Understanding Company Culture: What it Is and How to Diagnose Problems

Founders and HR leaders know that nurturing company culture is critical for productivity and success. But understanding what exactly company culture is—and how to foster a great one—can be decidedly more difficult to pin down.

At one of our recent HR events, three NYC HR leaders discussed the key building blocks of company culture and some warning signs to look out for.

Here are some of their main takeaways:

What is company culture?

Defining company culture can be more complicated than it seems at first glance. Alex Adamson, Director of Talent at Bowery Capital, says, “Sometimes with startups we talk about culture as beer pong or other fun stuff. But that’s not your culture. That’s what your team might like to do. If your culture starts being defined by that, it can be really toxic.”

So, what is culture then? Adamson explains, “Your culture is your company’s character and the values that your founders started with.”

Defining your company’s values

When founders began the arduous process of building a company, they did so for a reason. To define company culture, think back to the core values that formed the basis of your company’s founding. Adamson emphasizes that it’s never too early to clearly articulate values.

Examples of evergreen cultural values include kindness, empathy, and a drive for innovation. These values can and should guide everything that goes on within your company, not just surface elements of your workplace environment.

But culture doesn’t stop when you define your company’s values. Margaret Dwywer, Senior Manager of People Operations at SiteCompli, says that culture is a muscle: “It’s something you need to work on and actively develop and flex and continue to put time and energy towards. It needs constant attention and cultivation.”

What is cultural debt?

Culture must constantly be exercised in order to remain strong. As a startup grows, it’s very easy for cultural debt to set in. Sometimes, things that worked when your company was small morph into large problems when scaling.

Peter Phelan, Founder and CEO of ValuesCulture, compares cultural debt to the concept of technical debt. He explains that technical debt in software development is “where you do something a little bit sloppy, a little bit pragmatic and expedient to get something finished. Maybe you get a product to market or a feature to market ahead of the competition to please the client. And you know it’s horrible code and doesn’t scale, but it gets the job done. That’s fine—until the AI gets really advanced.”

When dealing with company culture—and hence people—it’s particularly critical to spot and solve potential problems proactively. Phelan warns against “cultural debt,” the cultural equivalent of technical debt.

The warning signs of cultural debt

Here are some signs that your culture isn’t working well any more:

  1. Star employees begin to leave your company.
  2. Employees are no longer referring friends to your company at the same rate.
  3. Data on employee satisfaction indicates that employees are increasingly dissatisfied with their jobs and the company.
  4. In the office, you can sense less energy, happiness, and general positivity. People appear less engaged and socialize with each other less frequently.

If you notice any of the following, founders and HR personnel need to address the cultural debt directly. Take the time to reevaluate your efforts, and solicit feedback from your team to formulate a data-driven solution.

At times, company culture can seem like an amorphous entity. But it has very real consequences for your company’s success. By actively monitoring culture, you can build a company where employees love to work.

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Marketing Manager @ CloserIQ. Previously Recruiter @ ManpowerGroup & Freelance Social Media Strategist. University of Wisconsin Journalism & Strategic Communication Grad.