A Healthy Culture is Money in the Bank
Definition of Company Culture: The combination of values, beliefs, behaviors, personality, and informal rules that guides the company in its day-to-day interactions.
Culture is the differentiator and the greatest predictor of continued company success. It starts at the bottom and it starts at the top. Everyone owns it. It’s the air we breathe. More than a cliché, company culture is a key business driver.
Here are some statistics —
Kotter and Heskett in Corporate Culture and Performance found that strong, adaptive corporate cultures grow four times faster than companies that did not have this type of culture. Also they created jobs seven times higher. Stock prices grew twelve times faster. And net income growth was 750 times higher with healthy cultures than companies that did not have shared values and robust cultures.
Jim Collins in Built to Last proved that companies that consistently focused on building strong values-driven cultures over a period of a decade outperformed companies that did not, by a factor of 6, and outperformed the general stock market by a factor of 15.
Done right, culture is the most powerful engagement tool an organization has. When we get it right, it sustains a workforce through good and bad times and it impacts everyone – employees, customers, and ultimately the shareholders. Few things in business are clear, but building and maintaining a healthy culture is crystal clear.
The way culture produces profit is largely the result of two things. First, by hiring the right people in the first place. Second, by knowing them personally, training them well, and appreciating them regularly. A robust culture takes care of them and they in turn take care of business.
Most companies have slimmed down, which means that a healthy culture is even more important. When employees are well treated and well trained, culture becomes a competitive advantage. A lack-luster, overly-critical, or tone deaf culture results in a disengaged and unplugged workforce.
The secret is to hire FOR culture. Identify the values and behaviors of your company and interview for that criterion. If candidates can’t demonstrate that they’ve got what you are looking for in their DNA, they are not a candidate for your company.
Once you hire them, your culture is what glues them to your company and significantly reduces turnover. You don’t want to lose good people. Even in $12 per hour positions, the costs of replacing one person can be upwards of $12,000. At senior levels it is generally 3 times the annual salary.
Google, Apple, and Trader Joe’s have something in common – highly developed cultures that keep employees and regularly delight customers. Interestingly it isn’t about throwing money at people. Some actually compensate at 10% below the norm. Smart organizations work hard to develop a culture of loyal fans, a dream company where the best want to work, a “Firm of Endearment.” Culture makes going to work on Mondays as much fun as Fridays because the atmosphere is consistently friendly, fair, and provides all employees the freedom to Make a Difference. Do Good. Make a Dent in the Universe.
Culture answers the questions of:
- How should I behave towards others?
- How hard should I work?
- How should I treat customers?
- What is most important in my role here?
Ultimately a healthy culture produces significant financial results because it creates an environment that:
- Is easier and less expensive to recruit new employees because the company has a great reputation
- Has lower turnover with the current employees because it is “The Place to Work”
- Generates greater productivity from employees because they enjoy their work and have autonomy to make it right for all customers
- Has more loyal customers because they are well treated by every person they encounter
- Produces greater brand and market value because customers have become the marketers…think social media and the impact of getting great reviews on Face Book, LinkedIn, Google, Amazon, Trip Advisor, Open Table, and Angie’s List.
Conrad N. Hilton said it well in 1954 in an inspirational speech at the American Hotel Association Conference, “…it is our responsibility to fill the earth with the light and warmth of hospitality.”