You might think that workplace culture is a topic reserved for big corporations with large, cross-functional teams.
But actually, workplace culture is just as important — if not more so — for small businesses.
A positive workplace culture is crucial for effective teamwork, efficient operations, and achieving your company goals.
So, while pondering questions such as “How much does it cost to start a business?” or “What’s the best marketing strategy for my small business?”, you should also be thinking about how to foster and maintain a positive workplace culture.
In this guide, we’ll define workplace culture and the factors that shape it, consider how culture impacts and benefits your small business, and share actionable strategies you can implement — whether you’re looking at how to improve your workplace culture or starting from scratch.
What is workplace culture?
Definition of workplace culture: The physical, social, and emotional environment that you create for your employees. Workplace culture is shaped by factors such as company values, policies, and processes, communication practices, the physical workspace, and leadership style (to name just a few).
When navigating the task of how to run a business, you have to make all sorts of decisions along the way — such as where you’ll be located, what pricing strategies you’ll use, and how to identify your target market to make sure your customer acquisition efforts are a success.
Then, as you consider how to scale your business, you might decide to hire some employees — which means even more decisions to make, such as how to pay your employees, what kind of training you’ll provide, how you’ll foster team collaboration, and what performance management techniques you’ll use.
Every decision you make about your business goes towards shaping your workplace culture.
When we talk about culture in the workplace, we’re talking about the overall environment you create for your team.
Your company culture ultimately determines whether or not your employees enjoy coming to work, how motivated and engaged they are, how comfortable and safe they feel, and how effectively they can perform their role.
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Why is workplace culture important for small businesses?
When you build a positive workplace culture, you’re essentially setting up your team, and your business, for success.
You’re creating an environment that allows your employees to do their best work — fostering smooth operations management, day-to-day productivity, and employee retention; all of which are crucial for running a profitable, financially healthy business.
A positive workplace culture helps to:
Attract and retain employees
Drive engagement, productivity, and job satisfaction
Facilitate teamwork and collaboration
Boost employee well-being and team morale
Build a positive reputation for your business (which can also help to nurture customer loyalty)
Altogether, a positive workplace culture is critical if you want to make the most of your small business budget, drive revenue, and increase your chances of longevity.
The cost of a toxic workplace culture
For small businesses with limited resources, the cost of a toxic workplace culture is particularly high.
Poor company culture leads to high employee turnover, a drop in productivity, potential damage to your reputation, and, in the worst possible case, legal actions or compliance issues.
While larger corporations may be able to weather the financial impact of a toxic culture, small businesses are more likely to run into operational and cash flow problems. And, if a toxic workplace culture is allowed to prevail long-term, your small business may even be at risk of folding completely.
The bottom line? An unhealthy company culture is not only miserable for everybody involved; it’s also extremely expensive. A positive workplace culture is not simply a nice-to-have; it’s an essential part of your small business risk management strategy.
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10 factors that contribute to a positive workplace culture
Workplace culture is the sum of many parts — some of them concrete and tangible, others more abstract. Among the most influential factors for a positive company culture are:
Strong company values
A core set of beliefs, principles, and practices that guide decision-making and general expectations across the business. You might define your company values when looking at how to create a USP for your business.
Transparent and trustworthy leadership
Communicating openly and honestly with your team helps to foster trust and confidence, ensuring that employees feel valued and secure.
Psychological safety
Creating an environment where employees feel safe to share ideas, voice their concerns, and make mistakes without fear of punishment. This is crucial for employee well-being, and for encouraging creativity and innovation.
Mutual respect and belonging
Every team member should feel valued, respected, welcomed, and included — regardless of their role or seniority. This helps to foster collaboration and boost loyalty, motivation, and job satisfaction.
Work-life balance
A positive company culture prioritises employee well-being and promotes a healthy work-life balance. This helps to reduce stress, avoid burnout, and keep employees happy and productive.
Opportunities to learn and grow
Most employees value the opportunity to learn new skills, develop personally and professionally, and take on new challenges at work.
