Company Culture

Understanding the 4 Elements of a Company Culture

Company culture is not just about perks, office vibes, or a list of company values. Instead, it is what drives business success, keeps employees engaged, and shapes how a company grows.

A 2024 Great Place to Work study found that the 100 Best Companies to Work For have delivered nearly 4x higher returns than the Russell 3000 Index over the last 26 years. This proves that companies that actively shape their culture attract top talent drive innovation, and build workplaces where people do their best work.

But when culture is toxic or ignored, it has the opposite effect. A study from MIT Sloan found that a toxic work culture is the number one reason employees quit, even more than salary. It’s 10 times more important than pay in predicting turnover. Employees today expect a workplace that aligns with their values and supports their growth. If the culture feels off, they won’t hesitate to leave.

So, how do you create a culture that actually works? Before you can improve it, you need to understand why defining it is so challenging in the first place.

But First, Why Company Culture Is Hard to Define?

If you ask different people in your company what the culture is, you’ll probably get different answers. Some might describe teamwork, others might point to leadership style, and some might just say, “It’s the way we do things here.” That’s because culture is not one simple idea. It’s a mix of habits, values, and unspoken rules that shape how people work together every day.

But why is it so difficult to define culture clearly?

1. Culture is Not a Mission Statement or a Set of Policies

It is what employees actually experience every day. You can write down company values, but if leadership decisions and daily work interactions don’t reflect them, those values mean nothing. A strong culture builds trust and engagement, while a weak or inconsistent one leads to confusion and disconnection.

2. The Biggest Disconnect Happens Between Leadership and Employees

Leaders often see culture through the lens of vision, values, and company goals. Employees, on the other hand, feel culture in how they’re treated, how decisions are made, and whether they have work-life balance. This gap can lead to misalignment where leaders may believe they have a great culture while employees quietly feel otherwise.

3. Culture Evolves Over Time

A startup’s culture at 10 employees won’t be the same at 500. Growth, leadership changes, remote work, and industry shifts can reshape how teams collaborate. If culture is not actively managed, it can drift away from what the company originally intended.

4. The Challenge of Measuring Culture

Traditional methods like exit interviews and annual surveys only provide a snapshot, often missing the deeper issues brewing beneath the surface. That’s where real-time engagement insights become invaluable. They help HR teams track how employees feel in the moment, not months later. Instead of guessing what’s working, you get clear, actionable data to build a stronger, more connected workplace.

If you had to describe your company’s culture in one sentence, what would you say?

Would your leadership team and employees give the same answer? or,
Would there be completely different perspectives?

The first step to building a strong culture is recognizing where these gaps exist. Once you identify what’s unclear, you can start shaping a culture that actually aligns with your business goals and employee experience.

But where do you start?

4 Elements to Shape Your Company Culture – Do You Have Them in Place?

Companies don’t own culture, its people do. But leaders can shape and influence it by focusing on what truly drives it.

By focusing on these four elements of culture, i.e., values, norms, symbols, and language, you can create a culture that keeps employees engaged, connected, and aligned with your company’s goals.

1. Core Values, Purpose & Belief: The Foundation of Your Culture

A company’s purpose, values, and beliefs define what it stands for and how it operates. They shape how employees work, make decisions, and interact with one another. When these elements are clear and consistently reinforced, they create a culture that drives engagement, trust, and long-term success. But when they are vague, misaligned, or just words on a website, employees disconnect, and the culture weakens.

The purpose is the “why” behind the company. It is about the impact the company aims to create instead of just profits. People today want to work for companies that stand for something meaningful. A survey by the American Psychological Association found that 93% of employees believe having a purpose at work is important. When employees connect with their company’s mission, they are more motivated, engaged, and likely to stay.

For example, Tesla’s purpose is not limited to selling electric cars. It is rather to “accelerate the world’s transition to sustainable energy.” This mission attracts employees who want to be part of an environmental revolution, not just work in the auto industry. Their purpose directly influences innovation, hiring, and even company policies.

While purpose is the “why,” values are the “how.”

They set the rules for behavior, decision-making, and collaboration. But for values to mean something, they must be actively lived and reinforced. If leadership values transparency but avoids tough conversations, employees lose trust, and culture deteriorates.

Values also shape workplace norms (which we will talk about later in the blog).

