Google the term “company culture” and you’ll find yourself, like Alice, falling down a very deep rabbit hole. Only this one doesn’t lead to Wonderland.
It leads to a mind-bending universe of ideas and opinions. For example, you’ll discover there are five types of corporate culture, seven types of workplace culture, nine types of organizational culture, strengths-based cultures, values-based cultures, acquiescent cultures, positive cultures, dysfunctional cultures … and on and on and on.
Unfortunately, this glut of viewpoints hasn’t exactly helped business leaders. In fact, it’s made things curiouser and curiouser. Many leaders are as uncertain as ever about the type of company culture they should nurture within their own organizations. Their basic problem is succinctly summarized by Deloitte: “While culture is widely viewed as important, it is still largely not well understood; many organizations find it difficult to measure and even more difficult to manage.”
According to Deloitte’s 2016 Global Human Capital Trends survey, 82% of participants believe that culture is a potential competitive advantage but only 28% believe they understand their culture well. Even fewer (19%) believe they have the right culture.
Despite all this uncertainty, there is one thing more and more business leaders are sure of: company culture is a matter that deserves their attention.
Reason 1: Culture Drives the Bottom Line
The link between company culture and key performance indicators—including profitability, employee engagement and turnover—is well documented. Recent studies by Deloitte, the Great Place to Work Institute, Glassdoor, the Journal of Organizational Behavior, SHRM and LinkedIn all show that culture has both direct and indirect impacts on the bottom line.
Last year, The Wall Street Journal reported on a study of car dealerships showing stronger bottom lines are the result of corporate cultures that engage and motivate employees. Companies that showed no improvement in culture generally became less profitable over time.
A few weeks later, Fortune published a piece, “Corporate Culture and the Bottom Line,” that stated: “The publicly traded companies on (our) annual list of the 100 best workplaces outperform the S&P 500 3 to 1. Privately held businesses also enjoy superior performance: Overall, the 100 best companies to work for average nearly twice the annualized stock market return of the general market. Not only that, but these organizations also report lower turnover, less shrinkage, and a higher caliber of job applicants than other businesses.”
Clearly, figuring out the culture challenge is in the best interest of business leaders, not to mention their companies, employees and investors. It’s also essential to solving one of their top concerns—finding the right talent.
Reason 2: Culture Determines Your Talent Strategy
“Get your culture right and your talent strategy will follow.” This brief but brilliant line appears on the website of exaqueo, an employer branding firm that, for my money, gets the culture/talent equation right.
The firm’s philosophy is that employers “need to define the culture of their business and then create a plan to infuse and manage that culture to keep it alive.” Only by taking this crucial step can they consistently draw the right people to their companies—people who truly fit their culture and who will bring passion, dedication and innovation to their work day after day.
Of course, exaqueo isn’t the only organization that believes in this philosophy of aligning company culture and talent. It’s been spreading among employers and talent firms for the past several years. But creating this alignment can be tricky. Once you begin wading into issues such as values, behaviors, beliefs, practices (and all the other fuzzy concepts encompassed by culture and talent) it might feel like you’ve fallen into a bottomless rabbit hole.
The best way to fight this feeling is by taking small steps, as outlined at the end of the Harvard Business Review article, “Don’t Let Your Company Culture Just Happen.”
It takes real effort to get your culture right but the payoffs can be substantial—not only for your company’s bottom line but for your talent strategy as well