Autonomy and purpose
Empowering employees to make decisions, take ownership of their work, and act autonomously helps to boost job satisfaction and a sense of accomplishment.
Physical comfort
This includes providing a clean, safe, comfortable, and accessible workspace (if you run a brick-and-mortar business).
Efficient processes
Streamlined workflows, clear communication channels, and equipping your employees with the right tools can all help to reduce frustration, eliminate bottlenecks, and ensure a productive working environment.
Clear and fair company policies
Establishing well-defined guidelines and protocols ensures clarity and consistency in how issues are handled, helping to reduce conflict, promote fairness, and set universal standards and expectations.
Whether you’re building a small team to help bring one of your online business ideas to life, or focusing on brick-and-mortar business opportunities, all of these factors together contribute to a happy, harmonious, and productive workplace culture.
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How to create a positive workplace culture: 5 high-impact strategies (plus key action points)
Perhaps you’re considering how to start a business from scratch and wondering: how do you build culture in the workplace? Or maybe you’re already up and running and want to know how to change your workplace culture for the better.
Whether you’re just starting out or already exploring business growth strategies, there’s plenty you can do to establish and maintain a positive workplace culture.
1. Define your core values
Your company values lay the foundation for your workplace culture. They represent your overall vision and purpose, and the principles that you want to live and do business by.
Core values help to provide clarity and direction. They’re like your company’s North star, steering everybody towards the same goal and fostering a strong sense of alignment. This is crucial for creating an efficient, productive, and collaborative workplace culture.
How to define your core values
When exploring small business ideas and setting up your company, what key goals did you set out to achieve?
Refer back to the company description, vision, and business goals you came up with when going through the process of how to write a business plan or how to write a mission statement.
If you’re running a café, for example, perhaps your mission is to create a warm and welcoming community space where everyone can come together, socialise, and enjoy high quality, home-made food from locally sourced ingredients.
With your mission in mind, brainstorm the values, principles, and actions that are crucial to your success.
In the hospitality sector, you might focus on values such as customer-centricity, transparency, and trust, for example.
If your mission involves creating a welcoming community space, your values might centre on inclusivity and accessibility. And, if your USP is based on serving locally sourced, home-made dishes, you might prioritise values such as quality and integrity.
Brainstorm as many different values as you can, then narrow it down to the most important — aiming for between three and five.
Values alone can feel rather abstract, so it’s important to relate them to concrete actions.
For each value you come up with, provide actionable examples of how you and your team can implement those values on a day-to-day basis.
If one of your core values is customer-centricity, you can action this value by regularly evaluating how to improve the customer experience, defining “what is good customer service?” and training your team in how to provide it, and establishing clear guidelines for how to deal with difficult clients.
Once you’ve defined your values and what they might look like in practice, share them with your team. Encourage all employees to keep your values in mind when going about their work and making decisions that impact the business.
Pro tip: If you’ve already got a team in place, consider brainstorming your company values together. You’ll benefit from a diversity of perspectives and foster a stronger sense of alignment and accountability among the team.
2. Promote open communication
The norms you establish around communication have a major impact on workplace culture.
Open communication fosters transparency and trust, facilitates collaboration and teamwork, and helps to avoid confusion and conflict. With a healthy approach to communication, you can create a productive environment where employees feel safe, respected, and included.
How to promote open communication in the workplace:
Open communication starts at the top, so model the communication behaviours you want to see from your team.
Communicate openly and regularly about how the business is doing and where it’s headed. Discuss goals and challenges, and keep your employees informed about important updates and changes — whether you’re looking at small business crowdfunding as part of your plans to expand, considering a change of venue, or experimenting with new product or service offerings.
Not only does this foster trust and security; it’s also an important part of effective change management for your small business, ensuring that operations continue to run smoothly as you grow and evolve.
Communication is a two-way street. Strive to build a workplace culture that encourages feedback and input from everybody.
The healthiest workplace cultures are those where employees feel safe and empowered to share their ideas, voice their concerns, and make suggestions.
