into the company operations and assimilated by the staff, then the company culture will grow from that.

For example, a company that values innovation will dedicate a good proportion of the budget to improvements and developments, will invest in training staff and updating technology across the business. Add clear procedures for submitting new ideas and timescales for feedback and staff will feel that their voices will be heard and everyone will be consistently working towards continuously improving.

Improving company culture is becoming a high priority for organisations now it has become more apparent that keeping employees engaged and satisfied is healthier for a business in both the short and long term. According to Glassdoor, the average employer spends about £3,000 and 27.5 days to hire a new worker but that money could easily be saved or invested into the development of a current employee, instead of hiring a replacement.

It’s also come about because as more millennials enter the workforce, they are bringing their own wants and needs for work which include feeling appreciated and working for empathetic employers. Even before the pandemic, in 2016, a Deloitte survey found that 82% of respondents believed “culture is a potential competitive advantage.” but that also, only 28% felt they understood their culture well, with only 19% saying they have the “right” culture.

Proving this trend further in 2018, an annual survey saw an increase from 77% to 81% of employees who would be willing to work longer hours for an empathetic employer. 81% also said they would switch companies for equal pay if the new employer were more empathetic. This is important because that directly relates to retention. If 81% of employees would prefer to work for the same pay but a more empathetic employer, think about what that says about their desire to belong to a positive company culture – it’s more important to them than a higher salary.

This is why it’s essential for company leaders to understand that company culture isn’t just an HR issue or a ‘nice-to-have’, it’s essential for attraction and retention of quality employees now. You might say that wanting to work for an empathetic employer or in a company with a positive culture is a given, who doesn’t want that? But millennials are taking it further, for them, it’s a basic right. They demand it. If an employer wants their talent, they have to meet the demands.

So how can employers ensure their company has a good culture? If it needs to start with managers and be present in all aspects of the organisation, isn’t that a major job? Yes, yes it is. But the evidence for getting it right, sooner rather than later, points to long-term productivity and profit, not to mention, happy employees who stick around.

At the risk of sounding like a Blue Peter presenter, to get started you will need;

  • Pretty much everyone on-board, especially the senior leadership
  • A cost-per-hire and retention exercise that you can work to improve upon
  • A defined set of values, mission or promise that you want the company culture to embody
  • A questionnaire designed to find out the levels of satisfaction, development and perceptions etc. of all your staff, management included – sent out yearly at least
  • A person or team (depending on your business size) of people who can go through the results, understand and organise the changes that are needed
  • A robust induction programme that focuses on candidate experience
  • A recruitment process that matches the values you want the company to be known for
  • Investment in learning and development
  • A desire to continuously work on improving and building the culture – it will always be a work in progress
  • A dedication to practice what you preach
  • An empty washing-up liquid bottle and some PVA glue... wait no, that's my other blog. 

This isn’t an exhaustive list and as I say above, it’s also a practice that needs to continue and evolve as the company does. But you’ll know it’s working when the questionnaires, the feedback and the implementation of new ideas become part of a positive feeling culture. When candidates answer the “why do you want to work here” question with, “My friend works here and they rave about how nice it is.” And when retention improves and employees stay for longer, and are happy about it.

About the author

Rebekah Frost

A champion problem solver; whether it’s a board game or a tricky computer conundrum, Bekah's attention to detail is second to none. Her interesting and varied work experience across different sectors means she always has a story to tell, a love of people and a way to fix any issue.