Why Company-Culture is Crucial for Improving Employee Retention

If you’ve ever spent a week in a big company getting trained, you’ve probably heard a lot of corporate jargon about “workplace culture” – possibly without knowing what it is. That’s very unfortunate because workplace culture, as it turns out, can make or break a company. And I’m not bluffing; it’s such a real deal.

Positive workplace culture helps employees live successful work lives and personal lives and establishes a corporation as a positive institution in its community. On the Contrary, negative corporate culture can drive down retention rates and send employees into a depressive state. Let’s look more closely at how this relationship works.

What Is Workplace Culture?

“Culture is best considered a set of psychological prejudices called primary beliefs held by the members of an organisation and which tend to impact how they behave,” according to the management textbook Organizational Culture and Leadership.

Simply put, workplace culture is “how we do things around here.” Every company has a unique culture comprised of values, rules, attitudes, and even oral routines. Your firm’s culture will determine how your employees handle problems, interact with one another, and conduct themselves daily. That is why, from a management standpoint, it is critical to establish the tone of your culture early on.

However, it is crucial to note that workplace cultures are multifaceted and not one-dimensional, like regional and ethnic cultures. Therefore, they can be conflicting and flexible at times.

While we can discover relevant patterns, we cannot always assume that our success will duplicate success in one area in the future. Developing your workplace culture will take time and a lot of active management, so plan to put in a lot of effort.

One thing is certain: company culture has an impact on retention. According to studies, at least one-third of job applicants would pass up the ideal job if the corporate culture was not a perfect fit. In one survey, 72% of workers listed corporate culture as affecting their decision to work for a specific business. Even more startling, according to a Jobvite survey of job searchers who left a job within the first 90 days, 32% cited corporate culture as a factor.

What Is a Poor Workplace Culture?

If you don’t know what makes a good employee stay or a good employee leave, you haven’t been hit over the head with our emphasis on employee engagement. (If you have, you’ll understand what I’m about to say here.)

Employee engagement is statistically the most dangerous illness in the corporate world, affecting both your high-performing and low-performing staff. Unengaged or idle employees are three times more likely to quit, even if they are well-paid, as I previously stated.

Other undesirable habits in business culture, such as delay, unpleasant attitudes, and procrastination, are contagious. It’s critical to remember that your leadership as an employer sets the bar for your staff, so set a good example and always work from the top down.

While rules and regulations are useful in some ways, they may also create a suffocating environment if overused. If regulations and standards are overly strict, employees will be terrified of making basic mistakes and will be unable to relax at work. This certainly will reduce casual chitchat, lighthearted jokes, and basic watercooler chatter.

All of this contributes to a heavier, more perceptible atmosphere in the room. Consider spending 40 hours each week in that setting. That is enough to make anyone sad. That is what we mean when we talk about toxic workplace culture.

What Is a Positive Workplace Culture?

A transparent set of values is an important aspect of your company culture. It is your “purpose” in the world, as well as the legacy you will leave.

We discussed how great business values might drive employee engagement and help raise retention rates to three times the national average in some cases in our post about what makes a good employee stay. Finally, your values are what your employees will identify as the impact they are making in the world while working for you; thus, your corporate values (whether “going green” or “ending hunger”) should ideally be something that pulls people together.

Why Employee Retention Matters

Employee retention benefits your company’s health and prosperity. However, hiring and training new staff takes substantial time, effort, and money, and turnover can negatively influence your business outcomes. High employee turnover causes many issues, including increased costs, knowledge loss, and decreased production.

Turnover Expenses

Employee replacement is costly, with expenditures ranging from 16% to 213% of an employee’s compensation. As a result, annual turnover expenses in the United States might reach $1 trillion.

Many hours are spent advertising your organisation to potential candidates, interviewing, onboarding, and training. This comes at a high cost to your company.

Lost Knowledge

When experienced employees go, they take their knowledge with them. You can lose employees’ information and abilities forever if they fail to pass their institutional knowledge to their peers. This can result in decreased productivity and confusion among team members left behind.

Obstacles to Productivity

As a position is empty, the hours of lost output add up. As a result, when other employees pick up the slack for vacant positions, they may become burned out, and overall productivity will suffer.

Furthermore, it takes a long time to bring a recruit to full productivity. According to research, it takes a new worker one to two years to reach the productivity levels of an existing employee.

Benefits of Employee Retention?

  • Reduced costs.
  • Improved morale
  • Increased productivity.
  • Increased customer experience.
  • Less time spent recruiting and training.
  • Improved company culture.
  • Higher employee engagement.
  • Improved revenue and ROI.
  • More employee expertise.

What are the important strategies for Increasing Employee Retention?

  • Strategic hiring is essential.
  • Enhance the onboarding process.
  • Use input from the top down.
  • Prioritise recognition.
  • Encourage employee development.
  • Exit polls can provide valuable information.


Positive workplace culture also encourages effort and involvement. In the same way that a bad company culture focuses on punishment, a good workplace culture promotes reward. Individuals who strive to innovate or go above and beyond to pick up the slack for a colleague should be rewarded with promotions or special recognition. Underappreciation is the fastest way to stifle a company’s culture.

Employers appear to be getting the short end of the stick for the time being. However, organisations must adapt to shifting employee needs if they hope to retain employees in the long run. In terms of long-term solutions, it appears that an industry-wide adjustment in corporate culture that is more accommodating to worker needs is the only way out. And, contrary to popular belief, such a transformation isn’t as drastic as it may appear; people have already arrived; organisations simply need to catch up.