Why company culture is so important
Friday, January 10, 2014
Unless you've spent the last decade or so living under a rock, you've definitely heard the phrase "company culture" being bandied about. And while it's become the center of attention in many discussions about how to build a successful company, I have to wonder if everyone who talks about company culture actually understands what it means and how to create and maintain an authentic one.
Let's consider the definition of company or organizational culture and why it matters.
Company Culture Sets the Tone
Some say company culture is quite simply a company’s personality. Others say it is how a company gets things done. And yet still others say it's the "beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions."
I would argue that it is all of this and more: A company's culture is the foundation or undercurrent upon which it bases — consciously and subconsciously — all internal and external decisions and interactions. It is the tangible and intangible aspects of an organization and the individuals who ascribe to them; it is a common belief structure that dictates the direction of the company as well as its mission and values.
Every company has a culture, whether it's actively curated — or even acknowledged — or not. And no culture is innately positive or negative, good or bad — it is all a matter of individual perspective and fit. It's a matter of what you, your employees, your customers and your partners want it to be.
Bad Culture = Bad Business
That being said, alignment is key. If your employees, customers or partners believe that your culture is bad for them, it can be bad for your business. The author of this article states that, according to the US News and World Report, a poor company culture is one of the main reasons employees are unhappy in their jobs. In other words, culture matters, and for many it's worth leaving a job over.
And before they actually do leave, unhappy employees can cause quite the financial burden. According to this article, Gallup found that lost productivity resulting from employee disengagement costs the U.S. more than $300 billion a year. Imagine what even a fraction of that loss could mean for a small business. If you don't see the connection yet, consider this: Another Gallup study found that employees' feelings about an organization can actually predict future business sales and profits.
People Perform Better When They're Happier
The article cited above sums it all up perfectly: "People perform better when they’re happier," and this translates directly into a better, healthier work environment and a more profitable bottom line. Just ask the authors of the book "Firms of Endearment." After researching hundreds of companies, they found that businesses loved by everyone — employees, customers, suppliers and the community — are significantly more successful than those that are not.
In fact, the companies highlighted in the book are also "wonderful for investors, returning 1025 percent over the past 10 years, compared to only 122 percent for the S&P 500 and 316 percent for the companies profiled in the bestselling book "Good to Great" — companies selected purely on the basis of their ability to deliver superior returns to investors."
Defining Your Culture
Now that you know why company culture is so important, it's time to start thinking about your own. And there are two questions to ask yourself: What is the culture currently? And what do you want it to be? If the two answers match, then you're doing it right.
And while that doesn't mean that all the hard work is done — you should still continue asking these question and adjusting accordingly as you grow — it does mean that you deserve a pat on the back. If the two answers don't match — in other words, if there's something missing — then it's time to hit the whiteboard.
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