Why Company Culture Matters

The last thing a busy business owner or leader wants to do is add one more task to an already overwhelming to-do list. But while you may feel like you don’t have time or energy to worry about another thing like “company culture,” improving your company’s work environment can be key in getting the most productivity out of your team.

It may seem like an abstract concept, but there is actually a lot of concrete evidence pointing to the value of a company’s culture. Just what is culture? It’s the personality of an organization as understood by its employees. It refers to the mission, expectations, work atmosphere, values, beliefs, and attitudes that characterize a company.

So, how are a company’s culture and its performance related? The Alternative Board recently conducted a Small Business Pulse survey to see what its members think. Of the hundreds of business owners questioned, 93% believe their company culture boosts employee productivity and creativity. Also, 90% say it improves employee recruitment and retention.

The benefits of a good corporate culture go beyond the walls of the building, however. Survey respondents also overwhelmingly believe their company culture improves customer acquisition and retention (94%), and increases profitability (87%).

TAB’s findings align with other research on company culture. A Columbia University study found that the likelihood of employee turnover in a company with a poor culture is nearly 50%, but decreases to only 14% in organizations with rich cultures. The reason for the difference, the study says, is great workers who don’t feel appreciated because of bad leadership or other cultural issues will eventually quit.

Another recent study in the Journal of Organizational Behavior found a positive culture can also help a company’s bottom line. Even more, companies that achieve financial gains without a positive culture in place are more likely to experience a decline in profits. Culture causes performance, not vice versa.

The payoff from a positive corporate culture doesn’t come quickly, according to the study. The effects of a company’s current culture can take two years to influence customer satisfaction, and then another two years to positively impact sales.

Unfortunately, many companies are falling short when it comes to culture. A survey of more than 200,000 employees from more than 500 organizations found that 64% of all employees don’t feel like their company has a strong culture.

That should be a terrifying number to anyone in management. Yes, you have products to develop, a staff to manage, clients to please, and more, but there’s strong evidence that a positive company culture can have a dramatic effect on your bottom line.

Building and sustaining a winning culture isn’t easy, but ultimately it’s worth the investment of time and energy — and leaving it on the backburner could be a costly decision.

Originally published at https://www.linkedin.com on March 30, 2017.