5 Proven Ways Small Businesses Can Improve Workplace Culture

Why your small business should improve workplace culture

A strong culture has been shown to transform small businesses by boosting employee satisfaction, retention, and overall success. According to a survey-based research report by HR.com, The State of Employee Experience in SMBs 2024, companies with a positive work culture report 89% higher employee engagement and a 60% reduction in turnover rates compared to their peers. For small businesses, where every team member’s contributions are critical, fostering a thriving workplace culture is essential.

For many small business owners, the concept of workplace culture might feel intangible or secondary to day-to-day operations. However, the way your employees feel about their work and environment directly impacts productivity, loyalty, and innovation. Studies show that employees in supportive, engaging environments are more likely to stay longer and excel in their roles. Such findings underline the need for small businesses to put intentional focus on culture and strive to become great places to work.

The good news is that improving workplace culture doesn’t require a massive budget. It starts with intention and small, consistent actions. Below we outline five proven strategies to help you cultivate a better work environment for your team.

Why workplace culture matters

Workplace culture encompasses your company’s values, attitudes, and practices. It shapes how employees interact, make decisions, and approach their responsibilities. But its significance doesn’t stop at workplace dynamics; it also has measurable impacts on business performance. UKG and Great Place to Work Research shows that businesses that prioritize culture achieve:

• More than 6X higher employee satisfaction scores
• Up to 45% increased productivity among positively engaged teams
• Reduced risk of team burnout, a particularly notable benefit in high-pressure environments

HR.com’s report also highlights the consequences of neglecting culture. Poor culture contributes to low morale, increased turnover, and obstacles in employee performance. For small businesses, these drawbacks can stall growth and even threaten sustainability.

Investing in culture strengthens the foundation of your small business and sets the stage for long-term success. Here are five proven strategies for leading this transformation.

1. Listen to your team

Understanding the needs and concerns of employees is your first step toward fostering a great place to work. Employees experience the day-to-day realities of your business, putting them in a unique position to identify changes that may improve overall company culture.

The HR.com research report found that small businesses that consistently act on employee feedback are 30% more likely to meet their performance goals. More importantly, businesses that actively engage in this kind of communication report increased retention and improved employee morale.

Steps to take:

• Run thoughtful surveys: Develop surveys that allow anonymous feedback, enabling employees to share honest thoughts. Regularly conducted surveys show stronger alignment between leadership and employees.
• Hold feedback forums: Organize town halls or smaller group discussions to encourage open dialogue that encourages transparent communication.
• Take action on feedback: While gathering input is the first step, following through builds trust and shows employees their voices are valued.

To improve workplace culture, taking the time to listen fosters a culture where employees feel respected and understood.

2. Offer tools that prioritize employee well-being

Modern technology can streamline operations, enhance collaboration, and support employee well-being. Thoughtful investments in these tools can improve overall workplace dynamics and create room for employees to thrive.

Studies show that companies implementing digital engagement tools experience 25% fewer workplace disputes and higher overall team productivity, and businesses using wellness-focused technology see 52% of employees reporting improved focus and reduced workplace stress.

Tips for effective implementation:

• Introduce wellness platforms: Offer employees access to wellness apps and other tools that help promote a healthier mindset.
• Adopt user-friendly collaboration tools: Platforms like Microsoft Teams or Slack improve transparency and reduce communication silos.
• Provide training for adoption: Employees may hesitate to use these tools if they feel overwhelmed or untrained. Training sessions can help facilitate smoother adoption and maximize the tools’ effectiveness.

The right tools can create an environment where employees feel supported in managing their workloads and stress.

3. Improve workplace culture by empowering ownership and leadership from within 

Empowering employees at all levels encourages accountability and drives innovation. When people assume a degree of autonomy over their responsibilities, they’re more motivated to perform well.

Employees with decision-making autonomy experience 38% greater motivation, leading to stronger collaboration and more engaged teamwork.. Businesses should also create leadership opportunities for employees for a more positive impact on retention.

How to empower your team:

• Include employees in decision-making: Allow employees to weigh in on changes that affect their work as an inclusive practice gives employees a sense of value.
• Offer professional development: Courses, webinars, and mentorship programs demonstrate your commitment to your people’s growth. Team members are more likely to remain loyal to companies that prioritize skill-building.
• Recognize initiative: Beyond formal leadership roles, acknowledge employees who propose solutions or take the initiative to solve challenges.

Autonomy fuels both personal and business success by giving employees ownership of their roles.

4. Build a culture of recognition

Recognition is one of the simplest and most effective ways to boost morale, especially in small teams where contributions may otherwise go unnoticed. Regularly acknowledging efforts not only improves motivation but also strengthens workplace bonds.

Research shows that 72% of employees believe frequent recognition boosts loyalty and builds a sense of purpose and shared success.

Ways to foster recognition:

• Celebrate milestones regularly: Whether it’s a work anniversary or project completion, milestones are significant occasions to celebrate.
• Develop peer shout-outs: Apps can facilitate peer-driven recognition, which has been shown to strengthen workplace relationships and camaraderie.
• Create tangible rewards: Offering small prizes or plaques delivers a personal touch that employees appreciate.

By fostering frequent and authentic recognition, you demonstrate that contributions – big and small – are valued.

5. Unite employees behind a shared purpose

A sense of purpose can be a defining element of workplace culture. Employees who understand how their contributions tie into a broader mission report higher satisfaction and are more likely remain committed to their roles. Purpose-driven workplaces consistently outperform others with 50% better retention rates for high-performing employees.

Strategies for building purpose:

• Make your company’s mission clear: Consistent communication of your company’s vision and goals is essential. Regular updates during meetings or internal newsletters can help anchor employees in your mission.
• Align with impactful causes: Supporting nonprofit initiatives or sustainability efforts resonates with your people on a personal level.
• Showcase the bigger picture: Highlight how individual efforts lead to collective wins.

When employees feel connected to a mission, they’ll find greater meaning and joy in their day-to-day work.

Small Actions, Big Impact

Workplace culture is not a 'set it and forget it' concept; it requires consistent and deliberate effort. Strengthening culture doesn’t have to be costly or complex, but it does require sincerity and commitment. By applying these strategies, small businesses can improve workplace culture by creating an engaging environment that inspires their people and sets the business up for long-term success.

Check out this short demo to see how UKG Ready® can help you seamlessly turn your cultural standards into operational processes and make a positive impact on your people.