A leader’s guide to cultivating an effective business culture 

We speak to leadership experts for their advice on what makes a positive company culture and how leaders can play a role in nurturing it for the benefit of their business’ growth and success

The culture of your business should be more than a slogan written on a wall. It’s the shared values, beliefs, attitudes, and behaviors that characterise the business. Culture has been described as a company’s ‘unseen operating system’ which governs how everything works. 

With everyone working in a positive environment, embracing a company’s values and pushing towards a common goal, a good culture has many benefits. They include increased staff engagement and productivity, enhanced innovation, positive risk-taking, the sharing of new ideas, better talent attraction and retention, and improved financial performance. 

Leaders of a business play a critical role in building a living culture. They should take steps to create a positive culture in the early days of a business and maintain and adapt to it as the organisation grows.   

Key components of a good company culture 

There are several must-haves for any good company culture.  

A crucial one is psychological safety. Harvard Business School professor Amy Edmondson first coined the term in 1999 when she defined it as a ‘shared belief held by members of a team that the team is safe for interpersonal risk-taking.’  

She said when this works individuals have ‘a sense of confidence that the team will not embarrass, reject, or punish someone for speaking up’ and it’s a ‘team climate characterised by interpersonal trust and mutual respect in which people are comfortable being themselves.’ 

Equally important for a positive company culture is one that embraces growth and development opportunities. 

 ‘Great cultures are learning cultures’, said Simon Phillips, author and founder of The Change Maker Group.  

‘They provide clear pathways for professional development, celebrate curiosity, and view challenges as opportunities to grow rather than threats to avoid. This means investing in training, mentoring, and creating stretch assignments that help people expand their capabilities whilst contributing to business objectives.’ 

Phillips also says that a good company culture is one that has a ‘genuine care for people’ and goes beyond surface level perks by understanding that people have lives, aspirations, and challenges outside of work.  

He advises ‘flexible working arrangements where possible, recognition that celebrates both effort and achievement, and leadership that takes a genuine interest in each person’s wellbeing and career aspirations.’ 

For Jeremy Stockdale from leadership consultancy Ylead, cognitive diversity, also known as diversity of thought, is an important element of an effective company culture.  

‘The culture based on cognitive diversity attracts talent and encourages contributions from a diverse range of backgrounds, personalities, and ways of thinking, which enables better decision-making and reinforces a culture where everyone’s input is valued’, he says. 

How leaders can cultivate a good company culture 

Culture is set at the top and leaders are crucial to nurturing a positive culture.  

‘Leaders must consciously be aware that their behaviours, communications, and decisions are telling people what is expected and what is tolerated,’ says Jeremy Stockdale. ‘If they get it wrong, they should acknowledge it and use this as a way of communicating what is really expected.  

Simon Phillips says leaders should start by understanding themselves. ‘Before you can lead others effectively, you must understand your own leadership energy and impact.  

‘This means honestly assessing your natural tendencies, strengths, and blind spots. Are you naturally a change catalyst, a strategic thinker, or an implementer? Understanding your leadership DNA helps you lead authentically and identify where you need support from others.’ 

Creating an inclusive environment 

Experts agree that listening is key to good culture. It’s important to create meaningful opportunities for people to share feedback, concerns, and ideas. This can be tools like surveys and focus groups, but also proactively making time for two-way discussion between staff and their leaders. Always act on what you learn from your team. 

Collaboration is important too. ‘Leaders set the tone and create the conditions, but culture emerges from the daily actions of every team member’, says Phillips. 

‘Break down silos and create opportunities for people to work together towards common goals. Great cultures are built on we, not I’. Use digital tools like Teams and Slack, and have regular and purposeful company meetings. 

Celebrating and learning from both successes and failures is another tip from Stockdale. ‘Recognising and rewarding achievements, no matter how significant, is the best way to reinforce what’s expected and valued’ he says.  

‘People respond to positive reinforcement far more than admonishment. When failures occur, these should be celebrated too as learning experiences, rather than opportunities to apportion blame. A culture that celebrates progress and nurtures growth builds loyalty and momentum.’ 

Common business culture mistakes to avoid 

Philips highlights the most common mistakes business leaders should avoid when it comes to culture.  

Confusing culture with perks 

 Ping pong tables and free snacks don’t create culture. They’re just surface level additions. Real culture is about how decisions are made, how people treat each other during difficult times, and whether actions align with stated values. Focus on the fundamentals: trust, communication, shared purpose, and mutual respect. 

Inconsistency between words and actions 

 Nothing destroys culture faster than leaders who espouse certain values but act differently when under pressure. If you say people are your greatest asset but consistently prioritise short-term profits over employee wellbeing, your team will notice. Culture is built through consistent behaviour over time, not inspiring speeches. 

Measuring the wrong things 

What gets measured gets attention. If you only measure financial outcomes, that’s what people will focus on. Include cultural metrics in your regular reporting: employee engagement scores, retention rates, internal promotion percentages, and feedback on leadership effectiveness. Make culture as visible and important as financial performance. 

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