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Every organisation has a culture, whether it was built deliberately or simply developed over time. That culture shapes how employees work, how decisions are made, how people communicate, and whether employees feel motivated to stay and grow.
A strong organisational culture can support employee engagement, wellbeing, productivity, employee retention and long-term growth. A weak or negative culture can create confusion, poor communication, low trust and higher turnover.
This guide explains what culture and organisational culture mean, why company culture matters, the main types of workplace culture, and how organisations can build a positive culture that supports both people and business outcomes.
Culture, in everyday life, refers to the shared beliefs, habits, stories and norms that shape how a group behaves.
Inside a workplace, organisational culture refers to the collective values, behaviours and assumptions that guide how work gets done. It affects how employees interact, how managers lead, how decisions are made and how people respond to challenges.
Organisational culture reflects shared values and beliefs, not just policies or procedures.
It can show up in:
Company culture is often described through values such as innovation, respect, customer focus, accountability or teamwork. However, the real test is whether employees see those values in everyday actions.
A company might say it values “open communication”, but if employees are afraid to challenge ideas, the lived culture tells a different story.
Many organisations have a gap between stated culture and lived culture.
Stated culture is what the organisation says it believes. This may appear in company values, employer branding, policies and leadership messages.
Lived culture is what employees actually experience. It is shaped by managers, team dynamics, workload, communication styles, decision-making, recognition and behaviour under pressure.
For example:
| Stated value | Lived culture test |
|---|---|
| We value wellbeing | Are workloads realistic and are mental health resources easy to access? |
| We value innovation | Can employees challenge the status quo without fear? |
| We value teamwork | Are cross-functional projects supported or blocked by silos? |
| We value inclusion | Do employees from different backgrounds feel heard and respected? |
| We value development | Are employees given time and support to learn? |
A healthy culture exists when stated values and lived experience are closely aligned.
Organisational culture significantly impacts employee engagement, retention, performance, wellbeing and business success.
In today’s workplace, culture matters because employees are looking for more than salary alone. They want meaningful work, clear expectations, fair treatment, growth opportunities, flexibility and a positive employee experience.
A strong culture can help organisations:
A weak culture can create:
Culture also affects how people respond during organisational change. When trust is strong, employees are more likely to engage with change. When trust is low, even well-designed initiatives can fail.
Culture and employee engagement are closely connected.
Culture defines “how we do things here”. Employee engagement reflects how committed, motivated and connected employees feel at work.
A positive culture helps employees feel:
Engaged employees are more likely to contribute ideas, support colleagues, serve customers well and stay with the organisation.
In practice, employee engagement is shaped by everyday behaviours such as:
This is why leadership style is so important. Direct managers often shape the employee experience more than formal culture statements.
The competing values framework is one of the most widely used models for understanding organisational culture.
It describes four broad types of culture:
Most organisations are a blend of more than one type of culture. However, one type often dominates.
Understanding the current culture can help business leaders decide whether it supports the organisation’s strategy or needs to change.
Clan culture is people-centred, collaborative and relationship-focused.
It often feels like a close-knit team where employees support each other, managers act as coaches, and teamwork is highly valued.
Key traits include:
Benefits of clan culture include high employee engagement, strong loyalty, open communication and better knowledge sharing.
Risks include slow decision-making, difficulty addressing underperformance and challenges scaling as the organisation grows.
Clan culture can work well in SMEs, professional services teams, charities and organisations where relationships and collaboration are central to success.
Adhocracy culture is flexible, creative and entrepreneurial.
It values innovation, experimentation and quick decision-making. This type of culture is common in start-ups, technology, digital marketing and project-based environments.
Key traits include:
Benefits of adhocracy culture include speed, innovation and competitive advantage.
Risks include burnout, unclear expectations, duplicated work and lack of structure.
Adhocracy culture works best when employees have enough freedom to innovate but enough structure to stay focused and supported.
Our project management courses can help teams working in fast-moving environments build better structure around creative work and change initiatives.
Hierarchy culture is structured, process-led and controlled.
It values stability, consistency, compliance and clear roles. This type of culture is common in public services, healthcare, finance, utilities and large corporate organisations.