Actively encourage feedback and input on a regular basis. You might ask employees one-on-one how they’re doing and what they think about, say, your plans for how to use social media for your small business, or if they have any ideas for how to get clients on board. You could also set up an anonymous feedback channel or suggestion box.
When it comes to receiving feedback, try to be as approachable and open-minded as possible. Listen actively, remain solution-focused (rather than getting defensive), and emphasise that feedback is both valued and appreciated.
Most importantly, make a conscious effort to act on the feedback you receive. Brainstorm solutions together with your team and communicate what steps you’ll take to make the necessary changes. This shows that you take feedback seriously, and that your employees’ opinions matter.
If you can foster a sense of camaraderie among your team, open and respectful communication will naturally follow.
Regular team get-togethers of any kind can be a great way to strengthen relationships, break down communication barriers, and create a space where everybody feels comfortable to contribute.
If you’re navigating the task of how to start an online business and foster a positive culture for your remote team, consider a weekly video call where you can discuss ideas or simply hang out as a team.
If you’re looking at how to create a positive working environment for your brick-and-mortar business, try to encourage semi-regular team lunches, break-room huddles, or team-building activities. This provides an informal setting in which employees can get to know each other — making it easier to communicate openly and respectfully in the workplace.
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3. Foster productivity and purpose
If your employees have a clear sense of purpose within your organisation — and feel empowered to fulfil it — they’ll be highly motivated and engaged.
This sense of purpose fuels productivity, which is crucial for achieving your goals, maintaining a positive net cash flow, and generally running a thriving business.
How to foster productivity and purpose
Define clear goals and expectations for both individual employees and the team as a whole.
Just as managing client expectations helps to ensure customer satisfaction, setting clear expectations for your employees helps to drive engagement and job satisfaction.
Make sure that every employee knows exactly what their role is and how it contributes to the overall company mission. Outline their tasks and responsibilities from day one, and set challenging but achievable goals they can work towards.
At the same time, set team objectives or targets on a monthly or quarterly basis (depending on what makes sense for your business). You might set monthly sales targets, for example, or set goals around customer retention — getting a certain number of customers to sign up for your loyalty scheme, for instance, or driving repeat purchases.
In your quest to create a productive and purpose-driven workplace culture, you must think carefully about how to motivate your employees.
One of the best things you can do is to encourage autonomy. Give your employees the freedom and agency to make decisions, come up with solutions, and take action.
Not only does this boost your employees’ confidence. It also promotes efficiency, problem-solving, and a general culture of “getting things done”.
Give your employees everything they need to succeed in the workplace.
Make sure all team members have the necessary tools to perform their role. If you run an online business, this might mean giving employees a laptop and providing access to relevant software.
If you run a brick-and-mortar business like a salon or a diner, this could involve providing employees with appropriate clothing, protective gear, and physical tools and equipment. You’ll also want to weigh up different payment options for small businesses and provide tools such as card machines and point-of-sale software to facilitate cashless payments.
In addition to tools, don’t underestimate the benefits of training your employees. Be it through workshops, online courses, or informal on-the-job instruction, equip your employees with the skills they need to thrive in the workplace.
4. Prioritise employee well-being
It’s impossible to build a positive workplace culture if you don’t take care of your employees’ well-being.
By prioritising health and happiness in the workplace, you show your employees that they are respected, valued, and cared for.
Neglect your employees’ well-being, on the other hand, and you’ll find that engagement and morale quickly take a nosedive — putting you on the fast-track towards a toxic workplace culture.
How to prioritise employee well-being as part of your workplace culture:
Psychological safety is consistently linked to higher performance and happiness at work — making it a crucial factor in building a positive workplace culture.
Psychological safety is about creating an environment where your employees feel emotionally safe. As a result, they’re not afraid to make mistakes, share ideas, and express their concerns.
