Why Company Culture Matters [Infographic]

JD Miller http://omba.wsu.edu 5m 1,314 #companyculture

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Company Culture and Employees

Company Culture

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.

Why Company Culture Matters [Infographic]

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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:

  • Autonomy
  • Mastery
  • Purpose

Consider Microsoft’s Encarta vs Wikipedia

Encarta had:

  • Professional writers and researchers creating the articles
  • Well-compensated managers overseeing the project

At Wikipedia:

  • 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



Source: http://omba.wsu.edu/resources/infographics/why-company-culture-matters/