Key traits include:
Benefits of hierarchy culture include consistency, safety, reliability and legal compliance.
Risks include bureaucracy, slow culture change, limited employee voice and reduced innovation.
Hierarchy culture can be important in regulated or safety-critical sectors, but organisations still need space for employee feedback, learning and cross-functional projects.
Market culture is performance-focused, competitive and results-driven.
It values targets, productivity, customer outcomes and measurable success.
Key traits include:
Benefits of market culture include strong performance, clear goals and competitive advantage.
Risks include pressure, short-term thinking, lower collaboration and reduced employee wellbeing if performance is prioritised without support.
A high-performing culture should not come at the expense of mental health, inclusion or long-term engagement. Strong leadership and clear company values are essential.
There is no single right organisational culture.
The right organisational culture depends on:
For example:
The strongest organisations usually balance different culture types. They build enough structure to work consistently, enough flexibility to adapt, enough collaboration to engage people, and enough performance focus to achieve goals.
The employee experience is the day-to-day reality of working in an organisation.
Organisational culture shapes employee experience through:
Employees work best when they understand expectations, feel respected and can see how their work contributes to the bigger picture.
A positive employee experience is not created by perks alone. Social events, wellness programmes and benefits can help, but they cannot fix a culture where managers communicate poorly or employees feel ignored.
To improve company culture, organisations need to focus on everyday actions, not only visible initiatives.
A positive culture supports employee wellbeing and mental health.
This does not mean removing every challenge from work. It means creating a work environment where employees can raise concerns early, manage workload realistically and access support when needed.
Healthy culture includes:
Employee wellbeing should be part of culture, not a separate initiative that sits outside day-to-day management.
Improving organisational culture starts with honest assessment.
Before launching new culture change initiatives, understand what employees currently experience.
Useful ways to diagnose current culture include:
Employee surveys can measure engagement, trust, wellbeing and job satisfaction. Focus groups provide deeper insight into lived culture.
The key is to compare leadership intention with employee reality.
Ask:
Culture assessment should include different teams, business units, locations and levels. Otherwise, leaders may miss important subcultures.
Once you understand the current culture, define the desired culture.
This should be linked to business strategy, not created as a branding exercise.
Start by asking:
Strong organisational values are specific and practical.
Instead of saying only “innovation”, define what that means in behaviour:
“We test ideas quickly, learn from mistakes and share what we discover.”
Instead of saying only “respect”, define it clearly:
“We listen before responding, challenge ideas constructively and treat people fairly.”
Company values work best when they guide decisions, hiring, onboarding, performance management and leadership behaviour.
Culture change takes time, but organisations can make visible progress by focusing on practical actions.
Leaders shape organisational culture through what they say, do, reward and ignore.
Strong leadership means:
If leaders say culture matters but behave differently, employees will believe the behaviour, not the message.
Open communication is essential for a healthy culture.
Employees need regular, honest communication from business leaders and managers. This is especially important during change, uncertainty or difficult trading periods.
Good communication includes:
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Team meetings should not only be used for task updates. They should also create space for feedback, ideas and connection.
Core values should be visible in everyday behaviour.
Use company values in:
This helps employees understand that values are not just words on a wall.
Learning and development is one of the strongest ways to shape culture.
A learning culture shows employees that the organisation values professional growth and long-term development.
This can include:
Our human resources courses, CIPD courses and project management courses can help organisations build leadership, people management and delivery capability.
For HR professionals supporting culture work, the CIPD Level 5 Associate Diploma in People Management can help build deeper knowledge of people practice, employee engagement and organisational performance.
Managers are central to culture.
They influence how employees experience:
If managers are not trained, even the best culture strategy can fail.
Manager development should cover:
You can also read our guide to leadership soft skills for practical examples.
Employees should have meaningful ways to share ideas and concerns.
This can include:
However, listening only matters if action follows.
After collecting feedback, leaders should explain:
This builds trust and reduces cynicism.
Recognition helps reinforce culture.
If an organisation wants collaboration but only rewards individual targets, employees will focus on individual performance. If it wants innovation but punishes every mistake, employees will avoid risk.
