How do your employees really feel about your company? Do they enjoy their jobs and do them well? And what would they say to their friends and family about your company — would they recommend it to others?
Company culture is complex, and it can seem subjective and intangible. Measuring it accurately can be a real challenge.
But a great company culture isn’t just a nice thing to have. It also has a major impact on your bottom line. Forget the ping pong tables — a positive culture can be seen in employee engagement, productivity, and employee turnover.
Figuring out ways to monitor your organization’s culture is crucial to keeping it strong. So, in this article, we’ll break down the elements of what makes a great working culture and outline some straightforward culture metrics so you can measure each component.
What is company culture?
There can be a tendency to confuse some of the outputs of a good company culture — perks and benefits and fancy office spaces — with company culture itself.
But company culture isn’t about perks. According to former Best Buy CEO Hubert Joly, company culture is “the essential elements of how an organization and its employees behave, as well as its governing beliefs and principles.”
It’s that sense of “how we do things around here.” It’s the values that are recognized and rewarded, and the behaviors that are criticized and rejected.
In other words, it’s all about the people. Company culture is reflected in the interactions and relationships between colleagues, leaders, and clients. It’s shown in the way you talk to each other during meetings. It defines how you manage performance, what training you offer and why, and how you recruit, engage, and retain your employees.
Benefits of Measuring Company Culture
This might all sound a bit fluffy and vague, but finding quantitative ways to measure and improve your culture can have powerful benefits. These benefits include:
Facilitating Talent Acquisition and Employee Retention
People want to work for companies that offer a great employee experience — and they want to stay there. As a result, a strong culture can secure lower turnover.
By measuring your company culture, you can discover how to better appeal to potential employees and how to keep your current employees committed to the company.
Strengthening Employee Engagement
A strong company culture is one of the main drivers of employee engagement, according to research by Quantum Workplace.
And better employee engagement can help your bottom line. Gallup research found that business units with engaged employees tend to see lower rates of absenteeism, greater productivity, and higher profitability.
Measuring your company culture can help you identify ways to reinforce and build employee engagement.
Driving Employee Performance
A company culture that encourages and supports employees in their work will help motivate them toward high performance.
Building your culture into your performance management, and then measuring how effective that link is, can help reveal ways in which you can cultivate and strengthen your shared values.
Fostering Innovation and Creativity
Company culture is all about how people work together. Creating an interactive and collaborative environment can give teams the license and freedom to innovate and explore.
Measuring how effectively they do this can flag potential roadblocks to innovation or spark further creative ideas and approaches.
Responding to Change
Culture constantly evolves, and company culture is no different.
“Monitoring culture all year is much more efficient than only paying attention when suddenly turnover is noticeable,” said Kelly Byrnes, founder and CEO of Voyage Consulting Group. “Paying attention all year positions leaders to respond and influence the culture, instead of simply reacting when something is wrong.”
To stay on top of cultural changes and still maintain a strong corporate culture, you need to be able to measure it.
10 Elements of a Great Organizational Culture — and How to Measure Them
Measuring company culture will require you to capture a broad range of qualitative and quantitative metrics.
For instance, if your company has a strong work culture, you’ll likely have a highly engaged workforce, low turnover rates, and a high employee Net Promoter Score (eNPS). This would reflect that most employees feel positive about their work, plan to stick around, and would endorse working for the company.
On the other hand, a company with a toxic culture may have a disengaged workforce, high absenteeism and attrition, and very few employee referrals.
Let’s look at what to measure and the methods and metrics you can use to evaluate your company culture.
1. Shared Core Values, Mission, and Purpose
In a strong company culture, everyone is rowing in the same direction. You have clearly defined values, and team members understand and believe in those values.
“Companies often spend a lot of time fine-tuning the words to define their core values,” said Byrnes. “And then that’s the last time core values are talked about. What’s better would be to recognize when or how often each core value is demonstrated.”
How to Measure Shared Values
Include questions about company values in your pulse surveys. Ask employees if they agree with statements like:
- “I am aware of the company’s values.”
- “I understand the company’s mission and my role in that mission.”
- “I identify with our company purpose and believe it is valuable.”
Include values in your performance management system. Explicitly acknowledge when employees demonstrate one of the key company values. For instance, if your company prizes teamwork, you should include a question like “Did the employee demonstrate teamwork this quarter?” in your managers’ quarterly review questionnaires.
