Company culture is essentially a company’s personality. It consists of the values, beliefs, underlying assumptions and behaviors that impact every aspect of an organization’s activities. It defines the environment in which people work; and it exists in all organizations, whether created through careful design and implementation or through natural evolution as a company grows.
Why Does Company Culture Matter?
The concept of company culture has taken on even greater importance recently because of the increased need for businesses to attract and retain talent, improve productivity, and stay competitive in a highly competitive business environment.
Recent studies by Cisco and others have proven that corporate culture has a strong influence on economic performance. These studies have shown that positive work cultures drive better financial results. In contrast, companies with negative work cultures are faced with financial repercussions in the form of higher healthcare costs due to stress in the workplace. On average, these organizations experience a 37% higher absenteeism rate. Moreover, their employees are significantly less engaged in their work, and according to the Gallup Organization, disengaged employees create 60% more errors in their work.
Significantly, in the organizations Gallup surveyed, those with low employee engagement scores also demonstrated 18% lower productivity, 16% lower profitability, and 65% lower share price over time.
And yet, despite the increased focus on culture-building as a lever for improved company performance, results from Deloitte’s recent Global Human Capital Trends Report found that only 12% of respondents believed that their company is creating the right type of culture for their organization. And only 30% of respondents said they understood their own organization’s culture. Clearly, organizations (specifically the leadership and management in those organizations) need to start investing more in cultivating a healthy company culture. Simply put, it’s in the best interests of both the employees and the company.
What Does a Healthy Company Culture Look Like?
This chart shows you what a positive company culture looks like compared to a toxic company culture.
|Characteristics of Positive Work Cultures:||Characteristics of Toxic Work Cultures:|
|• Mission and values are aligned
• Roles and accountabilities are clearly defined
• Focus is on performance
• Communication is open and transparent
• Employees support each other
• Innovation is rewarded
• High change agility and ability to recover from set-backs is supported
|• Lack of strategic alignment
• Unrealistic deadlines and work demands
• “Us” vs. “Them” dynamics
• Blame-focused communication
• Lack of expressed appreciation
• Low levels of empowerment and engagement
• Fear of speaking truth to power
What Is Leadership’s Role in Creating a Healthy Company Culture?
- Shape Company Culture. Defining a company’s culture starts at the top with the CEO, who works with the senior management to articulate the core values and behaviors that reflect the company’s DNA.
- Embody Company Culture. Leaders must model the company’s culture through their behaviors, including what they say and don’t say. Their actions and the way they interact with their team every day can either reinforce or contradict that.
A CEO I worked with several years ago learned this the hard way. One of the company values that he emphasized was the commitment to open and transparent communication, both among employees and between himself and his managers. One day during a management team meeting, he made some negative remarks about the performance of one of the managers who was not present. Following the meeting, he was caught off-guard when several managers confronted him about his remarks, which had violated the very company values he espoused. After getting over his initial embarrassment, he apologized to the team member and thanked the other managers for calling him out. His comment to me when we discussed the incident was, “Now I get it. Every day I have the power to make or break my organization’s culture!”
- Reinforce Company Culture. The “company culture” is more than just a written document that is sent out to employees with the expectation that everyone will automatically get on board with it. Well-intentioned but superficial attempts at building culture, such as simply putting up motivational posters, don’t work either. The culture needs to be an authentic, sustainable one that increases employee engagement and retains talent. These leadership “best practices” are critical for reinforcing culture:
- Say Something. Take every opportunity to clearly communicate what the organization’s values are and publicly recognize examples of your people supporting company values through both their words and actions.
- Reinforce Employee Engagement. People are motivated by feeling valued, having a sense of purpose at work, and knowing that their job is meaningful. Communicate to employees how “living the values” each day provides an opportunity for all of them to make an impact on the organization’s overall success.
- Train Leadership and Management. In order to make the desired culture “stick”, all leaders and managers need to be coached in how to reinforce the values and model the behaviors. Every manager at every level is a link in the leadership chain that connects culture to business results.
- Take the Company’s Pulse. Make time to informally interact with employees about the company culture. For example, you can get a group of employees together over coffee and say, “One of our values is finding opportunities for joint problem-solving between departments. How are we doing? How can we do more of it?”
How Healthy is Your Company’s Culture?
This goes along the lines of taking the company’s pulse in a more formal sense. How would people in your organization describe the current state of its culture? Since the quality of a company’s culture has been demonstrated to impact both employee engagement and financial performance, many companies find it extremely worthwhile to solicit employee input regarding the relative strengths and weaknesses of the company’s culture. Soliciting employee feedback can create a dialog that reveals valuable information about what’s working and not working from a perspective beyond the C-suite. It has been found to increase employee engagement and reinforce leadership’s commitment to listening to employees. However, the positive outcomes can quickly be canceled if employees perceive that there no real change has occurred as a result of the activity.
When TerconPartners is asked to work with a client to obtain employee feedback about the company’s culture, we often recommend a twelve- question survey that queries issues such as accountability for results, support for innovation, and the ability to deal with conflict constructively.
A strong, positive company culture is an essential part of building and maintaining a successful business enterprise. The benefits of the time invested in nurturing and reinforcing this culture continually increases the company’s competitive advantages. With a healthy culture in place, all that’s left for the CEO and the leadership team to do is pretty simple:
- Set clear direction
- Give people the resources they need to succeed
- Get out of the way!