In Japan, for instance, group harmony is a deeply ingrained value. People avoid conflict and prioritize consensus, even in workplaces. This cultural value impacts how teams collaborate, how leaders make decisions, and even how employees resolve disputes. Similarly, employees are encouraged to experiment, take risks, and challenge the status quo in a company that values innovation.

Beliefs are the unspoken rules of company culture. Unlike stated values, beliefs influence how things actually work. If leadership truly believes in work-life balance, they will encourage flexible schedules and respect personal time. But if there’s an unspoken expectation to work late to prove commitment, employees will follow that cue, even if official policies say otherwise.

At Google, psychological safety is a core belief. Employees know they can share ideas, challenge opinions, and take risks without fear of failure. This belief drives creativity, innovation, and open collaboration, making it one of the most innovative workplaces in the world.

For purpose, values, and beliefs to shape a strong culture:

Companies need to clearly define their purpose and ensure employees understand how their work contributes to it.
Values should be integrated into hiring, performance evaluations, and leadership decisions.
Leaders should actively demonstrate company beliefs through their actions and by setting standards for others.

2. Norms: The Everyday Behaviors That Define Workplace Culture

A company’s culture really comes down to what happens day-to-day. It’s all about the behaviors employees adopt, how decisions get made, and what becomes expected after a while. These norms are not usually listed like company values, but everyone gets them. Employees figure these norms out by watching how others act, especially the leaders, and noticing what actions get praise or disapproval.

When norms match up with the company’s stated values, they help build a positive culture. But if they don’t align, it can cause a lot of confusion and frustration.

For instance, a company might say it supports a good work-life balance, but if bosses send emails at midnight or applaud those who work late, the real norm becomes “always be available.” Employees will follow what they see, not what they’re told.

These norms affect everything from how meetings are run to how people work together. Talking about workplace norms in Japan (earlier in the blog), for example, you’ll notice that they focus a lot on group harmony. People there tend to avoid direct conflicts and like making decisions as a group. On the other hand, many U.S. companies encourage individual opinions and open debate. Even when values seem similar, workplace norms can create completely different environments.

Positive norms create:

Trust
Engagement
Efficiency

While toxic norms lead to:

Stress
Burnout
Disengagement

In a healthy workplace, employees feel comfortable sharing ideas, setting boundaries, and working together. In a toxic one, employees fear speaking up, overwork to “prove” their dedication, or compete rather than collaborate.

Netflix’s culture is a great example of how norms define a workplace. They ditch the usual strict rules on vacation and work hours, choosing instead a “Freedom & Responsibility” approach. This means Netflix trusts its employees to manage their own time. This trust builds independence, accountability, and quick decision-making, which really fits with what Netflix values.

3. Language: The Words That Define Your Workplace Culture

The way people talk at the workplace reveals a lot about a company’s ethos. The kind of language used helps shape how people get along, how bosses interact with their teams, and how strongly the company’s values are shown.

Every workplace talks in its own way.

Some companies like to keep things very formal and structured, which shows clear order and professionalism.
Others prefer a more relaxed and open way of talking to encourage creativity and teamwork.

The specific words and phrases a company uses can influence how employees think, act, and see their roles.

For example, some businesses might call their employees “associates” or “teammates” instead of “staff” or “workers.” This small change can make everyone feel more like equals and part of a team. Also, when leaders use “we” more than “I,” it helps everyone think in terms of what’s best for the group, not just themselves.

Language can also create barriers or biases without people realizing it.

This idea is part of the Sapir-Whorf hypothesis, a well-known linguistic theory. It says that the language we use can shape how we see the world. Letting aside the typical classical examples, Lera Boroditsky discusses in her TED talk how the words we use at work can really affect how employees see their jobs and their chances to succeed.

Look at big tech companies like Google.

They support a flat communication style where they let everyone, even new people, speak up and challenge ideas, which helps make a creative and team-oriented workplace. On the other hand, more traditional companies often have a top-down way of talking that keeps things very controlled.

To make a workplace where everyone feels included and valued, companies need to think carefully about their language. Simple things like choosing words that include everyone, letting people talk openly, and using language that matches the company’s values can make a big difference. This helps employees feel connected to their workplace and to each other.

4. Employee Sentiment: The Reality Check for Workplace Culture

A company might have strong values, clear rules, and a specific way of communicating, but if employees don’t feel connected to it, does that culture really exist?

What truly matters is how employees feel, whether they enjoy their work, feel valued, and believe leadership’s actions match their words.

