In professional and academic research, “company culture” is often misunderstood as a set of perks or office vibes. In reality, company culture is a deep-seated operating system. It’s the shared, often unconscious, set of beliefs that dictate how people behave when no one is watching.
The most widely accepted framework for understanding this comes from Edgar Schein, a pioneer in organisational psychology. To understand culture in a business sense, it helps to strip away the “soft” labels and look at the structural mechanics of how it functions.
1. What is Company Culture? (The Three Layers)
Schein’s model argues that culture exists on three levels. When people talk about “toxic culture” or “culture fit,” they are usually reacting to the top level, while the true source of the problem lies much deeper.
- Level 1: Artifacts (What you see): These are the visible elements such as the office layout, dress code, company handbook, and how people communicate. They are easy to observe but often misleading. You might see a “collaborative” open-plan office (the artifact), but that doesn’t tell you if people actually collaborate or rather fear being overheard.
- Level 2: Espoused Values (What you say): These are the mission statements, slogans and corporate values posted on the website. They represent how the company intends to operate.
- Level 3: Basic Underlying Assumptions (What you actually do): This is the core of culture. It consists of unconscious, taken-for-granted beliefs about how the world works. If leadership says “we value innovation” (Level 2) but consistently punishes employees who take risks that fail (Level 3 behavior), the actual culture is “risk aversion.”
The Definition of Company Culture: Company culture is the pattern of shared basic assumptions that the group has learned as it solved its problems of external adaptation and internal integration. It is the “way we do things around here” because it worked in the past.
2. How Does Culture Evolve?
Culture is not static, it’s an accumulation of historical experiences. It evolves through a process of collective learning.
- The Founder Effect: In a start-up for example, a company’s culture is essentially the personality, beliefs and values of its founder. As the business grows, these early “solutions” to problems (e.g. “we stayed up all night to save a client account”) harden into standard operating procedures and eventually become deeply held cultural assumptions.
- Success Reinforcement: If a specific behavior leads to success (e.g. aggressive sales tactics lead to rapid revenue growth), the company will repeat that behavior. Over time, it becomes the “right” way to act.
- Crisis and Transformation: Cultures often undergo radical shifts during periods of intense crisis. When old assumptions stop working (such as when a market shifts or a product fails) the organisation is forced to either adapt its underlying beliefs or face decline.
3. How Can it Be Controlled / Influenced?
The research suggests that culture cannot be “controlled” in a top-down, command-and-control manner. You cannot mandate a culture by printing it on a poster. You can, however, influence it by altering the environment and how you reinforce it.
Leadership is the primary lever for cultural influence. If you want to shift the culture, you must change what you explicitly reward, what you quietly tolerate and what you demonstrate in your everyday interactions.
- What Leaders Pay Attention To: Employees are experts at reading what leaders truly care about. If a leader only asks about financial metrics, they are signaling that “the numbers are the only thing that matters.” If they ask about team health, development, or obstacles, they are signaling that “people and process matter.”
- Reaction to Crisis: The most potent cultural signaling happens during a crisis. If a company claims to prioritise “integrity” but rewards an employee who hits their targets by cheating, the culture is set by that reward, not by the mission statement.
- Deliberate Role Modeling: Leaders transmit culture by demonstrating the behaviors they expect. The “Shadow of the Leader” is significant. People will mimic the behavior that gets a leader ahead, not the behavior described in the employee handbook.
- Selection: You influence culture by who you hire and who you promote. If you consistently hire people who share your desired values, the culture becomes self-reinforcing.
4. The “Toxic” or “Bad Fit” Dilemma
When research refers to “toxic” cultures, it often points to a misalignment between espoused values (what the company says) and underlying assumptions (what the company rewards).
When a person feels they are not a “good fit,” it is often because their personal underlying assumptions conflict with the organisation’s. For example, if an employee believes in radical transparency but joins an organisation where the underlying assumption is that “information is power and should be hoarded,” that friction is inevitable.
Culture is the long-term memory of an organisation. It is the sum of every lesson learned, every reward given, and every mistake tolerated. You change culture not by changing your message, but by changing the daily interactions and behaviors that are rewarded within the company.
5. Why Human Connection is Imperative
Most business leaders instinctively understand the importance of culture, motivation and employee engagement. Yet, when operational pressure mounts, these critical areas are often overlooked.
Conversations become purely transactional. Recognition is reserved for the final quarterly result. Appreciation becomes an assumption rather than an expression. Caught in the cycle of immediate deadlines, leaders often trade deep connection for superficial efficiency.
While this shift is common, it’s also costly. A strong workplace culture is a product of consistent human interaction. When leaders invest time in genuine connection, they create the conditions where motivation and commitment naturally thrive.
- Culture is the Sum of Everyday Moments: We often treat culture as a static entity, a set of values displayed on a wall, discussed at annual events, or embedded in formal onboarding programs. While these serve a purpose, they are only the framework. The lived experience of culture is defined by what happens in the office or on the video call each and every day.
- Culture is shaped by the subtle, recurring signals leaders send: Do you make time to listen, or do you only talk? Is effort acknowledged, or is it expected as the baseline? Are employees viewed as individuals, or are they treated as interchangeable resources? These moments may seem minor in isolation, but their cumulative effect is significant. They dictate how people feel about their organisation and, ultimately, how much discretionary effort they are willing to bring to their roles. Leaders must be conscious that their behaviour produces a culture, whether they have intentionally designed it or not.
- Connection as an Engagement Catalyst: Human connection at work does not require becoming close friends with your direct reports. It requires demonstrating genuine interest, being present in the moment and understanding the people behind the roles. Employees are looking for clarity, fair compensation and development. But they are also seeking meaning. When a leader takes the time to ask thoughtful questions and truly listens to the answers, they send a clear message: You are seen, and your work is vital. This is the bedrock of trust. When trust is established, teams are more willing to share ideas, raise concerns and take the appropriate risks required for innovation. Conversely, when leadership is perceived as distant or transactional, employees may fulfill their duties, but they will rarely offer the creativity and commitment that drive superior performance.
- Reframing Recognition: Recognition is often conflated with formal rewards, bonuses, annual awards, or performance reviews. While these are necessary, they are not a substitute for frequent, everyday acknowledgement. If recognition is exclusively tied to major KPIs, you risk ignoring the behaviours that make those outcomes possible: resilience, collaboration and consistent problem-solving. Leaders must recognise not just the what, but the how. Timing is also critical. Recognition is most potent when it is tethered to the event itself. Waiting for a quarterly review to acknowledge a significant effort diminishes the psychological impact of the praise.
- Making Connection a Leadership Practice: Human connection should not be left to personality or chance; it should be integrated into your standard approach.
- Prioritise one-to-ones: Use these sessions for more than just task-checking. Ask questions that explore challenges and successes.
- Listen to understand: Resist the urge to solve the problem immediately. Simply hearing an employee out is often the most powerful form of recognition.
- Follow up: Ensure that you are checking in on the ideas and concerns shared in previous conversations.
Consistency is the ultimate driver of culture. Employees will trust a predictable, genuine pattern of interaction far more than they will a single, high-profile initiative.
Ultimately, business performance is delivered by people. Strategies are executed by people and people perform at their best when they feel connected to their work, their colleagues and their leaders. Treat appreciation and recognition not as optional, but as essential leadership practices that drive sustainable results.