The Importance of Workplace Culture, According to Research

Workplace culture isn’t something any team, department, or company leader can afford to sit back and watch as it takes shape on its own accord. There is too much at stake to risk it developing into something unhealthy, unproductive, and possibly even toxic.

So, what exactly is at stake, and why is workplace culture so important?

According to recent research, a strong and healthy workplace culture within your team, department, and organization is important for five main reasons:  

• It contributes to a positive employee experience
• It fuels financial performance
• It increases employee loyalty and reduces turnover
• It supports a company’s ability to attract talent
• It creates a sense of community and belonging

Contributes to a Positive Employee Experience

In his book, The Employee Experience Advantage, Jacob Morgan wrote, “In a world where money is no longer the primary motivating factor for employees, focusing on the employee experience is the most promising competitive advantage that organizations can create.”

Fortunately, a healthy workplace culture and a positive employee experience go hand-in-hand. Building a strong workplace culture can stimulate engagement, boost productivity, and support an individual’s overall well-being, all of which are important to the experience one has at work.

• Employees who strongly agree that they feel connected to their culture are 3.7x as likely to be engaged at work, 5.2x as likely to recommend their organization as a great place to work, 37% more likely to be thriving, 68% less likely to feel burned out at work always or very often. (Gallup) 
• 66% of employees say their culture positively impacts their day-to-day work and behavior. (Quantum Workplace)
• Only 24% of employees who rate their workplace culture as good dread going to work, while 70% of employees who rate it as poor do. (SHRM)
• Employees who say their culture is positive are 3.8 times more likely to be engaged. (Quantum Workplace)
• Employees who describe their culture as healthy are 1.7 times more likely to say their team collaborates effectively. (Grant Thornton and Oxford Economics)

Fuels Financial Performance

Creating a strong and healthy culture does not just make the workplace a better place for yourself, your employees, and your customers; it also directly correlates to a healthier bottom line. For example, companies who are certified by Great Place to Work as willing to invest in culture see as much as a 4.1x revenue growth, a 756% increase in net income, a 13% increase in sales per employee, and a 15x return on investment.

• Companies with strong cultures achieve three times higher total returns to shareholders than others. (McKinsey)
• Companies with healthy cultures are 1.5 times more likely to report average revenue growth of over 15% for the past three years. (Grant Thornton and Oxford Economics)
• Public companies with extremely healthy cultures are nearly 2.5 times more likely to report significant stock price increases over the past year. (Grant Thornton and Oxford Economics)
• Companies with healthy cultures are 1.3 times more likely to say their company effectively wins repeat business. (Grant Thornton and Oxford Economics)

Influences Employee Loyalty and Turnover

If there’s one thing that the research on workplace culture proves time and time again, it’s that today’s workforce strongly takes culture into consideration when deciding whether to stay or leave a team, department, or organization. 

• 92% of employees across all generations say that culture impacts their decision to remain with an employer. (EY) 
• 90% of employees who rate their culture as poor have thought about quitting, compared to 32% who rate their culture as good. (SHRM)
• Nearly 2 out of 3 employees who rate their workplace culture as poor have actively looked for a new job in the past six months. (SHRM) 

Supports Hiring and Retaining Talent

Recruiting talent has never been easy. Today though, it’s not only a struggle to find qualified people to fill vacancies, but it’s also getting harder to keep them there. For instance, one in four Canadian employers has recently hired someone they normally wouldn't have due to a shortage of workers. Meanwhile, 60% of new hires that have been at a company for less than six months are already actively looking for another job. Regularly reviewing talent and providing support can help address these challenges by ensuring employees engaged and feel valued.

Fortunately, a strong and healthy workplace culture has been found to be a selling point for candidates during the hiring and onboarding process. 

• 40% of job seekers consider company culture a top priority when picking a job. (LinkedIn)
• Employees admit that one of the top three reasons they would leave a job within their first month or probation period is company culture. (Robert Half)
• Disengaged employees are 2.6 times more likely to leave their company for a better culture. (Quantum Workplace)
• Job postings that mention company culture see a 67% engagement boost. (LinkedIn)

Creates a Sense of Community and Belonging

In OC Tanner’s 2023 Global Culture Report, it was noted that “while workplace culture is the social operating system that influences the way people work and interact, community is what unifies the group, bringing and holding employees together to work toward common goals.” In other words, culture and community are what give employees the sense of belonging they greatly desire.

While this is obviously good for employees, it is also good for business as Deloitte found that “a sense of belonging can lead to a 56% increase in job performance, a 50% reduction in turnover risk, a 167% increase in employer net promoter score, twice as many pay raises, 18 times more promotions, and a 75% decrease in sick days.”

• A thriving culture improves the odds that an organization will have a strong community by 12 times. Likewise, a strong community improves the odds that an organization will have a thriving culture by 13 times. (OC Tanner)
• Organizations that have both a strong community and a thriving culture have a 99% probability of employees feeling like they belong at the organization. (OC Tanner)