Corporate Culture Is Way More than a Soft Concept

a word cloud around "Organizational Culture"

This word cloud highlights the way many think of organizational culture…as a soft concept. Yes, organizational culture has to do with worker’s attitudes and behaviors but it also can be seen as a “hard” concept. We define culture as how things truly get done in an organization based upon the way people think, behave and work. A company’s culture includes the known and unspoken values and assumptions that drive key business practices and behaviors – especially in leaders and in who they hire, fire and promote.

When a corporate culture is strong and vibrant, it has an enormous impact on business performance.

Recently Harvard reported that an effective corporate culture can account for up to half of the differential in performance between organizations in the same business. Our own organizational alignment research found that cultural factors at a company account for 40% of the difference between high and low growth companies.

Here are two ways a high performance corporate culture can affect your bottom line:

  • A powerful and positive corporate culture attracts potential business partners
    Beyond attracting talented individual employees, a high performing corporate culture is a magnet for new business alliances. Executives want to do business with companies that stand for and practice high values, companies that have a mission that matters, and companies that plan for and envision a great future. Decision makers care that the companies they decide to join forces with behave with the kind of consistency, integrity, open communication, accountability and growth mentality that signals a healthy culture.
  • A strong corporate culture engages and retains top talent
    When you have employees who live the company values and are committed to the company’s mission and vision, they are typically more engaged employees and less likely to leave. How does this affect company costs? There is less spent on recruiting and hiring, productivity is higher due to high discretionary effort, customers are better served and more likely to stay, and, accordingly, sales are better. Our research shows that, in terms of revenue, profits, employee engagement, customer retention and leadership effectiveness, corporate culture accounts for 40% of the difference between high and low performing organizations.

Corporate culture matters a lot…it can be a powerful differentiator. To build an organizational culture that attracts and retains good employees and good business:

  1. Create Strategic Clarity. Be clear about why you are in business, what separates you from the pack and where you are headed. Your company’s vision, mission and value proposition should be stated in a simple-to-understand and compelling way.
  2. Live Strong Corporate Values. Since the demise of Enron, much has been written about the hypocrisy of their values of communication, respect, integrity and excellence. Do not be fooled into complacency. Current and future employees as well as current and future business partners want to know what values your company lives and breathes on a day-to-day basis. They want to know not just why you are in business but how you do business.
  3. Share your culture publicly. If you truly live and embrace your values and corporate culture, you will draw employees and customers who respect the way you think, behave and work. With each positive customer experience, you strengthen your reputation as a great place to work and build customer loyalty.

Businesses that want to grow should take a close look at their culture…both internally and externally. In today’s economy, a real competitive advantage can make the difference between success and failure. When you look at an engaged workforce supported by a strong culture, your advantage is in your people.

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