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    home  /  Insights  /  The Impact of Organizational Culture on Employee Performance

    The Impact of Organizational Culture on Employee Performance

    By Michael Manzo

    Organizational culture is an important part of any company since it impacts employees’ attitudes, behaviors, and beliefs. A positive organizational culture can promote work satisfaction, morale, and staff performance. A negative or poisonous culture, on the other side, can lead to low productivity and high turnover rates.

    In this article, we’ll look more closely at the relationship between organizational culture and employee performance, give examples of firms with strong cultures and high employee performance, and offer strategies for creating a good culture to enhance productivity.

    The Connection Between Organizational Culture and Employee Performance

    Organizational culture is the set of values, beliefs, norms and practices that shape the way employees interact and work together in an organization. It has an impact on how people perceive their jobs, objectives, expectations, and incentives. Employee performance is defined as how well employees complete their tasks and obligations. It demonstrates how successfully individuals apply their skills, knowledge, abilities, and drive to contribute to the success of the organization.

    Many academic research and empirical statistics have found a substantial relationship between company culture and employee performance. Gartner estimates that strengthening company culture can boost employee performance by 22% and reputation outcomes by 16%.

    A positive organizational culture can foster employee performance by creating a supportive, collaborative and innovative work environment. A friendly, collaborative, and imaginative work environment can be fostered through a healthy organizational culture. Google is well-known for its emphasis on employee well-being, providing its staff with free healthy meals, on-site medical care, and fitness courses. As a result, Google has consistently been named as one of the world’s greatest places to work. Google employees are extremely productive and happy with their jobs.

    By offering clear direction, feedback, and acknowledgment, a positive company culture can also improve employee performance. Another organization with a great culture and high employee performance is Southwest Airlines. The organization places emphasis on fostering a friendly and supportive workplace culture, allowing employees to bring their personality to work and have fun while providing exceptional customer service. Zappos is an excellent example of a company that places a high value on employee empowerment and autonomy, which has resulted in great employee engagement and retention.

    You may want to read: 6 common reasons for miscommunication at work (and how to avoid them)

    A negative organizational culture, on the other hand, might impair employee performance by fostering a hostile, competitive, and restrictive work environment. Enron, for example, was infamous for its toxic company culture that encouraged greed, dishonesty, and arrogance. Employees at Enron were unethical and irresponsible in their behavior.

    Therefore, organizational culture is a critical factor influencing employee performance. Organizations that wish to increase employee performance should examine their corporate culture and ensure that it is consistent with their vision, mission, and values. Organizations that want to develop their organizational culture should involve their employees and encourage them to express their thoughts, ideas, and comments.

    Strategies for Building a Positive Organizational Culture to Boost Employee Performance

    Building a positive organizational culture requires intentional and consistent efforts from leaders and employees alike. Here are some strategies that can help, along with some examples:

    • Concentrate on staff well-being. Physical and emotional well employees are more productive, innovative, and engaged. Leaders should foster a wellness culture by giving employees with resources, support, and flexibility to care for their physical, mental, and emotional health. They can, for example, provide flexible working hours, on-site counseling, childcare facilities, or wellness programs that include yoga, meditation, or gardening.
    • Communicate effectively. Leaders should communicate the organization’s vision, goals, and values clearly and frequently. They should also encourage feedback, dialogue, and collaboration among employees and across teams. For example, they can use newsletters and posters to share information, host walk-and-talk meetings to facilitate discussion, or create online platforms or forums to enable communication.
    • Demonstrate respect. A positive organizational culture is built on respect. Leaders should treat employees with dignity, fairness, and appreciation. They should also recognize and reward employees for their contributions and achievements. Employees should respect each other’s opinions, perspectives, and diversity. For example, leaders can use surveys or polls to solicit employee input, send thank-you notes or gift cards to show gratitude, or organize recognition events or ceremonies to celebrate success.
    • Employees should be evaluated objectively. Employees want to be evaluated based on their performance, not on their personality or other factors. Leaders should use clear and quantitative criteria to assess employees’ strengths and areas for improvement. They should also provide constructive criticism and coaching to employees in order to help them grow and develop. For example, leaders can use performance reviews to measure employee outcomes, use 360-degree feedback or peer reviews to gather multiple perspectives, or offer mentoring or training programs to support employee development.
    • Promote equality. Equality means ensuring that all employees have equal access to opportunities, resources, and benefits within the organization. Leaders should foster a culture of inclusion and belonging by eliminating any forms of discrimination, bias, or favoritism. They should also celebrate the diversity of employees and leverage their unique talents and perspectives. For example, leaders can implement policies or practices that ensure fair hiring, promotion, or compensation decisions. Create affinity groups to promote awareness and engagement. Or organize diversity events or activities to showcase different cultures or backgrounds.
    • Motivate employees through gamification. The use of game features and mechanics to encourage and engage employees in their work is known as gamification. Leaders can use gamification to make work more enjoyable, challenging, and rewarding. They can, for example, design leaderboards, badges, points, or rewards for achieving specific goals or completing specific tasks. Or they can create quests or missions that require employees to solve problems or learn new skills. Or organize competitions or tournaments that pit teams or individuals against one another.
    • Show appreciation. One of the most effective ways to foster a strong workplace culture is through appreciation. Leaders should convey their appreciation and praise to staff frequently and sincerely. Also, encourage employees to appreciate each other and share their achievements and stories. Leaders can, for example, foster a culture of appreciation by providing verbal or written praises, establishing a wall of fame or a newsletter that highlights employee accomplishments, or establishing a peer-to-peer recognition program that allows employees to nominate or thank one another.

    You may want to read: 7 Effective Ways to Motivate Your Team


    To summarize, a positive corporate culture is critical for employee performance and a company’s overall success. You can create a culture that inspires and engages people by promoting openness, trust, recognition, professional growth, fun, and supportive working culture. The data on the benefits of a positive culture on staff retention, customer happiness, and financial success speak for themselves, so it’s critical that your organization prioritizes culture-building efforts. Remember that creating a healthy culture is a continuous process that involves dedication and effort, but the benefits are well worth it in the end!

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