When your employees are off the clock, spending time with friends and family, what are they saying about your company? Do they say it’s a great place to work, using words like trusting, transparent, recognition, camaraderie, development, engaging? Or are they using words and phrases like draining, micromanagement, or, worse yet, “…meh…”?

The words your employees use to describe your business is a telling sign of your company’s culture. A healthy culture is one that fosters trust, innovation, engagement and team unity. A healthy culture has employees who stay and perhaps more importantly, customers who return.

Studies show that organizations with an unhealthy culture have higher rates of turnover, largely due to a simple reason … a bad culture creates a place employees don’t want to be.

In the Core Beliefs and Culture survey from Deloitte, which tallied responses from 1,310 employees and executives, respondents from companies without a strong culture said their customers and employees were less likely to be satisfied than respondents from companies with a strong sense of purpose and culture. “Organizations that have a culture of purpose focus on delivering meaningful impact for all of their stakeholders — customers, employees and communities,” said Punit Renjen, chairman of the board at Deloitte.

In a study from Burson-Marsteller and the Great Place to Work Institute, senior executives from top-ranked companies were asked about the value of a positive work environment. When asked which elements of workplace commitment most benefit daily operations, companies ranked culture at 80 percent and recruitment/retention at 70 percent. Trailing far behind, with less than 20 percent each, were items including competitiveness, customer loyalty, innovation and productivity.

James L. Heskett, author of The Culture Cycle, wrote that effective culture can account for 20 to 30 percent of the differential in corporate performance when compared with “culturally unremarkable” competitors.

Can your organization afford to ignore culture?

Tony Hsieh, CEO of Zappos.com, thinks culture is king. He’s seen an unhealthy culture firsthand at his first company, LinkExchange. In an interview with bigthink.com, Hsieh said that LinkExchange appeared to be doing well from the outside, but he soon realized something wasn’t right. “By the time we got to 100 people, we hired all the people with the right skill sets and experiences, but not all of them were culture fits,” he said. “And when we got to 100 people, I remember I, myself, dreaded getting out of bed in the morning to go to the office. That was kind of a weird feeling because this was a company that I co-founded and if I felt that way, then I wondered how all the other employees must have felt.”

That experience is why culture is the No. 1 priority at Zappos. “I wanted to make sure that I didn’t make that same mistake again,” Hsieh said. “From the beginning, culture has always been really important. Our whole belief is that if we get the culture right, then most of the other stuff, like delivering great service, or building a long-term, enduring brand, will just happen naturally on its own.”

BUILDING A STRONG CULTURE

What kind of culture does your organization have? While there may not be any obvious red flags of an unhealthy culture, a non-existent, unestablished culture can eventually be just as damaging. A culture, or lack thereof, can define an organization.

In an interview with Entrepreneur.com, culture expert David Vik shared his tips for building a strong company culture. Vik has worked with a multitude of companies to help them develop a culture, including Zappos. He said there are five key components to creating an “empowering culture.”

The first is to define your vision. Look at what your company is doing now and wants to do in the future. Vik stressed that it’s important not to limit yourself when defining what you do — stay broad with your definition to allow flexibility and change.

The second key component is to find your purpose. He shared the example that if you’re a bakery, you’re in business to provide the finest quality baked goods. “The purpose would be nourishing the world,” Vik said. Defining what your business is doing will help you identify what the reason behind the business is.

The third is to redefine your business model. What are the best avenues for bringing your services to your customers? Are there other players in the industry or related to the industry with whom you could partner?

The fourth component is to define your ‘wow’ factor. Vik recommends identifying what makes your business different from the rest, and then to be sure to always work to maintain that differentiating factor.

The final component is to stick by your values. Vik said a culture can’t survive if it doesn’t have a set of priorities. Define what’s important to you and what matters to your employees.

These components help you get a holistic idea of what your company is about and how it should operate, culturally. Once you’ve defined it, you have to put it into action. A large part of that responsibility lies with you — you must live and breathe the culture you’re trying to establish. If your employees don’t see you living it, they’ll find it hard to believe that the company truly supports that way of operating.

A GOOD FIT

But does simply building your company’s culture mean that you’ll have droves of perfect fit candidates lining up to work for you?

Unfortunately, building the culture isn’t enough. You have to find ways to embed it within your business practices, not the least of which is the hiring process.

You’ve likely heard about hiring for “fit” – finding candidates who match your organization’s culture is a sizeable portion of that challenge. Netchemia, a company that helps schools and educators streamline their processes, was experiencing a growth spurt. CEO Carlos Antequera knew that they needed to incorporate culture into their company’s hiring process from the beginning. In an Inc.com article, Antequera said he partnered with his management team to identify their company’s six core values. He tested those values with their existing employees to be sure that they were accurate. Those values are now an integral part of the hiring process: Job candidates meet with at least five current employees and are evaluated against the core values through specific interview questions. Netchemia has seen its employee base triple but has maintained its unique culture.

Antequera’s approach to developing the core values with his management team, as well as ensuring they resonated with current employees, was a great example of how the culture is a team effort. The process will move faster and you’ll see a more accurate result.

If you already have a healthy culture or are establishing one, you or your leadership team might be aware of existing employees who don’t fit that culture. Hsieh has been open about what happens to those employees at Zappos — they’re fired. “If someone is bad for our culture, we fire them,” he said. He explained that even those employees who are rockstars at their jobs and top performers aren’t safe if they don’t fit the culture. “Performance reviews are 50 percent based on whether you’re inspiring the Zappos culture in others.”

Once you’ve gotten your culture in place, what happens if and when your company expands to other locations? Part of your solution is already built in: making the right hiring decisions. But sometimes even if you hire all the right people, the culture doesn’t pick up traction. One solution is to put people in place who exemplify your organization’s culture.

John Mackey, CEO of the grocery chain Whole Foods Market, uses the yogurt metaphor for sustaining company culture. “The way yogurt works is you take the old yogurt culture and put it in milk. You have to put enough of the old culture in,” he said. “That old culture will convert the milk into yogurt. So when we start a new store, we make sure that we transfer enough starter culture from other stores that are already ‘Whole Fooders,’ who’ve already incorporated our values and culture within themselves into the store. If you get them in the key leadership positions and you do good training, you have the basis for the yogurt culture to transfer to the new store.”

Mackey said that if you’ve hired the right new people, they will be looking for ways to flourish at this new location. “If you provide that through leadership by example, people just naturally emulate it,” he said.