Key Metrics to Track
- Employee Survey Results
- Performance Metrics
2. Employee Sentiment
Measuring how employees feel about their work can give you insights into the whole employee culture. Employee sentiment is a snapshot of how your staff members feel at any point and a general overview of how happy people are to be working at your company.
How to Measure Employee Sentiment
There are a few different approaches to capturing employee sentiment, including the following:
- Employee Engagement Surveys: Run regular surveys for employees to discover how their sentiments about the company, what they need in order to perform, and how they might be incentivized to do their best work.
- Employee Net Promoter Score (eNPS): These surveys offer a quick way to capture employees’ experience and satisfaction by using a simple question: “On a scale of 0-10, how likely are you to recommend this company to others as a great place to work?”
3. Trust and Transparency
Research by Great Place to Work found that companies with high-trust cultures have half the turnover of their competitors and see faster rates of innovation.
The same research found that, in a high-trust culture, staff see their managers as trustworthy and communicative. They feel respected not only in their work but also in relation to their personal lives and needs. They act with integrity toward peers, customers, and stakeholders. And they feel their performance expectations and compensation are fair.
A high-trust culture depends on a few different factors:
- Do employees trust each other?
- Do they trust their managers?
- Do they behave in trustworthy ways toward customers and stakeholders?
- Do they maintain high-quality standards so customers can trust their products or services?
How to Measure Trust and Transparency
Run employee surveys. An employee survey can be a straightforward way to measure the trust your employees feel. Ask employees to agree or disagree with statements like:
- My manager has my best interests at heart.
- My manager will put my needs ahead of the bottom line when appropriate.
- I feel like I can share honest feedback with my manager.
- I trust my colleagues to support me.
- Integrity is important to me.
- Integrity is valued at this organization.
- This is an ethical organization.
Increase employee involvement in strategic decisions. To foster a sense of transparency, encourage employees to get involved in strategic decision-making. This can be as simple as:
- Holding a regular all-hands “ask me anything” style meeting with senior leadership
- Sending out regular internal communications updating employees on company strategy and results, and giving them the reasoning behind decisions
- Hosting employee focus groups to gauge employee sentiment before making major strategic changes
- Sharing meeting notes from senior leadership meetings
- Inviting employee involvement in continuous improvement programs, to create a sense of shared ownership
4. High Performance
A high-performance workplace culture supports and motivates employees to meet and exceed their goals. It implements processes and practices geared toward helping employees be as effective as possible and delivering organizational value. And with that sense of achievement comes the motivation for better performance.
How to Measure Performance
A solid and consistent performance management process is central to building a strong, high-performance company culture. To measure performance:
- Work with employees to set clear, objective goals that align with company targets.
- Set a regular schedule of 360-degree performance reviews that give you a well-rounded picture of employees’ engagement and performance — from managers, peers, clients, and themselves.
Key Metrics to Track
- Average Performance Ratings: A score of how employee performance compares with expectations
- Top Performer Retention Rate: A measure of your ability to keep your best talent
- Success Stories: Examples of how your culture has led to positive outcomes
5. Fair Compensation
If you want your company culture to be more than a flowery mission statement, you have to put your money where your mouth is.
Are you offering employees a competitive salary? Is it fair and equitable pay? Do you link pay to performance?
Metrics that demonstrate how your pay compares to the market average and where it falls within the range of salary bands help you to guarantee fair pay and to be transparent about your compensation strategy.
How to Measure Fair Compensation
Start by conducting a compensation benchmark to compare your salaries to the competition. Lattice can help with this one. Our Compensation Benchmarks powered by Mercer give you accurate, real-time information so you can make data-driven budget decisions that support employees — ensuring equity, efficiency, and consistency across your business.
Key Metrics to Track
- Market Ratio: How competitive salary is compared to the labor market
- Compa-Ratio: Where salary fits within a salary range
6. Recognition and Appreciation
In a positive company culture, managers and leaders acknowledge a job well done and recognize employees for showing initiative, achieving goals, or contributing to the culture itself. A culture of recognition shows employees that the company appreciates them and fosters a sense of belonging and job satisfaction.
How to Measure Recognition
To track whether or not your employees feel recognized and appreciated, you can try:
- Recognition Program: If you don’t already have mechanisms in place for recognizing and praising employees, software like Lattice Praise can let your managers and employees celebrate one another publicly. Share feedback and compliments where work gets done — such as a company Slack channel — so that praise is always seen.
