A great organisational culture has been viewed in the past as a “nice-to-have”, but not a business imperative. The evidence is becoming increasingly irrefutable, however, that:
- Companies who have taken steps to create outstanding cultures see an impact on their bottom line.
- Companies who don’t, pay the price in terms of staff turnover and lower customer loyalty and trust.
“Culture eats strategy for breakfast” famously said Peter Drucker. Successful companies need a point of difference, and culture is more powerful than strategy in this regard. While competitors can imitate your strategy, they can’t copy your culture.
We’ve compiled this list of the top 5 stats underlining why great company culture is a must:
- A recent Glassdoor survey found that company culture is one of the top five most important things job-seekers consider before accepting a new job.
- To be recognised as a “Best Workplace”, you have to demonstrate a great workplace culture. By far the most important factor, at 56%, when professionals consider an employer, is whether it’s a great place to work.
- A 4-year study at the London Business School, showed that the Best Workplaces financially outperform their competitors by 2-3% per year.
- Places that are considered great to work at have much lower voluntary turnover rates compared to their peers, by as much as 65%.
- This improved retention is hugely significant when you consider that it costs over £30K to replace a staff member, and that the average time taken to recruit a non-executive candidate is more than 2 months, increasing for more senior level appointments.
Not only are the figures compelling, but the string of recent corporate scandals is pushing corporate culture higher up the agenda. A Culture Coalition project, set up last year by key bodies including the CIPD, Financial Reporting Council, Institute of Business Ethics, and CIMA, has highlighted the issues that can arise when organisations do not focus on company culture. They have stressed the need for leaders to embody the desired culture, for values and incentives to be aligned to culture, and for culture to be better measured. 
What are the signs of a High-Performing Culture?
Every organisation has its own distinct culture which will guide the experience of all stakeholders involved with it; whether investors, customers or employees. A positive, well-defined culture underpins strong business performance, and has the following attributes:
- Employees feel pride in the work they do; there is mutual respect through all tiers of the organisation; managers can clearly and confidently translate the strategy and behaviours of the organisation to their teams; and people can enjoy the open relationships they have with their colleagues. All of this generates a strong sense of trust in the leadership of the organisation, in its managers, and within teams, and organisational performance is accelerated.
- Continual improvement processes are embedded in the way that things get done. The leadership sets the overall direction and purpose. Meanwhile, ideas for improving the way things are done at a tactical level are generated regularly by the team members themselves, based on what they experience in their day-to-day work and the fact that they are highly motivated to make things better. The cumulative impact of making regular, small improvements has a huge impact on overall business performance.
- High-performing cultures are created when leaders provide clarity and purpose, and employees are empowered to get things done in their own way. The “Loose-Tight model” is a useful reference. The tightness is created by leaders’ clarity on organisational purpose and strategy, and what individuals are personally there to achieve. However, this is combined with a “loose” approach, in that it’s open to employees how they deliver on this. Teams have tactical freedom and are empowered to find their way to address the situation.
Outstanding organisational culture deserves research and focus, and where companies have taken steps towards establishing a great culture, this also deserves recognition and celebration. For the first time in 2016, a team of 18 top HR leaders have identified companies operating within the UK and beyond who have proud stories to tell about their organisational culture work.
To find out who these organisations are, as announced today, click here. (You’ll also be able to find out more about how your organisation can get involved, if you have your own proud story to tell).
Sources for Statistics:
- Glassdoor, Top 25 Companies for Culture and Values
- Geoff Colvin, How to Build the Perfect Workplace
- 4 year academic study of Fortune Best Companies, Prof A Edmans, London Business School.
- The 10 Best Ways To Build Company Culture, business.com, 2016
- Oxford Economics Report 2016, and Randstad 2016 Workplace Trends.
- HR Magazine 2016, FRC calls for stronger focus on corporate culture