Is there a link between company culture and profit? 

In short, yes. 

Culture and Performance

Company Culture is increasingly seen as the critical measure of a business’s potential and performance. 

Great company culture is what everyone is striving to create to help attract and retain great employees, to create innovation, positivity and excellence and to bring success for customers, clients and stakeholders. 

However, very few companies can describe what their company culture is; how to measure it, how effective it is and how to go about changing it.

Company culture is intrinsically linked to so many business decisions and business outcomes, you would be surprised.

  • Do you know what your Company Culture is or how to describe it?
  • Are your teams or employees working to peak performance?
  • Are all the people in your business heading in the same direction?

Culture is such an important part of any organisation and increasingly so in a world that is changing rapidly. 

It is the foundation upon which the business happens, i.e., fails or succeeds. 

"We are a technology company with a banking licence" - to quote  a COO in a financial services company. That thinking and belief is going to have to lead to a seismic shift in behaviour, strategy and culture.

Recent Research

Recent research from the US of over 1,300 CEOs and CFOs have shown that there is a link between culture and businesses succeeding and growing or failing. 

The answers in the survey were fascinating and support everything we tend to see when working with companies on their corporate culture.

  • 92% of senior executives believe that improving their Company Culture would increase the value of their business, yet only 16% believe their culture is where it should be.
  • More than 50% of all organisations globally have difficulty retaining some of their most valued employees, where the cost of replacing a highly- trained employee can exceed 200% of their annual salary.
  • Defining and living a company’s vision, values and culture resulted in revenue growth from £16m to £60m in 2 years for one company 
  • Employees who are highly engaged at work on average miss 70% fewer workdays over the course of a year, are 27% more likely to report “excellent” performance and are 45% more likely to report high levels of adaptability in the presence of change.
  • Most executives would walk away from an M&A deal if the target acquisition is not aligned culturally with their existing cultures; others would require a substantial discount on the purchase price.
  • An effective culture improves the company’s value and profitability through: fostering creativity and encouraging productivity; higher risk tolerance; mitigating myopic behaviour; and creativity and innovation.
  • Effective cultures (i.e., a culture that promotes employee behaviours that drive the successful execution of the company’s strategies) happen when the company walks the talk and lives the values.
  • An ineffective culture (does not promote those behaviours, and might even work against the right behaviors) increases the chances that employees will act unethically or illegally.

“Shibboleth” - a custom, tradition, value or norm that is no longer important. Do you have any of these in your organization?

I used to believe that culture was ‘soft’ and had little bearing on our bottom line. What I believe today is that our culture has everything to do with our bottom line, now and into the future.”—Vern Dosch, author, Wired Differently (DPZ Technology, 2015)

If you are needing some help with your company culture, please do not hesitate to contact us.

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