The Psychology Behind Company Culture: Why Putting Employees First Works for Business

By Katie McBeth

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Richard Branson

Company Culture has become a buzzword within the past decade. Businesses will spend thousands - or even millions - of dollars to reinvigorate their boring offices in an attempt to inspire their workers.

They’ll try everything: fitness centers, bright and colorful interiors, and even slides, ball pits, or video games.

Sometimes these massive overhauls work for the business. They find their niche, and their employees benefit. But other times, businesses will attempt so much only to get so little out of it.

Is your team a mixed cohort of mostly creative introverts? Or is there a 60:40 split between millennials and older generations? Or maybe your office is mostly remote workers, with very little face-to-face interaction. How can you build a culture that suits everyone?

When it comes to creating a company culture that works for your business, there isn’t really a step-by-step guide. There are plenty of suggestions around the web, but the only real way to know what will work for your business is to understand the psychology of what motivates your team.

Finding Your Flow

Flow: the state of mind where things come easily. A worker is fully focused, with creative energy, and ideas are populating rapidly. Flow is the ideal state for an employee to be in, yet that rarely seems to be the case.

Every year, Gallup releases a new State of the American Workplace study, and every year the same dilemma is the disengaged worker. Luckily, that number is slowly decreasing year after year, but as of the 2017 study 70% of employees state they are “not engaged” while at work. What is leading to this massive disengagement crisis?

Daniel Pink, author of the NY Times bestselling novel Drive: The Surprising Truth About What Motivates Us, is an expert at understanding the psychology of motivation. In his TED Talk based on his work, Pink describes a study done at MIT and funded by the Federal Reserve Bank. Results of the study found an interesting connection between monetary incentive and job performance. (You can watch an illustrated version of the talk here.)

As Pink describes: “As long as the task involved only mechanical skill, bonuses worked as they would be expected: the higher the pay, the better their performance. [...] but once the task called for even rudimentary cognitive skill, a larger reward resulted in poorer performance.”

To many people, this might seem backwards, and in fact it defies much of what we learn in basic economics.

Pink continues: “Money is a motivator [at work] but in a slightly strange way. If you don’t pay people enough, people won’t be motivated. There’s a curious paradox here: that the best use of money as a motivator is to pay people enough to take the issue of money off the table. Once you do that, there are three factors that lead to better performance and, not to mention, personal satisfaction: Autonomy, Mastery, and Purpose. [emphasis added]”

Pink’s idea of motivation is backed by many within the psychology profession. According to the University of Southern California, to truly succeed an employee must like their job. Money only motivates an employee up to a certain point, but after that, the employee has to enjoy what they are doing. Once they do, they can tap into their state of “flow” and become engaged in their work.  

Cultivating Flow

All this information is interesting, but how exactly does it play into workplace culture?

Well, to build a truly inspiring and positive workplace culture, you must keep those three key points in mind. Employees want to be autonomous, master a craft or study, and have a purpose. Creating an environment that promotes growth and creative flow for employees will help keep them engaged and will help the business become more profitable in turn.

How can a business cultivate this state of flow in their office? What sort of company incentives or projects should they look to build? Breaking down the three factors Pink mentioned, here’s some ideas to make your company culture work for every team.


Autonomy: Arguably one of the most important parts of autonomy for employees is for managers and leaders to avoid micromanagement. Allow your employees to communicate and ask questions when they need to - and certainly follow up on tasks that are falling behind - but otherwise leave them to their devices. This can build a stronger link of communication between manager and employee, but also will help prevent workplace disputes, and potentially workplace violence. No one likes a boss who hovers, and it can add tremendous amounts of stress to employees. Stress leads to outbursts, disengagement, and poor work performance.

Autonomy, however, allows employees to work on what they want, for as long as they want, with very little management supervision. Some businesses even create “free days” (Pink describes one business, Atlassian, that created “Fedex Days”) where employees get to work on whatever project they want for the day. No assignments, no expectations, just freedom. Surprisingly, it has solved hundreds of problems and led to truly innovative solutions. Isn’t that what every business should strive for?


Mastery: Many employees judge a business based on the current structure: are there opportunities to advance within the business? Employees can thrive when they’re given an opportunity to grow. Whether that means advancing into a new position, or simply learning and mastering a particular aspect of the industry; employees want to better themselves.

Every business might approach this motivator differently; some might even offer paid schooling for employees, such as the partnership between ASU Online and Starbucks. The important part is to not let your employee’s needs go stagnant. Don’t just talk about ideas but hold yourself accountable for implementing them. If you haven’t set aside time for up-training sessions or continued education, then perhaps it’s time to readjust your priorities a little bit. Both the employees and the business will benefit greatly from investing in your employee’s education. Fill a business with masters in the industry, and you’ll be on the fast track to success.


Purpose: This is where companies can get really creative: what is your company's purpose? Besides meeting goals and generating revenue, what purpose does your business give to the community? What about the country? What purpose does your business have in this world? Employees want insight into all these answers. How can they contribute and make an impact?

Some businesses have found their niche in volunteering. They partner with local non-profits or groups that allow their employees to contribute directly to the betterment of their city. Other businesses invest in corporate social responsibility (CSR), and create energy efficient and “green” offices for their employees. The options are almost endless, but the point is the same: find your business’s purpose and stick with it. As Pink describes, when profit becomes “unmoored” from purpose, “bad things tend to happen.” Quality of service declines, employee’s leave, and profits become stagnant. Talented people will leave a business if they don’t see a purpose for why they should stay. Find your purpose.


There’s a reason company culture is all the rage in the business world, but that reason only has merit when businesses find a culture that is successful. Not all ideas will work, but keeping in mind the three motivators that Pink mentioned in his talk, you can more accurately picture the culture that you want to create. Once you do, your people will let you know if it’s working.

Last bit of advice: let your people mold and provide input into your culture. The people who work for your business are not just cogs in the machine; they are bright, intelligent individuals with ideas, aspirations, and a desire to do good. Give them a baseline to start, but trust them and give them the autonomy to create a culture they want to work for.

Once you find your niche, your business will only improve from there. It has worked for giants like Apple, Google, and Salesforce. You can look at the list of the top employers in the nation and see that their cultures are genuine and work. There is merit in investing in your employees. Happy, engaged employees will carry you forward and into success. You just have to give them the space, knowledge, and purpose to succeed.


About the author:

Katie McBeth is a researcher and writer out of Boise, ID, with experience in marketing for small businesses and management. Her favorite subject of study is millennials, and she has been featured on Fortune Magazine and the Quiet Revolution. She writes during the day and snuggles up with a book and her three cats at night. You can follow her writing adventures on Instagram or Twitter: @ktmcbeth.

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