The Importance of Company Culture as a Retention Lever

This article is part of Benefits Broker Confessional, where we talk shop with the leading minds in HR and break down the latest in benefits.

Company culture plays a vital role in employee retention. 

So, what exactly is company culture and why is it so important?

Company culture encompasses shared values between the organization and its employees, which includes beliefs, attitudes, and behaviors that shape the working environment and how team members interact with one another. 

When an organization fosters a strong and positive culture, it can significantly impact employee satisfaction, engagement, and loyalty, which increases employee retention rates, improves organizational efficiency…and ultimately affects the financial growth and health of the overall organization.

The 4 types of corporate culture

So, now that you know the definition of company culture, you might be asking yourself, are there different types of cultures in business? 

Why, yes there are!

• Clan Culture
• Hierarchy Culture
• Adhocracy Culture
• Market Culture

Clan culture

If you work in a highly collaborative environment focused on teamwork and inclusive participation, chances are, you work in a clan culture organization. Leadership in this culture type prioritizes mentorship and values encouragement to help maintain a strong morale.

Hierarchy culture

Have a lot of formal processes and procedures in place at your business? If so, you guessed it, you may work in a hierarchy culture. A hierarchy culture maintains a tiered structure along with clearly designed career paths. Think of financial institutions or the government as great examples of hierarchical organizations.

Adhocracy culture

Startups are one of the main business types that adopt an adhocracy culture. Innovation, creativity, and bold ideas are highly encouraged by employees in an adhocracy organization. Moving fast and getting things done is the name of the game for this culture type. Google is probably the most recognizable company that exhibits a strong adhocracy culture environment. 

Market culture

Are you highly competitive and enjoy working in a fast-paced, results-driven organization? You may be the perfect fit for a market culture-centered company. Leadership here set clear goals and metrics and are insistent on seeing results from their teams. 

Company culture and employee engagement

Employee engagement and satisfaction are the result of a strong company culture that cultivates an environment where employees feel valued and respected. When employees are satisfied and engaged in their work, they are more likely to remain with the organization and contribute to its success. A positive culture that aligns with employee values, such as promoting a work-life balance, enhances overall job satisfaction.

Today’s workforce thrives on a sense of belonging. A well-defined company culture creates a sense of belonging by fostering a shared purpose, values, and goals and making employees feel connected to something larger than their individual roles and job responsibilities. When employees identify with the organization’s culture and objectives, they are more likely to stay and contribute to the organization’s growth and success as well as seek opportunities for additional responsibilities, advancement, and assistance in other areas when the need arises.

Collaboration and teamwork

A positive company culture encourages strong relationships and collaboration. Successful teamwork comes from a sense of camaraderie and mutual support. When employees engage in collaboration, they are more likely to enjoy their work environment and also build long-lasting relationships with colleagues. These connections can impact employee retention as a strong motivator to remain with the organization.

Career development

A supportive company culture drives employee empowerment and development. By providing opportunities for skills development, growth, and career advancement, employees feel encouraged and motivated. A culture that invests in employee development fosters loyalty, encouragement, and higher retention rates as employees are less likely to seek opportunities elsewhere if they feel their personal development, advancement, and compensation goals are supported.

Hybrid and remote work

Embracing the hybrid and remote work model has also become an essential offering to boost employee engagement and positively impact the overall organizational culture. While this option may not be appropriate for all positions, making a remote schedule available to those qualified positions can help improve the work-life balance. Remote work eliminates commute times, allows employees to utilize their break periods to complete household tasks and free up more personal time, is cost-saving by reducing commute and mileage expenses, and offers more flexibility to tend to family and personal needs. Many organizations also find greater retention success by allowing a flexible schedule in addition to the hybrid/remote model as not every job requires “nine to five.” The organizational impact can also be positive as fewer people in the office require less office space and associated expenses.

A thriving company culture not only retains employees, it also helps to attract and recruit new employees. When an organization has a reputation for having a strong, positive culture, it becomes more desirable for potential candidates. This gives the organization a better opportunity to attract top-performing individuals who are a good fit for the culture, more likely to succeed, and will contribute positively to the job…all of which results in a solid employee retention strategy.

High employee turnover is costly for any organization. Recruitment fees, time allocated for screening and interviewing, training, and other associated costs affect profitability. When employees are engaged and committed to their job and the organization, turnover rates are reduced as they are less likely to leave. Increased employee stability and continuity within the organization allows management to focus on top strategic initiatives, growth, and financial success.

Company culture and benefits

Providing employees with the benefits and services they need is also a vital component of employee engagement, fulfillment, and success. Medical and life benefits, paid time off, retirement and health savings, and employee assistance programs are among the traditional benefits offered. However, additional, heightened benefits are also shown to increase employee loyalty and engagement well beyond these traditional offerings. 

Benefits designed to support employee engagement can include:

• Rewards for longevity. Bonuses, additional vacation or paid time off (PTO) hours, or a commemorative item such as a paid weekend away.

• Reduced work hours based on tenure. For example, employees with five or more years with the organization may be entitled to four paid hours off every other week.

• Sabbatical leave for senior managers.

• Team-building events and gatherings to celebrate achievements, recognize outstanding performance, and acknowledge top contributors.

• Create a collaborative space where small groups may gather in person or virtually. Encourage committees to tackle projects, work together on a launch or event, or discuss solutions to issues that arise.

• Offer financial wellness programs to help address debt repayment, savings, budgeting, and financial planning.

• Employee benefit portals are also an employment-enhancing offering. These portals offer exclusive discounts on travel, event tickets, insurance products, shopping, and more. These services are often free to implement and enhance the employment experience.

The cornerstone of your company culture: trust

Lastly, and most importantly, a successful company culture can only thrive when there is mutual trust between the organization and its employees. 

The accurate processing of payroll is the baseline of this trust. Providing employees with a payroll schedule, an efficient method to report hours worked and request time off are essential. Employees are best served with options on how to receive earned wages. This may include a printed check, direct deposit to a bank account, or other electronic funds payment options such as a pay card.

Furthermore, providing employees with easy access to earned wages has become an important payroll option that positively impacts culture and retention. Whether the employee has an unexpected expense or has financial obligations that do not coincide with the payroll schedule, earned wage access eliminates the need for using costly credit cards, withdrawing from a savings account, or asking the employer for a payroll advance. Earned wage access is impacting employee success and is the culture benefit many organizations can use to retain and attract employees.

Organizations that successfully implement, manage, and prioritize the culture through these initiatives benefit from a solid retention strategy and a more stable, productive, and successful environment...which ultimately enhances employee satisfaction, engagement, and loyalty.