How Company Culture Impacts Productivity

Business owners and company leaders know that company culture is not just another fancy phrase. It’s one of the key elements that affect a company’s productivity in more ways than one.

In this article, we’re taking a closer look at the definition of company culture and the many ways it can affect employee productivity levels.

The Relationship Between Company Culture and Productivity

Gone are the days when employees would spend decades working for a company that was not necessarily in tune with their principles and values. With the increase in employment opportunities, these are nowadays some of the most critical aspects that employees look for in a job.

On the other hand, employers and human resources specialists are slowly but surely becoming aware that listening to and aligning with employee needs is essential for streamlining the company’s activities, as well as improving its chances for success.

They are starting to understand that how employees feel affects the way the organization moves forward, and that it impacts everything, from production to income.

Unclear directions and tasks, failure to communicate, little to no recognition are becoming a thing of the past. Instead, terms like employee engagement, employer branding, and company culture are coming into the spotlight and bringing significant changes to the job market.

What Is Company Culture?

Company culture is the thoughtful mix of a company’s goals, practices, policies, and values. It could be described as the company’s personality. But company culture is not just about the company, since it also dictates the employees’ attitude and the organization’s direction.

When the quality of the environment they work in increases, employees are much more likely to invest their interest, energy, and attention into achieving company goals. As a result, this will be translated into increased performances, workplace accountability, and more productivity.

When their work-life balance is good, employees are much more likely to become more involved in the tasks they perform. They will be more willing to contribute to the company’s success. In turn, this translates into increased employee retention and engagement.

According to Gallup, replacing an employee can end up costing businesses from one-half to two times that employee’s annual salary; clearly, employee engagement and retention are essential, without even considering the difficulties you will have with hiring new people. 

Because of this tight-knit relationship, more and more managers and leaders are putting their efforts into defining their company culture. In doing so, they are working to increase their teams’ day-to-day productivity.

However, to do it effectively, they need to understand the ‘whys’. They need to understand how company culture can negatively impact productivity and how it can help increase productivity.

And this is precisely what we’ll be getting into next.

How Company Culture Can Negatively Impact Productivity

Before we get into all the ways company culture can help increase productivity, let’s take a closer look at how it can negatively impact productivity:

Leadership and Guidance

Many employees will tell you that they don’t like to be told what to do every step of the way when it comes to doing their job. However, the opposite is just as valid.

Employees in company environments that lack good and strong leadership, direction, and proper internal communication often underperform. It’s simply because employees feel that they do not clearly know the management’s expectations. They don’t know where they are heading, or what is their real purpose inside the company.

Communication is vital for providing employees with much-needed direction and guidance. In the end, this is what allows them to understand their role. 

Corporate culture needs to clearly define the company’s goals and direction, but also each employee’s role. From upper to middle management, leaders need to be clear about the organization’s mission statements, goals, and the steps each employee must take to achieve the objectives.

Considering that 52% of exiting employees say their manager or organization could have prevented them from leaving, this is also a great way to ensure employee retention.

Lack of direction is one of the elements that negatively impact productivity levels and can cost organizations a lot of money in the long run.

Morale and Recognition

We’ve all heard of toxic relationships. As surprising as it may sound, they are not limited to personal relationships, and can easily occur as bullying in the workplace.

Company culture can become toxic fast if the organization’s leaders and managers do not pay close attention to the dynamic between their employees, or between their teams and departments. In turn, a toxic environment can crush a company’s productivity levels and leave the management wondering where they went wrong.

Another factor that can create a toxic work environment is the lack of recognition. As much as 82% of employees consider recognition a crucial part of how happy they feel about their job. Sadly, though, not many employees get the credit they crave, only 62% of them think that their management distributes the recognition fairly.

If you don’t put any effort into appreciating employees’ hard work, they will also start putting in less effort into their work,or even consider quitting.

Lack of employee recognition can:

  • cause a massive drop in employee engagement
  • decrease productivity levels
  • reduce employee retention levels
  • affect the company’s success in the long run

Managers need to understand that recognition can come in many shapes and forms, and change their leadership style accordingly. While the most common form of recognition is a raise, employees are also happy to receive written or verbal praise or some form of award for their hard work.

Managers can make use of employee recognition platforms to appreciate, engage, and retain top-performing employees whenever they deserve it. These tools allow you to automate and set up different types of recognition and reward systems for your team.

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How Company Culture Can Positively Impact Productivity

Company culture can have many negative effects on a company’s productivity levels. However, it doesn’t take much to create a positive company culture and pave the way for many positive impacts, from increased productivity to employee engagement, employee retention and overall employee wellbeing.

Just like small business SEO can drive a family company to international fame, company culture can help your business reach new levels of success.

Let’s take a closer look at the positive impacts of cohesive and employee-oriented company culture:

Employee Motivation

Strong company culture needs clear goals, transparent policies, and explicit tasks. These elements combined will translate into a positive work environment, and senior leaders should absolutely take this into consideration. 

Effective employee communication, clear objectives, and recognition can increase employee engagement and motivation. When your employees know what is expected of them, they are more motivated to perform. They will be willing to put more effort into their work and follow the company’s strategies to achieve goals.

