Culture and Climate Are More Than Just Good Vibes and Birthday Cakes

Choosing a job is a lot like picking out a car. Sure, the salary and benefits might catch your eye first – they’re a sleek exterior that looks so appealing. However, just like a car, it’s the engine that really matters. The company culture is what powers your day-to-day experience, keeps you going and determines how far you’ll go in the long run. A shiny paycheck might get you in the door, nevertheless it’s the right culture that truly drives your success, engagement and overall job satisfaction. When culture isn’t supportive, inclusive or aligned with your values, your commitment and loyalty to the company fades quickly.

Did you know that 90% of employees strongly consider the company culture when choosing a job? A positive workplace and strong culture directly influence attraction, productivity, engagement and retention. As organisations strive for growth, it’s becoming increasingly evident that culture and climate are important to long term success. So how can we actively shape and nurture a culture that aligns with organisational goals?

In this post, we’ll explore the importance of workplace culture and climate and how HR can guide businesses in cultivating a high performing culture.

Culture vs. Climate: What’s the Difference?

While both culture and climate are essential aspects of an organisation’s atmosphere, they refer to different things:

Culture represents the long-term values, beliefs and norms that shape the behaviour and practices within an organisation. It’s the “DNA” of a company. This is developed over time through leadership, policies, shared experiences and collective behaviours.

Culture can be presented formally through tangible guidelines; however it’s also heavily influenced by the unspoken actions and behaviours of those you work with, more importantly it’s the behaviours that are tolerated.

Climate refers to the mood or atmosphere in the workplace. It’s the collective feeling of the employees and can shift based on a variety of factors, from management decisions to external pressures.

When there’s a disconnect between the accepted behaviours and the policies or values, it creates a sense of uncertainty among the team. For example, if the company promotes a culture of collaboration and open communication, but has rigid, top-down policies that don’t consider employee feedback or autonomy, employees can become frustrated, confused and demotivated. This misalignment directly impacts the climate and can result in even the hardest workers burning out quick.

Studies have shown that culture is directly linked to business outcomes. According to a 2019 report by Gallup, organisations with strong cultures have 14% higher employee engagement and 30% better productivity. A well-defined culture attracts top talent, retention and drives innovation. Conversely, a toxic or unclear culture can lead to disengagement, high turnover and a lack of alignment with business objectives.

• 68% of employees say that a company’s culture is more important than salary when deciding whether to stay at a company (Deloitte, 2020).
• Organisations with high employee engagement see a 21% increase in profitability (Gallup, 2019).

A strong culture sets the foundation for business success, however it needs to be continuously nurtured.

As a leader, one of the most effective tools you can use to shape culture is through strong learning and development (L&D) programs. Effective L&D gives employees the opportunity to develop their skills and reinforces the behaviours that align with the company’s core values.

A great Learning and Development Program takes a holistic view of organisational culture. It’s not just about ticking boxes with compliance training or onboarding—it’s about shaping how people work together, lead, and grow. Skills like active listening, emotional intelligence, inclusive communication and conflict resolution are foundational to creating a psychologically safe and inclusive workplace. When leaders actively champion and invest in thoughtful Learning and Development initiatives, they send a clear message: growth is valued, people matter, and inclusion is non-negotiable. People are not just seen as resources, but as valued contributors with unique potential.

As Simon Sinek wisely puts it, “Leadership is not about being in charge. It’s about taking care of those in your charge.” This perspective is at the heart of what it means to build a thriving organisational culture where team are nurtured and developed at all levels.

A McKinsey study found that companies with robust leadership development programs enjoy 37% higher employee satisfaction and 25% greater retention rates. The message is clear: investing in leadership is about building a culture where everyone has the opportunity to lead, grow, and make an impact.

Culture and climate play a central role in shaping how people respond to change, and in today’s environment change comes quick and constant. Companies need to build a culture of continuous learning to create a workforce that is agile and open to change. McKinsey research shares up to 70% of change initiatives fail. Why? Often from poor communication, low trust and a lack of psychological safety. Employees who feel psychologically safe are 67% more likely to embrace organisational change.

