Can Company Culture Be a Competitive Advantage?

2 weeks ago

A quiet skepticism still lingers in business corridors. When the conversation turns to company culture, many executives inwardly sigh: "Are we talking about the 'soft stuff' again? Let's look at the sales figures instead." This is a natural reaction in a market that has been taught for decades that success is measured solely by profit margins and that an employee is merely a resource to be optimized.

However, today we see a paradox: companies paying the highest salaries in the market are still losing talent. Strategies that look perfect on paper fail in reality. Why? Because business has forgotten one essential truth: organizational culture isn't just a Friday party. It is the business operating system. And today, more than ever before, it is becoming a critical competitive advantage.

The Salary War: Why Money Is No Longer a Shield?

One of the most common questions leaders ask is: "Do we really need to invest in culture if we can just raise salaries?" It is a valid question. However, the answer lies in human psychology. Yes, salary is a hygienic factor—if it is too low, culture won’t help. But if it meets the market average, additional euros have diminishing returns on motivation. This is called hedonic adaptation: after receiving a 20% raise, we are happy for two months, but by the third month, it becomes the "norm," and dissatisfaction with the work returns.

This is where the difference opens up between companies that compete solely on money and those with a strong culture. When competing only on salary, you attract mercenaries—people who will leave for a competitor the moment they offer just 100 euros more. Meanwhile, a strong company culture attracts missionaries—people who believe in the organization's purpose and stay even during tough times.

Do Companies Really Compete on Culture, or Is It Just "Culture Washing"?

The reality is two-fold. Some companies still treat culture as a marketing gimmick. This is called "Culture Washing."

Much like "Greenwashing" in ecology, these companies externally declare trendy values (e.g., "we are flexible," "we are a family"), but the reality in the office resembles a 90s factory with a strict hierarchy. Such a mismatch between words and actions is the most toxic thing for an organization—employees sense it instantly and react with cynicism.

However, market leaders behave differently. They use culture not as a poster, but as a strategic weapon that creates three tangible advantages:

1. Speed through Trust: In traditional companies, decisions are coordinated through five layers of management. A culture based on trust allows employees to make decisions independently. This means such a company moves 10 times faster. This is a true competitive advantage.

2. Innovation through Safety: If an employee is afraid of making a mistake, they will never suggest anything new. Companies that have created an environment safe for failure constantly outpace competitors with new products.

3. Reputation (EVP): Top talent talks. If your company has a "toxic" atmosphere, no amount of money will force an A-level specialist to join you.

A Real Success Story

This isn't just theory; examples of Lithuanian business success illustrate this perfectly. Nord Security, which became a unicorn in 2022, is a textbook example of how culture becomes a key driver of business success.

This company grew without external investment (bootstrapping). How did they manage to outcompete global giants? The answer is their cultural principle of "Ownership."

They didn't create bureaucratic processes. Instead, they instilled a culture where everyone—from the programmer to the customer support specialist—feels responsible for the final result. If you see a problem, you solve it, rather than writing a report to a manager. This cultural aspect allowed them to move at incredible speed and adapt to the market faster than their competitors.

8 Steps: How to Create Such a Culture?

If we understand that culture is more than foosball or free coffee, the question arises - how do we create it? Culture is what happens in reality - it is those silent rules of engagement that no one says out loud, but everyone follows.

Here are 8 steps for HR professionals and leaders:

1. Turn Values into Verbs. A common mistake is using abstract concepts like "innovation" or "respect" (by the way, do you know what values employees and employers in Lithuania actually rely on?). They mean nothing until it is clear what they look like in practice. Define the behavior: "We don't talk behind backs," "We always give feedback." 

2. Leaders Must Walk the Talk. Employees are excellent detectives. They observe not what is said during annual presentations, but what leaders tolerate in daily life. If a manager declares work-life balance but sends emails on weekends, the culture collapses.

3. Invest in Middle Management. Deloitte research shows that the atmosphere is most heavily shaped by direct supervisors. HR can create a wonderful strategy, but if a team lead behaves toxically every day, the strategy will not work.

4. From "Culture Fit" to "Culture Add". Strengthen your Employer Value Proposition (EVP) by abandoning the search for "clones." Looking only for people who "fit" implies stagnation. Move towards "Culture Add"—look for those who share your values but bring a new perspective or experience that the team lacked. This is the only way to avoid the "bubble" effect.

5. Onboarding: Cultural Baptism. Organizational culture must be felt by a new hire on day one. If an employee is left to fend for themselves during the first week, they get the message: "You are just a cog." Use this time to build an emotional connection.

6. Transparency, Even When It Hurts. Trust isn't built when everything is going well. It is built during crises. Does leadership share bad news? Organizations that treat employees like adults win their loyalty.

7. A Growth Culture: Feedback and Recognition. Annual reviews are a relic. In a modern company, feedback happens continuously, and recognition is given not just for numbers, but for behavior. Do you celebrate when an employee helps a colleague, even if it wasn't their duty? That creates real motivation.

8. Offboarding. This is a frequently forgotten but critical moment. A dignified farewell to a departing employee signals to those remaining that the company values the human being, not just their function.

Why It Matters for People, Not Just Profit

Finally, why should we, as human beings, care? Because a poor culture is damaging. If employees experience constant tension, disrespect, work stress, or even burnout, it becomes not just a business problem, but a public health issue.

A strong culture provides meaning. We spend a third of our lives at work. Working in an environment where there is trust, where your voice is heard, and where you feel part of something bigger is the foundation of psychological stability. When a company wins the competitive battle through its culture, the employee wins too—they get a dignified, growing, and safe space to realize themselves.

So, let's return to the initial question: can company culture be a competitive advantage?

Yes, and perhaps the only sustainable one. Products can be copied, prices can be lowered, strategies can be adopted. But no one can steal that feeling, that bond, and that passion possessed by the people in an organization.

Companies that understand this don't just "contribute" to culture—they make culture the axis of their business. They don't compete on salaries; they compete on meaning.

In closing—one question worth considering for every leader:

If tomorrow all products, offices, and technologies were taken away from your company, and only the people and the way they interact remained—would you still be a strong organization?