Unmotivated employees naturally underperform as they do not feel any passion for their work and cannot see its purpose. In the end, their job satisfaction levels drop, and they start looking for a new job.

Naturally, the more unmotivated employees you have, the harder your organization will take a hit. Lack of motivation among employees decreases overall productivity levels and the company’s chances for success. It also causes low employee engagement and retention rates that translate into even more loss.

How to Use Company Culture to Increase Motivation

The best thing you can do to counteract the negative effects of weak company culture is to apply policies that empower employees. What this means is allowing employees the opportunity to express their opinions, including contributing to how the company culture is defined.

Many companies rely on policies and procedures to enforce rules and dictate how the company runs. Some leave room for employees to have an opinion on them, while others don’t.

The companies that choose to make employees part of defining the policies that govern their activity are the ones that stand to gain. Why? Because employees want to feel like they are part of the decision-making process. They want to feel like their opinions matter.

Making employees part of what defines the company culture empowers and motivates them to think independently and grow. It increases their satisfaction and engagement levels by making them feel connected and invested. This positively impacts both the work environment and productivity levels.

Community and Collaboration

No matter how well one employee performs, they cannot do everything alone. What defines a company’s success is collaboration. The better your team members work together, the more they will produce for your company.

Strong company culture needs to encourage both competitiveness and collaboration. In fact, as an i4cp study performed on 1100 companies shows, companies can be five times more performant when they promote collaborative working.

And it’s easy to see why.

When employees feel that communication and collaboration are encouraged, they will use this to achieve their goals. They will be more open, more collaborative, and more supportive of each other. If people interact, they feel more united and motivated to achieve common goals.

Doing so, they will feel more in-tune with their teams,  colleagues, and the organization as a whole. They will motivate each other to develop their skills, share ideas, and build strategies.

However, it is important to note that using the right tools is necessary for a successful team. For example, if you invest in reliable, high-quality CRM software, your team will be better equipped to deal with unhappy customers.

How to Use Company Culture to Increase Cooperation

Streamlining communication between employees and different departments will translate into:

In order to encourage this, your company culture must motivate employees to work together. This means creating a community working environment that promotes:

  • open communication
  • idea sharing
  • creativity

When your employees feel that they are part of a supportive team, they will feel encouraged to openly address issues and solutions. They will be more driven to express their ideas and deliver results.

Employee Engagement

Employee engagement is one of the top factors that drive a company’s success.

Your company’s level of employee engagement shows how:

  • motivated your employees are
  • invested they are in the work they perform
  • committed they are to the company’s goals
  • satisfied they are with their job
  • devoted they are to their respective teams and their objectives

Employee engagement doesn’t only translate into increased productivity. It influences everything from individual performance to team efficiency and overall company results. On top of this, having a company culture that fosters and values employee engagement will also allow you to retain and attract top talent.

Whether they handle your email marketing, brand strategy, or the manufacturing process, the more engaged your employees are, the better they will perform.

Any company culture model should have employee engagement at its core.

Increased employee engagement levels:

  • Directly impact job satisfaction levels
  • Encourage individual performance and self-organization
  • Promote efficient communication and collaboration between employees and departments
  • Increase employee retention rates
  • Attract more high-quality talent

How to Use Company Culture to Increase Employee Engagement

To increase employee engagement and drive productivity, you should create a company culture that:

  • Is clear about your company’s values and goals
  • Is clear about each team/employee’s role in achieving goals
  • Promotes open communication and feedback
  • Encourages creativity and individual thinking
  • Values employee input
  • Fosters employee satisfaction and wellbeing
  • Recognizes and rewards hard work
  • Acknowledges individual and team achievements

As good as it sounds, you probably know this won’t happen overnight. Creating a strong company culture is a long-term goal that needs to be nurtured and regularly cultivated.

You will need to invest in regularly assessing employee engagement and motivation levels. You will also need to understand employee needs and wants. Once you do, you should weave them into your company policies and use them to improve the work environment.

In the end, your employees need to feel part of the company and valued to perform. For this, they need a positive work environment.

A positive work environment is all about recognition, flexibility, and communication. It gives employees:

  • more opportunities for development and growth
  • a better work-life balance
  • a sense of purpose and empowerment
  • more motivation to perform tasks and achieve goals


Company culture is challenging to grasp and nearly impossible to measure, but at the same time, it is critically important for the happiness of your employees. As a logical result, it will directly influence the quality of your product or service, as well as your customers’ satisfaction. 

While it is relatively simple to have a good company culture when you have five people, it becomes increasingly challenging as your company grows bigger. 

Creating and maintaining a positive culture and a productive environment is a process that never ends. While it may be difficult and present many challenges, the results will pay off several times over.  


Jan Kuzel

Jan Kuzel is the Head of Growth at SatisMeter - a platform that helps you get customer feedback and grow your business.

1 comment

  • It’s very important to have proper knowledge of Cultural Services. Really appretiate this blog, I would like to suggest you to please share some details on the significance of culture.

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