A good company culture can build you up and support business growth and success. A poor culture can just as quickly tear it down. Having a good culture versus a poor one is a matter of choice and action, not luck, and working to create a good, intentional culture can have profound effects on your organization. In this three part blog series, Notogroup will explore the profound financial impact a good culture can have on your organization, how to create an intentional culture, and how to hire for a culture fit while still embracing diversity of ideas and people.
We’ve all recently watched while Uber has taken a big step backward in the public spotlight due to a public revelation of their hyper-competitive and aggressive culture where harassment, discrimination, and attempts to undermine other employee “competitors” abound. This revelation has had a huge negative effect on the company, from bad PR and declining stock value to a CEO step-down, and has even resulted in Uber-loyal customers making the switch to ride-share competitor, Lyft. At the same time that Uber’s culture has hurt their business, it has also helped their competition – light is now being cast on Lyft’s positive, community-centric culture and they’ve been thrown into the spotlight in contrast to Uber’s issues. While Uber may be a dramatic example of how deeply a poor culture can affect a business, it is true nonetheless that a poor culture will always be less financially rewarding to the bottom line than a well-defined and executed positive culture.
An intentional culture built around values can have powerful effects on business that lead to increased customer loyalty, consumer confidence, and more engaged employees – all resulting in sustainable financial growth. When a company’s culture has a positive impact on employees, customer experience improves while employee engagement increases. Online software provider Cvent reports that on average, customer retention rates are 18% higher when employees are highly engaged, and a strong culture naturally leads to high employee engagement.
A company that is guided by a well-defined mission and purpose builds a positive culture with engaged employees who create an outstanding customer experience. For example, take EILEEN FISHER, a fashion brand whose mission is to make it easy for women to dress. Their commitment to great design starts by listening to what women want and need and designing clothes that simplify the equation of getting dressed, so women can focus on what matters most in life. By creating interchangeable shapes and proportions in versatile materials and beautiful colors, women are invited to express their own style with ease and confidence, and feel at home in their bodies. Additionally, EILEEN FISHER’s focus on sustainability is also tied strongly to their purpose, to the extent that they are the leader in sustainability in the fashion industry. Success is also shared more equally across the employee population as an employee-owned company. The strong mission and purpose translates into a joyful and collaborative culture that celebrates design and the customer, which in turn creates a differentiated product and a workforce that is focused on continually delighting the customer.
Not only does a good culture naturally increase customer loyalty, but it also boosts financial success by decreasing the costs associated with a high-pressure environment and by increasing overall employee well-being. An eye-opening report from the Harvard Business Review reveals that companies with high-pressure, “cutthroat” environments (often associated with a poorly executed or undefined company culture) experience:
- 50% greater healthcare expenditures, as 60-80% of workplace accidents are attributed to stress, as well as 80% of employee’s doctor visits
- Higher employee disengagement, resulting in 37% higher absenteeism, 49% more accidents, and 60% more errors and defects
- That same disengagement also leads to, on average, 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time
- Additionally, these companies experience 100% fewer job applications than their good-cultured counterparts, as well as a 50% increase in voluntary turnover
HBR continues to postulate that while many companies try to create well-being with material goods, such as in-office gyms and other perks, those make only a small difference in actual well-being when they aren’t presented in the context of a positive workplace culture.
“77% of consumers prefer to purchase from companies that demonstrate community responsibility.”
Outside of your company walls, a good culture with strong values can affect your brand perception. According to a Conscious Consumer Report by Union + Webster, “77% of consumers prefer to purchase from companies that demonstrate community responsibility.” In fact, these surveyed customers even indicated they’d spend 5-10% more for an identical product that came from a community-conscious company than from company with no social or sustainability goals embedded in its culture. Certifications like Fair Trade, LEEDs ratings, and B Corp gives customers confidence that they are investing in companies who will invest to improve our world.
Clarity on a company’s ‘purpose’ aligns and engages employees in a meaningful way towards a common mission with co-workers that share their values and sense of connection to the purpose. Patagonia is an incredible example of a company that has built a culture around such a meaningful purpose. At Patagonia, the mission is to “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” This mission focused on creating the highest quality products while respecting and improving the planet ties all the way back to Patagonia’s founding story, and has fostered a culture that unites employees in their shared respect for the earth and all its inhabitants.
The impact that a good culture can have on your financial growth is astounding. A good culture nurtures a team that’s invested in their work, that believes strongly in what they are doing, and who are motivated, productive, and happy. These happy, invested employees work at peak productivity to improve your product and the customer experience. Investing in creating an intentional culture will always pay-off in the long run, and we invite you to join us in part two of this three part series on culture as we explore how to define, implement, nurture, and grow an intentional culture at your business.