If leadership says one thing and does another, trust breaks down, and engagement drops. The real test of culture is whether employees genuinely feel a part of it or if it’s just empty words.

Employee sentiments and engagement can change over time. A company with a great culture today can lose it if employees feel ignored or overworked. That’s why companies need to check in with employees regularly, not just once a year. Traditional surveys only give a limited view.

But with tools like Peoplebox.ai, you can:

Avoid blindspots with real-time engagement insights
Detailed people insights to improve engagement and retention
Easily identify what’s driving positive or negative sentiment across teams
Analyze engagement by department to uncover specific pain points
Compare your engagement scores against industry standards for a clearer perspective
Instantly export engagement data into professional presentations, saving time and effort

At the end of the day, employee sentiment is the most honest reflection of a company’s culture. Companies that succeed are those that listen, adapt, and ensure their culture is something employees genuinely experience and not just hear about.

Now that we have discussed the four components of organizational culture remember that they provide the foundation for building a strong company culture. But defining culture is only half the battle. The real challenge is measuring it.

Measure Your Cultural Elements with the Right-Dimensional Models

Without a clear way to assess and track it, you’re left guessing whether you are on the right track or not. In this instance, cultural dimensions and frameworks become really helpful. Let’s explore four widely recognized frameworks that can turn abstract culture into something measurable and actionable.

1. The Competing Values Framework: What’s Your Culture Type?

Not every company operates the same way, and culture plays a big role in how work gets done. Nearly at the start of the 1980s, researchers Robert Quinn and Kim Cameron found that 90% of companies fall into one or more of four culture types. These aren’t random categories,” says Kim Cameron, Professor at the University of Michigan.

The Competing Values Framework (CVF) helps organizations understand what type of culture they have and whether it aligns with their business goals. This model classifies culture into four types: Clan, Adhocracy, Market, and Hierarchy, each with its own strengths and challenges.

1. Clan Culture: A Close-Knit, People-First Workplace

You might have a Clan Culture if your company feels more like a tight-knit community than a rigid corporate structure. This type of culture thrives on collaboration, employee development, and a strong sense of belonging. Think of it as a workplace where teamwork and mentorship matter more than strict hierarchies.

How to recognize it:

Employees genuinely enjoy working together and see each other as family.
Leadership is approachable and acts as mentors rather than authority figures.
There’s a strong emphasis on loyalty, tradition, and long-term employee growth.
Decisions are often made through consensus rather than top-down orders.

Example: Zappos, the online retailer, is famous for its people-first approach. Their top priority isn’t just customer service—it’s company culture. Employees are encouraged to bring their authentic selves to work, and collaboration is at the heart of everything they do.

Pros

High morale and strong employee engagement.
Encourages creativity and innovation through collaboration.
Open communication that builds trust and teamwork.

Cons

A strong group identity may make it harder for employees to challenge ideas.
Too much collaboration can slow down decision-making.
The lack of a clear hierarchy can sometimes create confusion about roles and responsibilities.

2. Adhocracy Culture: Innovation at Full Speed

If your company thrives on experimentation, rapid growth, and pushing boundaries, you might have an Adhocracy Culture. This culture values risk-taking, flexibility, and a fast-paced environment where creativity is the driving force.

How to recognize it:

Employees are encouraged to think outside the box and take risks.
The company moves fast, often launching new ideas without waiting for perfection.
There’s a minimal hierarchy, allowing for flexible and quick decision-making.
Change is constant—adaptability is a must.

Example: Tesla follows an Adhocracy Culture, constantly challenging industry norms and encouraging employees to take risks to drive innovation.

Pros

Employees feel empowered to take ownership of projects.
High levels of creativity and breakthrough ideas.
Helps companies stay ahead of competitors by constantly innovating.

Cons

The fast-paced environment can lead to burnout.
Excessive risk-taking can sometimes lead to costly failures.
Lack of structure may create uncertainty and confusion.

3. Market Culture: Compete, Win, Repeat

A Market Culture is all about results. In this high-performance environment, competition, efficiency, and achieving goals take center stage. Leadership sets aggressive targets, and success is measured by profitability and market dominance.

How to recognize it:

The workplace is fast-paced and performance-driven.
Leadership is firm and goal-oriented, expecting employees to deliver results.
Employees are motivated by rewards and recognition for achieving goals.
Customer demands and market trends dictate business decisions.