- Daily Pulse Surveys: A quick daily yes or no question, such as “I feel appreciated for the work I do,” can create a picture of how effective your employee recognition program is.
Key Metrics to Track
- Number of Uses of Recognition Software per month
- % of Employees Using the Recognition Software
- % of Managers Using the Recognition Software
- Pulse Survey Scores
7. Development and Progression Opportunities
A company with a strong culture looks beyond employees’ current jobs and invests in their careers. Providing learning and development opportunities and clear career pathways strengthens employees’ skills and competencies, as well as their commitment to the business. At the same time, it enhances retention and the company’s experience and expertise.
How to Measure Employee Development
To track how well your company fosters employee development, monitor both your learning and development (L&D) program and your internal mobility.
Key Metrics to Track
- L&D Engagement Rate: The percentage of people currently engaged in learning programs
- Employee Satisfaction Scores: How satisfied employees are with your L&D offerings
- Career Path Ratio: A measure of internal mobility and promotions
- Internal Mobility: The percentage of internally filled positions
8. Employee Wellbeing
Wellbeing factors are on employees’ minds. In fact, when respondents were asked in Executive Networks’ 2023 global survey what factors they believed were driving attrition at their business, “experiencing stress and burnout” ranked in the top three reasons for every role.
It’s crucial to cultivate a positive and supportive company culture that prioritizes employee wellbeing. This means not only understanding and promoting wellbeing but also having the policies, practices, and tools — from work flexibility to mental health resources — to support it.
How to Measure Employee Wellbeing
There are two factors to focus on when it comes to employee wellbeing and company culture. On the one hand, you should measure the effectiveness and reach of your wellbeing initiatives. And on the other, you should be monitoring signs that your employees are struggling — such as frequent absences.
Key Metrics to Track
- % Uptake: How many employees are currently taking advantage of your wellbeing offerings
- Absenteeism: Number of employees absent from work at any given time
9. Diversity, Equity, Inclusion, and Belonging (DEIB)
A strong and positive company culture is welcoming, accepting, and inclusive to all. To support DEIB at your company, consider employing strategies to eliminate unconscious bias, attracting candidates from diverse backgrounds, and providing diversity training for managers.
How to Measure DEIB
Measuring DEIB starts by taking a deep dive into your workforce analytics. You need to know who you’re hiring, who you’re promoting, who you’re training, and who’s leaving the company — and you need that information for each seniority level and sector of your business.
For that, you’ll need to gather and analyze demographic data on your employees. Involve your legal team to ensure you’re collecting DEIB data on your employees in an appropriate, compliant, and respectful way.
Key Metrics to Track
- Representation (headcount and turnover) in current workforce (broken down by total workforce, voluntary and involuntary turnover, management roles, business units, etc.)
- Representation in future workforce: The percentage of historically marginalized groups in your overall applicant pool, candidates interviewed, candidates hired, and leadership candidates hired
10. Talent Acquisition
How effective are you at attracting and recruiting new talent? Do potential candidates see your company as an appealing place to work? And is your management team as strong as it needs to be?
By measuring how long it takes you to fill vacancies and the quality of your new hires, you can work toward creating a high-performance culture.
How to Measure Talent Acquisition
To track the impact of your company culture on your talent management, monitor the following metrics:
- Quality of Hire: The value new hires bring to your organization and the efficacy of your recruiting strategies
- Time-to-Fill: How long it takes to hire an eligible candidate
Enhance your company culture with Lattice.
Company culture is complicated, and measuring all the diverse and distinct elements that comprise it can be a challenge. But it’s a rewarding challenge — both for your business and your people.
When you can explore and analyze the intricate web of workplace interactions and relationships, you are better poised to improve them and to nurture a positive, supportive, and productive working environment for all your people.
Lattice’s people management platform helps weave together all the separate threads — performance, engagement, compensation, and analytics — so that you can make sense of your company culture and make it stronger than ever.
Discover the formulas for calculating many of these metrics, as well as the industry standards to help you evaluate them, by downloading Lattice’s free HR Metrics Cheat Sheet.
You can also download this free HR metrics slide deck template to present your findings to your team or your company leadership — and prove just how great of an impact your people programs have made.
