Company culture and performance: why it matters

A company’s culture is the engine that powers performance, shaping everything from employee motivation to long-term growth. Today, company culture and performance are tightly intertwined. Organizations that invest in building a strong, value-driven culture don’t just see happier employees; they gain a strategic advantage in engagement, retention, innovation and ultimately, financial success. The connection is clear: how people feel at work directly impacts how they perform, collaborate and innovate.

What do we mean by company culture?

Company culture refers to the shared values, behaviors and daily practices that shape how people work and interact. It’s the invisible operating system that influences how decisions are made, how leaders communicate and how employees feel about their workplace experience. Culture shows up in everything — from how leaders recognize achievements, to the way teams collaborate, to whether employees feel their well-being is supported.

When employees describe their job as satisfying and their organization as aligned with their personal values, they are more likely to stay. According to Gallup, strong cultures contribute to measurable business outcomes such as higher engagement, stronger productivity, and improved financial performance. This shows why the concept of what is a high-performance culture is no longer an abstract discussion — it’s a business-critical necessity.

The core elements of culture

A healthy culture is built on several foundational components:

• Mission and vision – providing a clear purpose and direction.
• Values – guiding principles that define how people work together.
• Leadership – modeling behaviors and reinforcing consistency.
• Communication – creating trust and transparency.

Circles’ own vision and values illustrate this well.

• Our Vision: To create a future of work where everyone feels valued, supported and connected.
• Our Values:
  
  • Empathetic. We actively listen and are aware of other people’s perspectives.
  • Curious. We’re interesting and interested.
  • Determined. We’re well connected, ready to improvise and relentlessly dedicated to getting it right.
  • Charismatic. We’re fun, charming, happy, confident, articulate and great to spend time with.

These values are not abstract. They shape how we deliver our services, support clients and create stellar workplace experiences.

This alignment between values and behavior builds trust across the organization. It also creates a shared sense of belonging — a cornerstone of any people first culture.

Culture vs. employee experience

While culture defines the shared beliefs and behaviors of an organization, the employee experience is how individuals feel during their daily interactions at work. They are distinct but interconnected. A company can have well-written values but if employees’ everyday experience contradicts them, engagement will suffer. A thoughtful employee experience strategy ensures culture comes to life in meaningful ways. When companies prioritize improving the employee experience — through recognition, benefits, or workplace amenities — culture becomes tangible, not just aspirational.

How culture impacts business performance

Recent research makes the link between culture and performance unmistakable. Weak cultures lead to disengagement, high turnover, and poor collaboration. For example, Gallup found just 33% of U.S. employees reported being engaged at work in 2023, with disengagement costing organizations roughly $1.9 trillion in lost productivity. Employees who don’t feel connected to their company are less likely to stay, less likely to perform at their best, and less likely to contribute new ideas. When many workers feel this way, productivity falls, innovation stalls, and customer satisfaction starts to slip.

The opposite is also true. A strong culture creates the conditions where employees thrive and organizations excel. Below are the major areas where culture fuels performance.

Employee engagement and productivity

Engaged employees are more motivated, collaborative and productive. A supportive workplace experience, where employees feel recognized and valued, translates into better outcomes for both individuals and the business. Organizations that intentionally improve work life balance for employees see reduced stress, stronger team performance and higher customer satisfaction. A culture rooted in trust and recognition fuels sustainable productivity.

Gallup’s research highlights that engaged employees show significantly lower absenteeism, higher productivity and greater loyalty. This demonstrates why building a high-performance culture is not simply an HR initiative — it’s a bottom-line driver.

Retention and talent attraction

In a tight labor market, culture is a magnet. People want to work for companies that share their values and provide workplace amenities that support both work and life balance. Organizations like Circles stand out with services that ease everyday pressures — errand running, on-site support, hybrid work solutions — showing employees they are cared for. A strong culture not only improves retention, but it also makes talent attraction easier by strengthening the employer brand.

In fact, research from Eagle Hill Consulting found that 77% of employees say workplace culture influences their decision to stay or leave a job. This underscores how culture shapes the employee value proposition and determines whether top talent will see an organization as a long-term home.

Innovation and adaptability

A high-performance culture also drives innovation. When employees feel safe to share ideas and challenge assumptions, organizations can adapt quickly. This adaptability is critical in today’s environment of constant change. Cultures that encourage curiosity and collaboration empower workers to identify improvements, test solutions and drive progress. Companies that embrace innovation within their culture are better positioned to thrive, even in uncertain times.

Innovation also requires resilience. A positive, well-aligned culture builds the foundation for employees to remain adaptable under stress, a trait that distinguishes high-performing organizations from stagnant ones.