Example: Amazon is a prime example of a Market Culture. Jeff Bezos built an environment where high performance is expected, and competition fuels success. Employees are challenged to work hard, innovate quickly, and stay ahead of competitors.

Pros

Clear business goals and expectations lead to strong productivity.
Employees are highly motivated and driven to succeed.
Companies with this culture often dominate their industries.

Cons

Excessive internal competition may lead to a cutthroat culture.
High-pressure environment can cause stress and burnout.
Employee well-being and engagement can take a backseat to results.

4. Hierarchy Culture: Structure, Stability, and Control

If your company operates with clear rules, structure, and processes, it likely follows a Hierarchy Culture. This type of workplace prioritizes stability, risk management, and long-term efficiency.

How to recognize it:

Decision-making follows a top-down structure—leaders set the rules.
Employees follow established processes and procedures.
The company focuses on minimizing risk and ensuring consistency.
There are clear career paths with well-defined roles and responsibilities.

Example: Large corporations like Chevron, Goldman Sachs, and Blue Cross Blue Shield operate under a Hierarchy Culture, where stability and structure guide business decisions.

Pros

Employees have clear career paths and well-defined job expectations.
Risk is minimized through structured decision-making.
Predictable and stable work environment.

Cons

Excessive bureaucracy can slow decision-making.
The structured environment can feel rigid and slow-moving.
Innovation may be limited due to strict policies.

2. Schein’s Organizational Culture Model: What’s Beneath the Surface?

Edgar Schein, one of the most influential thinkers on organizational culture, explains that culture operates on three levels:

Artifacts – What’s Visible
Espoused Values – What’s Stated
Basic Assumptions – What’s Truly Believed

Think of culture as an iceberg, where what you see above the surface is just a small part of the whole picture. The deeper layers, though invisible, are what truly shape how a company operates.

1. Artifacts: The Visible Signs of Culture

Artifacts are the things you can see, hear, or experience in a company. They show up in how the office looks, how employees interact, and even how meetings are run.

For example:

Open office layouts vs. private cubicles (collaborative vs. structured culture).
Casual dress code vs. formal suits (laid-back vs. professional culture).
Whether leadership sits in a separate office or among employees (hierarchical vs. approachable leadership).

But just because something is visible doesn’t mean it tells the full story. A company might have a fun, colorful office space but still have a stressful, high-pressure work culture. That’s why you need to look deeper.

2. Espoused Values: What a Company Says It Believes

Espoused values are the principles and beliefs a company claims to stand for. But just because they’re written down doesn’t mean they’re actually followed. Most companies have mission statements that mention values like “innovation,” “transparency,” or “work-life balance.” But do those values really guide decisions?

For example:

If a company says it supports innovation, but employees are afraid to take risks, the real culture doesn’t match what’s written.
If leadership promotes work-life balance, but employees feel pressured to answer emails at all hours, the message is mixed.

3. Underling Assumptions: The Unspoken Rules That Shape Behavior

These assumptions are the deepest layer of culture, the things people just know and follow, even if they’re never said out loud. These beliefs shape how employees behave every day.

For example:

Do people feel comfortable challenging leadership, or do they stay quiet?
Is collaboration truly encouraged, or are teams secretly competing?
Do employees feel they have job security, or is there constant fear of layoffs?

These assumptions form over time and influence behavior more than any written policy ever could.

Understanding these three layers of culture helps leaders spot inconsistencies. If the visible culture (artifacts) and stated values (espoused values) don’t match the real, lived experience (basic assumptions), employees will notice. And when that happens, engagement drops, trust weakens, and culture starts to break down.

For example:

A company that claims to promote teamwork but rewards individual performance creates confusion.
A company that preaches innovation but punishes mistakes stops people from sharing ideas.
A leader who talks about transparency but makes big decisions behind closed doors erodes trust.

How to Apply Schein’s Model to Your Company

Look at the full picture. Don’t just focus on office perks. Watch how people actually work and interact.
Check for misalignment. Do the company’s actions match its stated values? If not, something needs to change.
Ask employees. Leaders often see culture differently than employees do. Get real feedback from your team.
Reinforce the right behaviors. Culture isn’t built by what’s written down. It is built by what companies reward and tolerate.

3. The Denison Model: Is Your Culture Driving Business Success?

It’s easy to talk about company culture, but how do you actually measure if it’s working? That’s where the Denison Model comes in. Unlike other models that describe culture, this one focuses on how culture impacts business success.

