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Organisational culture: Indicating factors, ROI and beyond.

Keywords: Organisation culture, corporate culture, management, performance, turnover, ROI


If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening. — Edgar Schein


Did you know? 46% of job seekers cite company culture as very important when choosing to apply to a company and 47% of active job seekers cite company culture as their driving reason for looking for work.


Culture is a term that is used regularly in workplace discussions. It is taken for granted that we understand what it means. In its very broadest sense, culture serves to delineate different groupings of people on the basis of the extent to which each group is perceived and perceives itself to share similar ways of seeing and interacting with the animate, inanimate and spiritual world (Benedict 1934; Kluckhohn & Strodtbeck 1961; Trompenaars 1993). In simple terms, culture is the acquired knowledge people use to interpret experience and generate behaviour."


But what do we actually mean when we say a company has a great culture?

Like wider delineations such as national culture, organisational culture may be generally described as a set of norms, beliefs, principles and ways of behaving that together give each organisation a distinctive character (Brown 1995).


One of the initial reliable studies on corporate culture was conducted by John Kotter, a Harvard Business Professor who is also known for his work in leading change. The study noted above focused on companies that strategically and continually worked hard to build and then sustain a high performing culture as a key part of their ongoing strategy versus companies that did not have a strategic focus on culture. Their research noted the following about the companies who recognized culture as a powerful strategic tool:


  • Revenues increased in these companies four times faster.

  • Job creation rates grew to seven times higher.

  • Stock prices increased 12 times faster.

  • Profits climbed 750% higher.

  • New revenue grew 700%.

  • Customer satisfaction doubled.

An often-cited example of good company culture is Google. With an employee count of 47,756, it hardly qualifies as a mom and pop shop, and yet people who work there describe it as having a small-company feel where no one hesitates to “spike a volleyball across the net at a corporate officer.” Every company has a culture, it might be dysfunctional or lackadaisical, but there is a culture.


Let us take a look at what are the indicating factors of a great company culture:


Employee satisfaction and turnover:

Employee satisfaction and turnover are strong indicators of company culture. Simply put, happy, engaged employees who are offered continued opportunities for growth are more likely to stay put.

In 2012, Gallup researchers studied 49,928 work units, including nearly 1.4 million employees to quantify the effects of engaged employees and strong culture. Work units in the top quartile in employee engagement outperformed bottom-quartile units by 10% on customer ratings, 22% in profitability, and 21% in productivity.

Work units in the top quartile also saw significantly lower turnover, absenteeism (37%), and fewer quality defects (41%).


Transparency:

Transparency from the organisation and the employee’s part go hand in hand.Transparency fosters trust, and trust is important for the health of every relationship under the sun. This increases happiness among employees, helps solicit ideas from everywhere, makes realistic goal setting easier and overall, makes for a smoother operation. Only 46% of employees say they have a “great deal of trust” in their employers. The top reasons for low trust are poor communication and lack of transparency. The ROI of investing in transparency is not only the present — it’s the future.


Leadership:

Work culture statistics indicate that fewer than one-third of business leaders truly grasp their corporation’s culture. While they understand its importance, they fail to fathom the culture itself. (Deloitte 2016).

When the leaders of an organization are at the forefront, in the center and available to all, it makes employees much more comfortable with the goals they are working towards and the mission of the company. Team leaders’ talent, skill, and knowledge can improve company culture and productivity exponentially. There is a whopping 70% difference in culture quality between companies with lousy and great team leaders. (Gallup). Ninety-two percent of CEOs report their organization is empathetic. However, only 50% of employees say their CEO is empathetic. This gap in perspective directly affects employee morale – 81% of employees would be willing to work longer hours if they felt their employer was empathetic. (Bonfyre).


Employee engagement:

Highly engaged business units achieve 59 percent less turnover (Gallup’s State of the American Workplace report). Employee engagement is a workplace approach resulting in the right conditions for all members of an organisation to give of their best each day, committed to their organisation’s goals and values, motivated to contribute to organisational success, with an enhanced sense of their own well-being. An employee who feels engaged and inspired is 125 percent more productive than the satisfied staffer (Bain & Company’s Time. Talent. Energy).


Clear goals and vision:

It has to be articulated and communicated throughout the organization, and then it can be lived out by the leadership and employees at every level. A positive company culture has values that every employee knows by heart. These values and this mission are accessible and branded into all of the company’s internal and external communications. (Biospace).

Employees are 23% more likely to stay in a company if the manager explains the goals and mission clearly, which also makes the employee more passionate about the job and 32% of job seekers are even willing to settle for a lower-paying job if it means the corporate culture and work is more aligned with their goals.


Source: https://www.aihr.com/blog/types-of-organizational-culture/


It is important to understand that getting a high-performance culture is hard work. It’s so much more than a benefits package or a shiny brand or a "fun" place to work or crazy perks. It’s so much more than a list of tasks to do or things to offer. It takes intention and a relentless pursuit of greatness to build a viable business culture that will give you a return on your investment. The responsibility for culture begins with leadership and becomes a responsibility of each employee; these functions are in a position to communicate the implications of the culture.


It is also important to note that the newer workforce constituting this generation represents 35% of the global workforce for whom corporate culture is more important than anything else. Around 75% are primarily interested in the work environment and professional growth. (HBR)

Taking into consideration the changes in recent times, what kind of organisational culture would you prefer?

 


About the author


Hi! I am C G Abilasha, I am doing my triple major in Psychology, English literature and journalism from Mount carmel college, Bangalore. I love all things related to the mind and how it works and how we can use and change it. But, Do I know any psychology jokes, you ask? I am A-Freud not. I’m interested in pursuing I/O psychology in the future. In my free time, you will find me playing with my dog and reading books.


 

References


Australian Journal of Management & Organisational Behaviour, 3(2), 91-99 © L. Willcoxson & B. Millett


Heinz, K. (2021, May 12). 42 Shocking Company Culture Statistics You Need to Know. Built In. https://builtin.com/company-culture/company-culture-statistics


McCullough, C. (2020). Corporate Culture and Investment Returns: The ROI of Company Culture. Rhythm Systems. https://www.rhythmsystems.com/blog/the-roi-of-company-culture


Nyhus, E. M. (2021, January 21). The ROI of company culture. Visma International Blog – Technology, Business & Life at Visma. https://www.visma.com/blog/the-roi-of-company-culture/

 





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