We’ve been hearing a lot of buzz about creating the perfect workplace culture. From ping pong tables to flexible work hours, companies are going to great lengths to create a work environment their employees are excited to clock in and out of. But does this focus on culture hold water from a fiscal and strategic perspective, or is it the equivalent of a fast-fashion trend — in today and out tomorrow?
Let’s put it this way: as you grow your business, there are very few levers you can pull to help you stay ahead of the competition, but your company culture can differentiate you from the rest.
A focus on culture can net your organization numerous benefits, including:
- Attracting the Right People. A strong culture can serve as a magnet, attracting highly qualified candidates and giving you an advantage over the competition in hiring the best and brightest.
- Retaining Great Talent. Finding the right people takes time, so once you’ve got them in the door, you’ll want to keep them around as long as you can. A winning culture is one that nurtures, grows, challenges and empowers your employees. When your best, most experienced employees feel valued, they’re slow to leave for greener pastures, helping you stay ahead of the innovation game.
- Keeping Employees Engaged. As stated above, a winning culture keeps employees excited about coming to work. In addition to helping you retain good employees, this also helps reduce costs associated with unplanned turnover and absenteeism, leaving margin available to deploy in ways that help gain more market share.
- Inspiring Discretionary Effort. If your people are happy, they’re more likely to go above and beyond for you and your customers. And if your people consistently work smarter and harder than the other guys, you win.
The context for these benefits is intuitive: People want to feel valued by their organization. They want to make a difference — to believe in their company’s mission, create positive change, make their voices heard and exert influence.
By developing a culture that elevates your employees, you create an environment where they’re willing to go the extra mile — and that can lead to real, tangible benefits for your company.
If this analysis still seems a bit squishy, here are the hard facts: A number of studies have found a strong, positive correlation between a company’s culture and its bottom line. That means the extra effort you expend on developing and nurturing a successful culture will pay off — literally. A few highlights:
- In their 2017 State of the American Workplace, Gallup reported that disengaged workers are absent 37% more often, have 49% more accidents and have 60% more errors and defects in their work.
- In a 2006 report on employee engagement, The Conference Board found that companies with high employee engagement have reduced turnover — their voluntary turnover rates are half of that of average employers.
- In an extensive study of 200 corporate cultures, Drs. Kotter and Heskett found that companies with strong, performance-enhancing cultures experienced an average net profit growth of 756% over an 11-year period, as compared to an average net profit growth of 1% among companies that didn’t prioritize culture.
The evidence supports intuition —organizations that are intentional about the culture foster engaged employees who consistently give discretionary effort. This, in turn, leads to better work output, reduced turnover and bottom-line results. When your tribe is better than their tribe, you win.
To learn more about creating a healthy organizational culture, check out our eBook, How CEOs Drive Change.