Whether you’re only just thinking about how to hire employees or looking to improve your existing team culture, there are many steps you can take to nurture psychological safety. These include:
Leading with vulnerability: speak openly about your own setbacks and failures to show employees that it’s ok to make mistakes
Modelling respectful behaviour: treat all employees with fairness and respect, and make sure that everybody feels welcome, valued, and included
Addressing disrespectful behaviour: have a zero-tolerance policy towards any kind of disrespect or discrimination in the workplace, and make sure all employees are aware
Create a workplace culture that normalises breaks, time off, and reasonable working hours.
Whether your employees work online, on-site, or a mixture of the two, work-life balance is essential across all types of employment. Encourage your employees to take regular breaks, make sure they take sufficient time off, and leave enough time between shifts to allow for plenty of rest.
A healthy work-life balance is crucial for keeping employees happy, healthy, and fit to work — and for staving off stress and burnout.
If you’re running a brick-and-mortar enterprise, the physical workspace you provide has a major impact on employee well-being and company culture.
Besides navigating the legal requirements for starting a small business with a physical premises, it’s important to find a venue that’s safe, comfortable, and accessible for employees and customers alike.
In particular, make sure employees have a private break room away from customers, provide access to clean and hygienic kitchen and bathroom facilities, ensure that the premises are well-lit and well-ventilated, and, if necessary, consider creating a quiet zone for focused work or relaxation.
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5. Inject some fun into the workplace
Amongst all the rather serious aspects of running a business — like managing your small business finances, figuring out how to do a payroll, and getting to grips with cash flow management and small business tax — don’t forget to inject some fun into your workplace culture.
While it’s important to emphasise productivity and efficiency, all work and no play can make for a very dull workplace. Celebrating your successes and sharing some lighthearted moments with your team will help to boost morale, lift your employees’ spirits, reduce stress, and create a positive atmosphere.
How to create a fun and engaging workplace culture:
Regular social events help to foster team bonding and provide a break from the usual routine.
Whether it’s an informal book club, a monthly Come Dine With Me-style cook-off in the company kitchen, a team quiz, or a games night — try to create opportunities where everybody can get together in a fun, social capacity.
Alternatively, look for community events that you can attend together. This is a great way to combine small business networking and team bonding in one.
Make a point of highlighting the positives, recognising achievements, and celebrating milestones — however big or small.
And, if you’re worried about your small business expenses getting out of hand, note that there are many free and low-cost ways to celebrate your success.
If you have a weekly team meeting, you might spend the first five minutes reflecting on highlights from the previous week or thanking your team for something they did especially well.
For bigger milestones and achievements, you might have celebratory coffee and cake, hold a small office party, or go out for a team lunch. You could even set up a quarterly awards ceremony where employees can be nominated for various fun titles.
Create traditions and rituals that everybody can look forward to throughout the year.
Whether it’s dress-down Fridays, sweet treats on employee birthdays, or taking part in a yearly charity event; company traditions help to foster a sense of community and make sure that fun is a regular part of your workplace culture.
Pro tip: Bear in mind that everybody has their own definition of fun. Make sure that all social activities and traditions are inclusive, and seek input from your employees to find activities that everyone can enjoy. At the same time, don’t force participation or pressure your employees to give up their free time.
Key takeaways and next steps
Creating a positive, healthy, and productive workplace culture is a crucial part of running a successful business.
Whether you’re exploring creative ways to make money online or turning one of your side hustle ideas into a thriving brick-and-mortar enterprise, the environment you create for your employees impacts every area of your business — from productivity and engagement to team morale, your company reputation, and ultimately, your financial health.
Next steps
Assess your current workplace culture. Use employee surveys, one-to-one feedback sessions, and your own observations to evaluate the health of your existing workplace culture. You might also consider running a SWOT analysis for your small business to identify strengths and weaknesses.
Prioritise one or two strategies from our guide. Based on the strengths and weaknesses you’ve identified, choose one or two priority areas you want to improve. Then select the most relevant strategies and action points from our guide, adapting them to suit the specifics of your business.
Commit to continuous improvement. Affecting cultural change is an ongoing effort, not a one-time fix. With incremental changes and regular input from your employees, you can steadily build and improve your workplace culture.
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FAQs
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