Company Culture Matters

Your business has specific goals that it wants to achieve.  Maybe you’re in the early stages of your business so you feel it’s possible to double your sales this quarter.  Or perhaps you want to increase your net profit margin by 5% this year.  Regardless of what your specific goal is, many of the decisions you’re making every day are based around achieving that goal.  In the middle of your day-to-day business operations, somewhere along the way, your company’s culture was established.
Investopedia gives a definition of corporate culture that provides a solid foundation for understanding what corporate culture is.  Investopedia says corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions.  Additionally, Investopedia specifies that corporate culture is often implied, not expressly defined, and that it develops organically over time from the cumulative traits of the people the company hires.  That’s a solid start to understanding corporate culture. builds on that understanding of corporate culture by stating that corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature.  It is rooted in an organization’s goals, strategies, structure, and approaches to labor, customers, investors, and the greater community.  If you think corporate culture sounds complex, abstract, and difficult to grasp, that’s because it is. But this article will give you a better understanding of corporate culture.

Why Does Company Culture Matter?

Culture in a small business is particularly important.  A strong company culture leads to increased employee commitment and productivity.  Conversely, a weak company culture inhibits company growth and may ultimately lead to business failure.  In an extremely small business, an owner can take an authoritarian management style and do fairly well.  However, as the company grows it becomes more and more important that the owner creates a healthy culture that enables people to do their jobs.
If the importance of corporate culture still evades you, Gallup estimates that disengaged workforces are costing companies $450 billion lost in productivity per year.  Furthermore, 95% of employees say that culture is more important than compensation. In other words, if you can establish a healthy company culture, you will experience less churn because your employees aren’t leaving your business for a pay-raise.
Harvard Business Review analyzed thousands of executive assessments for more than 100 corporations and their findings were interesting.  What they found is that corporate cultures influence employees’ leadership styles more than any other aspect of their jobs.  Specifically, they discovered that employees who work for a corporation, no matter what their job is, are 30% more likely to exhibit similar leadership competencies (defined as the way a person learns, deduces, envisions, engages, and executes) than people who do the same job but who work for a different company.  Put simply, this means that there is significant overlap between what a company values and what the individuals within that company value. Do you want your employees to value something specific? Make sure your company, specifically the leaders of your company, values that specific thing and it will increase the likelihood that your employees value it as well.

Building Your Culture  

First, you’ve got to understand that building a healthy culture begins at the top.  Leaders of a company need to share their vision with the company frequently.  A company without a vision is reactive in nature.  Perhaps more importantly, small business owners should be aware that their own behavior and attitudes set the standard for the entire workforce.  A few areas that business owners need to set good examples in are lifestyle, dedication to quality, business and personal ethics, and dealings with others.  Neglect in these areas will inevitably bring about an unhealthy culture.
Next, hiring decisions should reflect desired corporate cultures.  Identify the values that you desire to have in your company culture and then hire individuals that will strengthen that aspect of your company culture.  This is not to say that hiring decisions should be based on ethnic, racial, or gender issues.  Businesses benefit from having diversity in the workplace.  But issues like dedication to quality and personal ethics should not be substituted for anything else.
Lastly, hire for communication.  Small business owners who discuss problems with their workforce and enlist employees’ help in solving them are often rewarded with a healthy internal environment.  Establishing a participatory culture is a great first step toward propelling a small business ahead of its competition.
Developing company culture is going to happen whether you intend it to or not. Remembering these factors of corporate culture will allow you to establish the culture that your business is aiming for.