Challenges of building a high-performance culture

While the benefits are clear, building a strong culture isn’t easy. Organizations often stumble on two major obstacles.

Misalignment between values and practices

When company culture and values are stated but not lived, employees lose trust. For example, a company that claims to prioritize work-life balance but doesn’t provide meaningful support services risks disengagement. Authenticity matters. Employees expect companies to back up their promises with real action — whether through workplace experience investments, feedback loops or transparent leadership.

Resistance to change

Cultural transformation can meet resistance from entrenched habits or leadership styles. Change requires consistent reinforcement from the top and visible modeling of new behaviors. Leaders who fail to adapt risk slowing organizational progress. Overcoming resistance often requires both communication and investment in tools, resources or services that make change tangible.

Strategies to strengthen company culture

Organizations looking to align company culture and performance can take deliberate steps to embed values into the employee experience.

Leadership and clear vision

Leaders set the tone. They must clearly articulate vision, model the desired behaviors and ensure values cascade across the organization. A strong vision creates clarity and unites employees around shared goals. 

But clarity alone isn’t enough — empathetic leadership is what makes those goals resonate. Leaders who actively listen, show awareness of employee perspectives and respond with authenticity build trust and commitment across teams. When leaders pair vision with empathy, employees feel seen and supported, which strengthens alignment and loyalty. Leadership development programs, coaching and regular feedback sessions can help leaders embody empathy, reinforce company culture and values and consistently connect strategy to the human side of work.

Communication and transparency

Open, honest communication builds trust. Transparency in decisions, especially around change, strengthens alignment. Leaders who invite feedback and respond authentically foster environments where employees feel heard and respected. Regular updates, town halls and accessible leadership teams are practical ways to keep communication flowing.

Investing in employee well-being

Employee well-being is the foundation of sustainable performance. Companies that provide workplace amenities, flexible scheduling for hybrid work, and work life balance services send a clear message: employees matter. As an example, we partner with organizations to deliver workplace hospitality management services that improve work life balance for employees and enhance overall satisfaction. Prioritizing well-being leads to higher engagement, reduced turnover and better organizational outcomes.

Employee support initiatives — like concierge services, on-site support and personalized experiences — help reduce daily stressors. When employees feel their organization supports their lives outside of work, they bring more energy and focus into their roles.

Future outlook: culture as a competitive advantage

As organizations face rapid shifts — from hybrid work to evolving employee expectations — culture has emerged as a decisive factor in business performance. Companies that build high-performance cultures, grounded in authenticity and employee well-being, will be better equipped to adapt, innovate and grow. Culture is no longer a soft metric; it’s a strategic lever that separates successful organizations from those struggling to keep pace. Leaders who invest today in aligning culture and performance will build resilient companies capable of long-term success.

Frequently asked questions about company culture and performance

How does company culture affect financial performance?

Company culture and performance are deeply connected. A positive, people-first culture strengthens employee engagement, productivity, and retention, which directly reduces turnover costs and increases efficiency. Gallup research shows that highly engaged teams achieve 21% greater profitability compared to disengaged ones. When employees feel valued and supported, they deliver better customer service, fueling revenue growth and brand loyalty. Conversely, a weak or toxic culture drains motivation, drives attrition and ultimately erodes financial results.

What are examples of strong company cultures?

Strong company cultures are those where values and daily practices align consistently. For example, Patagonia is recognized for embedding environmental stewardship into its culture, shaping decisions at every level. Microsoft has been widely cited for revitalizing its culture under Satya Nadella, shifting from a “know-it-all” to a “learn-it-all” mindset to fuel innovation and growth. At Circles, the vision is to create a future of work where everyone feels valued, supported and connected. Living by values like empathy, curiosity, determination and charisma ensures employees feel supported  —  and that culture is experienced by clients and their employees as well.

How can leaders measure company culture effectively?

Leaders can measure culture by looking at both quantitative and qualitative indicators. Employee engagement surveys, pulse checks and feedback tools reveal how people feel about their workplace environment. Metrics such as retention rates, absenteeism, productivity benchmarks and even customer satisfaction scores reflect cultural health. Importantly, measurement should go beyond numbers  —  leaders should observe whether stated company culture and values are lived in daily interactions, decision-making and leadership behaviors.

What happens when company culture is weak or toxic?

When company culture is weak or toxic, the business impact is immediate and long-lasting. Employees in toxic environments are more likely to disengage, underperform or leave altogether. Studies from MIT Sloan show toxic culture is a top predictor of employee turnover, outweighing compensation as a reason people quit. It can erode trust in leadership, damage the employer brand and discourage innovation. Over time, it also reduces customer satisfaction, as poor employee experiences ripple outward into client interactions.

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