Business News

How does company culture assist with employee retention?

By Business & Finance
17 August 2018
employee engagement, healthy workplace

In the Employee Experience series, sponsored by Irish Life, we look at the most important initiatives for better employee experience. Does company culture and diversity initiatives affect employee retention?


Hiring based on shared values and beliefs leads to a better fit and lower employee turnover.

Is company culture important for employee retention? As the workplace is somewhere we spend most of our days, it makes a huge difference to our overall happiness if it is somewhere we feel ‘right’ in. A company culture which chimes with our own personal value system is more likely to lead to a shorter bedding in period after joining the company, greater feelings of loyalty and a more authentic work experience. 

Employee turnover is costly, and companies are increasingly looking at hiring based on a good cultural fit, as it leads to better employee retention. In order to do this, many employers first need to figure out what exactly their company culture is, and define it. Some work with consultants, some gather senior leaders into a committee – most, or at least those who are most effective – put it in writing, and make it part of the company’s story. 

Although company culture may have been an organic thing which grew from the personality of the founder, or a haphazard amalgamation of organisational beliefs, it is not necessarily set in stone. It needs to align with the vision and goals of the organisation – and if it doesn’t, it may be the case that the culture needs to change. For example if a company has as goals to be diverse and inclusive to all and aims to reach quotas of 30 per cent females at senior leadership and board level, then having a patriarchal misogynistic culture won’t cut it.

Having gone through the process of defining what exactly a company’s culture is, every decision, strategy and communication from the company should align with it. The tone from the top down should emphasise it. And the HR department should incorporate it into hiring policy, looking for prospective employees who are a good fit. 

Diversity and the workplace

Studies have shown that employees who don’t fit in with the existing company culture tend to display poorer work quality, decreased job satisfaction and higher turnover. Conversely, employees who are a good fit culturally and share a strong belief in the values of the company, are more likely to flourish within the organisation; they display greater job satisfaction, superior job performance and lower turnover. 


This doesn’t mean that everyone in the company should be cut from the same cloth or come from the same background. A good cultural fit means that employees align with the vision and goals – they don’t need to be carbon copies of each other. It has been shown time and again that more diverse teams bring better business outcomes, and a diverse hiring and interviewing panel will also speak to this. 

Assessing cultural fit

So how do you go about assessing cultural fit? Everyone has a bad recruitment story, and while experience and skills are visible on a CV, there is no way of telling for sure if someone will fit in well or flourish in an environment, until they are in situ. 

Asking the right questions at interview is crucial, tackling topics such as: 

  • Why do you believe you are the best candidate to work here, aside from technical expertise?
  • From what you have seen of this company, how would you describe its culture?
  • How would you describe the culture of your previous workplace? How well do you believe you fit in with it?
  • What is most important to you about an ideal workplace environment?
team culture

If time, or the process allows, getting a prospective candidate to spend some time touring the offices, sitting in with teams, or going out for lunch with some other employees will give valuable insights to both interviewer and interviewee as to how well they like and suit the environment. 

In the race to fill a position, rushing through the hiring process is more likely to lead to bad decisions – it’s better to be the tortoise than the hare, and give both parties time to get a good sense of each other, to make the best match. 

The Employee Experience Award sponsored by Irish Life will be held in October and nominations are open now. Categories include: Diversity, War for Talent, Agile Working and the overall Employee Experience Award. If you wish to nominate your company please fill in a very short questionnaire here.