Importance of good workplace culture and its impact on employee retention

Importance of good workplace culture and its impact on employee retention
A plethora of studies have shown that the link between workplace culture and retention is real. 15% of job seekers declined a job offer due to the company’s culture

Good workplace culture but an average salary package or a toxic workplace culture but lucrative salary package- which one do you think is going to attract more people? I think the former one because this is a new age- the age of millennials. Unlike baby boomers who give more preference to a stable job and a paycheck, millennials are less likely to thrive in a toxic workplace. Millennials are more likely to be a part of an organization that offers a good work/life balance and the opportunity to grow. 

A plethora of studies have shown that the link between workplace culture and retention is real. 15% of job seekers declined a job offer due to the company’s culture (source- Builtin). This means you need to build a winning work culture in order to attract, engage and retain top talents. When employees feel belonged to an organization, they tend to feel settled, comfortable and therefore want to continue to be part of their work family. 

Why is Good Workplace Culture Important?

Besides increasing your retention rate, good company culture can offer you a lot of other benefits and some of them are mentioned below. 

Attract Top Talents

According to a report by Glassdoor, organizations that invest in delivering a strong candidate experience improve their quality of hire by 70 percent. This means by developing a healthy workplace you can hire the best players in your team. Therefore, you need to focus on fostering a workplace where employees feel valued and actually enjoy coming to the office every day.

Drive Engagement and Retention

No matter how attractive your employee benefits program is, you can’t retain your employees for long if you don’t have a positive workplace culture. A good workplace culture instills a sense of belonging among employees and when they feel connected, they are more likely to perform well and stay for a long time. You should offer them the flexibility to work from anywhere, avoid micromanaging, and offer them the support they need. 

Improve Internal Communication

A good workplace culture encourages employees to voice their opinions, and communicate effectively with their seniors or peers. When you create a culture of trust and transparency, your employees feel safe in discussing things with you, they give honest feedback, and they don’t hesitate to ask for help. This eliminates all the troubles that might be affecting their work or productivity.

Encourage Healthy Development 

With unnecessary drama and gossip, employees find it hard to concentrate on their work, which affects their productivity. This can cause a lot of damage to the business. Therefore, you need to eliminate all the causes that fan out negativity in the workplace. When you get rid of toxicity from the workplace, you create more opportunities for the employees to grow. This gives them more time to focus on things that matter the most. 

Drive Financial Performance

According to the Work Institute’s 2017 Retention Report, the cost of replacements after turnover is $45,000 a year, which is quite huge. You can reduce this cost by creating a good work culture. Your people will stay with your organization for long if you are offering them a great environment to work in. A good workplace culture helps in reducing absenteeism, which results in more productive hours. More productive hours mean more business. 

So these are some of the advantages of having a great work culture but how can you build one? Below are a few tips that can help you create a good work culture:

Tips to create a good work culture: 

1- Don’t be a boss, be a leader -A good job in a great company can become unbearable if an employee has to deal with a bad manager. Therefore, you need to focus on hiring great people for managerial positions. You need to train your managers to be people leaders not ‘The Boss’. Communicate frequently with your team members, listen to their voices, be there in times of need, avoid micromanaging and offer autonomy. 

2- Career development opportunities– Your employees need growth and development within your organization, so make sure you offer them immense opportunities for their career development. Nobody will work for the same position in the same organization for years to come. They need career advancement and the chance to unleash their potential, showcase their talents, and improve their caliber. Invest in learning and development programs and allow your employees to enhance their skillset. 

3- Frequent feedback– Receiving frequent feedback from employees is a great way to build a company culture. Let your employees speak and act on the things that need improvement on your end. You need to keep your communication channels open and be willing to listen to your employees at any time of the day. A simple- Hey, how are you doing?- can make a big difference. When your employees feel heard they feel valued and appreciated. 

4- Team building– Most of the time we consider team-building activities unfruitful. However, this isn’t true in any sense. Team building activities bring people together and foster a positive work culture. Therefore, one should focus on organizing team activities, indulging in frequent one-on-ones, planning team outings, short trips, or game nights. After all, teams that play together, stay together.     


Positive work culture, great career opportunities, a good work-life balance, and organizational policies have been cited as strong antecedents of employee retention.  Apart from high retention rates, good work culture can boost happiness and satisfaction which directly impacts performance and employee well-being. 


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