Americans have a “pull yourself up by your bootstraps” mentality that speaks to our individualism and enterprising spirit. This mindset is especially pronounced among business owners, who have chosen to forego the typical employment route in favor of creating their own enterprise
Independence is relative in the business world, however. Businesses involve complex, interconnected webs of customers, employees, and vendors. No company truly stands on its own; it is reliant on strong relationships with others.
Knowing how to treat people is a fundamental part of any organization’s success. For some, business relationships come easy. Others must work harder to develop business relationships. It all starts with having a core company culture that sets the tone for interactions with employees, customers, and business partners.
The Importance of Company Culture
“No man is an island, entire of itself.” So begins the seventeenth century prose work of English poet John Donne. This quotation from his work is one of the more eloquent reminders that no one is wholly self-sufficient.
Although he wrote this line 400 years ago, Donne’s message is arguably more relevant than ever in a highly connected world that prioritizes cooperation, consensus, and communication.
The concept of “company culture,” or the shared set of values, attitudes, beliefs, and practices that a company adopts, has become a key differentiator in the modern workplace. Companies that are seen as having a good culture are rated as more attractive to employees and have lower turnover. Happier workers mean more productive workers and more profitable businesses.[1]
Company culture is no less important to a business’s consumer-facing side. Engaged employees have been shown to drive a 10 percent increase in customer ratings. In addition, more than 82 percent of consumers say they prefer that a company’s values align with theirs.[2]
A cultural match with a company’s vendors also should not be overlooked. Alignment not only can ensure a good fit between partners, but can reinforce a company’s goals, mission statement, and reputation.
Setting Company Culture
Developing a company culture should not come at the expense of strategy. It is often said in sports that “winning cures everything.” In business, growth and profitability, although not a cure-all, solve many issues. A company that has a great culture but does not have a good product or service and does not make money cannot paper over this fatal flaw.
What does a winning culture look like? Building company culture is easier said than done. It starts with vision and leadership and trickles down through the rest of the organization to internal and external stakeholders.
Shared values are at the heart of a company’s culture. Common values should touch on the following concepts:
- How results are measured, emphasized, and reinforced
- The way people are treated
- Collaboration
- Attention to detail
- Innovation
- Competitiveness
- Stability and consistency
When developing a culture, the design should fit the function. Business owners must know where the business is headed, have a strategy for getting there, and build a culture that aims to achieve specific goals.
Culture is defined by action. Social infrastructure, like physical infrastructure, requires investment. Practices that develop culture include the following:
- Hiring that focuses on personalities compatible with company culture
- Onboarding programs that teach a company’s value system and reinforce culture
- Rewarding employees and customers
- Providing a forum for employees and customers to provide feedback
- Communicating cultural impact to stakeholders
Company Culture and Legal Issues
Company culture should not come at the expense of sound business—or legal—practices. An overfocus on culture can blind a company to issues that could result in a lawsuit or regulatory action, such as the following:
- Hiring discrimination: Inappropriately addressing cultural fit in the recruitment and hiring process could open a company up to discrimination claims. Employers should avoid giving the impression that only candidates who fit a certain mold will be considered. Emphasizing “sameness” could be interpreted as exclusionary and discriminatory.
- Contracts: Culture cannot protect a company in the event of a dispute with an employee or vendor., but a well-drafted contract can help avoid misunderstandings related to issues such as confidentiality, competition, termination, and intellectual property.
- Achievement award programs: Employee achievement awards have pay, tax, withholding, deduction, reporting and disclosure, and communications considerations that need to be accounted for in their design and execution.
- Loyalty programs: Possible legal issues surrounding customer loyalty programs include state gift certificate and coupon laws, privacy and data security, unfair and deceptive trade practices under the Federal Trade Commission Act, and federal and state sweepstake and contest laws.
Start a Relationship With Our Small Business Legal Team
No company is an island. Companies have complex relationships with their employees, customers, and other companies.
Building the right business relationships is key to a company’s success. Our law firm wants to build relationships with our clients for the long haul. Every strong relationship begins with a good conversation. Schedule a consultation so you can let us know how we can help you form and maintain legal relationships that achieve your goals.
[1] Jim Harter, Employee Engagement vs. Employee Satisfaction and Organizational Culture, Gallup (Apr. 12, 2017), https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx.
[2] Giusy Bounfantino, New Research Shows Consumers More Interested in Brands’ Values than Ever, Consumer Good Technology, Consumer Goods Tech. (Apr. 27, 2022), https://consumergoods.com/new-research-shows-consumers-more-interested-brands-values-ever.
