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The impact of company culture on employee engagement

The impact of company culture on employee engagement

Business used to be business, and culture played little to no part so long as the job got done and profits were up. 

But today, company culture is central to business success. In fact, many former startups like Buffer, LinkedIn and NVIDIA attribute at least some of their success to their excellent company cultures. 

Crucially, culture helps spur engagement by empowering employees to do their best for themselves and the business. 

This article is all about the effect company culture has on employee engagement. But first, here are four reasons why you shouldn’t take company culture or engagement for granted:

  1. According to PwC's 2021 Global Culture Survey, 72% of 3,200 business leaders report that culture helps successful business initiatives, and 67% said culture was more important than strategy and operations.

  2. Gallup found that engaged teams show 21% greater profitability and that culture is an effective way to access engagement.

  3. A Deloitte report found that 83% of executives and 84% of employees ranked engaged and motivated employees as the primary factor in business success.

  4. Deloitte also cites that companies that proactively manage culture exhibit a 516% higher revenue growth than those that don’t.

As part of our #FounderStories series, we ask founders to share their thoughts on company culture and many of their responses align with these stats.

In the words of Michael Groves, founder of Topolytics, "Culture eats strategy for breakfast!”

So now, let’s explore the impact of company culture on employee engagement. 

The link between culture and engagement 

Company culture and engagement are linked, but they’re not the same.

Culture is a system or set of values, principles, beliefs and behaviours that shape and influence the way a business works.

Engagement is defined by commitment, empowerment and interaction - the way people feel about the way things work.

Consider a culturally rich area that has something for everyone. There are plenty of wholesome things to do and places to immerse oneself in. Here, there’s something to get engaged in no matter your interests.

That engagement sucks people into the culture which they then contribute to, and thus, the culture grows. Engagement feeds into culture and culture feeds into engagement.

It's similar in business. In a business context, engaged employees are more likely to:

  • Connect to the business, its goal, mission and future.
  • Do their best work as they genuinely care about the outcome.
  • Proactively engage with learning, development and growth, both for themselves and the business.
  • Suggest ideas, provide feedback and immerse themselves in the process.
  • Apply their skills and creativity to solve problems.
  • Feel positive and optimistic about their roles. 

How to enhance employee engagement

Culture isn’t magicked out of thin air; it’s grown and cultivated. Businesses that place culture at the forefront of their strategies take an active role in cultivating culture.

Overall, company culture is a mix of many things, especially the following.

Vision and goals

Inform employees of where the business is right now, where it wants to go, and why. This is hugely important for attracting employees and retaining them for the long term.

Values

Our values are autonomy, collaboration, diligence, purpose, recognition and trust. Learn how to create core values for your business.

Practices and behaviours

Define how business is conducted. Practices and behaviours are also relevant to feedback, praise and other organisation and management techniques.

People and personalities

People and personalities shape how teams interact and work together towards shared goals.

Narrative

The language, signs and symbols businesses use to communicate internally. Some businesses communicate more casually than others.

Place

An office environment has a very different feel than a remote one. But there are plenty of things remote companies can do to welcome new starters, and continuously engage employees. 

Events

Businesses with excellent company culture tend to host unique internal events for teams, like Dropbox’s Annual Hack Week. These strategies go beyond the typical corporate away days, lunches and other cookie-cutter events.

Learn more about Dropbox and how other tech startups cultivated their company cultures.

And while smaller businesses and young startups may not be able to tick all the boxes just yet, it’s still important to build a cultural roadmap that involves the above. 

How to create and nurture a strong company culture

1. Start at the beginning

Company culture begins from the very moment an employee comes in contact with your business. That might be through a job post, an email, a LinkedIn message, or something else.

When it comes to hiring, the screening and onboarding process greatly impacts employee engagement. A smooth and effective onboarding experience is proven to boost engagement and retention.

Engage employees by starting as you mean to go on, which means:

Just on the first point, studies show that giving employees an incentive like a share scheme is an effective way to boost engagement from the outset. Learn more about employee share schemes and the best way to set one up.

2. Get everyone involved

Businesses can’t force culture upon employees. Culture is for everyone to get involved in, from the bottom to the top.

You want to know if a company’s culture fails to resonate with the team. Ask questions, survey employees and actively engage in conversations.

Shopify provides an example of how employees tend to dissent when the actual business culture fails to live up to the implied business culture (rightly, in this case).

Several controversial incidents in the business’s Slack chats hit the business hard at a point it was facing external pressures.

Those incidents made news headlines, and it’s probably only the business’s immense size that prevented more serious damage. The business lost touch with its culture, which eventually buckled and broke down. 

3. Value feedback

Research shows that feedback is paramount to employee engagement. According to PwC, around 60% of survey respondents preferred daily or weekly feedback, yet only 30% received it.

Another study suggests that 85% of employees value either positive or negative feedback.

The problem is that feedback is notoriously tough to master, so managers often avoid it altogether. Business coaches encourage feedback and praise but note that leaders find it tricky.

There are two main types of positive feedback: 

  • Ability-focussed feedback
  • Effort-focussed feedback

Ability-focussed feedback takes the form of, "You’re good at [insert ability here]". This form of praise is proven to stimulate a negative response. People ask themselves, "Am I really? Can I even do better?"

Whereas effort-focussed praise takes the form of, "You did a really good job there". Studies show this form of praise is effective and memorable.

When coupled with feedback that has positive intent e.g., "Great work there, I have just a tiny suggestion for next time", that praise can stimulate engagement and foster a culture of growth and development.

When it comes to giving negative feedback, studies show that you're better off waiting till you're calm and relaxed. Ensure the feedback is effort-focussed and not focussed on the person and their ability.

Company culture evolves over time

By setting the cultural tone early on, businesses have the best chance of growing into the business they want to be.

The data shows that managers, founders and C-suites often find the topic of company culture enigmatic but that those who embrace it tend to reap the rewards.

It’s important to respect that company culture is unique to the business - one business’s most effective strategy might seem like a novelty to another.

Ultimately, so long as a business can find an effective strategy, it doesn’t matter what it is. If employees are happy and engaged and the business is growing, then what more can you ask for anyway? 

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