"Define Your Culture, Don't Let Your Culture Define You"
A recent study on the Employee Experience by IBM and social recognition provider Globoforce revealed a direct link between company culture and employee performance and retention. There is also increasing evidence linking company profitability and culture. Clearly, culture is important. And the critical component in both creating and defining culture, according to both studies, is a company’s leadership.
There is a fine balance between dictating your company culture and allowing it to develop organically. Good leaders know the difference. Too much control and you risk stifling change, creativity and even profitability. Too little and you create a cultural vacuum that can be just as damaging.
Good cultures don’t develop without a little guidance. If leaders fail to define company culture, someone or something will and that presents a huge challenge for organizations. First, there is the inherent risk of cultural confusion and frustration. The IBM study confirms that organizational integrity alongside a clear sense of belonging and purpose is critical to a positive employee experience. Translation: Everyone has to be on the same page. Company culture has to be consistent in everything from the mission statement to company practices. A superficial tweak, say, to the company’s online bio, will not establish culture. It is not going to take long for new hires to figure out that the open, fun workplace advertised on a website or by eager recruiters is, in fact, something else entirely.
Letting A Culture Define You
If you don’t take a thoughtful approach to developing a culture everyone buys into, one will develop without your input. The problem is that it may not be the type of culture you want and if that happens, it will affect everything from retention to your bottom line. Your people will follow the lead of managers or the voice of strong employees who claim to know what the company expects.
A lack of thoughtful culture development also means someone with less authority over the big picture sets core values, norms and behaviors. The result can be a mishmash of different subcultures spread throughout your organization, sending out inconsistent messaging to employees. This can be frustrating for employees, can affect your bottom line and will inevitably lead to attraction and retention challenges. Eventually, both productivity and profitability will be affected.
Why It Matters
The good news is that a strong, cogent company culture can deliver on both profitability and retention. Recruiting and training costs aside, there are other financial reasons for defining a strong company culture. A 2015 study published in the Journal of Organizational Behavior revealed a direct correlation between a positive company culture and profits. It also suggested that the reverse was not true and in fact, companies with high profitability but a less positive culture frequently experienced declines in profitability over time. Culture provides people with a sense of belonging and purpose, both of which are critical to their success. According to Gallup, highly engaged business units result in 21% greater profitability, realize 41% reduction in absenteeism and are 17% more productive.
Whether you are leading a cultural re-invention for an existing company or creating one on the clean slate of a brand new company, there are things you can do to define a culture that works for your company.
- Lead by design: Link your company vision and mission statement to the company culture. All should be natural extensions of the other. Consider your company goals and how your vision, mission and culture can all help fulfill these goals. Be as strategic with your company culture as you are with other aspects of the business.
- Lead by discussion: Discuss culture with your employees. Whether you use a formal survey, informal meetings or an app that gauges employee moods, find out how they perceive your company culture and what, if anything, they think should change.
- Lead by example: Executives in the company should model the cultural norms you expect from everyone. This includes everything from whether or not to answer emails over the weekend to dress codes to customer experience. If you want an open-door policy that encourages new ideas from everyone, keep your doors open. Incentivize and make it easy for employees to push these new ideas.
- Lead with change: Your world is in a constant state of flux: markets change, customers change and employees change. Culture should be something that perseveres through challenging times, but as businesses change and evolve, there are times when your culture may have to as well. Don’t stick to the old ways simply because this is what you have always done. Conversely, don’t abandon your existing culture in favor of the next new thing. Listen to your employees and to your executives.
- Lead with clarity: Understand your organizational culture and ensure it is reflected in company norms, values and how employees go about work. You should be able to clearly describe your company culture to both employees and people outside the business in a clear, consistent and concise way.