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The Cost of Culture

Sharing an article I previously published on LinkedIn last month.

Culture is something we have heard a lot about in recent years. It is not a new concept, it has been around forever and a part of every organization whether they realize it or choose to recognize it, they exhibit some form of corporate culture. It may not always be the one they think or even want but it is a culture none-the-less.

Today, many organizations, large and small, new and old are coming to the realization that there is a value associated with their culture and a direct correlation to their company’s culture and their level of performance, client satisfaction and employee retention and more.

Yet, despite statistics, studies and hard facts, company culture remains one of the most difficult challenges for many organizations. Why is this? There are several reasons, and this would be a novel were I to dive into each of them in this article, rather I am going to address the overview and in subsequent articles hit the three areas specifically.

There are three main reasons in my experience are:

  1. Lack of understanding of “culture”

  2. Inability to implement

  3. Complete disregard for reality

Newer organizations, regardless of their purpose, recognize the importance of culture and they understand what “culture” means and they are able to structure their organization from the beginning implementing their vision. It is not a word that they simply toss around, it represents actionable items in their agenda. They structure their offices around it, in one marketing firm I visited they had a pool table set up in an area of the office. It was their brainstorming and recreation area. They would go and brainstorm new ideas or tackle problems over a game of pool. One IT company had sofa’s and lounge chairs set up around their office. They recognized that their employees often are more creative when comfortable, and she showed me a picture of one of her team members laying on his stomach feet in the air across a modern bright colored couch with his laptop open. He was working diligently on one of their client’s projects with a smile on his face. These two organizations although providing different services and products shared similar cultures and beliefs in how they engage their employees.

They both established environments in which their employees feel comfortable, they promote transparency in their mission and goals and they are consistently involved with their employees. They created as part of their “culture”, transparency and inclusion which resulted in their employee’s sense of accountability and desire to perform for them. They have minimal turnover and excellent client satisfaction.

Conversely, we look at companies who still operate with a '70’s and ‘80’s mentality and structure who treat employee’s like children who should be seen and not heard. They are chained to a desk, spoken at and not to and believe their employees should feel fortunate enough to be employed by the organization who so graciously allows them to come in and work for them daily, often in stress orientated environments where they are held to incredible standards with limited direction and governed by fear. These types of employers do not engage their teams unless it is to bring to their attention some deficiency in their performance or need to improve to meet new corporate expectations.

These are the offices where employees are often divided into cliques. Where management doesn't speak with desk level workers and where you are fortunate to make eye contact and get a good morning or hello as you walk by one another in the aisle. These employees come in, do their job and go home. They won't put in more unless asked and the organizations normally have high turnover rates and little to no job satisfaction if you question the staff. There is no team only you and me and the only important thing is me. Productivity in these groups is usually subpar and customer service and client satisfaction are never more than average.

So compare Company A to Company B and what do you find aside from more smiling faces. Well, I read a Forbes article that sites a study showing the correlation or causality of culture and performance from Queen's University Centre for Business Venturing. They used data from over a 10 year period of employee engagement surveys and company results. The results demonstrate that companies with cultures of engagement had:

  • 26% less employee turnover

  • 20% less absenteeism

  • 15% greater employee productivity

  • 100% more unsolicited employment applications

And most importantly these companies had a 30% greater customer satisfaction level than the rest.

Now all of the above is pretty simple to figure out. Greater customer satisfaction equates to increased customer retention and increased return customers. Happy employees, convey happiness to clients, they share their enthusiasm and love for their work with those whom they are servicing. Clients feel a sense of sincerity, increased attentiveness and when a client can enjoy their interaction with their vendor or service provider a few things happen.

  1. Perception – versus being viewed as just another person or entity from whom they purchase goods or services. Your company and employees become their partners and colleagues. By representing a positive force in their workflow you become a valued member of their team. To boil it down, you develop consumer loyalty.

  2. Understanding– When you demonstrate attentiveness to your clients concerns and have been a true partner to them in servicing their needs. When the inevitable issue does arise, versus it being your head immediately on the platter, companies who have valued relationships with their clients and employees that have consistently shown them attentiveness and concern and are not more problematic to deal with than the issue at hand are afforded some latitude in these situations. Why? Because when you can work together with a partner who is easy to work with, and has your best interest at heart, it makes it that much easier. Plus true partners are difficult to find and smart companies do not quickly walk away from them.

  3. Increased Opportunities – Two ways your business opportunities can increase are through obtaining additional lines of business from your already satisfied customer and word of mouth referrals. In the fore, it should be safe to assume that if one unit of your organization is so effective and well structured that the others are as well and as a CEO I once worked under told me "I look to do business with people I like." The logic is if I don't like you or you me, then my concerns are going to be viewed as whining or complaints. You won't be inclined to jump on getting me what I need, and I will not want to call and deal with your organizations unpleasantness. So why bother working with them and move business to the companies who you do enjoy. So if they have multiple product lines, then you have now opened the door to securing other lines of business from them. Second is good old word of mouth. The best referral you can receive is from one client to another. Business leaders speak and convey their likes and dislikes about organizations just like you do with your friends about stores or restaurants. If they have a great experience they want to share it. On the same token, if it is a poor experience, they look to save their colleagues the headache that they may have had to deal with. So what is the message you want conveyed about your company?

All of that because you have an employee that smiles? The answer at the core is yes. It does not mean there are not obstacles, issues and great processes which they utilize in servicing your clients. But in over 20 years of leadership, this is something which has been proven to be true. My teams have never had to be asked to stay late, they chose to get the job done for our clients. Even when at some organizations I had to cut overtime to zero, they stayed. Because they were engaged, they understood what it meant and they were part of the team. That was the culture I created, we were one cohesive unit with an emphasis on servicing our clients.

There are so many examples good and bad that I can share from my years of experience and those of my colleagues. Perhaps in future articles I will do so and dive into some specific examples of how types of cultures have helped organizations thrive and others where it has proven detrimental.

As for this article the premise was The Cost of Culture and the truth is the cost is dependent on the value you place on it for your organization. In my company, and companies I have lead in the past, I place a tremendous value on culture. The benefits outlined above are just a few which if we want to really dive in we could place a specific monetary value to in a specific business, but overall I believe them to be priceless.

So for me, the cost of creating a good culture, maintaining the morale of my teams and ensuring my clients are interacting with a happy and content workforce is worth budgeting in to our annual budgets. Aside from establishing HOW we communicate and work with our teams, we focus on activities and events to boost morale and increase interaction socially for all of our employees from senior management to our newest employee.

So what is your corporate culture worth to you?

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