While culture evolves over time, the climate within a workplace can shift rapidly based on many factors, change being a huge one. HR plays a crucial role in responding to the immediate needs of the team and improving the work environment, to ensure the climate doesn’t reach a point of toxicity. When managers actively support and engage in Learning and Development, it signals to the team that growth is highly encouraged. It’s not just about attending training sessions, it is about fostering curiosity, sharing knowledge, and creating space for people to stretch themselves.

• Making learning visible by sharing something new you’ve learned in a meeting or encouraging the team to bring insights from training into everyday work.
• Give people time to learn—block out space in the calendar, reduce non-essential tasks during training weeks, and treat development time as a priority, not an afterthought.

Managers can influence team culture by embodying the values and behaviours they want to see in their teams. Simple actions like showing empathy, fostering open communication and prioritising well-being can set a powerful example for employees.

• Switching off after hours and don’t send that Sunday night email. If you’re always “on,” your team will feel pressured to be too. Want your team to rest and recharge? Model that behaviour yourself.
• Encouraging team bonding through shared activities, casual check-ins, or celebrating wins together. Stronger relationships lead to better collaboration and a more supportive team dynamic.
• Leading by example in everyday moments. Employees are more likely to adopt positive behaviours they consistently see from their leaders – whether it’s taking part in team activities, recognising others’ contributions or celebrating milestones.

The key to building a positive climate is understanding how your team is currently feeling. Creating an environment where employees feel safe sharing feedback and ideas is crucial.

• Regular meetings (Both one on one and group): Ask open-ended questions about how employees are feeling, what challenges they’re facing and what improvements they suggest.
• Pulse surveys: Quick, anonymous surveys can provide valuable insights into current climate.
• Open forums for team members to express their thoughts on the current culture and identify areas for improvement.

Acknowledging both big and small achievements boosts morale and reinforces the values that make up a positive culture. Recognition should be timely, meaningful, and aligned with the team’s goals.

• Creating spaces for peer recognition, whether through team meetings or dedicated online channels. These platforms give team members a chance to celebrate each other’s contributions and share valuable insights.
• Tying recognition to the organisation’s core values, not just KPIs. Hitting targets is important, however so is living the values—whether it’s showing empathy, supporting a teammate, or driving collaboration. Recognising these behaviours reinforces the culture you want to build.
• Marking key milestoneslike anniversaries, birthdays or achievements to boost morale and show people they matter. These small gestures go a long way in fostering a people-first culture.

Hiring is one of the most powerful tools for building the right culture. Take the time to find people who align with your company values and not just the job description. Set clear expectations from the start about how the company operates and what to expect. As Jim Collins said in Good to Great, “Get the right people on the bus.”

• Including value-based interview questions to assess cultural fit, not just technical skills.
• Involving team members in the hiring process to gain diverse perspectives and ensure alignment.
• Clearly communicate the team’s purpose and expectations from day one to set the tone early.

Performance management sounds like a dirty word and it gets such a bad reputation in the workplace, but when done right, it becomes a tool to shape behaviour, support development, and strengthen team culture.

• Holding regular check-insthat focus not just on goals, but also on mindset, behaviours, and wellbeing. Performance management isn’t always about addressing poor performance – it can be to encourage better behaviours.
• Recognising and rewarding performance, not just high output. While hitting targets and delivering results is essential,how those outcomes are achieved matters just as much.
• Addressing misalignment early, with coaching and clarity, to support improvement and maintain team standards. Set clear expectations with actionable SMART goals.

Creating a positive workplace culture starts with investing in employee development. HR professionals are key to this transformation through strategic Learning and Development initiatives that align with organisational goals. A strong culture drives engagement, productivity, and long-term success.

Enquire about our L&D Programs designed to help your team develop and make your culture thrive or pass this post along to someone passionate about people and performance.

Call today on 1300 406 005 or email us info@performhr.com.au.