If you want to attract the best employees then you need to have the right culture. We explore the rise in importance of business culture and its positive impact on the bottom line.
Quick takeaways if you’re in a hurry
- 87 percent of organisations surveyed in Deloitte’s Global Human Capital Trends 2015 research cited culture and engagement as one of their top challenges
- A young workforce has increased the importance of culture to businesses: it’s become a key driver in selecting an employer as well as a reason for staying with them
- Good business culture has been demonstrated to correlate with profitability
Read on: When “culture eats strategy for breakfast”
(estimated reading time: 6 minutes)
Strategy has a history of being more important in business than culture. That is until now. In Deloitte’s Global Human Capital Trends 2015, the increase in importance of company culture was clearly captured. 87 percent of the businesses surveyed indicated that culture and engagement was one of their top challenges.
It’s clear where this shift in importance has come from. Unemployment levels have recovered after the increases caused by the financial crisis of 2008. And this improvement has created a skill shortage, creating movement in who is in control of the employment process. Now increasingly the employee holds the power and businesses have to meet their needs to attract and retain good staff. As a consequence employees can be increasingly selective when they choose which company to work for: and the top recruits rate culture as an important criteria. Culture is now high on the list of company priorities.
Culture is traditionally challenging to define. But in a company setting the culture can be viewed as a combination of the values of the business and the attitudes of the employees. To delve deeper, it’s comprised of the way that a company’s values translate into the way it behaves, the infrastructure that supports it, routines or calendar events, and the process of reward and performance management. When values, employees and these other factors are aligned, a strong culture is created. But when they pull in separate directions then the disconnect can lead to unsettled and dissatisfied staff.
What impact does culture have on business?
Having the right culture definitely eases the recruitment process. And if your culture is strong then it can have a wide reaching positive benefit that can impact your bottom line. The right culture can drive employee satisfaction; recruitment; increased productivity; and improved customer service. Combined these translate to increased profitability as your assets align to support your business goals.
Glassdoor recently completed a study titled “Does company culture pay off”. This study identified a direct correlation between the performance of business on the US stock market and employee ratings of company culture. Businesses that rated highly for culture outperformed stock market performance while those who unperformed measured below average against the market.
Hills to climb
With the acceptance that a good culture has wide reaching benefits, many business are forced to acknowledge that they have a hill to climb in order to build it. A Gallup poll in 2013 identified that a mere 13 percent of the global workforce would rate themselves as “highly engaged” and nearly half the employees surveyed would not recommend their employer to their peers.
Historically businesses were able to motivate their workforce with the newest technology or the highest wages. But for the current generations of employees, work life balance has created a blurring of the lines between work and personal life and so values have extended across both. This means that businesses must now be culturally aware of their employees (and customer’s) holistic view of life and create values that recognise that.
Culture and life
Business values and personal values need to be aligned for today’s generation of employees. This means that companies need to think about the contribution that their businesses can make to society: and not just to their bottom line. In the Deloitte Millenial Research of 2014, millennials demonstrated their belief that businesses were in operation to do more than just make money. When asked if businesses could do more to help society: 68 percent said yes regarding resource scarcity; and 65 percent sought more action around climate change.
And when businesses bring their cultures to life with behaviour, infrastructure and rewards, then they need to maintain this focus. Employees rate their company cultures on sites like glassdoor.com, and list the key features they value. These include but are not limited to examples like flexible hours and working, investment in learning and development, the opportunity to work in teams, and clear goal-setting.
There are also the physical infrastructures – i.e. the office spaces – that both reflect values and create a positive working and living environment for employees. On a basic level it’s unlikely you can bring to life a modern culture in an outdated office block. Giants like Google are making huge advances in office spaces as well as the way that they do business: from their inception they have evolved their workplace into a place to live rather than a place to work.
Getting a good company culture has the ability to have a great impact on your bottom line. The right culture will ensure you can recruit and retain the best people for your company, giving you the best chance of meeting your goals and ensuring you don’t waste money on retention issues. If your staff are happy then you can expect increased productivity and improved customer service. Creating a good company culture is highly beneficial but a long term investment. It’s also especially challenging for companies with established businesses and workforces. Step 1 is to be aware of the potential. Step 2 is the opportunity to make it a reality.
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