Recognition should reward behaviours that reflect the desired culture, such as:
Recognition does not always need to be expensive. A meaningful thank you, public acknowledgement or development opportunity can have a strong impact.
No single metric can measure culture fully. Organisations should use a mix of data and employee insight.
| Data source | What it can show |
|---|---|
| Employee surveys | Engagement, trust, wellbeing and job satisfaction |
| Focus groups | Deeper insight into lived culture |
| Exit interviews | Why employees leave |
| Stay interviews | Why employees remain |
| HR data | Retention, absence, internal mobility and promotion patterns |
| Customer feedback | How internal culture affects external service |
| Employer reviews | How job seekers and former employees view the organisation |
| Learning data | Whether employees are accessing development opportunities |
Culture measures should be reviewed regularly, not only during annual engagement surveys.
Segmenting data by team, location, business unit and employee group can reveal subcultures and inclusion gaps.
Culture change is difficult because it asks people to change habits, assumptions and behaviours.
Common challenges include:
Employees lose trust when senior leaders say one thing but do another.
Leaders must model the desired culture consistently.
If previous initiatives failed, employees may be sceptical about new programmes.
Acknowledge past attempts honestly and focus on practical actions.
Culture washing happens when employer branding does not match employee experience.
This can damage trust, workplace culture and employer reputation.
Middle managers often feel pressure from both senior leaders and frontline employees.
Involving them early, supporting them with training and listening to their concerns can reduce resistance.
Shadow culture refers to unspoken rules and informal behaviours that contradict official policies.
For example, a company may promote work-life balance but reward employees who work late every night.
These hidden patterns must be addressed if culture change is to last.
At e-Careers, we see how skills, culture and employee experience connect across many UK industries.
Organisations often want to improve company culture, but culture change becomes much stronger when employees and managers are given the skills to behave differently.
Learning can support culture goals such as:
Our flexible online learning helps employees build skills around work and personal commitments, supporting work-life balance while helping organisations close skills gaps.
Culture and capability are closely linked. The right culture encourages learning, and the right learning strengthens culture.
Organisational culture is not a slogan, a values poster or a one-off campaign. It is the everyday reality of how employees work, communicate, make decisions and treat each other.
A strong culture supports employee engagement, wellbeing, retention, performance and long-term growth. A weak culture can damage trust, slow change and make it harder to attract and keep talent.
The best place to start is with honest listening. Understand your current culture, define the desired culture, align leadership behaviour and invest in the skills that help employees and managers succeed.
Explore our human resources courses, CIPD courses and project management courses to support learning, leadership development and culture change.
What is organisational culture?
Organisational culture is the shared values, behaviours and assumptions that shape how people work, communicate and make decisions.
It is reflected in everyday actions, leadership behaviour, team dynamics and employee experience.
Why is organisational culture important?
Organisational culture is important because it affects employee engagement, wellbeing, job satisfaction, employee retention, performance and business outcomes.
A positive culture can help employees feel supported, motivated and connected to the organisation’s mission.
What are the main types of organisational culture?
The four common types of organisational culture in the competing values framework are clan culture, adhocracy culture, hierarchy culture and market culture.
Most organisations are a blend of more than one type.
How can you improve organisational culture?
Improving organisational culture starts with honest assessment, clear values, aligned leadership behaviour and meaningful employee voice.
Organisations should also invest in manager training, learning and development, communication and recognition.
How long does culture change take?
Meaningful culture change often takes time. Some visible improvements can happen within weeks or months, but deeper change usually requires consistent effort over a longer period.
Culture change should be treated as an ongoing commitment, not a one-off project.
Can a company have more than one culture?
Yes. Different departments, locations or business units may have different subcultures.
This is not always a problem, provided those subcultures still align with the organisation’s core values and strategy.
How does company culture affect employee engagement?
Company culture affects employee engagement by shaping how employees experience work.
When employees feel respected, supported, recognised and able to grow, they are more likely to be engaged. Poor communication, unfair treatment or lack of trust can reduce engagement.
How can training support culture change?
Training helps employees and managers build the skills needed to support the desired culture.
This may include leadership development, communication, inclusion, project management, HR, digital skills, wellbeing, coaching and change management.
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CIPD Level 3 Foundation Certificate in People Practice
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