How Does Workplace Culture Impact Employee Retention?

If you’ve ever been trained for a week at a major corporation, you’ve probably heard lots of corporate slang surrounding “workplace culture” -- possibly without being told what exactly it is. That’s a shame, because as it turns out, workplace culture can make or break a company. 

Positive workplace culture not only helps its employees live successful workplace and personal lives, but it cements a corporation in its community as a positive institution. However, negative corporate culture can drive retention rates to the ground and employees into depressive states. Let’s take a look at exactly how this relationship works. 

What is Workplace Culture?

The management textbook Organizational Culture and Leadership defines workplace culture like this: “Culture is best thought of as a set of psychological predispositions called basic assumptions held by members of an organisation and which tend to influence the ways in which they behave.”

More simply, workplace culture is “the way we do things around here.” Every company has a set of values, rules, attitudes, and even unwritten routines that make up its unique culture. Your culture will dictate the way your employees handle problems, interact with each other, and carry themselves on a day-to-day basis. That’s why, from a management perspective, it’s important to set your culture’s tone early on. 

But it’s important to remember that workplace cultures, like regional and ethnic cultures, are complex and not monolithic. They can be contradictory, and at times fluid. 

While we can find meaningful patterns, it can’t always be assumed that success in one area can be repeated every time. Developing your workplace culture will take effort and a lot of active management, so expect to put a lot of time into participating. 

One thing is for sure: workplace culture impacts retention. Studies show that at least one-third of job seekers would pass up the perfect job if the corporate culture was a bad fit, and in one survey 72% of workers cited corporate culture as a factor influencing their decision to work at a given company. Even more staggering, on a Jobvite survey of job-seekers who had left a job within the first 90 days, 32% listed company culture as the reason. 

What is Bad Workplace Culture? 

If you haven’t read our articles about what makes a good employee stay or a good employee leave then you probably haven’t yet been hammered over the head with our emphasis on employee engagement. (If you have, then you know what we’re about to say.)

Lack of engagement is statistically the biggest infection on employee retention in the corporate world, and it impacts both your well-performing and under-performing employees alike. As we pointed out, unengaged employees are three times more likely to quit even if they’re well-paid. 

Other bad habits in corporate culture tend to be contagious -- things like tardiness, negative attitudes, and procrastinating. It’s important to remember that your leadership as an employer sets the standard for your employees, so lead by example -- always take a top-down approach. 

Rules and regulations, while important in some regards, can also create a stifling atmosphere if overdone. If rules and policies are overdone, employees will live in fear of simple mistakes and be unable to relax at the office. You’ll see a reduction in casual chitchat, lighthearted jokes, and basic watercooler conversation. 

All of this will lead to a heavier, palpable atmosphere in the room. Now imagine spending 40 hours a week in that environment. That’s enough to make anyone depressed. That’s what we’re talking about when we talk about toxic workplace culture. 

What’s a Good Workplace Culture? 

Having a clear set of values is a big part of your company culture. It’s your “mission” in the world, and the legacy you will leave behind. 

We talked a little in our article about what makes a good employee stay about how positive company values can drive employee engagement, and help boost retention rates up to three times the national average in some examples. Ultimately, your values are what your employees will personally identify as the difference they are making in the world while they are employed with you -- so your corporate values (whether “going green” or “ending hunger”) should ideally be something that brings people together. 

Good workplace culture also fosters effort and engagement. Just like bad workplace culture overemphasizes punishment, good workplace culture emphasizes reward. Employees who strive to innovate, or go the extra mile to pick up the slack for a co-worker should feel appreciated in the form of promotions or special recognition. Nothing starts to stagnate a company’s culture faster than underappreciation. 

Do you want assistance finding the most talented employees for your company, or help retaining your best talent and developing your company culture? Reach out to SelectOne for all of your recruiting needs.

Guide: How to Retain Your Best Workers