The Denison Model breaks company culture into four key dimensions:

Mission: Does your company have a clear purpose and direction?
Consistency: Are company values actually guiding everyday work?
Adaptability: Can your culture evolve with change?
Involvement: Do employees feel engaged and empowered?

Companies that score high in these areas tend to have better financial performance, higher employee retention, and stronger leadership alignment. Let’s break each of them down.

1. Mission: A Clear Purpose That Guides Everyone

A strong culture starts with a clear mission. A shared sense of why the company exists and where it’s headed.

How to recognize it:

Leadership communicates long-term goals clearly.
Employees understand how their work contributes to bigger company objectives.
Decisions are made with the future in mind, not just short-term gains.

Warning Sign: If employees feel like they’re just “doing tasks” without knowing why they matter, your company lacks a strong mission.

2. Consistency: Are Your Values Actually Lived?

Having company values written down is one thing, but following them is another. A company with high consistency ensures that values aren’t just words but are actively shaping decisions, behaviors, and leadership actions.

How to recognize it:

Company values are reflected in how people work, lead, and collaborate.
Leadership sets an example by following the same rules as everyone else.
Teams have a shared understanding of expectations and ways of working.

Warning Sign: If employees feel like values are just for show or if leadership doesn’t follow them, culture starts to break down.

3. Adaptability: Can Your Culture Keep Up With Change?

A company with strong adaptability doesn’t fear change. Instead, it embraces it. It listens to employees, reacts to market shifts, and constantly looks for ways to improve.

How to recognize it:

Employees feel safe suggesting new ideas without fear of failure.
The company is proactive, not reactive then it anticipates challenges rather than scrambling to fix them.
Teams are encouraged to experiment and improve processes over time.

Warning Sign: If leadership resists change, discourages new ideas, or sticks to outdated ways of working, the culture becomes rigid which can lead to falling behind competitors.

4. Involvement: Are Employees Truly Engaged?

A strong culture includes employees at every level. In companies with high involvement, employees feel heard, valued, and trusted to contribute.

How to recognize it:

Employees have a voice in company decisions that affect them.
Leadership actively listens to feedback and acts on it.
Teams are empowered to take the initiative and own their work.

Warning Sign: If employees feel like “just another number” with no real influence, engagement and motivation will drop.

Remember that culture is not just about having a “great place to work.” It directly impacts business success. Companies implementing this model outperform their competitors in areas like:

Return on Equity (ROE)
Return on Investment (ROI)
Customer Satisfaction
Innovation
Employee Satisfaction
Quality and more.

How to Use the Denison Model to Improve Your Culture

Evaluate where you stand. Does your company have a clear mission? Do employees feel involved in decisions? Identify which areas are strong and which need work.
Ask employees. The best way to understand culture is to ask the people living it. Surveys, focus groups, and real conversations provide the best insights.
Close the gaps. If your mission isn’t clear, communicate it better. If employees don’t feel heard, change that. Culture isn’t about what you say. It is about what you do.
Track progress. Cultural shifts take time. Regularly check in on engagement levels, leadership effectiveness, and how well your values align with daily actions.

4. Hofstede’s Cultural Dimensions: Are Global Differences Impacting Your Culture?

Just like we discussed with the example of Japan and the U.S. earlier in the blog, company culture is shaped by the national culture it operates in. What works in one country might not work in another because every society has different views on authority, teamwork, risk-taking, and decision-making.

That’s where Hofstede’s Cultural Dimensions Theory comes in. Developed by Dutch researcher Geert Hofstede, this framework helps businesses understand how cultural differences influence workplace behavior, leadership styles, and communication.

Hofstede identified six key cultural dimensions that explain how people from different parts of the world think, work, and interact. Let’s break them down in simple terms.

1. Power Distance: How Comfortable Are Employees with Hierarchy?

This dimension looks at how much inequality in power is accepted in a society.

High power distance: People respect authority and hierarchy. Employees expect clear directions from managers, and questioning leadership is rare.
Low power distance: Workplaces are more egalitarian. Employees feel comfortable challenging ideas, and decision-making is more collaborative.

Example: In Japan and Mexico (high power distance), employees typically defer to senior leadership and avoid questioning authority. In contrast, in Sweden and Denmark (low power distance), employees openly share ideas, and leadership is more participative.