Why Company Culture Matters [Infographic]
Company Culture and Employees
What separates the winners from the losers in the business world? There are many concrete ways to measure a company’s success: how many people it employs, its annual and quarterly revenues, the value of its stocks to shareholders—often, these are the only things people consider in looking at a business of any size. But perhaps the most critically important element that defines a company is something less measurable: its culture.
Work culture is determined by several factors, mostly revolving around the way employees communicate, collaborate, innovate, and excel. Everyone from executives to trainees are influenced and affected by company culture. While scientific management principles have their place, hard numbers only tell part of the story, because humans are naturally social creatures, and anytime they assemble they will begin to forge a new group culture.
Just because it is a natural phenomenon among people doesn’t mean a company can’t take a deliberate approach to developing its own unique culture. After all, almost everyone has a story about working in a toxic corporate environment, yet knows someone who always seems thrilled to be going to work every day.
The following infographic from Washington State University’s Online MBA program highlights the various ways companies across different industries prioritize cultural development in order to ensure their employees thrive and their customers keep coming back.
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Why Company Culture Matters
Every company has a unique style, its own way of doing things, and we call this the company's culture. Culture affects a number of different aspects of an organization, from the hiring process to employee engagement and productivity, even a company's brand.
Company Culture and Branding
Companies with strong cultures have employees who actively participate in those culture, influencing branding perceptions. For example:
Walt Disney Corporation
Focuses on making dreams come true
Employees are trained to treat guests like royalty
When a young girl at a Disney Theme Park lost her doll, Disney employees:
- Washed the doll's hair
- Made the doll a new dress
- Returned the doll doll to the guest with a photo album of the "adventures" she'd been having
- Photographed her at a tea part with other Disney princesses
Focuses on customer service
SouthWest employee Randy Ward volunteers time at Ronald McDonald houses making balloon animals for children
Trains everyone in their customer service department
Zappos employees are well-known for the lengths they go to on behalf of their customers, such as:
- In 2011, a customer service rep sent a bouquet of flowers to a customer after learning about her mother's health issues
- The woman then learned that she and her mother were entitled to free, expedited shipping on all orders
- In 2009, Zappos employees purchased and hand-delivered shoes to a customer in town, for free
- Zappos no longer carried the shoes, so they purcahsed the item from a rival shoe company
Culture and the Hiring Process
Job applicants care about culture
College students were willing to receive 7% less in starting pay to work for an organization whose values they shared.
Candidates who are chosen based on their fit in a company's culture are more likely to:
- Form stronger teams with their fellow employees
- Contribute to the organization
- Stay longer with the company
An insurance company found 30% less staff turnover in departments whose environments fit the company's cultural goals.
46% of new hires quit or are fired within 18 months
Many hires leave due to cultural mismatches, including:
- How crises are handled
- Preferred communication style
- How feedback is given
- Amount of openness to be expected
Work skills can be taught. Fitting into a culture cannot be taught.
How They Do It
When Southwest Airlines flies candidates in for interviews, the attitudes and behavior of the candidates are monitored by:
- Gate staff and flight crew
Southwest wants to know how their prospective employees will react in potentially stressful situations
Zappos perform two sets of interviews with candidates:
- One focuses on job skills, resume, and ability
- The other focuses on how well the candidates would fit into their company culture
Zappos even offers new hires $2,000 to quit after their first work or training. This is an attempt to weed out someone who isn't passionate about the company.
Culture, Engagement, and Happiness
According to a Gallup poll, only 13% of American workers are engaged at work.
24% are classified as "actively engaged"
63% are classified as "disengaged"
- Less emotionally connected
- Doing just enough work to keep one's job
Companies with a storng culture have a less staff turnover tahn those that don't.
Strong culture 13.9% turnover rate
Weaker culture 48.4% turnover rate
Employees that fit a company's culture are more likely to be happy.
Employee happiness directly correlates to their productivity.
Happy employees can be as much as 31% more productive
Unhappy employees are 10% less productive
This loss in productivity costs U.S. businesses approximately $450 - $500 billion a year
Employees that provide the most social support, i.e. engage in their company's culture are more likely to:
- Receive a promotion in the following year
- Report high levels of job satisfaction and engagement
- Companies whose employees are satisfied can outperform others in the industry by as much as 202%
How to Create a Great Company Culture
Every company's culture is different, but there are a few general strategies that experts like Dan Ariely and Dan Pink recommend, such as:
Acknowledge Meaningful Work
Ariely, a psychologist and economist, performed a series of experiments
These experiments determined that people are more likely to continue doing a task when they feel their efforts:
- Having meaning
- Are acknowledged by others
They aren't simply going to be destroyed right after they finish
Ignoring someone's work is almost as demotivating as destroying it immediately
How Great Company Cultures Take Advantage of This
- Ensure employee work is meaningful
- Acknowledging effort drastically increases motivation
- Ignoring someone's work is easy to do, but very demotivating
Incentives Can Hurt Motivation
A number of psychological experiments over 40 years have shown that offering an incentive to solve creative problems can actually hurt performance.
In one experiment, two groups of people needed to complete a timed task.
One group was told they were being timed to establish norms and averages
The other group was told those who performed the task quickly would receive a monetary award
The second group took 3.5 minutes longer to perform the task
Pink quotes a similar experiment by Dan Ariely:
- He found rewards work well for mechanical tasks
- However, in tasks that called for "even rudimentary cognitive skill," greater rewards led to poorer outcomes
Pink advocates three qualities of intrinsic motivation that have been shown to increase performance in creative tasks:
Consider Microsoft's Encarta vs Wikipedia
- Professional writers and researchers creating the articles
- Well-compensated managers overseeing the project
- No one is paid
- People write because they're interested in the subject matter
In January 2009, 97% of online encyclopedia visitors went to Wikipedia instead of Encarta. Microsoft canceled Encarta by the end of that year.
How Great Company Cultures Take Advantage of This
Companies like Google have "20% time" self-directed time when employees can set their own tasks, form their own team and make something to present to the company
In an average year, approximately half of Google's products emerge from their engineers' 20% time.
Dramatically increase employee motivation and creativity by:
- Giving them time to direct themselves
- Giving them opportunity to become better at a task
- Make them feel their work is part of a larger whole
Workplaces with strong company cultures have some of the most successful brands in the world, and a key facet of their success is the strength of their culture. A positive, uplifting cultures increases employee productivity and creativity, decreases burnout and turnover, and strengthens a company's brand overall.
Washington State Unversity
CARSON COLLEGE OF BUSINESS
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- Work culture is determined by several factors, mostly revolving around the way employees communicate, collaborate, innovate, and excel.
- While scientific management principles have their place, hard numbers only tell part of the story, because humans are naturally social creatures, and anytime they assemble they will begin to forge a new group culture.
- Just because it is a natural phenomenon among people doesn’t mean a company can’t take a deliberate approach to developing its own unique culture.